Medicare’s changes to physician compensation; the impact on providers and provider networks

As I’ve been reporting for several months, Congressional Democrats and the President are working hard to increase reimbursement for cognitive services by up to 10%.
This would go a long way towards fixing what is perceived to be a core problem with US health care – overly generous compensation for procedures (surgery, imaging, etc) leads to over-utilization of those procedures, while under-reimbursement for office visits and other ‘primary care’ services results in a shortage of physicians willing to do primary care.
This morning’s New York Times features a headline story about the conflict in Washington, noting that the Obama Administration is very concerned about the shortage of primary care docs. The solution being discussed in DC is to get more applications into med schools.
Wrong answer.
The ‘right’ answer is staring us in the face – there are too many specialists, physicians who have already graduated from medical school and have lots of experience and training. It would be far easier, faster, and cheaper to re-train these physicians to take on more primary care responsibilities, albeit primary care with an orientation towards their specialty. Would this be difficult, and expensive, and meet with strong resistance from those docs?
Absolutely. But on balance it would be much easier, and faster, than waiting at least eight years for the supply of primary care docs to begin to meet anticipated demand.
Compensating docs more for primary care would potentially have another effect; it might reduce the volume of procedures performed, as specialists would also benefit from the higher compensation for evaluation and management services. I wouldn’t bet too much on this, as docs – like the rest of us – won’t change dramatically overnight. That said, increasing compensation for primary care service codes (the 99xxx CPTs) would help take a bit of the sting out of reduced reimbursement for surgery etc.
What does this mean for you?
A lot.
Most network contracts are based on Medicare’s RBRVS; if the Feds change, your provider compensation will too. Think about the potential impact, and think deeply. The trickle-down will likely cause specialists to seek higher network reimbursement for two reasons – first the base from which their reimbursement (RBRVS) has declined, and second, they’ll want to make up their lost revenue from Medicare by increasing reimbursement from private payers.
Oh, and you can bet utilization is going to see a big jump, so get your data mining and evidence-based utilization review processes tuned up.