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From Medscape Business of Medicine
What Does the Healthcare Reform Bill Really Mean for Doctors?
Leslie Kane, MAC
Posted: 03/23/2010
Euphoria or consternation?
Many Americans are cheering about the recent landmark healthcare reform legislat
ion. Others are dismayed, and still others feel a mix of optimism and trepidatio
What do doctors stand to gain or lose in all of this?
As people in a caring profession, many doctors are either truly or theoretically
happy that about 32 million more Americans will soon have health insurance.
Yet physicians have every right to be concerned about their own livelihoods and
medical practices. For some doctors, the healthcare bill will create benefits an
d opportunities. Others see no benefits, particularly specialists. And funding t
he reform -- despite what politicians say -- could portend an ominous future for
"In the short timeframe, the premises are great," says Thomas N. Ahlborn, MD, Pr
esident of Medical Staff and Director of the Department of Surgery at Valley Hos
pital in Ridgewood, New Jersey.
"It appears that internists will get paid adequately, insurers will accept peopl
e with preexisting conditions and won't be able to drop patients from insurance
plans if they're ill, and there will be subsidies for people who don't make enou
gh to pay for their own insurance," says Ahlborn. "These are all great things."
"But the reality is that the expense is going to be huge and there's nothing in
there to control costs," says Ahlborn. Ultimately, a shortfall could come from p
hysicians' pockets, he says.
Also, the proposed 21.2% Medicare reimbursement cuts still loom like a fire-brea
thing dragon that could wreak havoc on the best-laid plans.
Some Pros, Some Cons for Doctors
Although the currently uninsured population clearly benefits, the new legislatio
n brings both positives and negatives to doctors. The key areas are new Medicaid
patients at Medicare reimbursement rates, potential new business opportunities
for primary care, funding issues and controlling expenses, lack of tort reform,
continued chaos with Medicare reimbursement rates, and prevention efforts.
New Medicaid Patients at Medicare Reimbursement Rates
About 16 million Americans will be added to the Medicaid program. Medicaid reimb
ursements will be raised to Medicare levels for general internists, family physi
cians, and pediatricians in 2013 and 2014.
"A number of doctors have said that this is a good thing," says Ahlborn. Many pr
imary care physicians anticipate new patients at what they consider a fairly att
ractive reimbursement rate.
"Some internists say, 'Medicare pays us better than some of the other plans that
pay us only 70% to 80% of Medicare,'" says Ahlborn. "So for them to have these
potential new patients and be reimbursed at full Medicare rates is positive."
Still, many doctors have no interest in this new pool of Medicaid patients. Thro
ughout the country, some doctors are trying to lower their percentage of Medicar
e patients or even eliminate them entirely. Some doctors will also avoid the new
Medicaid patients because they say that dealing with government insurance progr
ams is a snarled tangle of frustrating paperwork.
"I think there will be a great number of primary care physicians who will not ta
ke either Medicaid or Medicare patients," says Mary Ann Bauman, MD, IM, and Medi
cal Director for Women's Health and Community Relations with Integris Family Car
e Central, Oklahoma City, Oklahoma. "Doctors want to give the best care to every
one, but sometimes the present insurance system makes it difficult."
Most physicians don't have that choice, says Ahlborn. "A lot of physicians opera
te on very short margins and are unable to cut their overhead. They get paid rel
atively little per patient visit and need to have volume. Yes, there are premier
practices that won't accept insurers offering less than Medicare rates, but the
y are the exception rather than the rule."
Although many primary care doctors are eager to start seeing these new patients,
specialists get the short end of the stick. The Medicaid reimbursement rate for
them will not rise to Medicare levels.
"Congress was very smart to say that they would pay primary care physicians 100%
of Medicare rates," says Ahlborn. "But specialists and people who do procedures
may simply say they won't see Medicare patients, or they'll see a very small nu
mber of them."
New Business Opportunities for Primary Care?
The roster of newly insured patients could turn into a flood or it could turn ou
t to be less than anticipated. But in many cases, it could represent practice op
portunities for doctors.
* New business models may attract primary care physicians willing to hire mo
re PAs and NPs in order to see patients. Doctors who expand in this way could in
crease their volume of patients while containing costs by using healthcare provi
ders with salaries less than that of physicians.
* Inner-city practices may spring up. Some doctors may be interested in sett
ing up practices in inner cities or areas where patients are now served by clini
cs or training hospitals. "There might be more demand in inner-city areas or ind
igent areas where the Medicaid population is greater," says Ahlborn. "Many of th
ose distressed areas probably have a paucity of physicians to begin with."
* Payment instead of unpaid charity care. Hospitals currently lose millions
of dollars annually on charity care for patients who show up in the emergency ro
om without insurance and who do not pay their bills. Physicians also do not get
paid -- or receive a pittance -- for charity care. If patients going to hospital
emergency rooms have insurance -- even at Medicare rates -- hospitals and docto
rs will receive at least some degree of payment.
* More primary care doctors will be trained. There are provisions of increas
ing the number of primary care doctors to be available in the future to care for
the additional patients.
However, Ahlborn cautions that it's not a given that all newly insured patients
will opt to see primary care doctors in office practices.
"Most uninsured people are being seen now, whether it's in clinics or hospital e
mergency rooms," says Ahlborn. "There are also people who have the opportunity t
o see physicians but don't access them. And some patients may not be diligent at
managing their healthcare or getting screening tests every year or every 3 year
s. "
Funding the Plan and Controlling Expenses
A new tax being levied to fund healthcare reform may hit doctors (and other high
earners) harder than the rest of the population.
The legislation calls for a 3.8% Medicare Part A (hospital insurance) tax on une
arned income for individuals making more than $200,000 ($250,000 for married cou
ples). Many doctors are in that tax bracket.
"You'll pay a tax on your investment capital gains, and if you sell your house,
you'll pay a tax on the capital gains," says Ahlborn.
Paying hefty taxes may lead doctors to question working nights and extra hours.
When such a large chunk of income goes to taxes, it becomes less attractive to t
ake personal time to bring in more income.
Bauman says, "I don't think Americans have the stomach for the raise in taxes ne
eded to make healthcare a right and not a privilege."
"Ultimately, this is untenable," says Ahlborn. "The cost of these entitlement pr
ograms is going to be astronomical. It sounds good that insurers have to accept
everyone with preexisting conditions, but where does the money come from?"
Tort Reform Is Overlooked
The inattention to malpractice reform has 2 effects: It fails to lessen the numb
er of lawsuits brought against doctors by plaintiffs looking for a quick jackpot
. It also neglects to address the very real issue of defensive medicine, which d
octors say jacks up the costs of healthcare.
"If a doctor has ever gone to court, he's going to do anything to never have to
go back again," says Ahlborn. "Physicians order hundreds of exams every year jus
t to document conditions that don't exist. Even if they know that the chance of
something being there might be 1 in 10,000, they will still order. In this legis
lation, they did not even toss a little bone to discuss tort reform."
Adds Bauman, "I know that every doctor who is a good doctor practices defensive
medicine. So I'm disappointed that tort reform will not be a part of the healthc
are reform bill. I think that will make doctors less willing to embrace those ne
wly insured patients."
Continued Chaos With Payment Rates
Notably absent was any mention of fixes to the Sustainable Growth Rate (SGR), wh
ich determines physician reimbursement. Medicare reimbursements cuts -- whether
or not made at the full 21.2% as proposed -- would be disastrous.
"The biggest issue on the physician's horizon right this minute is the proposed
21.2% Medicare pay cuts," says Ahlborn. "If those cuts were to occur, it would b
e devastating to primary care, particularly internists, who run on such small ma
rgins. Everyone knows that. My understanding is that it can't happen."
Even with that tax, however, private and government insurers are taking in too l
ittle to fund healthcare benefits," says Ahlborn. "Part of the budget reconcilia
tion scoring included the 21% cut in physician fees. That's why it could be budg
et-neutral. However, such a cut would shake the foundation of the system and the
consequences would be significant."
A natural place for the government to try to make up the difference is through c
uts to doctors' reimbursement, says Ahlborn.
Prevention and Wellness
Many politicians have said that keeping patients healthy through prevention educ
ation will be important as far as keeping healthcare costs low.
Where's the beef?
The legislation contains no financial incentives directed at patients to encoura
ge them to lower their cholesterol, quit smoking, lose weight, or in other ways
to take responsibility for their health. At the moment, responsibility rests wit
h public education programs and with physicians who are supposed to motivate pat
ients. The patient has little financial incentive to be a collaborator.
"It will be interesting to see what plays out," says Ahlborn.
Social welfare -- more Americans will have access to health insurance, including
patients with preexisting conditions who could not get coverage previously.
Many say that the new budget cannot ultimately fund the healthcare reform. Money
may have to come from additional taxes or some cuts to physician payments.
Primary care doctors and pediatricians who currently contract with lower-than-Me
dicare-rate insurers can see new Medicaid patients at Medicare reimbursement rat
es. A 3.8% tax will be levied on unearned income (ie, interest income and ca
pital gains) for individuals earning over $200,000 ($250,000 for married couples
). Many doctors are in that category.
Hospitals and the physicians who work in hospitals may receive more payment from
newly insured patients rather being unpaid for charity care. For specialists,
reimbursements for the newly insured Medicaid payments will not be raised to Me
dicare levels.
Potential new business opportunities exist for primary care doctors to practice
in inner-city areas or locations where previously there were not many insured pa
tients. There is no tort reform provision, which will keep doctors pract
icing defensive medicine.
More money will go toward training in medical schools to increase the number of
primary care doctors. Cost-containment measures are not included.
Business expansion is possible for doctors willing to hire more PAs and NPs to s
ee more patients. There are no incentives for patients to have accountabil
ity for their healthcare improvement or to maintain wellness.
Authors and Disclosures
Leslie Kane, MAC
Editorial Director, Medscape Business of Medicine
Disclosure: Leslie Kane, MAC, has disclosed no relevant financial relationships.
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