What Health Care Reform Means for Physicians

Amid considerable discussion of the potential impact of Congress's 2010 health care legislation on hospitals, insurers, pharmaceutical companies, and patients, very little has been written about its effect on physicians. Partly, that may be because the effect has been barely perceptible so far, but mostly it's because, as usual, we are at the bottom of everyone's priority list.

While it is true that most physicians will see few changes in the near term, that paucity of change is part of the problem, since both of the essential changes sought by physicians – tort reform and revision of the ill-conceived Medicare compensation rules that threaten to cut payments by 25% every few months – were never addressed.

That said, many of the early provisions of the law do favor physicians in the short term. Beginning this year, insurers can no longer cancel policies already issued, nor can they exclude children with pre-existing conditions. Adults who were previously uninsurable because of chronic ailments will have access to insurance as well. Lifetime coverage limits are prohibited, and dependents may remain on their parents' policies until they are 26 years old. Early retirees will not have to risk going uninsured until they qualify for Medicare, and Medicare's infamous "doughnut hole" will gradually close. Small businesses will receive tax-credit incentives to insure their workers.

All of this adds up to more paying patients, with better insurance.

In addition, primary care physicians will see a 10% increase in Medicare payments for certain services, including preventive visits, management of new diagnoses and related follow-up visits, and management of acute medical problems.

However, as additional provisions come online beginning in 2012, the long-range potential impact on private practitioners becomes more uncertain, and more ominous.

"Physician payment reforms" will begin to appear. Although no one yet knows exactly what that means, the law mandates the formation of accountable care organizations to "improve quality and efficiency of care." The buzzword will be outcomes – the better your measurable results, the higher your reimbursements. This is supposed to reward quality of care over volume of procedures, but the result could be exactly the opposite if less-motivated providers cherry pick the quick, easy, least-risky cases and refer anything time consuming or complex to tertiary centers.

In 2013, Medicare will introduce a national program of payment bundling. A single hospital admission, for example, will be paid with a single bundled payment that will have to be divided among the hospital and treating physicians. The idea, ostensibly, is to encourage physicians and hospitals to work together to "better coordinate patient care," but arguments over how to divide the pie could, once again, have the opposite effect.

And it won't take long for hospitals to figure out that they can keep the whole pie if the partnering physicians are their employees. So look for more private offices to be absorbed by hospitals, which already employ almost a third of all physicians.

By 2014, states will have to set up "SHOP Exchanges" (Small Business Health Options Program), allowing small businesses (defined as 100 employees or less) to pool their resources to buy health insurance. Most people will, by then, be required to have health insurance coverage or pay a fine if they don't. Employers not offering coverage will face fines and other penalties, and health insurance companies will begin paying a fee based on their market share, which will no doubt be passed along to those they insure, nullifying some of the savings garnered by the SHOP Exchanges, which are already predicted to be marginal.

The big Medicaid expansion will be in place by 2014 as well, but few physicians are likely to accept more Medicaid patients unless Medicaid compensation increases. That is unlikely to happen without substantial reductions in the states’ woeful budget deficits – and probably not even then, since state governments already complain about their Medicaid budgets. Hospitals, with their deeper pockets, will get most of the new Medicaid patients and will hire even more physicians away from private practice to treat them.

If this sounds like a large potential problem for private practice as we know it, it is. Then again, it's too early for reliable predictions: There is a lot of potential leeway in the new law's future specifications, and a lot can happen between now and full implementation, from modifications and amendments to outright repeal. Only time will tell.

Amid considerable discussion of the potential impact of Congress's 2010 health care legislation on hospitals, insurers, pharmaceutical companies, and patients, very little has been written about its effect on physicians. Partly, that may be because the effect has been barely perceptible so far, but mostly it's because, as usual, we are at the bottom of everyone's priority list.

While it is true that most physicians will see few changes in the near term, that paucity of change is part of the problem, since both of the essential changes sought by physicians – tort reform and revision of the ill-conceived Medicare compensation rules that threaten to cut payments by 25% every few months – were never addressed.

That said, many of the early provisions of the law do favor physicians in the short term. Beginning this year, insurers can no longer cancel policies already issued, nor can they exclude children with pre-existing conditions. Adults who were previously uninsurable because of chronic ailments will have access to insurance as well. Lifetime coverage limits are prohibited, and dependents may remain on their parents' policies until they are 26 years old. Early retirees will not have to risk going uninsured until they qualify for Medicare, and Medicare's infamous "doughnut hole" will gradually close. Small businesses will receive tax-credit incentives to insure their workers.

All of this adds up to more paying patients, with better insurance.

In addition, primary care physicians will see a 10% increase in Medicare payments for certain services, including preventive visits, management of new diagnoses and related follow-up visits, and management of acute medical problems.

However, as additional provisions come online beginning in 2012, the long-range potential impact on private practitioners becomes more uncertain, and more ominous.

"Physician payment reforms" will begin to appear. Although no one yet knows exactly what that means, the law mandates the formation of accountable care organizations to "improve quality and efficiency of care." The buzzword will be outcomes – the better your measurable results, the higher your reimbursements. This is supposed to reward quality of care over volume of procedures, but the result could be exactly the opposite if less-motivated providers cherry pick the quick, easy, least-risky cases and refer anything time consuming or complex to tertiary centers.

In 2013, Medicare will introduce a national program of payment bundling. A single hospital admission, for example, will be paid with a single bundled payment that will have to be divided among the hospital and treating physicians. The idea, ostensibly, is to encourage physicians and hospitals to work together to "better coordinate patient care," but arguments over how to divide the pie could, once again, have the opposite effect.

And it won't take long for hospitals to figure out that they can keep the whole pie if the partnering physicians are their employees. So look for more private offices to be absorbed by hospitals, which already employ almost a third of all physicians.

By 2014, states will have to set up "SHOP Exchanges" (Small Business Health Options Program), allowing small businesses (defined as 100 employees or less) to pool their resources to buy health insurance. Most people will, by then, be required to have health insurance coverage or pay a fine if they don't. Employers not offering coverage will face fines and other penalties, and health insurance companies will begin paying a fee based on their market share, which will no doubt be passed along to those they insure, nullifying some of the savings garnered by the SHOP Exchanges, which are already predicted to be marginal.

The big Medicaid expansion will be in place by 2014 as well, but few physicians are likely to accept more Medicaid patients unless Medicaid compensation increases. That is unlikely to happen without substantial reductions in the states’ woeful budget deficits – and probably not even then, since state governments already complain about their Medicaid budgets. Hospitals, with their deeper pockets, will get most of the new Medicaid patients and will hire even more physicians away from private practice to treat them.

If this sounds like a large potential problem for private practice as we know it, it is. Then again, it's too early for reliable predictions: There is a lot of potential leeway in the new law's future specifications, and a lot can happen between now and full implementation, from modifications and amendments to outright repeal. Only time will tell.

Amid considerable discussion of the potential impact of Congress's 2010 health care legislation on hospitals, insurers, pharmaceutical companies, and patients, very little has been written about its effect on physicians. Partly, that may be because the effect has been barely perceptible so far, but mostly it's because, as usual, we are at the bottom of everyone's priority list.

While it is true that most physicians will see few changes in the near term, that paucity of change is part of the problem, since both of the essential changes sought by physicians – tort reform and revision of the ill-conceived Medicare compensation rules that threaten to cut payments by 25% every few months – were never addressed.

That said, many of the early provisions of the law do favor physicians in the short term. Beginning this year, insurers can no longer cancel policies already issued, nor can they exclude children with pre-existing conditions. Adults who were previously uninsurable because of chronic ailments will have access to insurance as well. Lifetime coverage limits are prohibited, and dependents may remain on their parents' policies until they are 26 years old. Early retirees will not have to risk going uninsured until they qualify for Medicare, and Medicare's infamous "doughnut hole" will gradually close. Small businesses will receive tax-credit incentives to insure their workers.

All of this adds up to more paying patients, with better insurance.

In addition, primary care physicians will see a 10% increase in Medicare payments for certain services, including preventive visits, management of new diagnoses and related follow-up visits, and management of acute medical problems.

However, as additional provisions come online beginning in 2012, the long-range potential impact on private practitioners becomes more uncertain, and more ominous.

"Physician payment reforms" will begin to appear. Although no one yet knows exactly what that means, the law mandates the formation of accountable care organizations to "improve quality and efficiency of care." The buzzword will be outcomes – the better your measurable results, the higher your reimbursements. This is supposed to reward quality of care over volume of procedures, but the result could be exactly the opposite if less-motivated providers cherry pick the quick, easy, least-risky cases and refer anything time consuming or complex to tertiary centers.

In 2013, Medicare will introduce a national program of payment bundling. A single hospital admission, for example, will be paid with a single bundled payment that will have to be divided among the hospital and treating physicians. The idea, ostensibly, is to encourage physicians and hospitals to work together to "better coordinate patient care," but arguments over how to divide the pie could, once again, have the opposite effect.

And it won't take long for hospitals to figure out that they can keep the whole pie if the partnering physicians are their employees. So look for more private offices to be absorbed by hospitals, which already employ almost a third of all physicians.

By 2014, states will have to set up "SHOP Exchanges" (Small Business Health Options Program), allowing small businesses (defined as 100 employees or less) to pool their resources to buy health insurance. Most people will, by then, be required to have health insurance coverage or pay a fine if they don't. Employers not offering coverage will face fines and other penalties, and health insurance companies will begin paying a fee based on their market share, which will no doubt be passed along to those they insure, nullifying some of the savings garnered by the SHOP Exchanges, which are already predicted to be marginal.

The big Medicaid expansion will be in place by 2014 as well, but few physicians are likely to accept more Medicaid patients unless Medicaid compensation increases. That is unlikely to happen without substantial reductions in the states’ woeful budget deficits – and probably not even then, since state governments already complain about their Medicaid budgets. Hospitals, with their deeper pockets, will get most of the new Medicaid patients and will hire even more physicians away from private practice to treat them.

If this sounds like a large potential problem for private practice as we know it, it is. Then again, it's too early for reliable predictions: There is a lot of potential leeway in the new law's future specifications, and a lot can happen between now and full implementation, from modifications and amendments to outright repeal. Only time will tell.