Day: April 27, 2009

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.

As the biennial Texas legislative session nears its end, it looks like the legislature may pass a bill that would have a dramatic effect on workers comp PPO networks.

According to WorkCompCentral (subscription required):

“HB 223 would regulate “discount brokers” that are engaged in (for money or other consideration) “disclosing or transferring a contracted discounted fee of physician or health care provider.” hb223

A broker could not transfer a physician’s or health care provider’s contracted discounted fee or any other contractual
obligation unless the transfer is authorized by a contractual agreement that complies with the provisions of the bill.

Those provisions include notifying each physician and provider of “the identity of the payers and discount brokers authorized to access a contracted discounted fee of the physician or provider.”

The notice must be provided at least every 45 days through “electronic mail, after provision by the affected physician or health care provider of a current electronic mail address” and posting of a list on a secure Internet website.”

Now that’s a huge change, one that would effectively stop much of the rental network business cold. The dirty secret of the work comp PPO business (well, one of the dirty secrets) is that networks don’t have direct contracts with providers in all states – every ‘national’ PPO uses another network’s contracts in at least a few jurisdictions.

Docs sign contracts in return for direction – they are trading a discount for the promise of more volume. Yet few networks actually drive any significant volume to the vast majority of their contracted physicians.

We’ve been seeing a rapid rise in the volume of litigation from providers contesting reduced reimbursement due to PPO contracts, with three payer clients reporting a significant upsurge in the last twelve months.

What does this mean for yuo?

Find a better, and more sustainable, way to reduce medical expense. The days of cutting costs by slashing provider reimbursement on the basis of some flimsy network contract are rapidly ending.

Editor’s Note: This was written by Joe Paduda