By Miriam J. Laugesen and Sherry A. Glied
Health Affairs, September 2011
Abstract
Higher health care prices in the United States are a key reason that the nationâs health spending is so much higher than that of other countries. Our study compared physiciansâ fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physiciansâ incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countriesâ national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physiciansâ counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.
http://content.healthaffairs.org/content/30/9/1647.abstract
And…
Letter
Alliance of Specialty Medicine
September 26, 2011
To: Glenn M. Hackbarth, J.D., Chairman
Medicare Payment Advisory Commission
(excerpts)
The Alliance of Specialty Medicine (Alliance) and its member organizations are writing to express our opposition to the Chairmanâs recommendations on the Sustainable Growth Rate System (SGR) proposed at the MedPAC meeting of September 15, 2011.
The Alliance recognizes that MedPAC has called for repeal of the SGR repeatedly and we welcome your understanding of the critical need to rationalize physician payment to assure stability of patient access to quality physician care. However, we were dismayed to hear the Chairmanâs first recommendation to slash the conversion factor for specialist services by 5.9 percent each year for three years to be followed by a freeze for seven years. The cumulative cut to specialty physician payments would be 18 percent over the first three years. The recommendations seek to shield a small percentage of primary care services furnished by primary care specialties by imposing only a 10-year freeze rather than an absolute cut on these services.
Furthermore, while the Alliance understands MedPACâs desire to support primary care, we have serious objections to the recommended proposal to essentially hold primary care “harmless” while cutting specialty physiciansâ reimbursement.
Private Contracting with Physicians Under Medicare
The Alliance strongly supports empowering patients with the ability to obtain medical services from the physician of their choice. To that end, we believe that patients and physicians should be allowed to privately contract for Medicare services without penalty.
Sincerely,
American Academy of Facial Plastic and Reconstructive Surgery
American Association of Neurological Surgeons
American Gastroenterological Association
American Society of Cataract & Refractive Surgery
American Society of Plastic Surgeons
American Urological Association
Coalition of State Rheumatology Organizations
Congress of Neurological Surgeons
Heart Rhythm Society
North American Spine Society
Society for Cardiovascular Angiography and Interventions
http://thehill.com/images/stories/blogs/healthwatch/specialtymedpac.pdf
Comment:
By Don McCanne, MD
Today’s message on physician income does not delve into the important topics of fee-for-service, capitation, salary and other such considerations, but rather is intended to provide a perspective on how much money physicians should take home. Having said almost nothing in this first sentence, just opening the topic undoubtedly has already provoked controversy, but we do need to take a look at this.
Before discussing physicians’ net incomes, we should first stipulate that our health care system should be designed to provide all necessary care to everyone. Since health care now is so expensive, that means that we must have some method of pooling funds, and the financing must be progressive. Medicare is an example of pooled funds with progressive financing.
Some of us can remember when Medicare was first established, physicians were allowed to set their own fees. The cost of the program skyrocketed far beyond even the highest cost projections. Medicare was forced into a system (under continual refinement) that controlled fees. Likewise, escalating costs in the private sector forced the insurers into provider contracting as a means of controlling fees. Even the plans that expose patient/consumers to the costs of health care still have limits on how much the physicians can receive.
We need to learn from other nations that have been successful in covering essentially everyone, while spending far less than the United States. The Health Affairs article demonstrates that one important difference between us and those other nations is that we pay physicians more, even with our current private insurance and public program controls on spending.
What is even more alarming is that procedure-oriented specialists are paid much more than primary care physicians. The Health Affairs study cited above looked at orthopedics as a proxy for procedure-oriented specialists. Other studies have shown that very high fees also apply to most other such specialties.
Unfortunately, this is setting up a battle between the primary care and specialty sectors of medicine. The letter to MedPAC (Medical Payment Advisory Commission) sent by the professional organizations representing high-fee specialists states, “we have serious objections to the recommended proposal to essentially hold primary care ‘harmless’ while cutting specialty physiciansâ reimbursement.” It’s war.
Worse, the specialists want Medicare rules changed so that they can set their own fees and collect from the patient the full balance beyond the Medicare allowed fees. If you have looked at any Medicare payment statements recently, you know that the amounts that the patient would be responsible for are staggering. Yet this unreasonable demand is from a sector of physicians that are already paid far more than similar specialists in other nations.
How much should physicians be paid? Under our current fragmented system, Medicare is not able to determine the costs of providing care to the beneficiaries since such costs are not segregated, and it is difficult to determine how much of the practice costs should be paid by the private insurers and by cash-paying patients. If Medicare were the only payer (single payer) then pricing could be based on legitimate total practice costs and fair profits (physician net income). This method would provide the greatest value in our health care purchasing – paying enough to be sure that physicians would be there when you need them, but not paying egregiously excessive profits.
Although it would be foolish to try to specify here precise levels of physicians’ incomes for the United St
ates, we can say that adopting an efficient system of financing health care would bring us far closer to getting the levels right. This is partly what we mean by “improved” in an “improved Medicare for all.”