(Bloomberg) — The Obama administration’s push to transform the way the U.S. pays for health care is splitting the medical profession, as family doctors embrace changes that oncologists, neurologists and other specialists are concerned will cause turmoil.
The government set a timetable last week to extinguish Medicare’s “fee-for-service” system, which rewards the quantity of care over quality. That’s adding to pressure on physicians who have been debating whether to join their local hospital, merge their practices into ever-bigger groups or get out of medicine.
Specialists warn that patients in some areas of the country may have difficulty finding their services as small, rural practices close and the doctors join larger companies. Just 35 percent of physicians described their practices as independent in a 2014 survey, down from 62 percent in 2008, according to the Physicians Foundation, a nonprofit advocacy group for the profession.
“You’re really losing ready access in many parts of the country that are rural,” said Bruce Sigsbee, a neurologist who works for a hospital system in Rockport, Maine. He is the immediate past president of the American Academy of Neurology. “There does seem to be a perceived push for people to leave independent practice by these policies.”
Jeffrey Ward, an Edmonds, Wash., cancer doctor who sold his practice to one of Seattle’s largest hospital chains about two years ago, said he worries that Medicare may encourage doctors to provide less treatments like chemotherapy — among the costliest and most lucrative of oncologists’ services.
Fee-for-service “is on its way to extinction. Bundling will hasten it,” Ward said, referring to one possible payment change. “Whether that’s a good thing or a bad thing is in the eye of the beholder.”
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The secretary of the U.S. Department of Health and Human Services (HHS), Sylvia Mathews Burwell, announced Jan. 26 that she wants at least 30 percent of Medicare’s $362 billion in fee-for-service payments moved, by 2017, into new programs that demand accountability from doctors and hospitals and in some cases penalize them if their care doesn’t meet quality and efficiency standards. The fraction would rise to 50 percent by 2019.
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Specialists will find the changes the most wrenching because they are largely paid based on how many services they perform. Primary physicians, on the other hand, expect a new system will compensate them for work they haven’t historically been paid for doing, such as monitoring their patients’ health between office visits. The Obama administration hasn’t finished programs to test new ways to compensate specialists.
“It’s not clear to me in this proposal how they would be included or even participate,” Lou Goodman, the president of the Physicians Foundation, based in Columbia, S.C., said in a phone interview.
The Centers for Medicare & Medicaid Services (CMS) plans to start with oncologists as it experiments with ways to pay specialists. Cancer doctors said they expect the government to attempt to pay them a single fee for all of the care each patient needs. Medicare already uses the concept, called “bundled payment,” in limited ways, including to pay dialysis centers that treat people with kidney failure.
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Specialists who aren’t closing their practices and taking jobs at hospitals are trying to get bigger, to consolidate market share and improve their negotiating positions with insurers. Tennessee Oncology, a group of cancer doctors based in Nashville, has grown from three doctors in 1992 to 85 today, said Jeff Patton, the firm’s chief executive officer.
“We’ve fared well in the fee-for-service world because we’ve played the fee-for-service game pretty well,” he said. “Getting big matters.”
The company is preparing for the future, he said. At one of its 32 clinics, it is testing an arrangement with the insurer Blue Cross Blue Shield of Tennessee in which oncologists act as primary care physicians for people with advanced cancer, monitoring their health, trying to prevent expensive emergency room visits and hospitalizations.
“If we do deliver savings at that site, we’re giving other payers and CMS a free ride,” he said, using an acronym for the Medicare agency. Tennessee Oncology will be fine in a world in which fee-for-service payment is diminished, he said. “Life’s about innovation.”
Thousands of primary-care physicians have joined programs created by PPACA that reward them for coordinating patients’ care with other doctors and keeping people out of hospitals. The programs encourage physicians to remain in private practice — in some cases, even loaning money to small doctors’ offices for computer systems and staff to keep up with record-keeping.
“This is a bless-your-heart day,” Doug Henley, the executive director of the American Academy of Family Physicians, told Burwell when she announced the Obama administration’s plan.
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Good primary care requires doctors to keep in touch with chronically ill patients, such as diabetics, when they aren’t in the physician’s office — making sure they are taking medications, watching their diet, exercising and monitoring indicators of their health, Henley said.
“A fee-for-service system only incentivizes that face-to-face visit,” Henley said in a phone interview. “It doesn’t pay for any of that other stuff.”
Even very small groups of primary care physicians have had success in Medicare’s new payment arrangements. Two years ago, 13 family physicians in McAllen, Texas — acting after their town found itself the subject of an unflattering New Yorker story on high U.S. medical spending — joined the Medicare program, which required them to create what is called an “accountable care organization.”
In their first year, the McAllen doctors saved Medicare $6 million. The doctors kept about $1.6 million for themselves, after paying back a loan from the government. Most of the savings came by reducing patients’ use of unnecessary or even fraudulent home-health services, Kenneth Oates, the administrator for the group, called the Rio Grande Valley Health Alliance, said in a phone interview.
This year, the McAllen doctors are targeting overuse of hospital services, including emergency rooms. “Hospitals won’t like that too much, but that’s the way it goes,” Oates said.
Reducing the use of health-care services is how programs like Oates’ work, Goodman said — a problem for specialists, paid based on the quantity of their work.
“They reduce admissions, reduce ER visits, reduce procedures, reduce imaging,” Goodman said. “The specialists should be paid to be available whether they perform a service or not. That’s a complicated concept. I haven’t seen any government programs that do that.”