Consumer [Patient] Beware: How Your Healthcare Provider Gets Paid May Affect Your Health

Colleague delivering care in the home in San Cristobal, Chiapas, Mexico

Medical care has traditionally matched patients (the customer) with services that are reimbursed either through private pay (the model before Medicare was established in the early 1960’s) or through insurance (post Medicare). At its most basic level, a patient will visit with a physician, have an examination and possibly a procedure; then the physician scores the visit with a code that then has some reimbursement associated with it. Medicare [CMS] has established a set of codes that all insurance companies use to base their reimbursements on. The codes [and therefore, reimbursements] also vary due to location (office, hospital, nursing home, assisted living facility, private home). The remuneration for each of these codes are periodically changed by CMS.

The dynamic of our entire healthcare system is based upon the reimbursements for those codes. A physician can estimate their salary based upon an average reimbursement for visits. Physicians in all types of specialties learn that certain things that they do have a higher reimbursement than others. For example, a primary care physician can make more money in five minutes by freezing precancerous lesions than they can working with a complicated patient with multiple medical problems for 45 minutes. Physicians also learn that there are things that they lose money on based upon current reimbursements. For example, if your diabetic patient needs their nails done every two months, then the physician will not be reimbursed one penny since the CMS ‘benefit’ only allows (pays for) this debridement every three months. Administering vaccines in the office are usually a money loser as the cost of the vaccines, storage issues, and waste (due to expiration) usually exceed the reimbursement.

Those examples are just for the primary care physician. At every level of care, I can give examples of where the effects of reimbursement or the threat of penalty has resulted in healthcare systems that are imperfect. Hospitals do not admit people officially using an ‘observation’ status because they are afraid that CMS will penalize them if they admit patients who never really required admission. This is a program that is not helpful to the 95-year-old woman with a severe urine infection who will be so weakened after a 48 hour stay that she cannot return home without some rehabilitation in a skilled nursing facility. But due to the 2 day stay she will have to pay for the stay herself, rather than CMS because CMS requires a three-day hospital stay in order to be eligible for that level of care in the skilled nursing facility.

The recent trend of CMS of offering groups of physicians programs (contracts) to take on risk is an interesting enterprise in futility. I am not sure that any physician should take on risk when the end result is the possibility that their patient will not receive resources that they require. The sad thing is that the typical patient will not know that their physician is participating in such programs; and the typical physician will justify their actions by convincing themselves that holding back on resources (or recommendations) that the patient is actually being better served. Outcomes in these situations will be clinical and financial; reimbursements under these programs will be rewarded for achieving certain clinical outcomes that usually (but not entirely) require groups and entities to form relationships with each other. In the future, we should expect that payments for the care of patients will be made to entities that include an entire spectrum of care (the patient with a fractured hip who requires care across several levels of care and by several types of physicians); specifically, a single sum of money will be paid and the entity will figure out who gets what. This places the financial risk on the entity rather than the payer. This places tremendous risk to the patients that fall outside of the usual successful path of recovery.

The patient needs to be aware that in all systems, reimbursement affects how and what type of care is delivered. Our systems of care are rapidly changing to reflect how we are reimbursed.

© 2016 Scott Matthew Bolhack MD, MBA, CMD, CWS, FACP, FAAP

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