Spending on physician services, take two

Reform is required in how physicians are paid, including a more rigorous analysis of the relative value of services and compensation for the cognitive work done outside of the patient encounter.

My column on incomes of U.S. physicians created quite a bit of controversy, with several ACP members writing in to take great exception to the premise that doctors here earn more than in other countries (“Does the United States pay its doctors and hospitals too much?”, ACP Internist, June 2012). Readers questioned the evidence, said the differences could be explained away by higher student debt and longer working hours, and felt that it was wrong for me, as ACP's top staff governmental affairs advocate, to even raise the question.

I addressed these concerns in my responses to several of the letters (“Readers weigh in on reimbursement reform,” ACP Internist, September 2012), but some are not persuaded. Yet, I continue to believe that physicians are best served when ACP and others representing physicians are willing to look dispassionately at the evidence on how physician compensation and spending on their services compares to that of other nations, and how physician compensation in the U.S. relates to rising health care costs.

At the same time, as I noted in my June column, the evidence also shows that the compensation gap between primary care and other specialties is much greater in the U.S. than in Canada, France, the U.K. and other studied countries. This relative compensation gap is contributing to our growing shortage of primary care internists, and it too must be addressed by the profession and policymakers.

The bigger question being asked by policymakers, though, isn't about physician income and compensation per se. Instead, they want to know if the relatively higher prices we pay for health care in the U.S. are reasonable and justifiable and yield better access and quality. They want to know if the care being provided is appropriate. And they want better ways to measure the value of the trillions of health care dollars we spend each year, that is, are we getting bang for the buck?

The evidence shows that the rising prices of health care services contribute more to growing (and unsustainable) health care spending than overuse of marginal and ineffective care (also an important contributor, to be sure), not just for physician services, but across the health care sector.

We know that some services are paid too much, by any reasonable measure of the overhead costs and physician skill involved, while others are paid too little. Cognitive care by physicians is underpriced relative to many procedural services. This discrepancy remains one of the reasons that primary care medicine is undervalued in the U.S. compared with other specialties.

The solution, ACP believes, is to reform how we set the prices for physician services, including making improvements in the resource-based relative value scale and Relative Value Scale Update Committee processes used by Medicare to establish relative values for physician services. ACP specifically advocates for using a more rigorous process to evaluate the relative values of services and making downward adjustments in the relative values (and prices based on those values) if they can't be reasonably justified based on costs of delivering care. At the same time, relative values (and prices) for services that are undervalued based on the same standard should be increased.

A better pricing system would also compensate physicians for the work they do outside of a face-to-face encounter with a patient. Especially for patients with multiple, complex, and chronic conditions, much of the work that an internist does to coordinate care, such as calls to home health nurses and coordination with family caregivers, is under-reimbursed if it is reimbursed at all. As recommended by ACP, Medicare recently proposed to pay physicians for the work involved in post-hospital discharge planning, a big step toward paying for the work associated with care coordination that falls outside an office or hospital visit.

We also know that much of the care provided in the United States is ineffective, wasteful, and even harmful to patients. Insurance companies try to reduce such overutilization by rules and processes (like preauthorization) that are maddening to patients and physicians alike.

A better way is for the medical profession itself to take the lead in developing clinical guidelines to better define what care represents high value to the patient and what care may be of marginal or lower value. Through its High Value, Cost-Conscious Care Initiative, ACP is developing guidelines for care that can be incorporated in physician training programs, as well as shared decision-making tools for practicing physicians and their patients. Eventually, these elements could be applied in designing a value-based benefit and patient cost-sharing framework for payers.

The imperative of getting better value for our health care spending trumps everything else. The United States simply can't afford to allow per capita health care spending to grow faster than the overall economy and median family incomes. The goal of changing the pricing of physician and other clinical services, and developing a better approach to utilization and appropriateness based on clinical evidence of effectiveness and cost, must be to contribute to better and more consistent outcomes of care at a cost the country can afford.

Defining value, though, requires better and more uniform measures, sparing duplicative, poorly designed, inconsistent and administratively intrusive measures that annoy both physicians and patients.

ACP has long argued that well-trained internists practicing in systems of care designed to help them achieve the best clinical outcomes, supported by a better payment system that appropriately measures and compensates them for the value they bring to patients, will be shown to be the best bargain in American health care. Crafting such reforms will do far more to advance the interests of internists and their patients than reflexively defending (or for that matter attacking) overall physician compensation levels.