Controlling Medicare Costs Through Primary Care Physician Reimbursements

Is there a good solution to the Medicare cost and quality issues? Setting aside either the Democrats’ approach to basically enact price controls by ratcheting down reimbursements or the Republican’s plan to re-structure Medicare to a defined contribution plan, albeit not for 10 years, are there approaches that could be instituted now that would have an immediate impact on improving quality of care and thereby reducing costs? There are, but in this Part 6 of my Medicare series for Vistage, we first need to understand a critical issue facing Medicare today.

First and foremost, primary care physicians (PCPs) have been marginalized by Medicare for decades with low reimbursement rates for routine office visits which has led to the 15-20 minute office visit with 10-12 minutes of actual “face time.” A 10-12 minute interaction means no time to truly listen, no time to prevent, no time to coordinate and no time to just think.

This has in turn meant that whenever a patient has a slightly more complex issue, one that is not easily recognized in a short time frame, then the PCP is quick to refer to a specialist. It is this very act that dramatically drives up expenditures with added tests, imaging and procedures along with the specialist’s fees. Medicare has been exceptionally short sighted in this regard and as a result is the prime culprit in the rapidly rising costs of care. Further, this lack of time being reimbursed means that 2 critical quality care needs are left largely unattended.

The first is offering extensive preventive care and the second is coordinating the care of the patient with chronic illness. Recall that 85% of Medicare enrollees have at least one chronic illness and 50% have three or more. These are mostly the result of years of adverse behavior patterns but it is never too late to begin preventive care so time spent here is valuable for better health quality and ultimately reduced costs.

Those with a chronic illness need to have their team of caregivers coordinated – every team needs a quarterback and the PCP is the obvious choice. But Medicare does not reimburse for this critical function which when done correctly means less reliance on specialists, tests, procedures and prescriptions.

The result of this low reimbursement for routine visits and lack of reimbursement for either extensive preventive care or chronic care coordination over the years is a PCP shortage, many current PCPs no longer accepting Medicare, and the remaining PCPs trying to see 24 to 25 patients or more per day, each for 15 minutes despite the patient’s complex problem list. And this means less than stellar patient care in many instances.

The result is a real problem facing Medicare right now – the rapid loss of primary care physicians (PCPs) who will no longer accept Medicare. In 2009 there were 3700 physicians that opted out of Medicare; the number rose to 9500 in 2012 according to CMS; this on top of the shortage of PCPs across the country, with no end in sight.

The ACA/Obamacare legislation does include an extra 10% increase to primary care providers but this will probably too little, too late. And if the mandated 27% across the board physician cut in reimbursement is ever implemented by Congress (it probably never will be but Congress refuses to clarify itself) then it is reasonable to expect that there will be a mass exodus from accepting Medicare reimbursements by all physicians, not just PCPs.

Medicare should enact a policy that reimburses PCPs for the time needed to listen, prevent, coordinate and think. And in settings where Medicare pays by capitation or globally, then the PCP needs to receive sufficient dollars per patient under care to allow the same time needed per patient. In essence this means that PCPs will be caring for less than 1000 patients rather than today’s 2500 plus. Money well spent.

It will stop the hemorrhage of PCPs from Medicare and encourage medical school graduates to enter primary care. This will improve care and reduce total costs, not to mention improve satisfaction for patients and reduce frustration for PCPs. A win-win-win.

But is this important to you as a top leader of a small to medium sized business? Yes, very important. Your company’s health care costs relate directly to the overall costs of care including those on Medicare. If Medicare is fixed, it will have a substantial impact on global costs and hence your business. So it is incumbent on you to lobby for a change in how Medicare does its business of insuring older Americans.

The next post will highlight some additional specific recommendations other than primary care that would improve quality and reduce costs.

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