Search This Blog

Thursday, April 1, 2010

What Does the Healthcare Reform Bill Really Mean for Doctors?

What Does the Healthcare Reform Bill Really Mean for Doctors?
Leslie Kane, MAC

Posted: 03/23/2010

Euphoria or consternation?

Many Americans are cheering about the recent landmark healthcare reform legislation. Others are dismayed, and still others feel a mix of optimism and trepidation.

What do doctors stand to gain or lose in all of this?

As people in a caring profession, many doctors are either truly or theoretically happy that about 32 million more Americans will soon have health insurance.

Yet physicians have every right to be concerned about their own livelihoods and medical practices. For some doctors, the healthcare bill will create benefits and opportunities. Others see no benefits, particularly specialists. And funding the reform -- despite what politicians say -- could portend an ominous future for physicians.

"In the short timeframe, the premises are great," says Thomas N. Ahlborn, MD, President of Medical Staff and Director of the Department of Surgery at Valley Hospital in Ridgewood, New Jersey.

"It appears that internists will get paid adequately, insurers will accept people with preexisting conditions and won't be able to drop patients from insurance plans if they're ill, and there will be subsidies for people who don't make enough to pay for their own insurance," says Ahlborn. "These are all great things."

"But the reality is that the expense is going to be huge and there's nothing in there to control costs," says Ahlborn. Ultimately, a shortfall could come from physicians' pockets, he says.

Also, the proposed 21.2% Medicare reimbursement cuts still loom like a fire-breathing dragon that could wreak havoc on the best-laid plans.

Some Pros, Some Cons for Doctors
Although the currently uninsured population clearly benefits, the new legislation brings both positives and negatives to doctors. The key areas are new Medicaid patients at Medicare reimbursement rates, potential new business opportunities for primary care, funding issues and controlling expenses, lack of tort reform, continued chaos with Medicare reimbursement rates, and prevention efforts.

New Medicaid Patients at Medicare Reimbursement Rates
About 16 million Americans will be added to the Medicaid program. Medicaid reimbursements will be raised to Medicare levels for general internists, family physicians, and pediatricians in 2013 and 2014.

"A number of doctors have said that this is a good thing," says Ahlborn. Many primary care physicians anticipate new patients at what they consider a fairly attractive reimbursement rate.

"Some internists say, 'Medicare pays us better than some of the other plans that pay us only 70% to 80% of Medicare,'" says Ahlborn. "So for them to have these potential new patients and be reimbursed at full Medicare rates is positive."

Still, many doctors have no interest in this new pool of Medicaid patients. Throughout the country, some doctors are trying to lower their percentage of Medicare patients or even eliminate them entirely. Some doctors will also avoid the new Medicaid patients because they say that dealing with government insurance programs is a snarled tangle of frustrating paperwork.

"I think there will be a great number of primary care physicians who will not take either Medicaid or Medicare patients," says Mary Ann Bauman, MD, IM, and Medical Director for Women's Health and Community Relations with Integris Family Care Central, Oklahoma City, Oklahoma. "Doctors want to give the best care to everyone, but sometimes the present insurance system makes it difficult."

Most physicians don't have that choice, says Ahlborn. "A lot of physicians operate on very short margins and are unable to cut their overhead. They get paid relatively little per patient visit and need to have volume. Yes, there are premier practices that won't accept insurers offering less than Medicare rates, but they are the exception rather than the rule."

Although many primary care doctors are eager to start seeing these new patients, specialists get the short end of the stick. The Medicaid reimbursement rate for them will not rise to Medicare levels.

"Congress was very smart to say that they would pay primary care physicians 100% of Medicare rates," says Ahlborn. "But specialists and people who do procedures may simply say they won't see Medicare patients, or they'll see a very small number of them."

New Business Opportunities for Primary Care?
The roster of newly insured patients could turn into a flood or it could turn out to be less than anticipated. But in many cases, it could represent practice opportunities for doctors.

New business models may attract primary care physicians willing to hire more PAs and NPs in order to see patients. Doctors who expand in this way could increase their volume of patients while containing costs by using healthcare providers with salaries less than that of physicians.
Inner-city practices may spring up. Some doctors may be interested in setting up practices in inner cities or areas where patients are now served by clinics or training hospitals. "There might be more demand in inner-city areas or indigent areas where the Medicaid population is greater," says Ahlborn. "Many of those distressed areas probably have a paucity of physicians to begin with."
Payment instead of unpaid charity care. Hospitals currently lose millions of dollars annually on charity care for patients who show up in the emergency room without insurance and who do not pay their bills. Physicians also do not get paid -- or receive a pittance -- for charity care. If patients going to hospital emergency rooms have insurance -- even at Medicare rates -- hospitals and doctors will receive at least some degree of payment.
More primary care doctors will be trained. There are provisions of increasing the number of primary care doctors to be available in the future to care for the additional patients.
However, Ahlborn cautions that it's not a given that all newly insured patients will opt to see primary care doctors in office practices.

"Most uninsured people are being seen now, whether it's in clinics or hospital emergency rooms," says Ahlborn. "There are also people who have the opportunity to see physicians but don't access them. And some patients may not be diligent at managing their healthcare or getting screening tests every year or every 3 years. "

Funding the Plan and Controlling Expenses
A new tax being levied to fund healthcare reform may hit doctors (and other high earners) harder than the rest of the population.

The legislation calls for a 3.8% Medicare Part A (hospital insurance) tax on unearned income for individuals making more than $200,000 ($250,000 for married couples). Many doctors are in that tax bracket.

"You'll pay a tax on your investment capital gains, and if you sell your house, you'll pay a tax on the capital gains," says Ahlborn.

Paying hefty taxes may lead doctors to question working nights and extra hours. When such a large chunk of income goes to taxes, it becomes less attractive to take personal time to bring in more income.

Bauman says, "I don't think Americans have the stomach for the raise in taxes needed to make healthcare a right and not a privilege."

"Ultimately, this is untenable," says Ahlborn. "The cost of these entitlement programs is going to be astronomical. It sounds good that insurers have to accept everyone with preexisting conditions, but where does the money come from?"

Tort Reform Is Overlooked
The inattention to malpractice reform has 2 effects: It fails to lessen the number of lawsuits brought against doctors by plaintiffs looking for a quick jackpot. It also neglects to address the very real issue of defensive medicine, which doctors say jacks up the costs of healthcare.

"If a doctor has ever gone to court, he's going to do anything to never have to go back again," says Ahlborn. "Physicians order hundreds of exams every year just to document conditions that don't exist. Even if they know that the chance of something being there might be 1 in 10,000, they will still order. In this legislation, they did not even toss a little bone to discuss tort reform."

Adds Bauman, "I know that every doctor who is a good doctor practices defensive medicine. So I'm disappointed that tort reform will not be a part of the healthcare reform bill. I think that will make doctors less willing to embrace those newly insured patients."

Continued Chaos With Payment Rates
Notably absent was any mention of fixes to the Sustainable Growth Rate (SGR), which determines physician reimbursement. Medicare reimbursements cuts -- whether or not made at the full 21.2% as proposed -- would be disastrous.

"The biggest issue on the physician's horizon right this minute is the proposed 21.2% Medicare pay cuts," says Ahlborn. "If those cuts were to occur, it would be devastating to primary care, particularly internists, who run on such small margins. Everyone knows that. My understanding is that it can't happen."

Even with that tax, however, private and government insurers are taking in too little to fund healthcare benefits," says Ahlborn. "Part of the budget reconciliation scoring included the 21% cut in physician fees. That's why it could be budget-neutral. However, such a cut would shake the foundation of the system and the consequences would be significant."

A natural place for the government to try to make up the difference is through cuts to doctors' reimbursement, says Ahlborn.

Prevention and Wellness
Many politicians have said that keeping patients healthy through prevention education will be important as far as keeping healthcare costs low.

Where's the beef?

The legislation contains no financial incentives directed at patients to encourage them to lower their cholesterol, quit smoking, lose weight, or in other ways to take responsibility for their health. At the moment, responsibility rests with public education programs and with physicians who are supposed to motivate patients. The patient has little financial incentive to be a collaborator.

"It will be interesting to see what plays out," says Ahlborn.

Authors and Disclosures
Leslie Kane, MAC
Editorial Director, Medscape Business of Medicine

Disclosure: Leslie Kane, MAC, has disclosed no relevant financial relationships.


  1. Small bits of content which are explained in details, helps me understand the topic, thank you!

    Oklahoma doctor INTEGRIS