Copyright 2001, California Medical Association. Reprinted with permission from California Physician, Spring 2001. What’s Going On Here? What it will take to ensure access to care for any patient By Cynthia Point, M.D. CMA will soon release a major report on physician supply in California, enlarging the data and our understanding of what looks to be a looming physician shortage. The phenomenon appears to be fed by such factors as physicians retiring early, seeking nonpractice positions in both medical and nonmedical fields, or pulling up stakes to move their practices out of state or to less stressful environs in California. Thousands of CMA members responded to a survey on this topic, many adding poignant notes to the survey forms. California Physician, in following up on some of the stories, contacted Cynthia Point, m.d., an internist who with two partners recently gave up on trying to run a five-physician practice in San Francisco, not long after an influential local magazine named her one of the top physicians in the area. Dr. Point is starting a practice in South Lake Tahoe, and San Francisco Medicine published a "farewell San Francisco-you win" article by Dr. Point in January. The following reflections, based on our own discussions with her, will resonate with physicians statewide who are trying to survive in the business of medicine amid the normal financial demands of everyday life. The Last Straw: The decision to leave San Francisco The coup de grace in our medical group was losing a physician who had had a child the year before and wanted to be a part-time physician and a full-time mom. We had worked out a job-sharing arrangement with another physician who was just starting out in Northern California. That situation became somewhat unworkable, mostly because patients never really got used to the concept that one doctor might order a test or do a procedure like a Pap smear and then another doctor would be the one to notify them of the results. But they then wanted the doctor who saw them first to give them the same information over again. Then the doctor/mother made a difficult decision to not practice for a while and instead focus on her family. Her final decision came about a week after the doctor she was job-sharing with accepted a position at Permanente. That left us with neither one of them. We tried to work something out with our landlord to bring in two other part-time physicians in an internal medicine subspecialty. But the landlord, acting in the midst of a wild San Francisco rent escalation, did not respond very quickly, and it was not easy to work things out. Financially we could not go on with just the three physicians and two physician assistants. So we had to disband the group. In the last six months that we were in practice, it also had become difficult to get patients who had no emergency-but did have potentially urgent problems requiring a visit to a specialist-seen by a specialist within a day or two. The problem had nothing to do with the patients’ insurance, but rather with the fact that physicians were booked up for three or four weeks or more. Now, all of us can squeeze in a patient in a day. But when four or five different physicians over the course of two days call you saying they have a patient with urgent medical needs, there’s a limit to how many people you can squeeze in and still do a good job. All of us have a breaking point, and beyond that you can’t do a good job. Victims of our principles In general, though, the real problem in San Francisco has been that for years reimbursements have not kept pace with the cost of doing business. Those of us dependent on generating revenue from seeing patients in our offices have been hit with a tremendous quadruple, quintuple, exponential whammy, because we do not derive substantial revenue from services rendered in a different setting such as a hospital. Those of us in general internal medicine, family practice, pediatrics, and the nonprocedural cognitive specialties, such as rheumatology, endocrinology, and neurology, have to have large offices with more bodies working for us because that’s where we do all our work. At the same time, our reimbursement rates are substantially lower than those for procedural specialists. When the cost of doing business-including rent and employee salaries and benefits-goes up drastically, those of us who have to have bigger offices and more staff end up paying a huge amount extra, yet meanwhile we’re still at the bottom end of the reimbursement scale. Our group had worked very hard, based on our common agreement that what motivated us was to take care of patients and to do a good job at it. We would do whatever was reasonable from a business standpoint to stay open, but there were some things we had decided we could not do. We would not try to keep all patient visits to 10 minutes-from the time the patient was said hello to until the note in the chart was finished. Ten minutes is basically what the insurance systems reimburse for now, and, unfortunately, most internal medicine visits really cannot be carried out in that amount of time. Within 10 minutes you can’t review patients’ charts nor look to see if they’re due for tetanus shots or should have pneumonia vaccinations. You can’t inquire about how their blood sugar is doing if the visit is for a blood pressure check-all those things that are so important to continuity of care. So we were in fact victims of our own principles. A long struggle ahead I’m now 52 years old, and if I were 10 years younger, I would have stayed in San Francisco and continued to fight. Were I younger I could expect to fight for another five or seven years, and see some changes ultimately take place so that at the tail end of my practice-my late 50s into my late 60s-I could practice in a reasonable environment. This area in Lake Tahoe is a different environment altogether. Although there are certainly some of the same insurance companies in place here, the crazy kinds of demands on formulary authorizations and prior authorizations isn’t a big problem here, because the population isn’t large enough for health plans to see profit potential from routinely throwing up treatment roadblocks. Several of my colleagues have made similar decisions about continuing in their current practices. Most of my friends who still practice in San Francisco are younger and still fighting away, figuring they’ll still be there when the system gets straightened out. Some of my friends who are my age or a bit older are hanging on until they can retire, thinking that if they can bring in enough to pay the office overhead, and keep up their home property-tax payments, they can keep on going. These are doctors who were lucky enough to have bought their houses 25 years ago and have them almost paid off. A lot of other doctors intermittently borrow from their own pension funds to meet their staff payrolls. A lot of colleagues just retired early, and some people left the area. Many physicians who are thinking about retiring in four to seven years haven’t started to look for a younger physician to come on board to take over their patients. I’m frightened about what will happen when they start looking for a replacement, because they’re not going to find anyone for a San Francisco practice. Medical school and residency program graduates currently owe somewhere between $1,000 to $2,000 a month in school loan payments. To rent an apartment in a part of the city where it’s safe to come home after dark or to leave your home during the night to see a patient in the hospital costs another $2,000 a month. That means a young physician must make $6,000 to $7,000 a month right off the bat, and a lot of established physicians aren’t making that kind of money. The main culprit: Medicare’s fee schedule The main culprit, because the insurance industry also uses it, is the Medicare fee schedule, which is supposed to be adjusted for the cost of doing business around the country. Those adjustments between one location and another, however, are relatively small, and the fee schedule has not been updated as frequently as it has needed to be. It now lags way behind the cost-of-doing-business increases that physicians experience. The 1997 federal Balanced Budget Act included a number of systemic changes to the Medicare reimbursement formula. For California physicians alone, those have resulted in $500 million in reimbursement cuts so far. Also, the move by the Health Care Financing Administration (HCFA) to convert the entire fee schedule to an RBRVS (resource-based relative value scale) system early in the 1990s was never fully implemented, because some specialty societies filed lawsuits that froze the continuing implementation of that schedule. Most of those who sued to stop the use of the updated fee schedule were surgical specialty societies, because under the new schedule their members stood to lose even more in their reimbursements. Under an RBRVS system, office-based procedures would have been reimbursed at higher rates than before, and so we office-based physicians have been losing ground financially with Medicare for several years. I know surgical specialties, too, are suffering Medicare cuts for other reasons. Decreases in reimbursements for standard surgeries, such as cataract surgeries are an example. As the lawsuits wend their way through the courts, some problems have been resolved, and some haven’t. To compound the problem, built into the Medicare formula is something called the "sustainable growth factor." It’s HCFA’s mechanism for keeping overall spending totals in check: If patients make more visits to physicians, HCFA pushes the allowable cost per visit down. HCFA, however, estimated the growth factor by which it determined physicians’ rates, and its estimates were wrong-so wrong that by CMA’s calculations California physicians were shortchanged for two years for an average $2,800 a year. Last fall Sen. Dianne Feinstein put a bill through Congress to help clear up the mess. Fortunately there’s a move afoot now to do away with the whole sustainable-growth-factor concept because it hasn’t worked very well. Meanwhile, however, the Medicare rate flaws have promoted reimbursement damage for physicians’ non-Medicare-patient services, because private-sector health plans-and Medi-Cal for that matter-use Medicare reimbursement rates as the standard from which they determine even lower rates for their physician reimbursements. For years the insurance companies have reimbursed physicians in Northern California at somewhere between 80 and 90 percent of Medicare rates, and now some are going as low as 70 percent. If they can, a lot of physician offices simply resign from the worst-paying contracts. We thought about doing that in our office, but it is very difficult to say to patients, "I’m sorry. I can’t care for you anymore." When a physician is no longer part of a plan’s network, not only does it mean that patients pay a slightly higher amount per office visit, but their deductibles can go up drastically. That makes it more than a very difficult business decision for a physician to say, "I’m sorry, I will no longer participate in your insurance plan." In my new location where I do not have established patients, I am not going to contract with certain plans, because they don’t cover the cost of doing business. I can’t make up in volume what I could lose on each visit. Legal Recourse-A hollow victory Over the years some of the health insurers have continually cut their reimbursements. They never notified physicians they were doing so despite issuing contracts that said they would notify us. Instead they would send out a generic letter saying they were readjusting fee schedules, and if we wanted to know how this would affect us, we should send them our most frequent CPT codes and they would send us an updated amount for those services. Well, we’d send off the codes and six months later, we’d still be waiting for the fee information. Meanwhile, we’re caring for the patients. So effectively what they did was lock you into a contract with a floating reimbursement schedule. You had no way of protecting yourself against the contract if it wasn’t covering costs. Some health plan contracts have no specified reimbursement in them. If you sign, you agree to care for patients at whatever amount the plan chooses to pay-and you can’t find out what it is until you get a check. In the legal world, these are called "contracts of adhesion," which means that the two parties negotiating do not have equal enough standing for the negotiations to be fair. But it’s very difficult to take the time out of a packed day to take that giant step back and pursue legal action against a health plan. So you win a suit against Blue Cross, Aetna, or some other company: It’s 10 years later, and your life is a shambles. What kind of victory is that? You still haven’t gotten paid. That’s why I was very much in favor of the Campbell bill in Congress, which would allow physicians to designate a third party to negotiate with health plans without fear of antitrust violations. I was also very much in favor of CMA’s state legislative efforts that would require that health plans’ capitation rates be actuarially sound and provable and would have allowed an entity like CMA to be designated as a third-party contracting agent for physicians who were not in group practices. A key CMA bill this year, AB 1600, to establish contract mediation and arbitration rights for individual physicians and groups of physicians is another reasonable and workable option for giving physicians leverage in negotiating fair contract terms. What kind of business should health care be? Truthfully, the HMOs are not the culprits by themselves. They’re the messengers. The fact is the rates that employers pay for insurance in California are way below market; they’re below those of any other part of the country that has the same kind of cost of living we have here. I appreciate that employers-which included my medical group-are in a difficult position. When we’re spending a lot for rent, salaries, and benefits, we aren’t anxious to spend a lot for health insurance. Well, you get what you pay for. I know that it’s tough to write a check for more money, but we can’t have the kind of medical care that we’ve come to expect for inadequate reimbursement. When an employer contracts with an insurance company the patient is a commodity. Insurance companies are mostly for-profit businesses answerable to their shareholders, who expect them to improve their bottom line. Watching their bottom lines, employers won’t necessarily pay higher premiums when insurers say that premiums are now too low to both cover costs of care and keep their shareholders satisfied. For the past few years both groups could minimize the import of that business-to-business stalemate by passing off the problem to the health care providers in the form of low payments for their services and costs. There is a for-profit-business-world presumption that providers can also commodify patients. Some people say that so many IPAs and medical offices are struggling or going under because we just don’t run our practices well enough. Besides seeing more patients in a day or an hour, we’re told that we can gain practice efficiencies with electronic medical records and the Internet. Quite frankly, that’s a pipe dream: Going electronic does not reduce administrative costs to an extent that would allow some of the struggling groups to survive, partly because there’s a huge information technology investment required. Maybe once you’ve paid for it-if you could find someone to loan you the money to buy it-maybe four or five years later when it was all in place, and the bugs were all worked out of it, you could begin to make some reductions in administrative costs. But by then the administrative paradigm will have shifted again so that the electronic program you’ve invested in to meet administrative challenges will not really be helpful anymore. And does this particular administrative cost component truly make sense in a society bent on controlling medical costs? Currently, when you submit a bill for a doctor’s services, no matter what that fee, how complicated or simple the service was, or how long a procedure took, that visit is billed to an insurance company. For every bill submitted, the insurer must check eligibility, adjudicate the claim, and then send out a check. Thus the administrative percentage of that transaction is huge. We need to consider how much money we could save in health care spending if we eliminated the administrative costs of routine insurance-billing transactions. Some of the dislocations and the problems we have seen in the delivery of medical care in California have come about because of the commodification of the practice of medicine. I think we as a society need to look carefully at whether it makes sense for medical care to be that kind of business.