We Ask Physicians to Lower Cost, Then Penalize Their Innovation

physician innovation We penalize efficient physicians that leverage innovation, then we cut their reimbursement to control healthcare costs (even more if Sustainable Growth Rates were implemented). How has that been working out for us? If the definition of frustrate is “to prevent from accomplishing a purpose or fulfilling a desire”, it is no wonder so many physicians are frustrated.

If a physician does a really good job responding to your emails or texts (assuming encryption), they could help prevent a condition from becoming acute. If a physician calls or Skypes you to triage an acute situation, it may prevent an unnecessary 3AM emergency room visit. If a physician reviews your smart phone app data from your Wi-Fi enabled weight scale and smart phone ECG, they may identify a heart attack coming.

Yet if an innovative physician does this, it would likely be as a hobby rather than as a profession. They would be working more hours, their offices would have less patients and they would likely be out of business quickly.

Electronic communications, remote triage and reviewing patient generated data can help lower cost, yet physicians mostly do not get paid for this. Not only do they not get paid, they would reduce their income source – office visits. For some physicians, it is the only way they get paid.

How do physicians get paid?

Physicians are mostly paid today based on a payment system used by Medicare that was first implemented in 1992. It is based on a Relative Value Units (RVUs) calculation for the cost for the physician to provide a service (average 52% physician work, 44% practice expenses and 4% malpractice insurance). The Medicare fee schedule has each of physician services that receive reimbursement. Most private insurance companies use the Medicare fee schedule as the foundation before adding negotiated rates and utilization management provisions. Whether a physician is independent or a salaried employee of a large organization, this is how physician services generate revenue and is the primary basis for most of their income.

What is missing from the Medicare fee schedule is paying physicians to respond to emails or texts, triaging an acute condition or reviewing patient data. The fee schedule was established before the Web, when email required a modem and when cell phones required a carrying case.

To improve the efficiency and effectiveness of healthcare delivery, a modernized physician fee schedule and compensation strategy is critical. It must include Physicians getting reimbursed for electronic communications, reviews of electronic patient data, researching patient specific issues, annotating electronic medical records, collaborating with other physicians and eVisits (via video conferencing). There would be an electronic record of each of these actions, so the reimbursement for these type services could be almost automatic.

The new performance reimbursement programs (See 8 Performance Programs That Will Change Healthcare) tied to overall patient outcomes will help drive this transition. Yet not having a modem physician reimbursement system or compensation strategy could prevent these programs from reaching their full potential. If the at risk entity is reimbursed based on performance and the physician is reimbursed based on in-office patient visits (Medicare Fee Schedule), we would not fully benefit from physician innovation.

Physician use of innovation will not replace the physician office visit, just like the ATM didn’t replace banks. Yet it is hard to know the impact physician innovation could have on effectiveness and efficiency of healthcare delivery if we penalize them for using technology that was developed after 1992. We need insight into the impact this could have in lowering healthcare costs, improve outcomes and retaining talented physicians.

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