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Extra: Will $87 Per Hour Rescue Primary Care?
Since the AMA has issued some “real” numbers relating to the RUC’s recommendations for valuing the Patient Centered Medical Home (PCMH), I’ve added a fourth part to this series.
The June 2 issue of American Medical News provides payment scenarios for a medical home:
Here’s how much a primary care practice could receive, if AMA/Specialty Society RVS Update Committee advice is accepted. Figures are based on the current conversion factor and are for a hypothetical practice with one doctor, one nurse case manager and 250 participating beneficiaries. Tiers represent how comprehensively the practice has adopted the medical home concept. Figures have been rounded.
Most of these items should be viewed as pass through expenses to a medical practice, e.g., case manager SW&B, professional liability insurance, EMR, patient education.
Let’s look at an example of how the RUC recommendations value physician time.
Assumptions:
Tier 3 — additional physician compensation per month = $3,346
9.2 minutes of physician time per patient per month x 250 patients = 38.3 additional hours of physician time per month spent in care coordination
$3,346/38.3 = $87.36 per hour of incremental physician time
Please correct my numbers if you believe my calculations are wrong.
Primary care doctors: are you willing to work 38 extra hours per month for $87 per hour?
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Your arithmetic is correct but you have solved the wrong equation.
The money the practice will receive for physician work, as calculated in the AMA article, is NOT physician compensation. The calculation you performed is not meaningful.
The practice will receive $13,489 per month for each 250 enrolled beneficiaries. (By the way, this works out to $352.19/hour of physician work). Part of that money will go to pay overhead, including staff, rent, EMR, malpractice, etc., and part will go to the doc’s take home pay. A substantial sum is made available to allow the doc to pay staff to help achieve the PCMH goals. This is not a “pass-through”; it will be up to the practice to decide how to organize the work and spend the money.
Do you believe that PCP’s today ever talk to family members or other doctors, fill out forms, reconcile meds, teach patients and caregivers, etc., etc., etc? To the extent these activities are carried out today, they are done for free (beyond a very minimal allowance incorporated into E and M payments). For the first time, docs will be paid to do this, and will receive money to pay staff to do this.
A bit of reality…Procedural docs make a substantial part of their income from overpayments for practice expense. Whether a well-run PCMH will use dollars as the RUC estimated remains to be seen. This is a demonstration. The payment recommendations are at best an educated guess.
Finally I completely agree that the payment system is unfairly stacked against primary care. The PCMH will not solve this entire problem; other steps will be necessary in addition.
Because applying the RUC to the PCMH is an inherently flawed approach, there isn’t a “right” or “wrong” way to view this.
I’ll certainly admit that RUC’s valuing direcct physician time for a Tier 3 PCMH at $87 per hour is not the only way to look at this. You’re correct that this number could be higher if you consider that the total payment (including overhead, etc.) is $352 per physician hour of work. Yes, doctors could and will contract for some services and presumably could capture a portion of the $352 per hour in their own income.
On the other hand, $87 per hour for direct physician payment also could be OVERSTATED. All of this is based on the RUC’s assumption that the “average” patient will require 9.2 minutes of physician time, a number that is about as good as pulling it out of you know where. What if doctors need to spend more than 9.2 minutes average per patient?
A physician could look at the $352 of direct + indirect revenue per hour and say “this is a great deal”, but I’m sure you agree this is inaccurate and overly optimistic. Thus, I’ll continue to suggest that if for a moment you accept the RUC assumptions, that $87 per hour is a more realistic way to state the valuation of direct physician time.
There’s another inherent contradiction in the RUC methodology. On the one hand, if as you suggest that physicians are already providing care management services but not getting paid for it, why bother to go through the RUC machinations? Under this assumption there would be no improvement in savings or quality if physicians are already providing the service.
If on the other hand, physicians truly DO need to spend more time to coordinate care to improve quality and reduce costs, then the RUC methodology doesn’t achieve a primary goal of the PCMH — to improve primary care income relative to specialists. Under the RUC methodology, if we assume physicians have to do more in order to be paid more, does that attract more physicians to primary care (especially if you then assume that the incremental payment is around $87 per hour).
Which is it?
Also, don’t forget that the RUC methodology also pays nothing for other technology and services to support care management — PHRs, call center technology, workflow software, predictive modeling software, etc. (see post #3 in the series).
Alan, I know that you’re not defending the RUC approach, that we agree that primary care is in big trouble, and that the PCMH is a good model to adapt primary care to the 21st century.
The real answer here is simple. The RUC methodology is flawed. Pull the RUC out.
PCP’s do large amounts of care coordination work today, for free.
PCP’s need to do more, and more organized, care coordination work than they currently do in order to achieve the best outcomes for their patients and to control overall costs.
Some PCMH work is done now. Some PCMH work will be new. The distribution of new vs. old will depend upon the circumstances of an individual practice.
The absence of financial support for care coordination means that there are very few examples extant that can be used to develop recommendations.
I am a geriatrician, in office practice. This is an extremely dicey endeavor in the US because of the miserable payment. It has been necessary to create new business models in order to do this. We have 20 geriatricians in our group practice. Not one cent of our income comes directly from the Medicare fee schedule.
The payments for PCMH as recommended would make it possible to run a viable geriatrics practice, as they would yield more than double what is currently being paid for taking care of the same patients.
The RUC process is flawed. PCP’s have fared poorly under the RUC process, and its inherent limitations make it unwise to look to the RUC for the solution. But for once, I think the process produced a reasonable recommendation.Is it the right number? I am sure it is not, but there is no way to produce the “right” number today. It is a reasonable guess which will be improved upon with learnings from the demo.
If you are enlisting people to advocate for a change in the payment system, sign me up. I simply feel that in this particular instance, the RUC work product is not nearly as bad as what would be suggested by what seems to me to be a reflexive rejection of it’s proposal.
What about the costs to learn to implement the PCMH? I can see a whole new industry springing up to fleece $1000’s from confused physicians. And what about the lost revenew from those 38 additional hours spent in care co-ordination? That is almost a week out of the month. If I am already working as many hours as I can and don’t want to take on 38 more hours, then I will have to decrease the time spent on other patients by 38 hours. I average about $80/patient x 38 x 4 patients per hour = $12160.
As a Family Physician I obviously have interest in this PCMH idea. It is very difficult to believe that the very causes of low primary care income (the RUC and congress) are going be able to bring themselves to spend more money on primary care. Theoretical ideas and demonstration projects that show cost savings rarely turn out the same in real life practice and if/when the savings are not realized to pay primary care physicians for participating then the whole idea will collapse. But of course someone will want to save face and thus it is possible that participation will be mandated or non-participation will be made financially risky.
If a physician is being conscientious and doing care management anyway, the additional income is welcome. After all, PCMH sounds an awful lot like what I was taught primary care was supposed to be in the first place.
On the other hand, if a physician accepts a PCMH payment, what is the implication for billing the usual 99214 every couple or three months for a face-to-face encounter?
The U.S. is in desperate need of patient-centered medical homes (PCMH)for people with complex health conditions. “Guided Care” is a type of PCMH in which a specially trained registered nurse, based in the primary care practice, works closely with older patients and their primary care physician in providing eight essential chronic care services. A federally funded, six-year randomized study of Guided Care among 904 older adults with complex health conditions and 308 of their family caregivers is showing large improvements in the quality of care and large reductions in health care costs. More information and links to publications about Guided Care are available at http://www.GuidedCare.org.
For the Medicare Medical Home Demonstration to succeed, participating physicians, nurses, and practice administrators will soon need convenient, affordable access to educational and technical assistance. Based on our development of Guided Care and the support of the John A. Hartford Foundation, we are working with CMS and four other organizations to provide participating practices with free information, education, and technical support to improve their ability to provide medical home services. Watch our website for more information: http://www.GuidedCare.org
Folks in PA seem to be much more realistic about required medical home payment levels.
From the Disease Management Care Blog http://diseasemanagementcareblog.blogspot.com/2008/07/never-mind-massachusetts-reform-efforts.html
According to the Philadelphia Inquirer report linked above, the south east learning collaborative has garnered the financial support of Philadelphia’s dominant health insurer, Independence Blue Cross as well as Aetna, CIGNA and others – all to the tune of $13 million. The money will be used to reimburse physicians for attending the training sessions, meeting certain standards involved in establishing the chronic care model, such as implementing supporting information technology (such as registries and decisions support and adding the necessary staff. According to another news report:
‘A typical four-doctor family practice that achieves all standards levels within two years, could potentially earn an additional $275,000 to $480,000 a year.’
That’s some serious coin
Medical home demos of various descriptions are developing all over.
I agree that if “a typical four doctor family practice that achieves all standard levels within two years could potentially earn an additional $275,000 to $480,000 a year.”, that “That’s some serious coin”.
In the medicare demo discussed at the top of this thread, four family practitioners, each caring for 250 Medicare patients, would be paid 4 times $162K, or about 650K.
That’s some serious coin.