Higher fees paid to US physicians drive higher spending for physician services compared to other countries

Higher health care prices in the United States are a key reason that the nation's health spending is so much higher than that of other countries. Our study compared physicians' fees paid by public and private payers for primary care office visits and hip replacements in Australia, Canada, France, Germany, the United Kingdom, and the United States. We also compared physicians' incomes net of practice expenses, differences in financing the cost of medical education, and the relative contribution of payments per physician and of physician supply in the countries' national spending on physician services. Public and private payers paid somewhat higher fees to US primary care physicians for office visits (27 percent more for public, 70 percent more for private) and much higher fees to orthopedic physicians for hip replacements (70 percent more for public, 120 percent more for private) than public and private payers paid these physicians' counterparts in other countries. US primary care and orthopedic physicians also earned higher incomes ($186,582 and $442,450, respectively) than their foreign counterparts. We conclude that the higher fees, rather than factors such as higher practice costs, volume of services, or tuition expenses, were the main drivers of higher US spending, particularly in orthopedics.     

Effect of a gatekeeper plan on health services use and charges: a randomized trial.

A randomized trial was conducted to determine the effectiveness of a health care plan which uses physicians as gatekeepers to control health services use and charges. New enrollees in United Healthcare (UHC), an independent practice association, were randomly assigned to the standard UHC plan requiring a gatekeeper, or to an alternate plan with equal benefits but without a gatekeeper. Individuals in both plans were similar in demographic characteristics, perceived health status, and other health insurance coverage. The gatekeeper plan had 6 percent lower total charges per enrollee than the plan without a gatekeeper. There were minor differences in hospital use and charges. Ambulatory charges were $21 lower per person per year in the plan with a gatekeeper (95% CI = -39.9, -2.1) and these were due to .3 fewer visits to specialists (95% CI = -0.50, -0.10). We conclude that a health plan which incorporates incentives and penalties for physicians to act as gatekeepers can reduce the cost of ambulatory services by limiting specialist visits.     

Lifetime costs for preventive medical services: a model.

BACKGROUND: Cost effectiveness and other issues relating to preventive health services have been widely discussed, but a computer search of the literature elicited no reports in which the lifetime cost of a patient's preventive services was calculated. The purpose of our study was to calculate the total lifetime cost of preventive medical services for idealized versions of male and female patients. METHODS: We used the preventive screening recommendations of the US Preventive Services Task Force as our standard. We developed a model using idealized patients who were asymptomatic, had no risk factors, and lived healthful lifestyles. We determined the typical charges in a specified marketplace for the office visits, procedures, laboratory tests, and purchases required to comply with the screening recommendations. RESULTS: Lifetime charges ranged from $5432.60 to $7529.60 for men and from $15,307.10 to $18,525.10 for women. CONCLUSIONS: Knowledge of the lifetime costs of preventive services may influence the decisions of patients, physicians, and insurance plans when purchasing or providing these services.     

Mental health treatment and medical care utilization in a fee-for-service system: outpatient mental health treatment following the onset of a chronic disease

Charges for medical services of persons covered by the Blue Cross/Blue Shield Federal Employees Program from 1974 through 1978 who were first diagnosed as having one of four chronic diseases in 1975 and within one year began mental health treatment (MHT) were compared with persons who also were first diagnosed as having one of these diseases in 1975 but had no subsequent MHT. In the third year following the diagnosis, those having seven to 20 MHT visits had medical charges $309 lower and those having over 21 MHT visits had medical charges $284 lower than the comparison group. The savings in medical charges over three years of the group having seven to 20 MHT visits were a function of lower use of inpatient services and roughly equaled the cost of 20 MHT visits. Outpatient mental health treatment can be included in a fee-for-service medical care system to improve the quality and appropriateness of care and, if not extensive, may also serve to lower medical care costs.     

Fitness centers can be a first step to redesigning rehab services, but exercise caution

Reengineering your rehab department. An Illinois hospital rejuvenated its rehab services with a combined fitness center, rehab, and physician office complex that's projected to net $1 million in revenues. But experts warn there are plenty of pitfalls when hospitals dabble in the fitness business, so heed the advice of these industry experts.     

The relationship of hospital ownership and service composition to hospital charges.

The relationship of hospital ownership and service composition to hospital charges was examined for 456 general acute hospitals in California. Ancillary services had higher profit margins, both gross and net profits, than daily hospital services. Ancillary services accounted for 55.3 percent of total patient revenue. Charges per day were 23 percent higher for ancillary services than for daily hospital services. Net profits for daily and ancillary services were lowest at county hospitals. Proprietary hospitals had the highest net profits for total ancillary services and the highest mean charges. Not-for-profit hospitals had the highest profit margins for daily hospital services. Neither direct nor total costs for ancillary services were significantly different among ownership groups, although direct costs for daily hospital services were significantly higher at proprietary hospitals.     

Financing Buprenorphine Treatment in Primary Care: A Microsimulation Model

PURPOSEWe sought to determine the financial impact to primary care practices of alternative strategies for offering buprenorphine-based treatment for opioid use disorder.METHODSWe interviewed 20 practice managers and identified 4 approaches to delivering buprenorphine-based treatment via primary care practice that differed in physician and nurse responsibilities. We used a microsimulation model to estimate how practice variations in patient type, payer, revenue, and cost across primary care practices nationwide would affect cost and revenue implications for each approach for the following types of practices: federally qualified health centers (FQHCs), non-FQHCs in urban high-poverty areas, non-FQHCs in rural high-poverty areas, and practices outside of high-poverty areas.RESULTSThe 4 approaches to buprenorphine-based treatment included physician-led visits with nurse-led logistical support; nurse-led visits with physician oversight; shared visits; and solo prescribing by physician alone. Net practice revenues would be expected to increase after introduction of any of the 4 approaches by $18,000 to $70,000 per full-time physician in the first year across practice type. Yet physician-led visits and shared medical appointments, both of which relied on nurse care managers, consistently produced the greatest net revenues ($29,000-$70,000 per physician in the first year). To ensure positive net revenues with any approach, providers would need to maintain at least 9 patients in treatment, with a no-show rate of <34%.CONCLUSIONSUsing a simulation model, we estimate that many types of primary care practices could financially sustain buprenorphine-based treatment if demand and no-show rate requirements are met, but a nurse care manager–based approach might be the most sustainable.Key words: primary care, opioid use disorder, health care financing, buprenorphine     

The value of a new family practice center patient to the academic medical center

BACKGROUND. Family practice centers are important contributors to the financial viability of academic health centers, although they often are not the direct beneficiaries of their own labor. The greater time commitment and lower costs of most primary care creates significant financial hardships for departments of family medicine in university centers. This study describes the use of inpatient and outpatient health care services by new patients at a university family practice center. METHODS. A sample of 215 new adult enrollees at a university family practice center were examined for a 1-year period after their initial visit to the center. Total billings by the university hospital, specialty services, and the family practice center were tabulated by insurance type. RESULTS. Medicare patients generated the highest average charges (+2501 per patient per year); self-indemnity patients generated the lowest average charges (+301 per patient per year). The largest portion of health services charges was generated by the university hospital inpatient service, which was responsible for approximately 60 cents of every dollar billed to patients in this study. Conversely, the Family Medicine Department billings generated only 17% of the total charges. CONCLUSIONS. The findings of this study indicate that university-based family practice centers are significant contributors to the financial and educational base of the academic health center. If family medicine and associated primary care centers are forced to reduce their size or services because of financial difficulties, the impact will be felt by the university hospitals and by other specialty departments.     

Food Insecurity and Health Care Utilization Among Older Adults in the United States

This study examined the relationships between food insecurity and utilization of four health services among older Americans: office visits, inpatient hospital nights, emergency department visits, and home health care. Nationally representative data from the 2011 and 2012 National Health Interview Survey were used (N = 13,589). Nearly 83.0% of the sample had two or more office visits, 17.0% reported at least one hospital night, 23.0% had at least one emergency room visit, and 8.1% used home health care during the past 12 months. Adjusting for confounders, food-insecure older adults had higher odds of using more office visits, inpatient hospital nights, and emergency department visits than food-secure older adults, but similar odds of home health care utilization. The findings of this study suggest that programs and policies aimed at reducing food insecurity among older adults may have a potential to reduce utilization of health care services.     

Toward developing a relative value scale for medical and surgical services.

A methodology has been developed to determine the relative values of surgical procedures and medical office visits on the basis of resource costs. The time taken to perform the service and the complexity of that service are the most critical variables. Inter-specialty differences in the opportunity costs of training and overhead expenses are also considered. Results indicate some important differences between the relative values based on resource costs and existing standards, prevailing Medicare charges, and California Relative Value Study values. Most dramatic are discrepancies between existing reimbursement levels and resource cost values for office visits compared to surgical procedures. These vary from procedure to procedure and specialty to specialty but indicate that, on the average, office visits are undervalued (or surgical procedures overvalued) four- to five-fold. After standardizing the variations in the complexity of different procedures, the hourly reimbursement rate in 1978 ranged from $40 for a general practitioner to $200 for surgical specialists.     

Relative value units and productivity: Part 2 of 4

The initial article in this series (Volume 17, No. 5: 225-228) discussed relative value unit (RVU) basics and touched on some of the more practical applications of RVUs for managing a medical practice. This article addresses how RVUs differ from encounters and fees in terms of measuring provider productivity and resource consumption. RVUs empower practice administrators to objectively measure and quantify a medical practice's physician productivity and performance data versus traditional productivity measures such as office visits, net charges, net collections, etc. The Resource-Based Relative Value Scale (RBRVS) RVU work component is specifically designed to measure physician (and midlevel provider) effort and the degree of independent decision-making skill required for performing a procedure; therefore, productivity is directly linked to provider coding.     

The estimated costs and savings of medical nutrition therapy: the Medicare population

OBJECTIVES: To measure the potential savings from medical nutrition therapy (MNT) and to estimate the net cost to Medicare of covering these services for Medicare enrollees. This includes developing an estimate of the cost of providing medical nutrition services to the Medicare population and estimating the savings in hospital and other spending resulting from the use of these services. DESIGN: Analysis of longitudinal data from the Group Health Cooperative of Puget Sound (Seattle, Wash) for persons aged 55 years and older who have coverage for MNT services. SUBJECTS/SETTING: Persons aged 55 years and older who had diabetes (n = 12,308), cardiovascular disease (n = 10,895), or renal disease (n = 3,328) and who were covered under the Group Health Cooperative of Puget Sound, including Medicare beneficiaries enrolled in the plan's Medicare risk contract program. Extrapolation to the US Medicare population is based on data for persons served by the Group Health Cooperative of Puget Sound. INTERVENTION: The use of MNT. MAIN OUTCOMES MEASURE: Differences in health care utilization levels of persons with diabetes, cardiovascular disease, and renal disease who do and do not receive MNT. Differences in utilization were estimated for hospital discharges per calendar quarter, physician visits per quarter, and other outpatient visits per quarter. STATISTICAL ANALYSES PERFORMED: Multivariate regression models of changes in utilization for persons after they receive MNT services. RESULTS: Our analysis showed that MNT was associated with a reduction in utilization of hospital services of 9.5% for patients with diabetes and 8.6% for patients with cardiovascular disease. Also, utilization of physician services declined by 23.5% for MNT users with diabetes and 16.9% for MNT users with cardiovascular disease. The net cost of covering MNT under Medicare is estimated to be $369.7 million over the 1998 through 2004 period. The total cost of benefits is estimated to be $2.7 billion over this period. This would be partially offset by estimated savings of $2.3 billion resulting in net costs of $369.7 million. The program would actually yield net savings after the third year of the program, which would continue through 2004 and beyond. CONCLUSION: After an initial period of implementation, coverage for MNT can result in a net reduction in health services utilization and costs for at least some populations. In the case of persons aged 55 years and older, the savings in utilization of hospital and other services will actually exceed the cost of providing the MNT benefit. These results suggest that Medicare coverage of MNT has the potential to pay for itself with savings in utilization for other services.     

Vertical integration strategies: revenue effects in hospital and Medicare markets

The purpose of this study was to evaluate the revenue effects of seven vertically integrated strategies on California hospitals. The strategies investigated were managed care contracts, physician affiliations, ambulatory care, ambulatory surgery, home health services, inpatient rehabilitation, and skilled nursing care. The study population included 242 not-for-profit hospitals in continuous operation from 1983 to 1990. Many hospitals developed vertically integrated programs in the 1980s as inpatient utilization fell in response to the Medicare Prospective Payment program. Net revenue rose on average by $2,080 from 1983 to 1990, but fell by $2,421 from the Medicare program. On the whole, the more physicians affiliated with a hospital, the higher the net revenue. However, in the Medicare population, the number of managed care contracts was significant. The pre-hospital strategies generated significant revenue, while the post-hospital strategies did not. In the Medicare program, inpatient rehabilitation significantly reduced revenue.     

Financial expenditures for the care of cerebrovascular disease patients in an urban setting.

A study was undertaken to determine the magnitude of the charges and costs and the sources of reimbursements for the care of cerebrovascular disease (CVD) patients in an urban setting, Orleans Parish (County), Louisiana, in 1971. The study helps to put national data on the cost-burden of cerebrovascular disease into perspective at the community level. It is thought that such data may prove useful in planning and evaluation of intervention programs and more coordinated approaches to care. All hospitals, nursing homes, extended care facilities, and noninstitutional sources of care (home health and rehabilitation agencies) that were identified as providing services to CVD patients were invited to participate in the study, and a sample of such cases was selected from each participating facility. The billing records for these cases were then reviewed and analyzed to determine charges by category of service and sources of reimbursement. At government institutions, per diem rates were used to determine costs. Total charges for care of the CVD patients amounted to $6,070,000. Hospital care generated the major charge, amounting to $5,159,000 (85 percent of the total charges) during the study year. Nursing home care charges totaled $391,000 (6.5 percent), extended care services $373,000 (6.1 percent), and home health care and noninstitutional rehabilitation services $147,000 (2.4 percent). Analysis of the data according to type of service revealed that only a small percentage of the care dollar was spent for rehabilitation services. The greatest amounts were spent for room and board in institutional facilities and for drugs, diagnostic services, and miscellaneous other services in hospitals. Average expenditures per CVD case for rehabilitation services in institutions were highest in extended care facilities, being much lower in hospitals and negligible in nursing homes. Average expenditures for care by noninstitutional health service agencies were highest for home aide services, followed by nursing and rehabilitation services.     

Provider networks and primary‐care signups: do they restrict the use of medical services?

This article analyzes the effect of gatekeeper and network restrictions on use of health‐care services using simulation‐based estimation methods. Data from the Community Tracking Survey (1996–1997) show significant evidence of selection into plans with gatekeeper and/or network restrictions. Enrollees in plans with networks of physicians have fewer office‐based visits to non‐physician medical professionals, but more emergency room visits and hospital stays. Individuals in plans that require signups with a primary‐care provider have more visits to non‐physician providers of care, more surgeries and hospital stays but substantially fewer emergency room visits. Enrollees of plans that do not pay for out‐of‐network services have more office‐based and emergency room visits, but less surgeries and hospitalizations. Copyright © 2008 John Wiley & Sons, Ltd.     

Small-area variations in the treatment of prevalent medical conditions: a comparison of three cities in the Northeast

This article presents a small-area variation study that examines utilization differences for primary care physicians (PCPs) in treating a homogeneous set of prevalent medical conditions. The study used secondary data collected over a 24-month period from a large, Northeastern region independent practice association. The diagnostic cluster methodology was used to examine geographic differences for PCPs in treating prevalent medical conditions. This methodology groups International Classification of Diseases, 9th revision (ICD-9), codes into diagnostic clusters based on clinical homogeneity with respect to generating a similar clinical response from the physician. For each diagnostic cluster, diagnostic episode clusters (DECs) were formulated. Each DEC links all services incurred in treating a patient's medical condition within a specific period of time. Differences in use rates across small areas were tested using t tests. The data showed little variation in the physician office visit rate across small areas. However, services generated from these office visits exhibited large rate variations. The most significant small-area differences were for hospital inpatient days and surgical procedures. Pattern-of-treatment differences exist across small areas for the homogeneous set of prevalent medical conditions treated by PCPs.     

Direct costs of diabetes care: a survey in Ottawa, Ontario 1986

205 unselected Ottawa area patients with diabetes completed questionnaires indicating their annual utilization of equipment, supplies, professional and institutional services. Respondents' average age was 47.3 and average duration of diabetes 18.3 years. About 70% used self-testing of blood glucose. Calculations of costs were based on prevailing local prices. Annual treatment-related costs for the 9.3% on anti-diabetic tablets averaged $236.40, for the 79% on injected insulin $362.34, and for the 7.3% on insulin-by-pump $1603.20. Averaged over all respondents, routine care costs were $962.01 annually, of which 23.4% was for at-home testing, 45.3% for treatment supplies, 20.9% for physicians' services and 10.4% for miscellaneous items. Non-routine care costs averaged $1982.24 with all except $45.84 for emergency room charges being in-hospital care costs. Cost of routine plus non-routine care averaged $2944.25 annually of which 64.4% was for hospital services, 13.9% for treatment needs, 9.6% for physicians' services and 7.7% for testing supplies. This type of survey, particularly if carried out with help from diabetes association volunteers, offers an affordable means to monitor utilization trends and costs of supplies and services for patient care.     

Somatization disorder in a family practice

Somatization disorder is a condition characterized by multiple unexplained complaints. This study was done to determine the prevalence of somatization disorder in a family practice office setting, to characterize the patients so affected, and to assess their impact on the practice. A sample of ill patients was interviewed, of whom 6 (5 percent) had definite somatization disorder and another 4 (4 percent) had borderline somatization disorder (ten or more symptoms). All were women, and they were more likely than controls to live in households with children but no spouse (P less than .01). They were also more likely than their unaffected counterparts to be from the lowest two social classes (P less than .01). Compared with matched controls, their rate of office visits and charges incurred was about 50 percent greater (.58 visits per month vs .41 visits per month; $23.28 per month vs $14.44 per month). Their charts were thicker (7 cm vs 3.6 cm) and heavier (3076 g vs 1843 g) and had more diagnoses (85 vs 51) than controls. The physicians of the somatizers were significantly less satisfied with the care rendered to them than to the controls (P less than .01). This study demonstrates that somatization disorder is a prevalent, expensive, and difficult problem for family physicians.     

Confidential billing accounts for adolescents in private practice

The purpose of this study was to determine how individual confidential billing accounts for adolescents in private practice would be received, and to assess the impact of these accounts on practice reimbursement. Adolescents wishing to keep confidential any part of the charges for an office visit were offered individual billing accounts. Enrollees agreed to pay whenever and whatever they could. One attempt was made to contact nonpayers at least 3 months after starting their accounts. The mean charge for 40 confidential accounts was $42 (total charges $1489) and all of the charges were for laboratory testing. Participants reimbursed 38% of the total charged ($565/$1489). Confidential accounts were well-received by study participants and may improve access to confidential care.     

Board certification and practice style: an analysis of office-based care

BACKGROUND. The relationship between family practice certification and practice style has important health policy implications. We used data from the RAND Health Insurance Experiment to study the relationship between family practice certification and (1) patient characteristics including age and sex of patients, and (2) facets of practice style including probability of hospital admission, number of visits in an episode of care, number of physicians seen per episode, total charges per episode, charges per service category, and inputs per service category. METHODS. Data on health care service utilization by a sample of 5554 nonelderly individuals over a 1-year period were used to define episodes of care. Multivariate regression techniques were used to measure the association between family practice certification and patient characteristics and between family practice certification and practice style, controlling for the effects of patients characteristics. RESULTS. Patients of certified family physicians were an average of 3 years younger than patients of noncertified family physicians, but other demographic characteristics were similar. Certified family physicians had higher pathology services charges and inputs, but no statistically significant differences in other measures of charges and inputs. CONCLUSIONS. Certified and noncertified family physicians treat similar patients. Certification in family practice is not associated with major differences in total service charges, but is associated with differences in the use of laboratory diagnostic services.