Pilot study comparing patients’ valuation of health‐care services with Medicare’s relative value units

Background and aims Physician reimbursement for services and thus income are largely determined by the Medicare Resource‐Based Relative Value Scale. Patients’ assessment of the value of physician services has never been considered in the calculation. This study sought to compare patients’ valuation of health‐care services to Medicare’s relative value unit (RVU) assessments and to discover patients’ perceptions about the relative differences in incomes across physician specialties. Design Cross‐sectional survey. Participants and setting Individuals in select outpatient waiting areas at Johns Hopkins Bayview Medical Center. Methods Data collection included the use of a visual analog ‘value scale’ wherein participants assigned value to 10 specific physician‐dependent health‐care services. Informants were also asked to estimate the annualized incomes of physicians in specialties related to the abovementioned services. Comparisons of (i) the ‘patient valuation RVUs’ with actual Medicare RVUs, and (ii) patients’ estimations of physician income with actual income were explored using t‐tests. Outcomes Of the 206 eligible individuals, 186 (90%) agreed to participate. Participants assigned a significantly higher mean value to 7 of the 10 services compared with Medicare RVUs (P < 0.001) and the range in values assigned by participants was much smaller than Medicare’s (a factor of 2 vs. 22). With the exception of primary care, respondents estimated that physicians earn significantly less than their actual income (all P < 0.001) and the differential across specialties was thought to be much smaller (estimate: $88 225, actual: $146 769). Conclusion In this pilot study, patients’ estimations of the value health‐care services were markedly different from the Medicare RVU system. Mechanisms for incorporating patients’ valuation of services rendered by physicians may be warranted.     

Physician response to Medicare fee reductions: changes in the volume of coronary artery bypass graft (CABG) surgeries in the Medicare and private sectors.

The demand inducement hypothesis predicts that physicians will respond to reductions in their income by increasing the volume of their services when the income effect is strong and negative. I test for such inducement in the market for coronary artery bypass grafting (CABG), using a longitudinal panel of physicians in New York and Washington states. The results show that physicians whose incomes were reduced the most by Medicare fee cuts performed higher volumes of CABGs, and they did so in both the Medicare and private markets.     

Medical school type and physician income

We wanted to determine whether the type of medical school attended--private US, public US, or foreign medical school--is associated with practice characteristics or incomes of physicians. Therefore, we used survey responses obtained during the 1990s from 10,436 actively practicing white male physicians who worked in one of 13 medical specialties and who graduated from a public US (5,702), private US (3,797), or international (937) medical school. We used linear regression modeling to determine the association between type of medical school attended and physicians' annual incomes after controlling for specialty, work hours, provider characteristics, and practice characteristics. We found that, for most specialties, international medical school graduates worked longer hours, were less likely to be board certified, had practiced medicine for fewer years, and were less likely to work in rural settings than US medical school graduates. After controlling for key variables, international medical school graduates' annual incomes were 2.6 percent higher (95% CI: 0.1%, 4.4%, p = .043) and public US medical school graduates' were 2.2 percent higher (95% CI: -0.9% -6.1%, p = 0.2) than private US medical school graduates' incomes. Because of their lower tuition expenses, international and public US medical school graduates may experience higher returns on educational investment than their counterparts who graduated from private US medical schools.     

Using a population-based database to explore the inter-specialty differences in physician practice incomes in Taiwan

Gaining an understanding of the distribution of physician incomes between different medical specialties could assist policymakers to predict the future medical manpower supply. The purpose of this study is to examine the differences in medical specialty-specific gross practice incomes between office-based physicians in Taiwan. The primary data source for the study, which includes 7444 office-based physicians, was provided by the Taiwan Department of Health, with the dependent variable of interest to this study being the annual gross income of physician practices, whilst the independent variable is physician specialty. The study controlled for physicians' age, gender, specialty-board status, type of practice, location of clinic and urbanization level of the community in which the practice was located. Multivariate regression analyses were carried out to explore the relationship between physician specialty and gross practice income. This study finds a significant relationship between the annual gross income of physician practices and the physician's medical specialty (P < 0.001). Of all physicians, those specializing in rehabilitation and orthopedics had the highest gross practice incomes; conversely, obstetricians and gynecologists had the lowest gross practice incomes. The regression analyses demonstrated that after adjusting for socio-demographic and professional characteristics, gross practice incomes of physicians were significantly related to their medical specialty. This study concludes that differences in the gross practice incomes of physicians were significantly related to medical specialties. Those physicians specializing in procedure-based specialties, such as rehabilitation and orthopedics, had higher practice incomes than their counterparts in other more diagnosis-oriented specialties such as family practice and pediatrics.     

An economic history of Medicare part C

Context: Twenty‐five years ago, private insurance plans were introduced into the Medicare program with the stated dual aims of (1) giving beneficiaries a choice of health insurance plans beyond the fee‐for‐service Medicare program and (2) transferring to the Medicare program the efficiencies and cost savings achieved by managed care in the private sector. Methods: In this article we review the economic history of Medicare Part C, known today as Medicare Advantage, focusing on the impact of major changes in the program's structure and of plan payment methods on trends in the availability of private plans, plan enrollment, and Medicare spending. Additionally, we compare the experience of Medicare Advantage and of employer‐sponsored health insurance with managed care over the same time period. Findings: Beneficiaries’ access to private plans has been inconsistent over the program's history, with higher plan payments resulting in greater choice and enrollment and vice versa. But Medicare Advantage generally has cost more than the traditional Medicare program, an overpayment that has increased in recent years. Conclusions: Major changes in Medicare Advantage's payment rules are needed in order to simultaneously encourage the participation of private plans, the provision of high‐quality care, and to save Medicare money.     

The RBRVS and hospitals: the physician payment revolution on our doorstep

As the months count down to the scheduled Jan. 1, 1992, implementation of Medicare physician payment reform, physicians and hospital administrators are still uncertain as to precisely how the new payment rules will affect them. But when it does kick in, the Health Care Financing Administration's implementation of the resource-based relative value scale (RBRVS) is sure to transform both physician reimbursement and physician-hospital relations. Experts expect HCFA to use the RBRVS to raise reimbursement for primary care at the expense of specialty care; that could lead to tension between hospitals and specialty physicians, as those specialists pressure hospitals to help them make up for income losses. What's more, HCFA is already planning for the possibility that specialists hit by the RBRVS will raise their Medicare volume to recoup reimbursement declines. Just how successfully an individual hospital weathers the coming payment revolution will depend on its mix of specialties and its medical staff relationships. It's also clear, according to experts, that RBRVS implementation will create a strong incentive for hospitals to enter joint ventures or other arrangements with physicians for outpatient services.     

Medicare assignment rates of physicians: their responses to changes in reimbursement policy.

A physician's Medicare assignment rate is one measure of his or her willingness to participate in the Medicare program. The assignment rate reflects the proportion of services provided to Medicare beneficiaries for which the physician accepts the Medicare reasonable fee as payment in full. Generally, Medicare reasonable fees are lower than the payment which a physician receives from providing the same service to a private patient or to a Medicare patient who is not treated on assignment. Because Medicare eligibles not treated on an assigned basis are financially liable for the difference between the physician's charge and the Medicare reasonable fee, the assignment rate is an indication of the out-of-pocket costs borne by Medicare eligibles. One factor which may affect the willingness of physicians to accept patients on assignment is the difference between the reimbursement which he or she may receive in the private market and the fee received from treating Medicare eligibles on assignment; Throughout this paper we assume that the physician's private price or billed charge is equivalent to the level of reimbursement received from treating privately insured patients and Medicare non-assigned patients. Since the level of reimbursement is generally no greater than the billed charge and may be less, this assumption may overstate the actual reimbursement received by the physician. In all instances, reimbursement refers to the aggregate amount received by the physician from all sources for a given service. The lower a physician's Medicare reasonable fee relative to the private market fee the less willing he/she may be to participate in Medicare assignment. This paper examines the effect of changes in Medicare reimbursement on the assignment rates of physicians. It also predicts Medicare assignment rates under a policy option which would increase Medicare reasonable fees to the level of prevailing fees.     

Analysis of consultants' NHS and private incomes in England in 2003/4

OBJECTIVE: Consultants employed by the NHS in England are allowed to undertake private practice to supplement their NHS income. Until the introduction of a new contract from October 2003, those employed on full-time contracts were allowed to earn private incomes no greater than 10% of their NHS income. In this paper we investigate the magnitude and determinants of consultants' NHS and private incomes. DESIGN: Quantitative analysis of financial data. SETTING: A unique, anonymized, non-disclosive dataset derived from tax returns for a sample of 24,407 consultants (92.3% of the total) in England for the financial year 2003/4. MAIN OUTCOME METHODS: The conditional mean total, NHS and private incomes earned by age group, type of contract, specialty and region of place of work. RESULTS: The mean annual total, NHS and private incomes across all consultants in 2003/4 were pound 110,773, pound 76,628 and pound 34,144, respectively. Incomes varied by age, type of contract, specialty and region of place of work. The ratio of mean private to NHS income for consultants employed on a full-time contract was 0.26. The mean private income across specialties ranged from pound 5,144 (for paediatric neurology) to pound 142,723 (plastic surgery). There was a positive association between mean private income and NHS waiting lists across specialties. CONCLUSIONS: Consultants employed on full-time contracts on average exceeded the limits on private income stipulated by the 10% rule. Specialty is a more important determinant of income than the region in which the consultant works. Further work is required to explore the association between mean private income and waiting lists.     

Medicare fee schedule in place

The Omnibus Budget Reconciliation Act of 1989 (OBRA '89) eliminates Medicare's "reasonable charge" method of reimbursing physicians, replacing it with a fee schedule based on a relative value scale. The new payment system's major goals are to decrease Medicare's long-term spending growth rate for physician services and to divide Medicare physician payments more equitably. The two major components of the fee schedule are a relative value scale and a conversion factor. With adjustments to accommodate geographical variations in practice costs, Medicare will pay the lower of (1) a physician's actual charge for service or (2) the fee schedule amount. The nucleus of the fee schedule will be a resource-based relative value scale (RBRVS), which is intended to reflect the costs efficient physicians are expected to incur when providing a service. OBRA '89 directs the Health and Human Services (HHS) secretary to review the RBRVS at least once every five years. The conversion factor, which the HHS secretary may calculate separately for all physician specialties combined or for groups of specialties, will initially be based on 1991 aggregate Medicare spending. Thereafter a formula will be used to update the fee schedule each year. Another feature of OBRA '89 will be a cap on fees charged by physicians who do not participate in Medicare. Because a number of tasks remain to be completed before RBRVS can be implemented, OBRA '89 provisions may be delayed. There is even a remote possibility that the new payment system may not be implemented.     

Determinants of physicians' decisions to specialize

In this paper, we study physician specialty decisions using several unique data sets which include information on almost all Canadian physicians who practised in Canada between 1989 and 1998. Unlike previous studies, we use a truly exogenous measure of potential income across general and specialty medicine to estimate the effect of income on physicians' specialty choices. Furthermore, our estimation procedure allows us to purge the income-effect estimates of non-pecuniary specialty attributes which may be correlated with higher paying specialties. Understanding the effect of potential income (and other variables) on choices is necessary if the desired mix across generalists and specialists as well as across specialties is to be achieved. Our results show that physicians respond to differences in income when making their specialty decisions.     

Does Medicaid coverage of Medicare cost sharing affect physician care for dual‐eligible Medicare beneficiaries?

ObjectiveTo assess changes in physicians’ provision of care to duals (low‐income individuals with Medicare and Medicaid) in response to a policy that required Medicaid to fully pay Medicare''s cost sharing for office visits with these patients. This policy—a provision of the Affordable Care Act—effectively increased payments for office visits with duals by 0%‐20%, depending on the state, in 2013 and 2014.Data SourcesFee‐for‐service claims for a 5% random sample of Medicare beneficiaries in 2010‐2016.Study DesignWe conducted a difference‐in‐differences analysis to compare changes in office visits among Qualified Medicare Beneficiaries (QMBs)—the largest subpopulation of duals for whom payment rates were affected by this policy—to changes among other low‐income Medicare beneficiaries for whom payment rates were unaffected (pooled across all states). Next, we conducted a triple‐differences analysis that compared changes between QMBs and other low‐income beneficiaries in 33 states with payment rate increases of approximately 20% to analogous changes in 14 states without payment increases.Data CollectionThe study included administrative Medicare enrollment and claims data for QMBs and a comparison group of other low‐income Medicare beneficiaries (1 914 073 beneficiary‐years from 2010 to 2016).Principal FindingsNationally, we did not find a differential increase in office visits among QMBs versus other low‐income beneficiaries that coincided with this payment change. In the triple‐differences analysis, we did not observe a greater increase in visits among QMBs vs other low‐income beneficiaries in states where the policy resulted in large (approximately 20%) increases in payment rates vs states where payment rates were unaffected (triple‐differences estimate: −0.12 annual visits, 95% CI: −0.28, 0.04; P = 0.15).ConclusionsPhysicians’ provision of care to low‐income Medicare beneficiaries may not be responsive to short‐run payment changes.     

Private health care provision in developing countries: a preliminary analysis of levels and composition

While the importance of the private sector in providing health services in developing countries is now widely acknowledged, the paucity of data on numbers and types of providers has prevented systematic cross-country comparisons. Using available published and unpublished sources, we have assembled data on the number of public and private health care providers for approximately 40 countries. This paper presents some results of the analysis of this database, looking particularly at the determinants of the size and structure of the private health sector. We consider two different types of dependent variable: the absolute number of private providers (measured here as physicians and hospital beds), and the public-private composition of provision. We examine the relationship between these variables and income and other socioeconomic characteristics, at the national level. We find that while income level is related to the absolute size of the private sector, the public-private mix does not seem to be related to income. After controlling for income, certain socioeconomic characteristics, such as education, population density, and health status are associated with the size of the private sector, though no causal relationship is posited. Further analysis will require more complete data about the size of the private sector, including the extent of dual practice by government-employed physicians. A richer story of the determinants of private sector growth would incorporate more information about the institutional structure of health systems, including provider payment mechanisms, the level and quality of public services, the regulatory structure, and labour and capital market characteristics. Finally, a normative analysis of the size and growth of the private sector will require a better understanding of its impact on key social welfare outcomes.     

Medical man-power and community health care in the city of Kitakyushu. Physicians working in the social welfare institutions and administrations

In 1982, there are 196 physicians who belong to the Kitakyushu Medical Association, working (full time or part time) in 244 social welfare institutions and administrations. Several characteristics regarding their sexes, ages and main specialties were classified by district (Moji, Kokura, Wakamatsu, Yahata and Tobata) and by medical group (class A members: physicians paying full dues including those being employed--mainly in private practice, and class B members: physicians being employed--mainly in public, university or private hospitals). There were 24 members in Moji, 78 in Kokura, 20 in Wakamatsu, 55 in Yahata and 19 in Tobata; 173 members in class A (165 males and 8 females) and 23 in class B (all were males). Among their main specialties, internal medicine was the highest (121 members) followed by pediatrics (31), surgery (20), obstetrics and gynecology (9), orthopedics (6), psychiatry (6), otorhinolaryngology (3) and ophthalmology (1). 32.5 percent (113 members) of all specialists of internal medicine in class A and 47.5 percent (28 members) of all pediatricians in class A work in social welfare institutions and administrations. Among orthopedists or specialists of obstetrics and gynecology class B members were more than class A members. It was noted that the main specialties of 64.3 percent of 126 contract physicians in 158 Day Nurseries were internal medicine (81 members), but on the other hand specialists were needed in some specialized institutions and administrations.     

Minnesota physician workforce analysis: rural supply and demand

Considering the physician supply in 2002, the potential number of new physicians, and the number of vacancies that year, rural Minnesota has shortages in the following specialties: family practice, internal medicine, obstetrics/gynecology, pediatrics, general surgery, gastroenterology, ophthalmology, orthopedic surgery, otolaryngology, psychiatry, and urology. Metropolitan areas have fewer shortages; however, there is a gap between supply and demand in obstetrics/gynecology, gastroenterology, general surgery, otolaryngology, and urology. Future areas of concern for all parts of the state include family practice, internal medicine, obstetrics/gynecology, pediatrics, cardiology, general surgery, psychiatry, ophthalmology, orthopedic surgery, and urology. In Minnesota, with several specialties facing a substantial number of retirements in the next 10 years, the number of new physicians completing graduate medical education remaining steady or declining, and the population growing--especially among people ages 65 to 84, the current shortages may increase, and additional specialties may experience a gap if the supply is not increased.     

Losing ground: physician income, 1995-2003

Between 1995 and 2003, average physician net income from the practice of medicine declined about 7 percent after adjusting for inflation, according to a national study from the Center for Studying Health System Change (HSC). The decline in physicians' real income stands in sharp contrast to the wage trends for other professionals who saw about a 7 percent increase after adjusting for inflation during the same period. Among different types of physicians, primary care physicians fared the worst with a 10.2 percent decline in real income between 1995 and 2003, while surgeons' real income declined by 8.2 percent. But medical specialists' real income essentially remained unchanged. Physicians reported working slightly fewer hours overall but spent more time on direct patient care. Flat or declining fees from both public and private payers appear to be a major factor underlying declining real incomes for physicians. The downward trend in real incomes since the mid-1990s likely is an important reason for growing physician unwillingness to undertake pro bono work, including charity care and volunteering to serve on hospital committees.     

A house divided. It's physician vs. physician in battle over Medicare fee schedule

Medicare is turning the house of medicine into a house divided against itself. Three different Medicare payment bases for different procedures practiced by the numerous specialties is pitting primary-care doctors against surgeons and sometimes against procedure-oriented specialists.     

CPT fee differentials and visit upcoding under Medicare Part B

Medicare Part B pays outpatient physicians according to the billed Current Procedural Terminology (CPT) codes, which differ in procedure and intensity. Since many performed services merely differ by intensity, physicians have an incentive to upcode services to increase profitability of a visit. Using nationally representative data from the 2001 to 2003 Medicare Current Beneficiary Survey, this paper explores the effect of Medicare Part B fee differentials on the upcoding of general office visits (i.e. for established patient visits with CPT codes of 99212‐99215). It finds strong evidence that these fee differentials influence physician's coding choice for billing purposes across a variety of specialties. For general office visits, Medicare outlays attributable to upcoding may sum to as much as 15% of total expenditures for such visits. Medicare has much to gain financially by clarifying its classification rules. Until the distinctions between types of Medicare visits are redefined in a way that eliminates ambiguity, upcoding under Medicare Part B is likely to continue. Copyright © 2010 John Wiley & Sons, Ltd.     

To sign or not to sign: physician participation in Medicare, 1984.

Factors leading physicians to sign the 1984 Medicare participation agreement are assessed in this study. The decision was highly sensitive to Medicare reimbursement levels. A 10-percent increase in the Medicare reasonable charge increased average participation rates by 9.5 percent, or 3.2 percentage points (around the mean of 34 percent). Higher collection costs associated with obtaining that payment from Medicare discourage participation, and physicians with large Medicare caseloads were more likely to participate. Although board-certified physicians were no less likely to participate, graduates from non-English speaking non-Western European medical schools were more likely to sign. Physicians in more liberal States and in areas with greater health maintenance organization activity were significantly more likely to participate, as were those with lower malpractice costs and weaker private demand.     

Factors that influence specialist physician preferences for fee-for-service and salary-based payment models: A qualitative study

Most physicians across the world are paid through fee-for-service. However, there is increased interest in alternative payment models such as salary, capitation, episode-based payment, pay-for-performance, and strategic blends of these models. Such models may be more aligned with broad health policy goals such as fiscal sustainability, delivery of high-quality care, and physician and patient well-being. Despite this, there is limited research on physicians’ preferences for different models and a disproportionate focus on differences in income over other issues such as physician autonomy and purpose. Using qualitative interviews with 32 specialist physicians in Alberta, Canada, we examined factors that influence preferences for fee-for-service (FFS) and salary-based payment models. Our findings suggest that a series of factors relating to (1) physician characteristics, (2) payment model characteristics, and (3) professional interests influence preferences. Within these themes, flexibility, autonomy, and compatibility with academic roles were highlighted. To encourage physicians to select a specific payment model, the model must appeal to them in terms of income potential as well as non-monetary values. These findings can support constructive discussions about the merits of different payment models and can assist policy makers in considering the impact of payment reform.