Monday, May 18, 2009

Health Care Reform (4)

I’ve been struggling with where I stand (sorry to keep you waiting, world) on the current crunch issue in health care reform. That is, given that there will be a regulated menu of choices for consumers to purchase health insurance, should there be a public option? That is, among all the private companies – Blue Cross, Blue Shield, Aetna, etc. – will there be a choice “Big Government Program (BGP)?

My first inclination was to say yes. There would have to be regulation on the BGP; they would have to operate with the support of premiums only. They would keep the private health plans honest to some extent.

But then I got to thinking. First of all, even though I am reflexively a liberal even after all these years, my experience with public programs is just what the anti-government proponents say it is. They are inflexible and stupid. The Medicaid people who come to audit our charts in our offices are officious and odious, often – not always, but enough. The extent of regulations is exasperating. They make us check and regulate our scales annually at great cost and with little gain. The public regulations on what tests we can do in our office makes it financially impossible to do simply tests that would benefit the patient, but we have to send them to the lab, so the lab makes more money from a virtual monopoly, all because some poor doctors’ office labs in NYC screwed up some pap smears. Government is a heavy hand.

So, I was on the fence. Then I thought about this – as a private group we now negotiate fee schedules with the private companies. Sometimes we win sometimes we lose, but as a larger group with 9 offices in the East Bay, we do get some price concessions. Also, since we are justifiably regarded as a higher quality group, the private plans want us in their network. We have a higher cost structure than very small groups – as all practices in or near our category do – so actually we need the higher payments. So, in the competition for patients, we try to leverage our advantages against our disadvantages and get a decent price from the health care plans.

But we can’t do this with Medicare. It’s the same price for everyone under Medicare. They want to add some quality provisos to discriminate somewhat among the practices, but this effort has a long way to go before it is accurate and effective. With a BGP, Bayside (our group) would be a price-taker, just like every other practice.

Except the big ones. I suspect that the big groups will find a way to enhanced reimbursement. So our group (true, I’m ever the pessimist) will be large enough for a higher cost structure, but small enough for no enhanced reimbursement.

If the cost structure were too low, could we just opt out? That would be strange for us to do, because we take Medicaid now, and the new BGP would probably pay more than that price structure. And, if a whole lot of people were to choose the BGP, how could we hold ourselves out? Some elite practices will be able to, but we try to serve everyone, so it would be hard to stay out. And then the private plans would say, why should we pay you more that BGP? We have to compete with them on price, so we can’t afford to pay you more.

The only hope in this scenario would be for primary care prices to be raised by Medicare, but any such rise will be small, because of the Medicare budget woes, and the intense political activity of the higher paid specialists, and the ongoing unrelenting unreforming pressure from hospitals for higher payments.

So, now I’m really wondering. I guess the end result is going to have to be further physician consolidation so that we can all bargain together, and we at Bayside will have no price advantage over our smaller brethren. And maybe the AMA and other national organizations will be further empowered by necessity to have some kind of national negotiation. Or maybe the laws all change and enable regional groups to coalesce and become negotiating forces.

We'll have to see.

Budd Shenkin

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