Dollars and Sense of RehabPart 2: Physician Payment Systems

Sue Palsbo, PhD, MS

NRH Center for

Health & Disability

Research

Goals for Understanding

• History of Medicare physician payment

• Alternatives to FFS payment

• Spreading financial risk

• Understand parts of a managed care contract

What is Medicare?

• Federal program

• Part A -- Inpatient (facility and house staff) -- acute hospitals, rehab hospitals, SNFs

• Part B -- Outpatient, physician, durable medical equipment, home care

Who is Medicare?

• Aged -- most people age 65+– Entitled separately to Part A and Part B– Sometimes, your patient will be entitled to Part A,

but NOT Part B

• Disabled -- mostly people with psychiatric disabilities, or people who were employed and then became disabled

• Sometimes, Medicare beneficiaries are also eligible for Medicaid

What is Medicaid?• State programs

– Combined with Federal money

• Pays for medical care• Often more generous than Medicare when

covering durable medical equipment and assistive devices

• Pays for Rx• Pays for transportation to doctor’s appointments

Who is Medicaid?

• Eligibility varies state to state– Poor– Blind– TANF (temporary assistance to needy families)– SCHIP (state children’s health insurance

programs)

• Disabled -- mostly people with developmental disabilities

Dual Eligibles

• People who have both Medicare and Medicaid coverage

History of Physician Payments - FFS

• UCR– Usual (simple average of what you charge)– Customary (what most people in your area

charge)– Reasonable (some percentile of what everyone

charges)– Insurers pay you the least of these 3

• You can BUY this information (so can other payers)

Example• CPT 99205. Evaluation and management of a new patient, which

requires these 3 components:– a comprehensive history– a comprehensive examination– medical decision making of high complexity

• Counseling and coordination of care with other providers or agencies are provided consistent with the nature of the problem(s) and the patient’s and/or family’s needs.

• Usually, the presenting problems are of moderate to high severity. Physicians typically spend 60 minutes face-to-face with the patient and/or family

• e.g.: Initial office evaluation and management of patient with systemic vasculitis and compromised circulation to the limbs.

• Others?

How Much Do You Charge?

Consequences (Gaming the System)

History of Physician Payments - RB-RVS

Overall PPS Methodology

Nation-wide base dollar amount

Local geographic wage multiplier

Nation-wide condition multiplier Payment

Overall Physician Methodology

Nation-wide base dollar amount

Local geographic practice cost

index (GPCI) multiplier

Nation-wide RBRVU multiplier Payment

Impact of RBRVS• Physicians increased volume• CMS clamped down on fees to compensate• Physicians upcoded complexity• CMS rebalanced RVU scale to compensate• Physicians declined to “participate”• Congress passed limit on non-participating fees

(115%?)• Cottage industry to develop RVUs for “gap codes”

Private Sector Insurance

OWAs

• Per Diem

• Global Fees

• Balance Billing

Difference Between HMOs and PPOs

• Deductibles

• Co-insurance

• Co-payment

You Will Probably Not Be Alone

HMO Enrollment

Capitation Contracts by Specialty

Why Capitate?

• Shifts financial risk from insurer to you!– Your patient may be on Medicaid; Medicaid capitates the

HMO

• Large numbers of people/encounters• Define by CPT• Rate books (utilization and pmpm)• Risk adjustment (age/sex/condition)

– http://www.nrhchdr.org/RAFieldGuide.prn.pdf

• My advice: Retain an actuary!

Contact capitation

Stop-loss reinsurance

• Accumulators– Per patient– In aggregate

• Thresholds

Coordination of Benefits

• Primary

• Secondary

• Auto, etc.