changing specialties in medicine :: Article CreatorWhy Congress Should Change How Medicare Pays Physicians
The problem began with the Budget Reconciliation Act of 1989, a law designed to keep total payments ... [+] to physicians relatively flat year after year. (Getty)
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In the sweltering heat of 19th-century colonial Delhi, legend has it that cobras were taking over the streets. To eliminate the dangerous snakes, British officials offered a bounty for every dead cobra brought to government offices. Soon, locals began breeding and killing cobras for profit. When British officers caught wind of the scheme, they ended the program immediately. In response, the breeders released their now-worthless snakes back into the streets, turning a problem into a crisis.
This tale of unintended consequences, known as the "cobra effect," serves as a stark reminder that well-meaning policies usually backfire disastrously when they fail to consider human nature and economic incentives.
Medicare's method of reimbursing doctors bears a striking resemblance to this parable.
Established with the intent to control healthcare costs through calculated payments and budget caps, Medicare's payment model has instead contributed to healthcare inflation and now threatens to compromise patient health.
Here's how we got into this venomous situation—and what Congress must do to help.
How We Got Into This Mess
The problem began with the Budget Reconciliation Act of 1989, a law designed to keep total payments to physicians relatively flat year after year, allowing total Medicare spending to increase by no more than $20 million annually.
To calculate its payments to doctors, Medicare assigns an intensity factor to everything from a doctor's office visit to an X-ray to surgery. This is called a relative value unit or RVU, to which Medicare proposes a fixed dollar amount. That value is then multiplied by the total number of RVUs to generate the actual physician payment.
When Medicare's projected payments for the year exceed the budget neutrality limit, the Centers for Medicare and Medicaid Services (CMS) reduces RVU payments. But as physicians face higher office expenses (staff, salaries, rent and utilities), they have no option but to perform more procedures and see patients more often. This, in turn, forces CMS to propose even lower RVU values the following year, perpetuating a never-ending cycle of volume escalation and payment cuts.
The counterproductive nature of this approach becomes even more apparent with the ensuing political response.
Once CMS announces reduced RVU values, individual physicians and the American Medical Association lobby Congress vigorously. Lawmakers almost always bend to the political pressure, increasing reimbursements for doctors. The combination of restored payments plus a higher volume of services drives total Medicare costs even higher.
Four Short-Term Failures In Medicare's Payment Approach
Here are four reasons why Medicare's approach is doomed.
Misplaced Focus On Physician Income: Although the goal of the budget reconciliation Act was to control overall Medicare costs, the legislation primarily targets physician income, which represents less than 10% of the nation's total healthcare spending. A more targeted strategy would address the much larger costs, such as hospital operations (30% of total spending) and the rapidly increasing price of medications. Ineffective Budget Neutrality: The requirement for budget neutrality is applied nationally, not at an individual level. So, it remains financially beneficial for individual clinicians to increase the volume of services they provide in response to reductions in unit payments. Increased Costs From Hospital Facility Fees: Hospitals, which employ nearly 80% of America's physicians, charge a facility fee for outpatient services that often exceeds the payments made to the physician. As lower RVU values lead to more outpatient services, Medicare costs rise even faster as the government must reimburse both doctors and the hospitals that run the facilities. Financial Strain And Physician Exodus: The pandemic has exacerbated labor and supply costs across healthcare. Within the confines of budget neutrality, the financial numbers don't work, especially for primary care practices. The Association of American Medical Colleges (AAMC) now projects a shortage of up to 139,000 physicians by 2033 with early retirements rising. Other physicians have started charging concierge fees to offset payment declines, which pushes low-income patients toward more expensive emergency room care—thereby increasing overall healthcare costs and delaying essential treatments. The cumulative effect of these policies: doctors must see more patients each day with less time for each. This rushed environment not only erodes patient satisfaction but also heightens physician burnout and increases the risk of misdiagnoses. These time-constrained conditions contribute to an estimated 400,000 U.S. Deaths annually from misdiagnoses, according to Johns Hopkins research.
Long-Term Consequences: Deepening The Healthcare Crisis
The implications of Medicare's current payment strategy extend far beyond immediate inefficiencies. They will spiral into a deeper healthcare crisis if Congress does nothing to stop the bleeding. Here's why:
Damage To Communities: When government payments decline, the businesses that fund private healthcare (covering 155 million Americans) pay higher prices to make up the difference. It's the only way to keep the providers of medical care viable in the face of higher labor and supply costs. Recent research led by Yale Economist Zach Cooper concludes that higher healthcare costs paid by employers result in lower wages and significant job losses across communities. Delaying Innovative Change: There exists a plethora of innovative AI approaches that can enhance the quality, accessibility and efficiency of American healthcare. However, the current pay-for-volume model used by Medicare fails to reward their adoption. Instead, it incentivizes in-person visits and additional procedures rather than encouraging clinicians to focus on preventing chronic diseases, avoiding their complications and eliminating redundant or ineffective medical treatments. Strategic Reforms: Implementing A Smart Solution
To safeguard the health of our nation and manage Medicare costs effectively, Congress must take decisive action. It's time to move beyond the current fee-for-service model. Here's how:
Pay-For-Value, Not For Volume: Pay-for-volume reimbursements fail to adequately incentivize effective chronic disease control, leading to a 30-50% increase in preventable heart attacks, strokes and kidney failures, according to the CDC. A shift to a capitation model—a fixed annual payment to a group of doctors for managing the health of a population—would incentivize doctors to leverage modern technology and empower patients for better health outcomes. This proactive approach could significantly reduce Medicare costs by preventing severe health issues before they arise. Eliminate The Middleman: Today, Medicare's capitated payments go to insurance companies, not directly to physicians. Insurance companies with no other means of limiting expenses implement restrictive prior authorization processes that delay and prevent necessary treatments, undermining patient outcomes. Direct payments to physician groups would align incentives and drive meaningful healthcare transformation. Fund The Transition To Smarter Payments: The shift to capitation involves considerable risk for individual doctors if undertaken alone. The most significant improvements in healthcare come from collaboration within groups of doctors. Yet, establishing high-performing medical groups demands substantial time, resources and leadership—all of which are scarce in our overwhelmed system. Today, instead of medical societies competing to increase RVUs for their specialty at the expense of other specialties, CMS should encourage medical organizations to collaborate. It could, for example, announce a five-year plan to phase out fee-for-service payments, transitioning instead to contracts with multi-specialty medical groups ready to embrace capitation. This strategic move would not only streamline healthcare delivery but also enhance the quality of care by fostering teamwork and integration among specialists. Transforming Medicare's payment model to a pay-for-value system, although complex, is entirely feasible. Organizations like ChenMed have already demonstrated success. This large primary care group specializes in caring for complex, older patients in socioeconomically challenged communities and has consistently achieved superior clinical outcomes at lower costs. The organization underscores the viability and benefits of capitated payment models.
Currently, the debate among CMS and healthcare groups focuses narrowly on whether next year's reduction in payments will be closer to 2.9% or 1%, and which specialties will face the harshest impacts. This myopic view overlooks the larger issue: 98% of the reimbursement methodology remains unaddressed.
If Congress makes these changes now, we can significantly enhance the physical and financial health of our nation and ensure a sustainable healthcare system for future generations.
The Centers for Medicare and Medicaid Services were contacted for comment on July 28, 2024.
CMOs Tackle Increasing Complexities In Pediatric Healthcare
Finding footing as a new chief medical officer looks different for each executive at each hospital, but at children's hospitals, there are different layers to consider in a leadership role.
Results from the 2024 National Resident Matching Program showed that residency positions in pediatric medicine dropped by 5% year-over-year from 97.1% in 2023 to only 92% of offered residency spots in pediatrics getting filled in 2024.
This change resulted in an increase of 164 more positions that went unfilled in the specialty this year, than in 2023. Additionally, 47.6% of MD seniors matched to pediatric categorical positions in 2024, a decline of 7.2% from 2023, according to the data.
"Children's hospitals play an essential role in kids' health and well-being by providing specialized care, crucial research, essential education, and vital community outreach," Torey Mack, MD, chief medical officer of the Children's Hospital Association said in a June news release. "However, when it comes to operational metrics, children's hospitals are often benchmarked against adult hospitals that provide pediatric care."
The ongoing, nationwide physician shortage can sometimes feel like a double-edged sword for executives in children's hospitals, a spokesperson from the Pediatric Infectious Diseases Society confirmed to Becker's.
For instance, there is a major shortage of infectious disease physicians nationwide, with 80% of counties in the U.S. Not even having one, according to the American Medical Association. Then, there is also a shortage of pediatric physicians. For children's hospitals, these issues overlap, with an even greater shortage of pediatric infectious disease specialists nationwide.
Therefore, finding the right staff for specialty care at children's hospitals can be a challenge.
"This year's national pediatric residency match data show a very worrisome, dwindling percentage of medical students entering pediatrics. Of course, those new residents serve as our substrate for future subspecialty fellows," William Steinbach, MD, president of PIDS wrote to members in a letter. "The national pediatric subspecialty match data were not much different, showcasing that many pediatric specialties are going to have massive workforce shortages in the immediate and near future."
"One could argue there is no single larger issue in our field, or in any field, than the workforce comprised of all of us," Dr. Steinbach added.
Data from a June 2024 report compiled by the Children's Hospital Association revealed that pediatric patients today are entering hospitals with slightly more severe illnesses, indicating "a slightly sicker cohort of patients now versus 2019," according to the release.
Inpatient and observation cases went up at children's hospitals in every region of the U.S., except the Northeast, which saw a decline, indicating overall that "children's hospitals in the West and Northeast regions may have had a different experience over the last three year compared to those in the Midwest and South," the release states.
This means that in 2024, chief medical officers at children's hospitals are not only grappling with staffing shortages and specialty recruitment, but even geographic location has been a factor influencing care and patient outcomes, as the report shows.
There are extra layers to consider for these executives due to these compounding factors, but even position scope for chief medical officers can vary hospital to hospital, which shapes how each executive guides staff through the headwinds differently.
"All health systems are set up differently, as are the expectations of the CMO," Blake Bulloch, MD, chief medical officer at Phoenix Children's, told Becker's. "We have a CMO, surgeon-in-chief, physician-in-chief, and chief physician executive. We all have our own responsibilities and report up to the chief physician executive, but there is some overlap in all of our functions."
The overlap requires constant coordination and communication among physician leadership, he said. The health system is adding two more community hospitals that are scheduled to open later this year, which is also requiring the C-suite physician leaders at Phoenix Children's to double-down on the coordination and communication even further.
"It is my responsibility to communicate to the other physician leaders what we are working on, where we think there could be risks and options for proactive risk mitigation," Dr. Bulloch added.
The challenges that are exclusive to children's hospitals are expected to get worse, unfortunately, and they might become even harder to tackle going forward, if things continue to play out this way, Aaron Carroll, MD, pediatrician and professor at the Indiana University School of Medicine wrote in a July opinion piece for The New York Times.
"What's been uniformly concerning for 20 years has been the waning interest in pediatrics subspecialties as the need has grown," Atul Grover, MD, executive director of the Association of American Medical College's Research and Action Institute shared with Dr. Carroll and The New York Times.
While the future of pediatric care and children's hospitals is likely to hold more obstacles for chief medical officers and physician leaders to overcome, what is certain, Dr. Bulloch said, is change.
"I am not sure people are aware of how dynamic this role can be," Dr. Bulloch said. "While some meetings, committee memberships and projects are ongoing, there are constantly new opportunities arising and challenges to overcome. Every day is different, and the job evolves over time."
CU's School Of Medicine Is First To Move To New Model For Training Doctors
The University of Colorado's School of Medicine is the first in the country to shift entirely to a new way of training doctors, with the hope of producing graduates who more naturally see patients as the center of the health care system.
In the typical medical school model, students spend one to two months learning the basics of a specialty, such as psychiatry or pediatrics, before rotating to the next one. In CU's "longitudinal integrated clerkship" model, students work under experienced doctors in multiple specialties at the same time, said Dr. Jennifer Adams, assistant dean of medical education overseeing clinical clerkships.
For example, someone might be in the family medicine clinic every Monday morning, with their other rotations spaced out throughout the week, she said.
The students at CU's Anschutz Medical Campus in Aurora also follow a group of patients over the course of the year. Their patient panels need to include certain types of patients, including a person with a mental health condition, someone seeking obstetric care and a patient nearing the end of life, said Dr. Emily Gottenborg, a hospitalist who oversees the students at UCHealth's A.F. Williams Family Medicine Clinic in Denver's Central Park neighborhood.
But they also have some freedom to invite patients to join their panel based on their interests, she said.
If patients give permission, their electronic medical records send notifications to the students if they visit an emergency room or are hospitalized, Gottenborg said. The students only have 15 patients in their panel — compared to hundreds or thousands for full-fledged doctors — so they won't drown in notifications, she said.
Haider Sarwar, a medical student from Chicago, said he wasn't sure what a longitudinal clerkship would mean when he chose CU, but he enjoyed the experience. He plans to specialize in ophthalmology and has an interest in eye surgeries, so he chose panel patients who had procedures coming up.
Following the patients brought some surprises, Sarwar said. He hadn't expected that one of his obstetric patients, who was visiting for a first-trimester appointment in July, would be someone he'd seen before when she needed a minor surgery. In another case, he came across a patient who needed a follow-up procedure to fix a broken arm again while working in the psychiatric clinic, and learned the patient's calm reaction to needing another surgery came after anger-management treatment.
"Being able to have that perspective helps you to make decisions," he said.
It also makes students feel more like advocates for their patients, and helps build their confidence as doctors, Sarwar said.
The students in the longitudinal model seem to have an easier time making connections between specialties than those educated in the traditional model, Adams said. They also scored higher on patient-centeredness and empathy, while not doing any worse on academic measures, she said.
"Six or seven years after (longitudinal integrated clerkships), students are still more empathetic," she said.
University of Colorado medical student Haider Sarwar leads a visit alongside Dr. Emily Lines at the A.F. Williams Family Medicine Clinic in Denver on Monday, July 22, 2024. (Photo by AAron Ontiveroz/The Denver Post) Pilot program launched 10 years ago
The CU School of Medicine started with a pilot longitudinal program at Denver Health in 2014, then slowly expanded it over the past decade, Adams said. For the last two years, all students have learned in the longitudinal model in their second year of medical school.
The longitudinal model is more complicated than the traditional block model, with one coordinator for every 12 students, Gottenborg said. Schedules have to offer some flexibility, so students can follow their patients, but they also need to get their hours in each specialty, she said.
Dr. Emily Lines, an assistant professor of family medicine and medical director of the Williams clinic, said she worked as a preceptor, or on-the-job teacher and mentor, for students before and after the change to a longitudinal model. The model fits family medicine particularly well, because students are unlikely to see effects within a month or two if they counsel patients on lifestyle changes, she said.
"One of the things to learn in primary care is that changes in health don't happen overnight," she said.
Learning from multiple types of physicians at the same time also gives students the ability to make connections they, or even their preceptors, might have missed otherwise, Lines said. For example, students have talked about seeing surgeons decline to move forward with patients referred to them from primary care, suggesting that different doctors' ideas about when the time has come for a more aggressive approach don't always line up, she said.
"You get to see the other side of the coin," she said.
As of 2016, 142 medical schools offered a longitudinal option, according to the Association of American Medical Colleges. The group didn't have more recent data available on the total number of schools with a longitudinal option, but said CU is the first to send all students through that model for their clinical year.
Rachel Ellis, The Denver Post
A view of the University of Colorado School of Medicine on the Anschutz Medical Campus in Aurora on Tuesday, Aug. 25, 2020. "They get to see people get well"
Having students follow patients instead of physicians gives them a fundamentally different view of the system, said Dr. Abraham Nussbaum, a psychiatrist, assistant dean of the CU School of Medicine and chief education officer at Denver Health. Nussbaum oversaw the pilot program and has since written a book about the model shift, called "Progress Notes: One Year in the Future of Medicine."
A longitudinal model also expands their education beyond the body and what can go wrong with it physically, to put more emphasis on patients' emotional and material needs, he said.
"The illnesses today also are illnesses of our communal and social life," he said.
Changing the model has been a challenge, because doctors overseeing students' training almost all learned in traditional blocks, Nussbaum said. But the longitudinal setup does seem to increase students' interest in less-popular specialties like psychiatry, he said.
"In the old model, they saw people at their sickest" when they were in hospitals, he said. "In the new model, they get to see people get well."
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Originally Published: July 29, 2024 at 6:00 a.M.
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