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How Outdated Data Distorts Doctors' Pay
Hugh Pickens DOT Com writes "Peter Whoriskey and Dan Keating report at the Washington Post that Medicare annually pays $69.6 billion for physician services according to an arcane and little-known price list, known as the Relative Value Update over which doctors themselves exercise considerable and less-than-totally-transparent influence. A 31-member committee of the American Medical Association (AMA) recommends what Medicare should pay for some 10,000 procedures — with the fees based in part on how long it takes to complete each one. But this time-and-motion study often fails to take full account of changing technology and other factors affecting physician productivity, so anomalies result. For example, if the AMA time estimates are correct, then 41 percent of gastroenterologists were typically performing 12 hours or more of procedures in a day, which is longer than the typical outpatient surgery center is open and and one gastroenterologist in the Post story would have to work 26 hours, according to the committee time estimates, to accomplish what he gets done in a typical workday. Here's how it works: Medicare pays for a 15-minute colonoscopy as if it took 75 minutes resulting in a median salary for a gastroenterologist of $481,000. It is possible that in 1992, critics allow, when the price list was first developed, a colonoscopy actually took something close to 75 minute when doctors had to hunch over an eyepiece similar to that of a microscope for a look. But technology has advanced and now the images are processed and displayed on a large screen in high-definition video. Responding to criticism that the nation's method of valuing medical procedures misprices payments, a bipartisan group of legislators has drafted a bill that would reshape the way the nation pays doctors. The bill would require Medicare officials to collect data such as how much time doctors spend doing procedures and reducing the doctor payment for overvalued services. 'What started as an advisory group has taken on a life of its own,' says Tom Scully, who was Medicare chief during the George W. Bush Administration. 'The idea that $100 billion in federal spending is based on fixed prices that go through an industry trade association in a process that is not open to the public is pretty wild.'"
So, it appears the article only talks about the time spent by the physician. I'm curious if the costs of the tools/technologies of these procedures have gone up, and how the doctors get paid for those (potentially) increased costs?
Sorry no information in this comment I'm just throwing out there that in my opinion since insurance companies are increasingly becoming the payors for services rather than individuals it seems stories like this are becoming more prevalent. I mean, and I stand to be corrected it seems that the medicare system now has a "watchdog/whistleblower" vis a vis the insurance companies. It appears to me insurance companies don't like to pay the costs it used to be OK for the average joe to mortgage their house/ruin their future for.
You know I am sick and tired of everyone blaming doctors for the cost of healthcare in the US. When in fact, doctors salaries are a miniscule portion of US healthcare, especially compared to drugs and device costs and hospital CEO pay! Doctors should be paid MORE. Yes I said it, more! What other profession do you study at least 12 years before you make a decent salary, take on at least $250k in school loans, and work 12 hour days for your entire career?
Yes doctors make good money but it's far less than other folks in the US make who are far less deserving. How about addressing the seriously disgusting salaries on wall street? Should a computer nerd working in Morgan's computer risk group really be making $500k which is FAR more than the majority of doctors? What about the asshole investment bankers making millions at Goldman figuring out new ways to screw every US citizen out of a couple of pennies. Meanwhile the doctor is someone who makes you feel better and often will save your life.
p.s. I am not a doctor. I just work with a lot of them and see how hard a life they have nowadays.
When the money comes from a Monoply box, there's no incentive for accuracy, only more money.
I want to delete my account but Slashdot doesn't allow it.
The light regulation being complete price and quality transparency, with the prices for all procedures and outcome statistics easily available online. Put the prices for the 100 most common procedures on posters in large type every 200 feet in every hospital. Put a booklet in every hospital and clinic room. Even insured people frequently have a high co-pay. Think prices wouldn't drop?
Other prices would come down quickly if congress were to deregulate. Allow insurance and prescription drug purchases across state and international lines and prices would drop in a hurry.
Moreover, the whole "prescription" idea is a bit of a racket. If I want to buy a stronger zinc oxide cream for foot problems, I have to see a doctor and get a prescription. For foot cream with 5% zinc oxide. I mean, WTF? It's time to release all but the most dangerous drugs into the wild.
My 2 bitcoins.
Please do not read this sig. Thank you.
So in order to fix under regulation, we reduce regulation.. To me that does not sound like the fix.
When you cant win, ad hominem.
15 minutes for a colonscopy? Where do they get this number? Getting informed consent can take 15 minutes just by itself (and is something the doc has to do). 15 minutes sounds like the best-case scenario (e.g. a screening colonscopy on a healthy 50 year old with no findings) and a number to sensationalize the article. What is the distribution of times that the procedure takes? Maybe 75 minutes is actually a reasonable time to expect the procedure to take on average?
That the health care system in this country is screwed up is not at issue. The article wants to point out the ludicrousness of the reimbursement mechanisms in place. Putting in a context-free and unexplained statistic only weakens its argument.
-- The Genesis project? What's that?
I have two barbers I like. One is an old guy who has been doing it forever. He does a good job, but only uses scissors and a comb so it takes about 30 minutes for him to cut my hair. He charges $18. The other guy is in his early 20's and has a nice selection of electric razors. The end result is just as good (maybe better), and takes less than 15 minutes. He charges $11.
The first guy is struggling because he's not willing to get the training or the tools to be more efficient, so he can't see as many people and he's already at the upper limit of what the market will bear in this area. The second guy has taken right off because he can deliver a cheaper, faster haircut with no loss in quality. I'd be surprised if he hasn't already recouped his investment several times over. I'd also be surprised if this didn't scale to the medical industry with prices is the three, four and five figure ranges.
Get out the pitchforks and torches, antisocialists.
What is interesting to me is that private hospitals negotiate rates with medicare and insurers, but basically set their own rates for the uninsured. My limited knowledge on the topic is merely based upon the few articles that have achieved my attention, but medicare rates are apparently the most reality-based, since the federal government gets to collect and analyze more of the pertinent data than anyone else. The private insurers have some strength in numbers/volume, and have their own data, and get to negotiate a bit. The uninsured are basically screwed, and are asked to pay many times what is charged to the insured or medicaid patients.
Google chargemaster, if you are interested.
While it's true that doctors and hospitals set their own prices for the uninsured, that doesn't mean the uninsured are being screwed. In practice, it's often just the opposite: if you're paying directly, they'll give you a significant discount to not have to deal with the insurer. However, if they submit a claim to your insurer on your behalf, they can't give you that discount. I know a number of people who have encountered cash prices less than half what the insurer would be billed, from both dentists and doctors.
My mechanic never charges me extra hours, but damned if I don't need to have my flasher fluid changed every time I go there...
And they should be hourly rates, set according to the education and certification of the Dr. Also, equipment should be charged at an hourly rate.
The opacity of actual costs is probably the most significant driver of increased costs.
When Fascism comes to America, it will call itself Anti-Fascism, and tell you to give up your guns.
a dentist, and even I can tell you there's more to the story here. That 75 minute colonoscopy is probably an average. No one can predict exactly how long any given procedure will take on any specific patient. If a patient has no polyps, the procedure goes faster. If they find polyps and remove them (that's how colonoscopies prevent cancer) it takes longer. Patient anatomical variations and other medical complications can affect the time required.
I run into the same thing with my patients. A simple 15 minute restoration on a cooperative adult patient can turn into an hour long ordeal on an uncooperative 5 year old, but insurance pays the same for either one.
And you don't see being billed $65,000 for $1400 worth of services as blatant fraud?
Some of the factors involved:
1. anti-trust laws and specific legislation prevent hospitals and doctors for sharing price information (aka Sherman Anti Trust Act)
2. The government demands a discount from hospitals for services.
3. The insurance companies, not to be outdone by Uncle Sam, also demand discounts. (8th paragraph )
4. Different geographic locations have different pricing indexes.
5. Local competition, despite #1 above, can influence prices
6. Different patients have wildly varying medical histories and co-morbidities.
7. Most complex cases (esp surgery and other procedural based care) fall into a class of billing called the DRG (diagnostic related group), which is kind of a set rate for a package of care....so if I take out your gallbladder and you leave in 1 day or 3, the hospital gets paid the same (see side note below)
Taken all together, the hospital is basically free to charge what ever they want....not that they ever get it.
Most insurance companies pay a "regionally adjusted payment", and that's what gets paid....with a few exceptions. Those without insurance, usually get some kind of compassionate coverage from Medicaid (state funded, not Medicare). Those who do not are often eligible for charity care where part or all of the bill is reduced. So why not just bill the uninsured a lower upfront cost? Rule #2. Uncle Sammy wants his discount
The interesting side story....patients who have an exceptionally difficult problem can fall into a group called the outliers (imaginative name, but better I suppose than the untouchables....). These are pts who fall outside of the DRG....as such the hospital may submit a bill for outlier payment. This is typically $0.10 on the dollar of hospital billing. Well that sucks for the hospital....but a less-than-scrupulous Mega-Health-Care-Corp came up with the idea of inflating their outlier billing to be 10x what they had been billing.....the end result is $ for $ reimbursement. This was all well and good for them, for a couple of years....then Uncle Sammy caught on.....10 years later and they still haven't gotten rid of the shit smell after the government came down on them and beat the living shit out of them financially and punitively.
We are talking specifically about how much time the doctor is working on the case of the patient.
The average time a doctor spends on a single patient isn't even close to the entire story. Bit of background: I'm an industrial engineer and also a cost accountant. I have degrees in both and have worked in healthcare doing six sigma projects, time studies and cost analysis.
1) Procedure times are NOT normally distributed. Not all cases are identical and some take considerably longer than the average. These longer cases typically are much more expensive. On a weighted cost basis the average cost will be higher than you would expect if you make the mistake of assuming a normal distribution.
2) You have to account for the time of the doctor PLUS the time of all the support staff. The time a doctor spends on a procedure frequently is not the biggest cost driver. My wife is a doctor. For the work she does her average time per case is about 10 minutes. For every minute she spends on a patient there is about 3-5 minutes of support staff time - sometimes more. On some cases she might spend an entire hour or more plus have to consult with other doctors for a particularly difficult diagnosis.
3) The value of a doctor's time isn't just driven by the average time for a procedure times some arbitrary hourly rate. What makes a doctor (particularly a surgeon) valuable is the value of his time when something unexpected happens. Patient goes into arrest on the operating table for instance. At that point the value of the doctor's time grows exponentially. If everything was just routine all the time, you could use nurse Now granted you can normalize the value of their time with enough study but the number you will get is going to be higher than if everything was routine and identical.
4) Time studies of procedure times are expensive and relatively difficult to perform. I've done a lot of time studies personally and trying to get an industry average for each and every procedure is far more difficult and expensive than most people realize. While there is no excuse for using outdated or wrong information, it is important to realize that maintaining an accurate and authoritative listing of expected procedure times is not a trivial exercise.
Replying to myself, but another thought: "Maybe some social programs are wasteful, maybe some are necessary." The issue here is that most of them are both. I don't know what the solution here is, but the polarizing nature of it means that no matter what we do, nobody is going to be happy about it.
I'm a good cook. I'm a fantastic eater. - Steven Brust
I had a facility bill my insurance for over $30k for a procedure that took less than one hour. Insurance paid about $600.00. The facility tried to get me to pay the balance, offered me a "deal" to pay just 1/3, alleging that I owed the amount because while the physician was in-network they were not. I didn't pay them anything and now the statute of limitations has expired to collect on the bill. The system is designed to screw over anyone who is accustomed to paying full retail price, religious people who presume they should always pay their "debts" regardless of how they were incurred, for people who don't have access to information to help them decide what the fair market value should be, people who are afraid of tarnishing their credit reports, people who are afraid of debt collectors, and people who don't have time or money to fight, haggle, negotiate, or go to court. Naturally the system hits honest, hard working American families the hardest.
To argue that we have a free market for health care makes no sense when such a massive portion of spending is channeled through government programs. When the government is paying your bill then you don't act like a cash conscious consumer at a grocery store. Instead, you get what you need from whoever is providing it with no regard to cost. Such a system artificially skews what is perceived as fair market value.
If you want a free market for health care, then you have to eliminate the non-free market participants. If healthcare providers could only be paid what their patients could afford then you wouldn't have a system like we have today - a system where a patient walks into a hospital and leaves behind his life savings. Even the so-called "charity" hospitals won't perform services for your child until your 401k has evaporated. Yet people keep donating to charity hospitals and feel good about themselves when they are only lining the pockets of physicians and managers. If you really want to be charitable, donate directly to patients. They aren't hard to find.
As for the free market, as long as patients can come up with data to show what the "usual, customary, and reasonable" charges are for a common procedure, they could argue effectively in court that they are being overbilled. Since the median income for most families is near $50k for many parts of the country, no clinic or hospital could effectively argue that their medical procedures should cost a patient $40k for a year's worth of services (say for treatment of diabetes, heart disease, cancer, etc.).
Of course the natural outcome is that those with below median incomes might be left with inadequate healthcare, free market forces being what they are, and expensive conditions, like cancer, might not be successfully treated except for those with substantial assets to pay for them. In the end, everyone loses, except physicians, hospital administrators, medical debt collectors, and pharmaceutical execs. Medical care would function much like dental care does in this country. Oddly enough, this is where we are today, in spite of the millions of dollars raised for private medical charities, private for-profit insurance companies, and programs like medicaid, medicare, VA benefits, and other state and federal welfare and disability programs. The problem is this patchwork of half-fixes leaves wide open gaps to exploit. Every day there is a clinic shut down after a physician and his staff were caught fraudulently billing medicare, medicaid, or even private insurance, but there are rarely any convictions of doctors who have been fraudulently billing their patients directly. There are physicians who target individuals that they suspect of having deep pockets and try all sorts of scams to tramp them into a situation where they are receiving servies out-of-network, because once a patient is receiving services without the protection of their insurance contracts they can be billed at rates several orders of magnitude over what insurance or medicare will pay.
When insurance and medicare a
I see it as the hospital trying to cover some of the bills on which they never collect.
I see even classic Slashdot is now pretty much unusable on dial up anymore.
I don't think $451,000 is unreasonable pay for someone who has to look up diseased arses all day to help prevent their owners dying a horrible death - with the prospect of being sued into oblivion if you make a mistake? Sure it's s lot of money, and definitely on the high side, but I think I'd still rather be a programmer earning less than 1/4 of that compared to doing that job. You thik the goatse guy is bad? I reckon a day in the office looking over a proctologist's shoulder would make it look like kittens.
The tens of millions paid for company executives in charge of companies that take a nose dive and have to be bailed out by taxes? Now that's unreasonable.