New Hampshire has only one health insurer participating in its federal exchange marketplace, but state lawmakers and regulators are optimistic that other payers will join the market in 2015.
Anthem's standing as the sole insurer in New Hampshire's federal exchange marketplace has created a painful experience for some hospitals and patients, but relief is on the horizon, state lawmakers and regulators say.
NH Rep. Thomas Sherman, MD (D)
"I think it's going to self-correct in a year, which is a long time for patients and providers to wait, but it's the law," said Thomas Sherman, MD, a gastroenterologist and Rye Democrat who was elected to the state House of Representatives in 2012.
See Also: Frozen Out of HIX, NH Hospitals Feel Burned
Sherman says Anthem Blue Cross Blue Shield of NH appears to have complied with state and federal law when it crafted Anthem Pathway, the only health insurance exchange product in the Granite state approved to enroll patients in 2014. The Anthem Pathway network includes 16 of the state's 26 acute care hospitals.
Anthem officials have cited the need to contain premium increases for individual policies—estimated as high as 40 percent—as the driving force behind the company's decision to design a narrow network.
"The ACA was designed with the fundamental premise that the public would not tolerate public funding of health care," said Sherman, who practices at Exeter Hospital, which is in Anthem Pathway's network. "You can't really punish people for following the rules."
"I absolutely get the devastating effect of a narrow network on patients and providers," he said. "But a knee-jerk reaction to pass legislation may not solve the problem."
'The Spirit of the Law'
Top executives at several of the hospitals excluded from Anthem Pathway are chafing under a provision of the law that allows exchange health plans to require patients to travel as far as 90 miles for services.
Charles White,
COO, Upper Connecticut Valley Hospital
"I don't think people should be bullied into driving an hour to get their health care," said Peter Wright, president and CEO of Valley Regional Hospital in Claremont, NH. "They created a product that maximized the value to their investors. Anthem didn't follow the spirit of the law."
Wright said being left out of Anthem Pathway poses significant transportation hardships for patients in Claremont, which is among the most disadvantaged communities in the state. "We have to make a choice of what's more important: maximizing an insurance company's profits or providing access to affordable health care to the residents of New Hampshire who need it," he said.
Charles White, COO of Upper Connecticut Valley Hospital in Colebrook, NH, said he suspects Anthem avoided economically challenged communities when it designed its narrow network. "The most disadvantaged hospitals were red-lined out of the network," he said, noting UCVH would have accepted Anthem Pathway's relatively low reimbursement rates because the hospital relies on commercially insured patients to remain economically viable. "We would have taken the product even though it would have hurt us financially."
Chris Dugan, communications director for Anthem Blue Cross Blue Shield of NH, flatly denied the company had written off any providers. "This is certainly not the case," he said. "More than 90 percent of our customers will continue to use Anthem's broad network, which includes all of the state's hospitals. Importantly, we also anticipate that many of the individual members purchasing an exchange product in 2014 will have previously been uninsured. That means that all New Hampshire hospitals should benefit from a reduction in the amount of uncompensated or charity care"
Dugan said Anthem expects to continue doing business with all of the hospitals in New Hampshire through other products. "The fact that a hospital or provider was not chosen for this network is not at all a reflection of Anthem's relationship with that provider," he said. "Anthem views all of its contracted providers as high quality and is pleased to continue to partner with them on the vast majority of our business for small and large groups, senior, and grandfathered plans."
Single-Player Marketplace
While acknowledging that a more competitive marketplace is desirable, state Deputy Insurance commissioner Alex Feldvebel said the federal exchange's modest beginning in New Hampshire is in line with regulators' expectations.
"It wasn't too surprising that in Year One there was only one player," he said of Anthem Pathway, adding, "it wasn't surprising that Anthem was the only player."
Feldvebel said Anthem held about 90 percent of the individual health plan policies in the state before this year. "It's typical in a state with a small population that one or two players constitute the whole market (for individual policies)," he said. "There aren't enough lives out there to sustain more than one or two players."
The state Insurance Department thoroughly vetted Anthem Pathway to make sure the narrow network followed state and federal law, Feldvebel said. "Our role was to review the filings," he said. "And we did that, and the adequacy standards were met."
State Sen. Nancy Stiles, (R-Hampton), said Anthem had several advantages over potential competitors when New Hampshire was launching its health insurance exchange, including a longstanding and broad presence in the state. "They were familiar with the process," she said.
Stiles, who has taken a leading healthcare reform role in the Republican-controlled Senate, said she also wasn't surprised when Anthem emerged as the only company offering a health insurance exchange product in 2014. "The single player in the market was pretty much set up from the beginning," she said. "We are getting to a point where we can move forward."
Boosting the Marketplace
Stiles, Feldvebel, and Sherman are all optimistic that New Hampshire can expand the range of options available to individuals who purchase a health insurance exchange plan beginning next year.
"I'm very hopeful," Feldvebel said. "The real solution to this issue isn't to have nationalization of Anthem; it's to increase competition in the marketplace."
The deputy insurance commissioner noted that Harvard Pilgrim Health Care has been approved to join the exchange marketplace in 2015 and Minuteman Health Inc. is seeking regulatory approval. He said Minuteman could be a valuable addition because it is a nonprofit organization intent on following a co-op model. "They have a lot of work to do, but we're hopeful they can get up and running, and get in the market in 2015."
With a key procedural deadline looming over the Statehouse, Stiles said she is hoping lawmakers can craft legislation that will encourage more players to enter the exchange marketplace soon. "Conversations are going well," she said. "If it's going to happen, it has to happen before the end of March. … There are still opportunities. I am forever the optimist."
Sherman said there are three managed care organizations serving Medicaid patients through the state Department of Health and Human Services and at least one of them is considering offering a health insurance exchange plan. "Their forte is to provide comprehensive care at low cost," he said.
When it comes to reaching a political deal between the Democratic House and the Republican Senate to advance health care reform efforts in the Granite State, Sherman has adopted a watchful-waiting approach, particularly on the highly contested issue of expanding Medicaid in the state.
"I have co-sponsored bills with them on other issues, but on (Medicaid expansion), they are going to disagree with me," he said of Republicans in the Senate. "We still have hope for compromise on these things, and I want to keep that hope alive."
New Hampshire hospital leaders are crying foul over being squeezed out of the single health insurance exchange plan available in the state. Anthem says offering a 'select network of providers' will offset premium increases.
The stage has been set for a clash over the issue in the Granite State, where Anthem Blue Cross Blue Shield of New Hampshire is the only insurer offering a plan—Anthem Pathway—on the health insurance exchange. Nine of the New Hampshire's 26 acute-care hospitals have been excluded from the network and Concord Hospital has declined to join over Anthem Pathway's relatively low reimbursement rates.
"Anthem [pays] providers at pretty much Medicare rates," said Scott Sloane, vice president of finance at Concord Hospital. "Over the long term, it's a really bad idea." Concord Hospital, based in the state's capital, is a non-profit regional medical center with 295 licensed beds.
While top officials at the out-of-network hospitals are concerned about the long-term financial effects of Anthem's narrow network, they are nearly apoplectic over the implications for two key goals of the PPACA reform effort: improving access to healthcare services and boosting population health.
'Swimming Against the Tide'
"It's not a money issue for me," said Maria Ryan, CEO of Cottage Hospital, a 25-bed critical access hospital in Woodsville serving 26 New Hampshire and Vermont towns. "It's making sure [the patients] stay healthy. I'm swimming against the tide now when it comes to making sure they are compliant and making their appointments."
She fears Anthem Pathway patients using population health programs, such as one for diabetes education, will stop if they have to drive as far as 90 miles for services at one of Anthem's in-network hospitals. "Transportation is a big issue for them," she said of Cottage Hospital's patients.
"I have to look at the overall health of our community," Ryan said. "We are hearing loud and clear from the patients, who are heartbroken over having to leave their primary care doctors."
'A Select Network of Providers'
An Anthem official says the insurer is living up to the spirit and letter of the healthcare reform law.
"A major goal of the ACA was to provide more affordable healthcare, " said Chris Dugan, Anthem's NH communications director. "While all other carriers in New Hampshire are sitting on the sidelines, Anthem Blue Cross and Blue Shield in New Hampshire is proud to be part of an effort to provide coverage for many who have not previously had insurance. We are offering this select network of providers to offset premium increases that would otherwise be necessary in 2014."
Dugan says attaining that affordability goal posed a challenge in building the Pathway network. "Independent studies performed by both the New Hampshire Department of Insurance and the Society of Actuaries predicted that the average increase, driven primarily by higher claims of the previously uninsured and those covered through existing high-risk pools, could be significant, [by] as much as 30 to 40 percent," he said.
A 'Huge Financial Burden' for Hospitals
Cottage Hospital's Ryan and leaders at several of the nine other out-of-network hospitals in New Hampshire say that requiring Anthem Pathway patients to travel long distances for healthcare services will hurt many.
Charles White, COO of non-profit Upper Connecticut Valley Hospital in Colebrook, NH, says Anthem's narrow network could have a devastating impact on residents in the hospital's 850-square-mile service area, which is the largest in the state. With just 16 beds, the critical access facility is the smallest hospital in the state.
"We're a very fragile economic and medically served area," White said, noting that the region has the worst health outcomes in the state, no public transportation, and a relatively high number of patients suffering from costly chronic diseases. "This network hurts those patients who don't have the financial means to stay healthy."
Charles White,
COO Upper Connecticut Valley Hospital
UCVH was one of five out-of-network hospitals contacted for this report and the only one where officials said they are committed to continuing to treat local patients if they are in the Anthem Pathway network. "Our mission is to provide healthcare to the patients we serve," he said. "If we have to find a way to lower fees or provide free care, we will."
White says denying local care to patients in communities served by UCVH could have dire consequences. A few years ago the hospital had considered dropping chemotherapy because there was another facility within 90 miles offering the service.
But the reaction from the community was shocking, White said, with some patients saying they had no way to get to the other facility and others reluctant to impose "a huge financial burden" on loved ones to drive them to appointments.
He summed up the reaction in chilling terms: "They told us, 'We're going to choose to die instead.'"
Anthem Pathway a 'Comprehensive Provider Network'
Anthem's Dugan says it was necessary for Anthem to narrow the Pathway network to hold the line on premium increases. "Without the use of the new network, all individual exchange members would have seen much higher premiums than they will now see."
Anthem's exchange network in New Hampshire includes the vast majority of physicians in the state and is well within regulatory bounds, he said. "Pathway is a comprehensive provider network that meets or exceeds New Hampshire's network adequacy requirements."
Alvin Felgar,
CEO, Frisbie Hospital
Despite leaving out 10 hospitals in the state, Dugan says Anthem was able to include 78 percent of primary care physicians; 87 percent of specialists, allied and other professional providers; and 87 percent of ambulatory surgery providers.
Raising the PPACA alarm
Alvin Felgar, president and CEO of Frisbie Hospital in Rochester, NH has been one of the most vocal critics of Anthem Pathway, pressing the state legislature to force Anthem to broaden its network, and seeking to energize the community into action with a billboard, an open letter on the hospital's website, and an opinion piece published in the New Hampshire Business Review.
"We have real and practical concerns about the impact of the Affordable Care Act," Felgar wrote in the open letter. "Our hospital is not part of the process. We are on the outside looking in, and it is entirely possible this new law will serve as a wedge between our doctors and our patients."
In addition to the transportation challenge many of his patients face, Felgar said in an interview with HealthLeaders Media that compelling Anthem Pathway patients to change doctors poses another access obstacle. "It's a daunting process for people, especially people who have multiple health problems," he said of finding a new physician. "It's not a simple process."
Not long ago, I attended a meeting on the future of primary care. Most of the physicians in the room knew one another, so the discussion, while serious, remained relaxed. Toward the end of the hour, one of the physicians who had been mostly silent cleared his throat and raised his hand to speak. The other physicians smiled in acknowledgment as their colleague stood up. "Nurse practitioners," he said. "Maybe we need more nurse practitioners in primary care." Smiles faded, faces froze and the room fell silent. An outraged doctor, the color in his face rising, stood to bellow at his impertinent colleague.
Often, when the government wants you to do something, it makes you pay if you don't. That would seem to be the case with Obamacare, which penalizes companies for not providing health care. But in that penalty, there could be a paradoxical result: dropping health coverage could save companies a lot of money. Once new health insurance exchanges are up and running in October, companies with 50 or more full-time employees will face a choice: Provide affordable care to all full-time employees, or pay a penalty. But that penalty is only $2,000 a person, excluding the first 30 employees. With an employer's contribution to family health coverage now averaging $11,429 a year, taking that penalty would seem to yield big savings.
At a Capitol Hill hearing Tuesday, journalist Steven Brill, who examined the issue of the high cost of health care in a much quoted March 2013 Time magazine article, told Senate Finance Committee members that President Barack Obama's health care law will do very little to lower prices for consumers. Joined by a panel of health policy experts at the hearing to explore ways to make health pricing more transparent, Brill said that while he views efforts to disseminate prices for health services to consumers favorably, he believes that increasing transparency has its limits. "[Transparency] starts the conversation about prices that we didn't have in the debate over Obamacare. It's only a start," Brill said.
The region's leading provider of human organs for transplantation has staked its reputation on finding innovative ways to increase organ availability and shaving precious seconds in delivery. But Mid-America is also a nonprofit charitable organization that acts increasingly like a for-profit enterprise, selling body parts for financial gain and harboring potential conflicts of interest—while exempted from most federal and state taxes. It invests millions of dollars in for-profit ventures and supplies human bone and tissue to firms in which it maintains an ownership stake and leadership role.
According to an Association of American Colleges report, U.S. specialties will reach a shortage of 91,500 doctors by 2020. The AAMC predicts Americans will need an estimated 45,000 primary care physicians and 46,000 surgeons and medical specialists.
"It's certainly the worse [shortage] that we'll have seen in the last 30 years," says AAMC chief advocacy officer Atul Grover.
"For the first time since the 1930s, our number [of physicians] per capita will start to drop in the next couple of years. That's less doctors per person, but at the same time, since they are aging and have more chronic illnesses, each person is going to need more healthcare and not less healthcare. That's a pretty bad situation," he says.
There are currently 709,700 physicians (in all specialties) for a demand of 723,400 physicians, with an existing shortage of 13,700. By comparison, in 2020, there will be 759,800 physicians (in all specialties) for a demand of 851,300 physicians, essentially a shortage of 91,500 too few doctors, according to the report.
One third of all physicians will be turning in their white coat and stethoscope for retirement, states the report, but the supply of doctors will only increase by 7%, according to the U.S. Department of Health and Human Services.
With a tug and war between supply and demand, the predicted shortage of doctors will leave many Americans without any, or with insufficient, care. The most affected areas will likely to be rural regions and inner-city areas, according to the report. Because physicians are not evenly distributed across the country per capita, there are likely to be gaps in provider services in less-recruitable parts of the country, such as rural and inner-city areas.
Crunching the numbers
The shortage of 91,500 is a higher estimate than other studies have previously reported. The AAMC report is based on data from the Center for Workforce, which includes utilization of medical care, as well as census projections of the U.S. population. Researchers factored in physician retirement rates, increases in doctors from various specialties and regions, and healthcare insurance expansion.
With healthcare reform, 32 million more Americans will have access to medical insurance and 36 million to Medicare, the report says.
"As more people get insured, they are going to seek out the care they probably should have been getting all along but haven't been able to necessarily access. That's why those numbers look worse in the next 10 years than we previously had estimated," Grover says.
Perhaps more significantly, the demand is increasing because of the growing population of seniors, estimated to grow by 37%, according to the Census Bureau.
"The overall reason for the physician shortage has [less] to do with reform; it has more to do with the aging U.S. population," Grover says. "As we get this silver tsunami of baby boomers coming at us over the next 10 years or so, what you're going to see is their need for healthcare is going to be much higher on a per-capita basis than younger adults."
Older persons often require more specialty care, especially as the chances of cancer increases with age. In addition, there are more treatment options available to older Americans to prolong their lives, thus requiring more care.
Possible solutions
With this dark forecast of numbers of too few physicians to care for too many people, how should health leaders adapt? AAMC offers the following solutions:
1. Increased federal support of residency programs through Medicare, the primary source of graduate medical education funding. Since the Balanced Budget Act passed in 1997, teaching hospitals are restricted to a capped number of resident physicians they can claim under Medicare reimbursement. Teaching hospitals therefore accept more residents to accommodate community needs beyond that maximum limit, totaling 7,000 residents of which teaching hospitals pay for out of pocket, according to Grover.
2. Medicare support for 15% more residency training (about 15,000 residency slots). Seven thousand new medical school students are expected to graduate every year, states the report. Additional subsidized graduate medical education could add on 4,000 more physicians every year.
3. More effective use of healthcare providers to include advance practice nurses and physician assistants and team-based approaches, such as the medical home model.
"We're going to have to figure out how to be more efficient in the way we deliver care, how to use other healthcare professionals to the top of their licensed skill sets, and also figure out how to get more physicians out there into communities by training more," Grover says.
Even with 91,500 too few physicians in the forecast, there's still time to meet the growing need for medical care, according to Grover.
"You have to remember it takes about seven years to train a physician. What we're talking about is in the next year or two, we really need to start expanding those residency training programs to take in those larger medical school classes," Grover says. "It has to start in the next year or two."
We learned the principles of economics in our youthful days at the lemonade stand; for every cup of lemonade we sold, we earned more money.
The State of Hospital Medicine: 2010 Report Based on 2009 Data explains that, supplemented with incentives, hospitalists perform more work and earn higher compensation even if they start with a lower fixed base salary.
"I think what the survey did—that interpretation—it confirms human nature. You have someone who is being incentivized more, they will produce more," says William "Tex" Landis, MD, FHM, chair of Society of Hospital Medicine (SHM)'s practice analysis committee. "If you have a need to have more productivity in your program, that might be a way to accomplish that," he adds.
Link between compensation and productivity
As the first joint survey between the Medical Group Management Association and SHM, this report combines MGMA's data analysis tools with SHM's active membership to provide compensation and productivity information from hospital medicine groups and individual hospitalists.
Researchers surveyed 443 hospital medicine groups that represent 4,211 hospitalists. They found that the median compensation is $215,000 for internal medicine hospitalists, higher than in previous years by SHM's data.
Interestingly, the survey showed that the lower the base salary, the higher the productivity hospitalists performed because of bonus incentives. Adult hospitalists whose fixed base salary is 50% or less of their compensation reported the highest median work of 5,407 work relative value units (wRVUs). Those whose base salary is part of of their compensation (51-70%) performed a lower median of 4,591 wRVUs. Those whose base salary is 71-90% of their compensation performed a median of 3,859 wRVUs. And those whose base salary made up almost all of their overall compensation (91-100%) only performed a median of 3,571 wRVUs.
Wary of the numbers
However, survey researchers caution that surveys should not be interpreted like scripture. The national median wRVUs is 4,107, with hospitalists' productivity ranging on both ends of the spectrum, some more, some less.
Researchers also caution that every program is different. Although the survey can provide benchmarks, it's not the letter of the law. Compensation and productivity may differ depending on the number of hospitalists, patient volume, location, and other variables.
John Nelson, MD, FACP, FHM, of the SHM practice analysis committee says in the survey, "Remember that this data does not reflect the position of SHM or MGMA regarding the right, optimal, or appropriate standards for hospitals practice."
When asked if there is one best model, Landis says, "I don't think you can say there's one best compensation method. It's not one size fits all. Different programs have to look at their situation, their local situation, and what they're trying to accomplish with their program."
Another thing to keep in mind is that this year's report excludes academic hospitalists from the data. As a replacement for SHM's biannual report of hospitalist data, the current report only focuses on nonacademic hospitalists, whereas previous editions of SHM surveys include both populations.
"We had very little participation of our academic members in this report, as it should be," said Landis. However, MGMA and SHM plan to release another survey that focuses on academic hospitalists, according to Landis. "We'll have another report upcoming in six months from now that'll have even more data and allows [us] to have even better information for our academic colleagues," he says.
Finally, Landis said, "Not all of the value of hospitalists to a health system is in productivity." A lot of the value that hospitalists provide isn't simply wRVUs, but the work that they do, such as process improvements that aren't always measured in productivity metrics, he said. For example, lowering the number of complications from blood stream infections doesn't show up as an RVU but is extremely valuable.
"The purpose for putting a lot of work into this [report] is to help patients," said Landis. "That's what it's all about. We can't sustain a situation where providers are being overpaid, compensated for work that is not valued or not being done, but we also can't have the other situation either, where they are underpaid and underappreciated. We need to get hospitalist programs the right size for productivity and compensation," he says.
Karen M. Cheung is associate editor at HCPro, Inc., contributing writer for HealthLeaders Media, and blogger for www.MedicalStaffLeader.com. She can be contacted atkcheung@hcpro.com.
For every 100 physicians, there are 95 medical lawsuits, according to a report from the American Medical Association. With nearly an overall average of one liability claim per physician, the report calls for tort reform for lower healthcare costs.
Why is it that physicians, at some point in their careers, will face the dreaded 'L'-word—lawsuit? What factors might make a physician likely to face a malpractice claim?
The report gathers data from more than 5,800 physicians in 42 specialties between 2007 and 2008. The report indicates that some physicians face medical liability claims more often than others. In reality, only 42% of all physicians are sued during their career. That means, 22% of physicians are sued more than once.
Despite the overwhelming statistics on overall claim incidence, a lawsuit is not as common as it seems.
"?In any given year, being sued is a rare event. Only 5% of physicians had claims filed against them in that time frame. Over the length of a career, however, claims are much more common," states the report.
Physicians might see more lawsuits because the longer they are in practice, they have more time and, therefore, greater exposure to malpractice claims. For instance, older physicians are more likely to face a claim because they are in practice longer than younger physicians; nearly 61% of physicians age 55 and over have ever been sued.
Along with age, claim frequency varied by gender, specialty, and practice ownership. For example, male physicians are twice as likely to be sued more than women. There could be a number of reasons of why men face malpractice claims more often then women. Men have traditionally been the medical workforce longer and work more hours per week than women; therefore, men have a longer time to accumulate claims, according to the report. Male physicians are also more often practice owners, compared to women; practice owners see more claims than nonpractice owners. Men also tend to specialize in general surgery and obstetrics/gynecology (OB/GYN), two the highest accumulated incidence of lawsuits of all the specialties.
About 70% of both general surgeons and OB/GYNs are sued. Pediatricians (27%) and psychiatrists (22%) were the least likely to be sued.
Does a claim = a medical error?
"Claim frequency should not be used as an estimate of the error rate or malpractice rate in medicine," states the report.
Most claims (65%) are dropped, dismissed, or withdrawn. Another 25.7% of suits are settled out of court, and 4.5% were decided using an alternative method. Five percent went to trial; in those cases, 90% of the time, the physician won.
One reason why 22% of physicians are sued twice or more is that practice owners are more often sued than nonpractice owners. Known as the doctrine of respondeat superior, the employer of a practice can be held accountable for a tort even though the claim stems from the care provided by the employee. For example, if an employed physician was accused of medical malpractice, the practice owner could be sued. That means, one physician owner could rack up more malpractice claims than other physicians without necessarily committing more medical errors.
Costs of claims
Even though most claims are dropped, lawsuits do not go without financial consequences. The costs of indemnity payments can range from $22,000 for dropped or dismissed claims to $100,000 for those claims that go to trial.
"This litigious climate hurts patients' access to physician care at a time when the nation is working to reduce unnecessary healthcare costs," said AMA immediate past-President J. James Rohack, MD, in a statement to HealthLeaders Media.
The AMA, whose position is comprehensive medical liability reform on state and federal levels, supports a cap on damages, according to Rohack.
"The findings in this report validate the need for national and state medical liability reform to rein in our out-of-control system where lawsuits are a matter of when, not if, for physicians," Rohack said.
Karen M. Cheung is associate editor at HCPro, Inc., contributing writer for HealthLeaders Media, and blogger for www.MedicalStaffLeader.com. She can be contacted atkcheung@hcpro.com.
How much does an overnight stay in the ICU cost? $750? $6,000? Haven't got a clue? Many hospitalists don't know either. The cost of an ICU bed per night is $1,107, according to a recent study of two Washington hospitals. The $750-$6,000 range was what physicians at those facilities guessed.
Even though proponents of the hospitalist model have long claimed that hospitalists cut costs, hospitalists are unaware of the actual costs of care to inpatients, according to “Hospitalists’ awareness of patient charges associated with inpatient care,” published in the May/June issue of the Journal of Hospital Medicine. The study indicated that, in some cases, hospitalists were off by thousands of dollars in their estimates of how much tests and procedures cost the patients.
The guessing game
Researchers from the Internal Medicine Residency Faculty Group in Spokane, an affiliate of the University of Washington, asked hospitalists how much a hypothetical unadjusted self-paying patient would be billed for commonly used services, procedures, tests, and physician charges. Out of the 26 completed hospitalist surveys, researchers found that only a tenth of them were within a 10% accuracy rate.
“Their guesses were not very close, in general, to the so-called ‘true price’,” says Jeremy D. Graham, MA, DO, internal medicine residency Spokane faculty, clinical assistant professor of medicine at the University of Washington School of Medicine, and lead author of the study.
Hospitalists could generally distinguish which services were more expensive relative to each other but could not pinpoint a correct price. For example, they knew that a CT scan was more expensive than a chest x-ray, listing them in the correct cost order. But when asked to name a price for a CT scan, hospitalists estimated anywhere from $150 to $1,800; the price of a CT scan is actually $2,204.
The study indicates that the in-the-trenches physicians do not have a solid grasp on pricing for the services they use everyday. Why? Hospital charges are established on a confidential pricing structure based on contracts between the hospitals, insurances, and vendors and not on the actual costs of the services delivered, according to Graham.
Because healthcare prices are, in reality, adjusted, researchers gathered data from the hospital departments to create an “intellectual tool” of an unadjusted list of charges for the purposes of this study.
“In reality, there isn’t really a single, true price in our system in the US, for a given healthcare service,” says Graham. “?Almost all bills are paid with adjusted prices, adjusted in confidential contracts between a legion of payer sources and the hospitals. Those prices ultimately paid are not known prices to the average consumer, if you will. They’re distorted by some of the back-and-forth deal making for a hospital system’s ultimate goal to have an overall beneficial payer contract,” he says.
Price opacity
Hospitalists’ lack of price awareness could also transfer over to the patient, who oftentimes does not have the choice in what tests are ordered, adds Graham. Unlike in the outpatient setting where a patient can choose not to go to the pharmacy to pick up a prescription, inpatients in acute care settings are often too sick to make those price comparison decisions.
“It would be almost unheard of for you, the individual patient, to be able get a clear price on a menu before the service is delivered. Almost always, those prices would take place in deals between an insurance payer and a facility, and the individual patient or the doctor who ordered the test would be left out of knowledge of that information,” says Graham.
Patients and hospitalists are not trained in price awareness, according to Graham. After a case is completed, there’s little opportunity to revisit a patient’s case to see how much it cost the patient, he says.
The testing trend
In addition to confidential pricing structures and a lack of price awareness training, today’s physicians also tend to order more tests to be on the safe side, which poses a disturbing trend to run up costs. Graham, who teaches residents, says that inexperience can contribute newer doctors’ urge to check off more tests on the lab forms. In addition, medical legal pressures can encourage physicians to order more tests.
“A lot of what is done doesn’t necessarily help the patient a lot. We hear a lot about defensive medicine, that [physicians] feel they need a lot of tests to rule out possibilities,” says Richard Rohr, MD, MMM, FACP, FHM, hospitalist program director at Guthrie Healthcare System in Sayre, PA. “The fact is that the best defense is a good offense. A well-trained internist should be able to examine a patient, form a differential diagnosis, and confirm the diagnosis with two or three carefully selected tests.”
Controlling costs with health reform
Just as inpatient costs can hit the patient’s wallet hard; the government might also take the brunt of the financial hit.
Although Medicare’s DRG system does place some limits on what the hospital can charge, there is really no limit on what the physician charges can be for a given case, according to Rohr.
“You can call as many consults as you want—get as many physicians on the case as you want—and Medicare really has no choice but [to] pay the bill,” Rohr says.
“Everyone who touches the patient feels the compulsion to order some additional testing, look at something else. This drives up costs significantly.”
As healthcare reform is implemented, one of the major elements to be considered is controlling costs.
“You need a health system where the skill of the physician—to think about a patient’s problem and analyze it—becomes valued; that’s really the key to health reform and what we’ve been missing for the last 50 years,” says Rohr.
Karen M. Cheung is associate editor at HCPro, Inc., contributing writer for HealthLeaders Media, and blogger for www.MedicalStaffLeader.com. She can be contacted atkcheung@hcpro.com.