No Medicare "Doc Fix" Could Result in Over 50% Salary Cut to Primary Care Physicians

With the Fiscal Cliff looming, I have re-posted this entry from November 2011, the last time Congress was against a deadline, and what got us into the mess we are in today.  Hopefully, Congress will come together and in addition to putting together a package that will spare most Americans tax increases, will eliminate the 27% cuts in payments to physicians that are set to go into effect on Jan 1, 2013.

From November, 2011:

Fortunately, the 27% reduction in Medicare payments to physicians that is set to take place in a matter of weeks unless congress acts is getting some press.  Fox News published this piece yesterday, as did the Washington Post. Writer Merrill Goozner breaks things down nicely in his article, "Is There a Doctor Fix in the House...and Senate?"

However, one thing that seems to be getting confused in all the media reports is the difference between physician payments and physician salary. A doctor's income is what he takes in (payments) minus expenses or overhead. Physician overhead (staff, office space, electricity, malpractice, equipment,etc.) is very expensive. One of the reasons, but not the only reason, a doctor's overhead is so high is because we need to hire extra staff just to deal with the insurance bureaucracy.  (See "Your 10 minute office visit needs 8 people and 45 minutes of work" via KevinMD.) While payments from Medicare to physicians have not really increased over time, overhead has gone up dramatically.

Physicians, patients, and policy makers need to understand that a 27% cut in physician payment will have a far greater impact on physician salary because of this overhead. 

An article from the AMA News discussing the issue of the "doc fix" has an interesting table with current payments and proposed payments.  Let's say a family physician sees 25 Medicare patients a day, 5 days a week for 50 weeks out of the year. At the current rate of  $68.97 per visit, this generates $431,062 in revenue. At 60% overhead of $258,637, this family physician's income would be $172,425 per year. Now any doctor reading this will tell you that 1) no physician would see exclusively Medicare patients because they just don't pay enough (at current rates) to sustain a practice and 2) you can't see 25 Medicare patients in a day because patients 65 and up have multiple medical problems and you simple couldn't see them all in 15-20 minute visits. However, the income is very close to$168,550 which is the average salary for a family physician. Thus, the numbers are good for the purpose of discussing the impact of Medicare cuts on not just payments but salary.

Now, if the 27% Medicare costs go into effect, Medicare will only pay $51.07 for that same visit.  Using the same numbers, the revenue generated is only $319,187 (26% decrease in Medicare payments), but the $258,687 in overhead stays the same.  This leaves the primary care physicians with a $60,550 annual income. That's a 65% cut in physician salary.  Even if my numbers are off, its clearly more than a 27% cut to salary, and much greater than 50%.  The bottom line is that if these cuts take place, primary care physicians will certainly stop seeing new Medicare patients, and many will stop taking Medicare patients altogether.Many already have!!!

Now, most pundits seem to think that since seniors vote, and Medicare is a big issue for them, and that the election is less than a year away; Congress will find a way (like they have for the past few years) to find the money to cover the cuts for at least another year.  However, I wouldn't be so sure.  I would advise anyone who is on Medicare, has a loved on on Medicare, or who plans on having Medicare in the future to call their representatives and ask them to ensure that these payment cuts not go into affect.

How can a psychiatrist write 100,000 prescriptions a year, and why this matters to Primary Care?

The Miami Herald is reporting an investigation of a psychiatrist who wrote almost 100, 000 prescriptions a year. Sen. Grassley and the feds have halted payment to this Miami psychiatrist who stated that "he prescribes only what is medically necessary" and "works long hours, seeing patients for 10 minutes at a time and many of his patients need four or five medications."

I have no personal knowledge, interaction, acquaintance with psychiatrist Dr. Mendez-Villamil. However, though this sounds fraudulent (which is why the fed likely pulled payment), how could this doctor personally benefit from all of these scripts? Doctors do not get paid by how many prescriptions they write (unless you count docs like oncologists who collect fees for administering chemotherapy). Drug companies are now forbidden to wine and dine doctors, so it is highly unlikely that some pharmaceutical rep is incentivizing this psychiatrist. Besides, these patients areMedicare and Medicaid, so they are likely getting generics in the first place.

So if there is no wrong doing or even an incentive to write all those scripts, is this even possible and why does it happen? If the good doctor is seeing patients every 10 minutes, and each patient needs 4-5 prescriptions (assuming an 8 hour day); that's 46 patients a day needing about 3 prescriptions on average to yield the 150 prescriptions a day that Dr. Mendez Villamil is "accused" of writing. Though this may not be good medicine, with that volume of patients, the numbers sound pretty reasonable, espescially since many chronic psychiatric patients are on multiple medicines. So it it possible that one psychiatrist sees almost 50 Medicare and Medicaid patients a day in 10 minute visits? If the psychiatrist accepts Medicare and Medicaid, then this is actually quite likely the case (and probably not the exception but the rule).

In a piece I wrote for KevinMd a year an a half ago, I described how there are two kinds of mental health care in the US: care for those who pay with insurance and care for those who pay out of pocket. The kind of care that you see in TV and movies where a patient talks to a psychiatrist and possible gets medication; that kind of care happens, but only if you are willing to pay out of pocket. In many cases fees for a regular sessions run over $200. For those paying with insurance, the experience is quite different. If a patient sees a psychiatrist, it is usually only for medication management and usually only in short (10 minute) visits. Any "talk therapy" is relegated to a psychologist or psychiatric social worker. I mean no disrespect to some of the excellent and well qualified non-physician therapist we have in the US. I am not even stating that having a short visit with a psychiatrist for medication management and counseling done by non-MD's is bad medicine. However, the public must be aware that this is how psychiatry is practiced in the US.

In the case of Dr. Mendez-Villamil, he probably is one of only a handful of psychiatrists in Miami that accepts Medicare and Medicaid. Patients probably wait months to see him. The Miami Herald makes him look like a criminal. However, think about the majority of his colleagues who only see patients who can pay $200 or more out of pocket per visit? Dr. Mendez-Villamil is probably a hero, and if he writes 100,000 prescriptions per year this should be seen not as a crime, but a sign of a broken system.

The piece I wrote for KevindMD was entitled, "As psychiatry goes, so will primary care." The reason why so many psychiatrist stopped taking insurance and the reason why those psychiatrist who accept insurance cram patients into 10 minute visits is because the reimbursement rate from insurers is ridiculously low. Many psychiatrist realized that accepting insurance just didn't make sense. The same thing is happening right now in primary care. More an more primary care physicians have stopped taking new Medicare or Medicaid patients, or any insurance altogether. Some have even gone beyond cash only, and started "concierge" practices which charge patients a retainer fee (sometimes well over the usual $1500 a year) in exchange for easy access to their primary care doctor.

Health care reform has focused on how to cover the uninsured and how to pay for this, but it has not focused on how to change the current reimbursement system that rewards "proceduralists" and punishes "congnitivists." If health legislation that covers the uninsured does eventually pass without addressing this fundamental crack in our health care system, there will likely be no primary care physicians to see all these newly insured patients (see what happened in Massachuesetts). The few primary care physicians that do accept the newly insured will likely have limited access and see more patients in less time....kind of like the good Dr. Mendez-Villamil. Whereas the typical psychiatric patient might be on 3-4 meds, the typical Medicaid and Medicare patient is on a great deal more medications. Primary care physicians, get your pens ready! 100,000 prescriptions a year will seem like nothing.