ICYMI: At Hearing, Warren Highlights How Low Reimbursement for Primary Care and Administrative Complexity in Value-Based Care Drive Corporatization and Consolidation
“[W]e should reward high-quality care rather than high-volume care. But to do this requires significant upfront investments that existing payment rates for primary care just don't cover. I think this has created the perfect environment for corporate investors to swoop in. ”
Washington, D.C. – At a hearing of the Senate Finance Committee, U.S. Senator Elizabeth Warren (D-Mass.) warned about the dangers of corporatization in health care and explained how Medicare payment policy has forced more physicians to sell their practices to private equity, insurance companies, and other corporate entities.
Senator Warren pointed out an alarming increase in buyouts of physician practices and how corporate consolidation increases costs and lowers quality of care. Senator Warren asked Dr. Steven P. Furr, President of the American Academy of Family Physicians, to explain what is driving independent primary care physicians to sell their practices. Dr. Furr shared that prior authorizations and the complexity of coding involved in the transition to value-based care is a growing frustration for physicians.
Senator Warren also called attention to the role of a committee of the American Medical Association, which places much higher value on specialty services than primary care, and its influence on Medicare payments. Senator Warren called for rooting out the conflicts of interest that assign more value to specialist services than to primary care, and for ensuring that value-based care models do not lead to further consolidation and corporatization of health care.
Transcript: Hearing on “Bolstering Chronic Care through Medicare Physician Payment”
U.S. Senate Finance Committee
April 11, 2024
Senator Elizabeth Warren: Thank you, Mr. Chairman. Physician practices are increasingly being gobbled up by corporations and Wall Street. Today, nearly three out of four physicians work for a hospital or corporate owner rather than for themselves. In between 2012 and 2021, private equity buyouts of physician groups increased over 500%. And it’s not just private equity. Insurance companies like UnitedHealth, giant retailers like Amazon, and investor backed groups have all dramatically expanded their control over physician practices.
Here is one to look at. The total capital raised for private investment in primary care alone increased by over 1000 fold in just a decade. It went from $15 million - with an “m” in 2010 to $16 billion - with a “b” in 2021. This is an alarming trend. And corporate consolidation of health care can increase cost and lower the quality of care and can accelerate physician burnout. But to reverse the trend, we need first to understand what is motivating physicians to sell their practices.
Dr. Furr, you are the President of the American Academy of Family Physicians. Why do you think independent private physicians are increasingly willing to sell their practices and work for a big corporation?
Dr. Steven P. Furr, President of the American Academy of Family Physicians: Thank you, Senator. I don't think it is their first choice. Physicians tend to be independent-minded, and when I first got into practice about 40 years ago, most of us did go into practice for ourselves. The cost of practice has just become overwhelming. It started with the emergence of the EHRs and the amount of cost that went into that.
And even though there was some reimbursement for it, that was still a cost expense. Now the cost of running your practice, which you have to pay for your staff – to have good staff – which you have to pay to do all of the prior authorizations, and all of the other hassles that go along with that. The cost has just become enormous.
And then, when you have something like the Change Healthcare attack where you suddenly don't get payments for six weeks and you're having to take money out of your bank account to fund your practice. And of course, if you're an independent physician, what happens? You pay everybody else and the way you make up the difference is you don't take any pay.
Senator Warren: Okay, so you’re telling me it’s about the economics of this.
Dr. Furr: Yes, and the complexity of the system.
Senator Warren: And the complexity of the system, but that is a part of the economics, too, right? So, let's take a look at the Medicare part of this. Seniors, people with disabilities rely on Medicare Part B to cover their doctors office visits and other physician services. But Medicare payment rates for primary care physicians in particular are basically too low to cover their costs. Medicare payment rates are set through what is known as the Physician Fee Schedule, which determines how much Medicare will reimburse a doctor for providing a routine checkup or performing knee surgery.
The payment rate is determined in large part by the "Relative Value" assigned to it. A secretive committee run by the American Medical Association has played an outsized role in recommending the relative values of physician services and it has overwhelmingly recommended that specialty services are worth a whole lot more than primary care. Dr. Navathe, can you explain why this committee over-values specialty services?
Dr. Navathe, Professor Of Health Policy And Medicine, University of Pennsylvania: The methodology the committee uses very much heavily values inputs like time, differentiated skill, intensity. And these are easier to estimate for concrete things like doing a surgical procedure more so than they are a cognitive activity like diagnosing a patient effectively.
Senator Warren: That is interesting. So let me ask, the committee itself for the AMA, is it dominated by specialists?
Dr. Navathe: I believe there is an overrepresentation of specialists relative to primary care, yes.
Senator Warren: Well, the reason I ask about this is many organizations, including the National Academy of Medicine and the GAO, have called for changes in the structure so that primary care is adequately paid. I strongly agree with them. I think this is a part of what we have to understand about why physicians feel forced to sell the practices.
There is another reason why primary care physicians have been motivated to sell practices. It is the growing administrative burdens you talked about earlier, Dr. Furr. Where people -- doctors are spending more time doing paperwork and less time with patients. Which has widened the gap between primary care physicians and their Medicare payments even more. We know the number of independent physicians that have chosen to sell their practices appears to have significantly grown over the last 10 to 15 years.
Dr. Furr, what changed during that time period to make the administrative burden so much worse?
Dr. Furr: As I mentioned earlier, one of the things is that more of them are covering Medicare Advantage plans, who have a lot of prior authorization – even on drugs now – that we used to not have to deal with.
Senator Warren: So, prior authorization is part of it. Anything more?
Dr. Furr: The prior authorizations and even admissions to the hospital, things like that, all of those had to be prior authorized procedures. And then, the complexity of coding. It continues to get more and more complex. So you’ve got to do additional codes. If you don't do one little thing – you do it wrong – that code gets kicked out and your claim gets rejected and you have to resubmit again and just all that continual cost and doing that.
Senator Warren: So, I had a doctor tell me last week, after we’d done a hearing, that it is now the case that you can't just do an animal bite as your code, there is a different code for a turtle bite as opposed to a fish bite. We want to watch out for those going forward.
My view is we should reward high quality care rather than high-volume care. But to do this requires significant upfront investments that existing payment rates for primary care just don't cover. I think this has created the perfect environment for corporate investors to swoop in.
There are things we can do to make physicians less vulnerable to corporate vultures. As this committee continues to work on physician payment reform, it is critical we root out the conflicts of interest that assign more value to specialist services than to primary care. But we must also ensure the transition to value-based care does not lead to further consolidation and further corporatization.
Thank you, Mr. Chairman.
###
Next Article Previous Article
