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Current Reimbursement System Devalues Primary-care Physicians


We have a marketplace that often values the time of lawyers more than the care provided by physicians. Something has to change.

Much has been written about the imbalance in reimbursement rates from Medicare, and by extension, insurance companies, for primary-care physicians (PCPs). For years, specialists strongly influenced the Medicare reimbursement rate system in their favor. This disparity, along with a general stagnation in reimbursement rates, has had an impact on the type of services delivered by PCPs, the number of them available, and, to some extent, the continued existence of the profession. I would like to focus on the consequences of this undervaluation on both patients and physicians.

First, we all know that when you get something for “nothing,” it is less valuable to you. So, a visit without a copay, where there is nothing paid for directly by the patient, is different from a visit that is paid for fully by the patient, who then had to seek reimbursement. By making the “out-of-pocket” cost for a service lower, it causes the patient to think of that service as having a lesser value.
Ironic, is it not? The purpose of third-party payment is to even out costs by taking them out the hands of the individual and moving them to an employer, government, or some other source of funding. Increasing copayments at least puts some “skin into the game” and makes the decision to go for a service, at least in part, an economic one. However, the value that people associate with these visits is quite low. The perception of value is established by what people pay. Explanation of Benefits (EOBs) for hospital services and specialty care that show high charges and low plan payments similarly impact the perception of value.

Second, and less obvious, is that primary-care physicians, whose reimbursements are almost all from third parties, have an inaccurate sense of the value of their services. By value, I mean what is an appropriate retail price. As their reimbursement rates have reduced or have stagnated over many years, the value that a physician puts on their services has also been reduced. Not only does the patient - the consumer of the service - look at it as less valuable, but the physician does as well.

When we price a concierge program, we put a value on the time and attention that a physician makes available. The physicians often have no idea what their time and expertise is worth to the general public. They do not expect people to pay for their services. I must admit that some physicians have no idea that moving away from a third-party system, even in part, introduces all the market forces: price, demand, satisfaction, and choices.

I talk with patient groups weekly in practices from all across the country. When I point out that they pay more for dental services, veterinary services, even plumbing and electrical services, it becomes clear that we as consumers actually undervalue what the primary-care doctor does for us and how much they are compensated.

If reimbursement rates for visits were 20 percent higher, most primary-care practices would be in very good shape. The incentive to go into primary care would grow and the service itself would not degrade into a form of triage alone. This of course is a fantasy, as insurance companies and Medicare won’t and can’t make such a change.

As it stands right now, we have a marketplace that often values the time of lawyers more than the care provided by physicians. Something has to change. By introducing practice models that ultimately increase primary-care compensation and reflect choices on the part of patients, the current trend will slow and evolve.

I’m not advocating a direct pay model for all patients. That clearly isn’t feasible. I am saying that there is value in bringing in models that reward effort and excellence. Ultimately I believe this would create more of an incentive to go into primary care, and that services for all patients would improve.

What do you think of the current reimbursement system? Has it led to primary care physicians, patients, and others devaluing the care provided?

Find out more about Wayne Lipton and our other Practice Notes bloggers.

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