Blog: The coming metamorphosis in cardiac care compensation

Debate over the federal budget continues to rage in Washington, D.C., and with little consensus other than vacillating recognition that the government’s expenditures continue to grow faster than its revenues and at an unsustainable rate.

In recommending either a $6 trillion cut (proposed by US Rep. Paul Ryan of Wisconsin) or a $4.3 trillion cut (President Obama’s proposal), both parties acknowledge that steadily increased spending for Medicare and Social Security cannot continue. Political reality suggests any changes in these popular programs will be incremental, cautious and as inoffensive as possible to voters — especially seniors. Fundamental ideological differences persist, credible court cases are pending, continued calls to repeal recent health care legislation are still being issued, and the presidential election is 18 months away.

Consensus underlying the contentious rhetoric suggests that cardiologists and other physicians will share in the pain of anticipated reduction in federal spending for health care, regardless of how these partisan issues are eventually resolved.

L. Samuel Wann

The advent of ACOs

As pressure mounts to control costs, various methods for motivating physicians and health care systems to provide high-quality care while compensating them less are evolving. The CMS, which controls Medicare and often sets the stage for private health insurers, recently released its proposed rules for creating accountable care organizations (ACO), which are the centerpiece of the Patient Protection and Accountable Care Act for restructuring Medicare. As an alternative to paying prespecified fees to individual physicians and hospitals for providing individual services to each Medicare patient cared for, CMS would pay a variable amount for an episode of care, including primary as well as specialty physician and hospital services.

An ACO would need to have at least 5,000 Medicare beneficiaries to be eligible to participate and demonstrate “meaningful use” of an electronic medical record, so that a minimum level of quality of care can be demonstrated as costs are reduced. These quality measures would change over time and would include patient experience, care coordination, patient safety, preventive services and assessment of the at-risk population served. Patients would be attributed to the ACO based on CMS retrospective review of billing records to determine where the plurality of their care was delivered. Bonus payments could be made to ACOs if spending for care of its member patients is less than anticipated based on a complex benchmarking formula.

These bonus payments would presumably be distributed among the primary and specialty physicians delivering care through some sort of sharing mechanism, not based explicitly on limiting services to patients. How these payment mechanisms would actually work in practice is not yet defined, but the process for implementing an alternative to the fee-for-service system is well under way, despite the continued partisan rhetoric in Washington.

Changes in physician compensation likely

Private insurers have more flexibility but often follow CMS’ lead in determining payment structure. Pre-authorization for imaging services to reduce utilization is an example of cost control widely employed in the private sector to control expenses. WellPoint Blue Cross, one of the nation’s largest health insurers, recently announced it will no longer automatically grant routine annual payment increases to hospitals, but will base rate increases on WellPoint’s assessment of “treatment quality,” with a formula based on health outcomes, patient safety measures and patient satisfaction.

Hospitals, long accustomed to receiving automatic rate increases, can be expected to respond to measures such as these by documenting compliance with measured performance and by reducing costs, including reducing payment to their employed physicians. Hospitals have never made money directly by hiring physicians, but they intend to profit by controlling referrals for lucrative inpatient services. Employed physician salaries will track downward as these inpatient services become less lucrative.

Even if the Patient Protection and Accountable Care Act is repealed or replaced by some sort of defined benefit voucher plan directing Medicare recipients to shop for their own care, it seems likely that systems will evolve to replace open-ended fee-for-service reimbursement for physician services. Small groups and solo practitioners may be able to form “virtual” ACOs, but comprehensive integrated health care systems seem to have an advantage in forming ACOs, particularly for a specialty such as cardiology. Both Republican and Democratic proposals rely on tax credits to purchase private insurance, with managed competition through state-based exchanges, cost-sharing for most patients and ever stricter external controls on Medicare cost growth. None of these factors favor independent practice or translate to more money for cardiologists.

The challenges of collaboration

The American College of Cardiology and others are calling on physicians to meet these challenges with innovative new ideas for collaboration between health care executives and integration of appropriately trained physician leaders into the management structure of hospitals and health care organizations to eliminate waste and inefficiency while improving access to and delivery of appropriate health care services in a cost-effective and patient-oriented environment.

This is a formidable task. Faced with continued, severe reductions in their income and loss of autonomy, many cardiologists are skeptical, frightened, angry or, at best, reluctantly resigned to working in systems that give more control and higher salaries to mid-level non-physician managers than to physicians involved in direct patient care.

It seems likely that most of us will move away from being paid for each service we perform (piecework) and migrate to a system in which we are salaried to perform our duties in a regulated environment that emphasizes not just how much we do, but how effective and valuable our actions are. The devil is in the details as to how effectiveness and value are defined, monitored and rewarded.

There simply are no easy solutions to these problems. We all should hope that success will come to those who focus on patients and their individual and collective well-being; that responsible members of our profession and society will collaborate to deliver cost humane and effective health care to all.

As you read these remarks, I hope you will respond to this entry with your own thoughts and ideas on how to meet these challenges:

If you intend to avoid hospital employment, how will you meet the financial and operational challenges ahead?
If you are employed or contemplating it, what advice can you share on how to preserve the best of past practices while adapting to the new order?
Will you try to avoid some of these issues by restricting your practice to those who can and will pay for service like you have always given?
Are you “burned out” and weary of all this noise? Will you retire or just become a disgruntled salary man?
What would you say to a friend’s daughter or son who is applying to medical school or for cardiology fellowships?

L. Samuel Wann, MD, is the director of cardiology at the Wisconsin Heart Hospital in Milwaukee. He is also the Section Editor of the Practice Management and Quality Care section of the Cardiology Today Editorial Board.