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Cash-only practices: One way to balance the forces against us
Some of our colleagues are accepting deeply discounted fees when contracting with health plans. They are doing this in an attempt to bring in larger numbers of patients or just to maintain their orthopedic practices.
Low levels of reimbursement often result in having to see more patients, work more hours and cover multiple emergency rooms. This leads to a hectic professional existence. To help service these discounted contracts some of these practices employ young orthopedists right out of training. From what I have observed in California, many of these young surgeons soon feel overworked, exploited and disenfranchised. They often move on after a few years of this type of employment.
Deep-discount health care plans exist in most of our medical communities. Most of us recognize them for what they are and will not accept their offers. But as long as some orthopedists are willing to accept the cut-rate fees offered by these systems, they will not change. Medicare, with its projected schedule of reimbursement cuts, is becoming one of these low-discount reimbursement contractors. However, there is a big difference.
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Medicare is a much greater threat to all levels of reimbursement. It represents a potent contractor covering large numbers of patients with the power of price controls, mandates, auditing and governmental trade regulations through the Federal Trade Commission. These aspects make it impossible for us to organize and negotiate or resist its continued decreasing reimbursement if we continue doing business as usual.
A transitory approach
Because of these restrictions and restraints, we find ourselves left with the “take it or leave it” world of price controls. This results in us having very few alternatives. Robert James Cimasi, a health care consultant specializing in orthopedics, stated at our recent Orthopedics Today Hawaii 2008 course that “Medicare … drives all the commercial reimbursements. It is sort of a benchmark for that and I think CMS has indicated that this conversion factor going forward is going to continue to see a drop.” He thinks that it is a given.
One timely option: A number of us may consider opting out of Medicare. We can offer transitory resistance to these trends of decreasing reimbursement and loss of autonomy by moving to a third-party-free/cash-only practice. It merits serious consideration and analysis by orthopedic surgeons both individually and collectively. We have less than 4 months before we will once again face the possibility of an 11% Medicare reimbursement cut.
Remember that third-party payers will follow Medicare’s lead with their fees. This approach means navigating carefully within and around existing federal and provincial regulations. The Business of Orthopedics Round Table discussion in this issue gives some insight and differing thoughts on this approach. Some of your colleagues share how they have adapted and pursued varying degrees of applications of this model in their practices. We can look to future Round Tables to our MD colleagues (ie, particularly plastic surgeons) as well as those in other disciplines, such as dentists, chiropractors, etc., who have adapted and worked through different approaches to be somewhat independent of third-party control.
What exactly is it?
A third-party-free/cash-only practice means the patients pay with cash, credit or debit card, check or some agreed upon payment schedule at the time of service. Imagine not having to send out bills, not having to request outside authorizations or not having to deal with third-party denials. The patient-physician relationship would be more autonomous from outside influences, and most of the headaches of managed care would be eliminated.
A third-party-free/cash-only practice would be composed of patients who are willing to pay cash and/or submit their own claims. It would mean patients would be going to out-of-network physicians and managing their own co-pays and deductibles. The shift of the financial burden from the practice to the patient would not be easy.
Instituting these practices will be subject to regional variations. Some states would present more challenges than others in terms of specific regulations already in place. This may mean enlisting health care attorneys to interpret and deal with the local and/or national regulations that would possibly limit the use of a third-party-free/cash only practice.
A movement to these types of practices may necessitate many of us forming an organization to assist us in this effort and the legal hurdles that will inevitably arise. We would need to learn from each other as well as invited experts and consultants. I am not naïve in thinking this would be easy; it may not work in many markets. However, if enough of us would do it, it will impact enough voters that legislators and policy makers will have to deal with us more seriously. Certain legislators and health-policy developers will sit down and discuss and negotiate some solutions. There will be some who will try to crush our resistance and actions on a larger scale, which may bring us under increased scrutiny and regulation that we may not like.
Criticisms to be addressed
I am not proposing this as a solution. What we really need is meaningful health care reform. There are some concerns with a third-party-free/cash-only practice even on a limited or modified basis. It definitely favors and selects out affluent, fiscally disciplined and healthy patients. Widespread implementation of this model initially would contribute further to our fragmented care in this country. It does not address the current needs of the indigent and uninsured patients and those without means. In our actions, whatever they are, we must not lose sight of patients’ needs. Adapting this model would mean volunteering at the clinics designed for the patients unable to function in this transitory system.
Another concern is that it may reduce the physician’s scope of practice in his/her office to treating the more acute problems; that patients with chronic illnesses are less likely to want to pay out of pocket for their care on a frequent and ongoing basis. There will be the possibility that many chronically ill patients may not be able to afford third-party-free/cash-only practices and some might even avoid routine preventive care.
Remember, I am not proposing we consider this model as a long-term solution to our health care needs in this country. It is only a mechanism to possibly combat the unreasonable anticipated Medicare reimbursement cuts. We cannot continue with business as usual. However, it would not be easy for us to stay the course until meaningful negotiations or changes occurred. During that time, if large numbers of us went to this model, we would most likely work fewer hours and have a decrease in patient volume — perhaps losing well over 50% of the number of patients we now treat. To me, simplifying my current private practice is better then seeing more patients and struggling with office overhead and continuing to run a small business that is less and less profitable each year. I would be willing to see those who could not pay cash or bill their own insurance companies at the county clinics as a regular volunteer. The government can cover the increasing overhead in those settings. I would not mind working for less, but it will start to approach the point of paying for the privilege to see certain populations of patients. It is easier and more satisfying to be a volunteer.
What is our worth?
A third-party-free/cash only practice will generate widespread debate on what our compensation should be and our worth as orthopedic surgeons. The answers and feelings will differ with time and even within our profession. Different and varying opinions will come from the public, health policy decision-makers, our colleagues in primary care and us.
One benefit of this form of resistance through a third-party-free/cash-only practice will be that we can make individual decisions based on what we charge. I personally would not charge more than I do now. Even though it would reduce my overhead by at least 20%, I would take home less income as the number of patients I see would decrease. However, I think I would have much less frustration dealing with managed care and Medicare, less overhead and enjoy interacting with my patients. This would be true whether in the third-party-free/cash-only setting or during my donated time.
Douglas W. Jackson, MD
Chief Medical Editor