Several practicing orthopedic and spine surgeons share their nine top concerns for 2010 and their opinions on how these concerns will affect physician practices.
1. Other payors may follow CMS’s lead. CMS recently released its final rule on the 2010 physician fee schedule, which includes a 21.5 percent reduction in payments for most specialty physicians, including orthopedists. For many orthopedic and spine surgeons, this drop in reimbursement is just further evidence of a trend that has been going on for the past decade. However, such a significant drop at once is problematic for many surgeons.
The drop in reimbursements many not affect only Medicare and Medicaid patients. Physicians may see the effect trickle down into other payors’ rates as well.
“Medicare is often used as a benchmark, and many third-party payors follow the trends of Medicare,” says Gerald Alexander, MD, medical director of the Orthopaedic Spine Center at Chapman Medical Center in Orange, Calif. “Medicare is really just a small part of the patients we treat, and if other payors follow trends, careers and livelihoods could be at stake. It’s more than just procedures.”
Jan H. Garrett, MD, an orthopedic surgeon with Azalea Orthopedics in Tyler, Texas, also notes some of these trends of lower payments over the years. “We haven’t has a raise in the past 8-10 years,” he says. “Total joint replacement reimbursements have decreased 47 percent over the past eight years and could go lower [with the new Medicare, and physicians need to find ways to stay in business and make a profit.”
Eric Monesmith, MD, an orthopedic surgeon with OrthoIndy in Indianapolis, notes that reimbursements for many orthopedic procedures, such as knee replacements, are down as much as 80 percent when adjusted for inflation. “In the early ’70s, reimbursement for a knee replacement was $1,400. Currently the reimbursement is still only $1,368. When adjusted for inflation, it should be closer to $8,000,” he says.
In order to combat private payors paying a percentage of Medicare rates, the Physicians Contracting Organization of Texas, which was formed around 15 years ago, banded together to negotiate better rates with payors, according to Dr. Garrett.
“Physicians need to find way s to work together,” Dr. Garrett says. “In Tyler, we formed the PCOT and increased our ability to negotiate rates on an easier basis.”
However, Dr. Garrett does note that if not done correctly, such an organization could lead to price setting and other legal issues. “We use a messenger model, where prices are negotiated through a central agency. I have no idea what other physicians’ rates are, and we have all of our legal bases covered,” he says. Dr. Garrett also suggests hiring legal counsel to ensure that the organization is following correct and legal procedures.
Other orthopedic and spine physicians have moved away from signing contracts with private insurers based on Medicare rates in order to combat falling reimbursements.
Michael Russell II, MD, a spine surgeon with Azalea Orthopedics and a board member of the Texas Spine & Joint Hospital in Tyler, says that his practice stopped signing such contracts years ago. “If [you do have a contract tied to Medicare rates], as an orthopedist, you should be concerned,” he says. “I would suggest getting way from those kinds of contracts.”
2. Lower rates may lead to limited access to care for Medicare patients. Although CMS may save money by lowering Medicare rates, such action may lead to limited access to care for Medicare patients as many orthopedists and other specialists may not be able to afford treating the same volume of these patients.
The proposed cuts may lead some orthopedic practices to lose as much as $2.5-3 million in income, according to Dr. Monesmith. “No practice makes money on Medicare,” he says. “At most, it pays the bills, and physicians don’t make money seeing Medicare patients. However the questions remains of how do we make-up for these losses.”
“Physicians want to deliver care, but if we can’t make a living, there will be a lack of access,” Dr. Garrett says.
Dr. Russell agrees. “Assuming that the CMS rate isn’t fixed [by Congress], orthopedists will be forced to limit the amount of Medicare patients they can see, and they will have to move from an open-clinic model to imposing these limits,” he says.
Dr. Alexander says with rising overhead costs and declining reimbursements, orthopedic and spine physicians will have to decide how many of these patients they can treat and still remain solvent. “If we don’t look at these levels, what we do won’t be viable,” he says.
At the same time, physicians are faced with a double-edged sword because practices that decide to stop seeing Medicare patients will have their decision vilified by the public, according to Dr. Monesmith. “The future of how surgeons can survive treating Medicare patients is uncertain,” he says.
3. Some sub-specialists will be hit harder, causing resentment within the practice. Some orthopedic sub-specialties, such as pediatrics and sports medicine, do not rely on Medicare beneficiaries as heavily as others, such as hip and knee orthopedists. As a result, the decline in Medicare physician fees could lead to challenges within a practice.
Dan Murrey, MD, an orthopedic surgeon and CEO of OrthoCarolina in Charlotte, N.C., says that hip and knee surgeons, especially, may feel a disproportionate impact compared to other sub-specialists.
“Certain sections will take a significant hit [as a result of the CMS changes], and this can lead to discontent among members of the group,” he says. “Historically, this is nothing new, and hip and knee surgeons have been dealing with this for years. They have been increasing efficiencies and throughput and using physician extenders to see more patients, but incremental changes may not be enough. Practices should look at a way to create efficiencies for these specialists and prepare for a sharp adjustment.”
Dr. Murrey, like many orthopedic and spine surgeons, has confidence that Congress will address the proposed payment rate, but the trend in declining reimbursements still remains a concern.
Dr. Monesmith notes that this could be problematic for some practices, but as many third-party payors do tie their rates to Medicare plus a percentage, all specialists may be hit. “I think it could test the strength of a group, but overall, everyone will feel it,” he says.
4. Increased hospital recruitment may decrease physician autonomy. More orthopedic and spine surgeons coming out of training are finding quick employment with hospitals. Small physician practices have also been absorbed by hospitals as they find it increasingly difficult to maintain profitable. This trend has many orthopedic and spine physicians concerned about the impact on cost and the autonomy of physicians in private practice.
“It’s been remarkable how aggressive hospitals have become in order to recruit orthopedists,” Dr. Murrey says. “They started by buying up primary care physicians and are now moving on to specialists. Some hospitals have been using referrals from employed physicians as a tool to threaten practices if we don’t fall in line with their strategic plan. You want to keep a good relationship with your local hospital.”
Dr. Murrey notes that this trend of hiring orthopedists by the hospitals has created challenges for independent physicians who have worked for a number of years with the hospitals. “Essentially, the hospital has hired their competition, and it can be hard for physicians to swallow, but it is part of the changing face of things,” he says.
There are two main reasons currently practicing private physicians may look at joining with a hospital group, according to Dr. Murrey — capital and a generational shift.
Capital concerns are from the drop in the physician fee rates, and this raises the possibility of more physicians moving to the hospital. “As a group, high overhead costs make it harder to maintain a solvent practice,” Dr. Alexander says. “Many physicians may look to the hospital model because it means they can no longer worry about managing a business and just practice medicine. We’ve seen this in California especially, as years ago, many well-trained physicians from UCLA joined with Kaiser Permanente and other HMOs.
“This could hurt patients because as physicians, we lose autonomy and the hospitals and third-party payors have more control of how physicians treat patients, making them less involved,” he adds.
Dr. Russell adds, “This is concerning as an independent surgeon, because we will loose the ability to decide what is best for our patients. I’ve seen circumstances where physicians were incentivized not to refer outside of the hospital’s group, and patients have had a poor outcome, leading them to see a new physician, which increases healthcare costs.”
As a result of a declining referral base, many practices may be faced with tough decisions as revenues decrease. Dr. Garrett says, “All private practice physicians should be worried [about this trend]. If you can’t pay your staff, many physicians may look to hospitals or larger groups. This is concerning as an independent surgeon, because if physicians have to leave private practice and join hospital, they will lose some control over how they can treat patients.”
Declining revenues can also force smaller practices to decide if it makes sense for them to continue to operate independently. “Many physician groups are looking ahead at advancements they can’t afford in small groups. They consider the small cost of joining a bigger organization versus the larger capital cost to invest in the technology,” Dr. Murrey says. “Large orthopedic groups have the size and capacity to develop programs similar to hospitals, and that makes us attractive to groups that don’t want to be acquired by the hospital.”
However, as older physicians leave private practice, the younger physicians who are not as interested in autonomy are joining hospital practices. “It’s been surprising how many more physicians have chosen hospital-based practices when coming out of medical school than just 15 years ago,” Dr. Murrey says. “This could be for many reasons including the draw of a salaried position, a captured referral base or general differences in expectations.”
One of these reasons could be a disinterest in running a practice. Dr. Russell says, “If Medicare rates or physician salaries are down, more people are forced out of private practice. Most physicians just want to provide good medicine and they don’t want to run a business.”
However, employment of younger physicians by hospitals may help orthopedic practices, as many specialists tend to leave hospital employment after only a few years. “A lot of the young guys are lured by the money, but to me, [hospital employment] seems like a revolving door; I’ve seen physicians come and go, which affects both continuity and quality of care,” Dr. Monesmith says. “In two or three years, the hospitals want to sit down and renegotiate the contract for a much lower rate, and the physicians leave. Some ride the circuit, moving from one offer to the next, and others, because of poor job satisfaction working for a hospital, leave within a year or two and enter private practice.”
Dr. Murrey says larger private orthopedic groups must be willing to respond to the concerns of these new physicians to keep private practice as a whole from being swallowed up by the hospitals. “In the future I see more large orthopedic practices competing with hospitals for new physicians as there will be fewer solo practices. The large groups need to present themselves as an alternative to institutionalized medicine,” he says.
5. Healthcare reform may lead to more government regulation. Another perceived threat to the autonomy of orthopedic and spine physicians is increased government regulation that could be included as part of the healthcare reform bills currently in the House and the Senate.
Many orthopedic and spine surgeons are concerned that the inclusion of a possible public option would mean that the government would have more control and institute more guidelines when it comes to care.
“It’s difficult knowing what is going to come out [of the healthcare reform bills], but I think there will be a significant increase in bureaucracy and intrusion into the physician-patient relationship,” Dr. Russell says. “In the long run, it will actually cost more, with fewer services provided to patients.”
Dr. Alexander agrees that one of the potential drawbacks of the bill could be government- or hospital-run fee-for-service programs. “Essentially, they are saying physicians cannot be trusted to provide the best, most cost-efficient care. Physicians are more invasive because they get paid,” he says. “This is nonsense. Fee-for-service eliminates the trust you need to have a good relationship with a patient.”
Dr. Murrey also thinks that moving towards an episode of care system could be problematic. “The problem will be thinking how to put together the collaborative of healthcare providers. A lot of power will rest in the hands of the entity that leads the collaborative, and if that power goes to hospitals, ultimately it could threaten the viability of independent physician practices.”
Eliminating the personal element from healthcare is also a concern of Dr. Russell’s. “Medicine is an art,” he says. “You can’t have a computer or a set of governmental guidelines make a diagnosis correctly. A patient may come in with multiple symptoms and have to see many doctors who run different tests or have a different set of experiences. These differences can lead to incorrect diagnoses, and I fear that governmental guidelines will mean more patients will be left out of the formula.”
6. Tort reform has not been adequately addressed. The current lack of tort reform in healthcare reform is concerning to many orthopedic and spine physicians. “There is no way to control healthcare costs without tort reform,” Dr. Alexander says. “Costs are the result of preventative medicine. For example, every spine patient I see gets an MRI because I am scared to think of what would happen if I would miss a tumor. No other industry is under as much scrutiny. If a baseball player hits the ball 75 percent of the time, he’s in the Hall of Fame. If a physician treats 299 out of 300 patients perfectly, he can still face a lawsuit once a year.”
Dr. Monesmith agrees. “It’s incredible that this has not been addressed because there is a huge popular majority opinion that [Congress] needs to do this, and they refuse,” he says.
Most physicians believe that the lack of tort reform is a result of successful lobbying by trial lawyers, which would prevent radical reform from happening on a national level. However, some states have been successful at making large changes regarding medical malpractice.
Texas is one state where tort reform has made a big difference. “We were down to two companies that would write liability insurance, and, as a result, costs skyrocketed for physicians. They either decided to go without or start their own company,” Dr. Russell says.
Since tort reform, Dr. Russell and Dr. Garrett note that a wide variety of insurance companies have come into the market, and liability costs have dropped 30-50 percent over the past five years.
“Tort reform has brought more physicians in to Texas, which means patients have more access to care. The legislation stopped some lawsuits in South Texas, especially, and improved overall service,” Dr. Garrett says.
Dr. Garrett says that some out-of-state legislators have misconceptions over what was done in states like Texas and California. “Tort reform limited non-economic damages, such as pain and suffering, to $250,000. Economic damages to the patients have no limits, so patients can receive up to $250,000 of non-economic on top of economic damages,” he says. “Tort reform has limited the amount of multi-million dollar lawsuits, but they still can occur.”
Aside from the cost issues, Dr. Garrett is concerned that over the long-term, the lack of tort reform may reduce the number of people who want to go into medicine. “It has made a big difference in recruitment for us,” he says. “We have been blessed with people coming and meeting needs that several years ago could not be met. Without tort reform and with more regulations, it could affect the number of physicians and further restrict access to care.”
7. Physician ownership could be severely restricted. The healthcare reform bill that recently passed in the House included language to drastically limit the amount of ownership physicians could have in hospitals and other healthcare organizations, which is concerning to many physicians.
“Physician-owned hospitals have done a really good job of maintaining high quality while keeping complications low, and they could be part of the solution of healthcare reform’s goal to keep costs lower,” Dr. Russell says.
Dr. Murrey agrees. “Physician-owned hospitals have shown that they reduce cost and increase quality. Healthcare will be at a loss if we can’t proceed,” he says.
One part of the restrictions includes a retroactive ban on physician-owned facilities that did not receive their Medicare licensure prior to Jan. 1, 2009. “This would result in many facilities closing their doors, forcing investors to eat the losses, or to have them open on a limited basis with no Medicare patients,” Dr. Russell says.
8. Increased scrutiny on consulting relationships may diminish innovation. Orthopedic and spine medicine depends highly on new technologies and innovations to improve how physicians diagnose and treat patients. However, over the past few months, the federal government has increased scrutiny on the relationships between physicians and medical device and drug manufacturers. A few highly publicized cases in the media have also dulled the public’s view on the legitimacy of these relationships.
“There really is a symbiotic relationship with manufacturers and physicians,” Dr. Alexander says. “Physicians bring the ideas and knowledge to the companies which lead to innovation. If you take away part of the relationship, you lose your ability to innovate. It leads to a ‘cut off my nose to spite my face’ situation without these relationships.”
One thing physicians can do to prepare for scrutiny is to ensure that if they are in a consulting relationship, they abide by the rules and regulations in place. “Make sure to document your hours at an appropriate rate,” Dr. Alexander says.
The good news for orthopedic and spine surgeons is that the DOJ has already completed most of its review of these relationships, according to Dr. Monesmith. “I think the relationships will continue, but it will be different and highly regulated. Most surgeons are following the eight basic points [suggested by the overhaul] that ensure any relationships you have are good. Some physician-industry relationships were found to be less than legit, but, for the most part, they have cleaned the bad apples out of the cart,” he says.
9. Cost of electronic medical records may be substantial in the long run. As part of the American Recovery and Reinvestment Act, HHS established the Health Information Technology for Economic and Clinical Health Act, which will require healthcare providers to enact an electronic health record system. HHS has appropriated funds for groups that qualify with programs deemed as “meaningful use,” through 2013. While the ARRA funds will help, some orthopedic surgeons are concerned that some practices may not be prepared for the long-term costs EHR systems may bring.
Dr. Monesmith, whose practice currently has an EHR system in place, notes some of these costs. “The long-term costs [of EHR] aren’t talked about. These included updates to software and hardware and licensures required for the information. The costs will equal more overhead, and physicians will end up paying for them in the long term,” he says.
