U.S. Health Care Delivery: Outpatient & Primary Care Physician Payment Session 9 Objectives • Discuss outpatient care and its development • Identify various outpatient care services and settings • Learn about primary care and its domains • Patient Centered Medical Home • Physician Payment What is Outpatient Care? • Any health care service not requiring an overnight stay in an institution of health care delivery (e.g., hospital, nursing home, etc.) • More precise term than ambulatory care, since patients do not always “ambulate” to receive care • May still be offered in a hospital or nursing home Outpatient Care’s History • Previously independent of care provided in health care institutions • Doctors saw patients in clinics or made home visits • With growth and dominance of hospitals, outpatient care was concentrated around community hospitals • Today, outpatient care is growing tremendously and delivered across a broad range of settings • Increasing shift from acute to outpatient care • Viewed by hospitals as an essential business segment Some Outpatient Care Statistics • In 2010: 110.4 million outpatient visits to officebased physicians – 22.8% of outpatient visits to family physicians – 18.1% of outpatient visits to internal medicine – 12.8% of outpatient visits to pediatrics – 7.2% of outpatient visits to OB/GYN • 86.8% of physician visits took place in metropolitan areas – 3.3 visits per person in urban areas vs. 2.7 visits per person in rural areas Today’s Outpatient Care • Physicians still providing basic diagnostic care and minor treatments in physician offices • Advanced outpatient care still centered around hospital-based facilities • Growing number of nonhospital-based facilities offering ambulatory and outpatient care • Intense competition between hospitals and community-based providers for outpatient medical services Why the Shift to Outpatient Care? • Reimbursement – Payers prefer outpatient care because it costs less – Prospective reimbursement increased demand for outpatient services as patients were discharged “quicker and sicker” – Hospitals developed outpatient services to offset decreased inpatient income – Growth of outpatient care to meet increased outpatient demand (e.g., home health) Why the Shift to Outpatient Care? • Technology – New diagnostic and treatment procedures – Less invasive surgical methods – Shorter acting anesthetics – Reduced recovery time, less trauma – Expansion of outpatient diagnostic, treatment, and surgical services as office-based physicians’ acquisition of technology is more feasible and cost-effective Why the Shift to Outpatient Care? • Utilization control factors – Payers have limited hospitalizations through authorization – Payers have sought to minimize length of stay • Social factors – Patient preference for care in home or community-based settings, not institutions – Desire for greater independence What are Outpatient Services? • • • • • • • Primary care Surgery Home health care Urgent care Dental care Vision care Chiropractic care Where Does Outpatient Care Take Place? • • • • • Physician offices Hospitals Walk-in clinics Urgent care centers Ambulatory surgery centers • Outpatient rehabilitation clinics • Optometry centers • Dental clinics • • • • • • • Mobile health care units Telephone triage Home health care Hospice Adult day care Public health care Community health centers • Free clinics Physician Offices & Outpatient Care • The backbone of ambulatory care and the vast majority of primary care services • Limited examination and testing, short visits • Shift from solo practices to group practices – – – – – – – – Address environmental uncertainties Compete with large health care organizations No start-up costs, shared overhead expenses Address complex bills and collections Patient referral network Negotiation leverage with managed care organizations Shared coverage for personal time off Attractive starting salaries, profit-sharing, benefits Hospitals & Outpatient Care • • • • Safety net clinics for indigent & uninsured Key source of profit for hospitals Refer patients back to hospital for inpatient care Common types of outpatient services – Surgical – same day surgery – Home health care – post-acute care – Women’s health – Emergency care – Diagnostic services – imaging, lab – Therapy – physical, occupational, cardiac, etc. – Education, counseling, etc. Freestanding Outpatient Facilities • Walk-in clinics & urgent care centers – Primary care & urgent care without appointments on a nonroutine, episodic basis – Convenient locations, times, and services • Surgicenters (ambulatory surgery centers) – Independent of hospitals, same-day services • • • • Outpatient rehabilitation clinics Imaging centers Optometry centers Dental clinics Mobile Health Care Services • Screening vans, mobile MRI units, etc. • Transported to patients • Efficient & convenient means to provide routine health services • Advanced diagnostic services, screening exams, health education, health promotion • Bring health care to small towns, rural communities, malls, fairgrounds Public Health Centers, Community Health Centers & Free Clinics • Public health – Well-baby care, venereal disease clinics, family planning services, outpatient mental health care • Community health centers – Serve anyone seeking care in medically underserved areas – Primary care safety net • Free clinics – Services provided at no charge – Clinics not supported by government agency – Services mainly delivered by trained volunteers Home Health & Hospice • Home health care – Nursing care, therapy, supplies, equipment, homemaker services brought to patients’ homes – Provides alternative to institutionalization, catering to patients’ desire for independence & comfort • Hospice – Comprehensive care not based on location – Pain & symptom management, psychosocial & spiritual support for terminally ill Additional Outpatient Settings • Long-term care – Case management & adult day care • Telephone triage • Alternative medicine clinics – Homeopathy, herbal remedies, acupuncture, meditation, yoga exercises, etc. – Growing interest Primary Care • The conceptual foundation for outpatient care • Not all outpatient care is primary care • Central role in the health care system • Distinguished from secondary & tertiary care • Secondary care: short term, sporadic consultation from specialist, hospitalization, routine surgery, rehabilitation • Tertiary care: complex, uncommon conditions, institution based, specialized, technology-driven, trauma care, burn treatment, neonatal intensive care, transplants, open-heart surgery What is Primary Care? • • • • • Point of entry Coordination of care Essential care Integrated care Accountability Primary Care: Point of Entry • Way to organize health care delivery • The first contact a patient makes with the health care delivery system • Primary care practitioners serve as “gatekeepers” to specialists and hospitals • Protects from unnecessary procedures and overtreatment • True primary care is community based • Convenient, accessible, basic, routine, inexpensive Primary Care: Coordination of Care • Coordinates the delivery of health services across the health care continuum • Primary care professionals advise & advocate • Ensures continuity & comprehensiveness • “Hub of the healthcare delivery system wheel” • A role not fully appreciated in the U.S. • Advantages when primary care physicians coordinate health care • Better outcomes, satisfaction, expense control Primary Care: Essential, Integrated, & Accountable • Essential health care that optimizes population health • Helps minimize disparities across population subgroups to promote equal access • Comprehensive, coordinated, and continuous services that provide a seamless process • Both clinicians and patients have accountability Benefits of Primary Care • Community-oriented primary care • Partnership between providers & communities identifies and addresses community health problems, including vulnerability to social problems and disease • Effective care & preventive care • Preventive interventions best carried out in primary care • Numerous studies indicate better health outcomes where primary care is emphasized Benefits of Primary Care • • • • • Lower rates of hospitalization Lower health care costs Lower rates of self-reported poor health Lower mortality rates Higher life expectancy Patient Centered Medical Home • Team based health care delivery model typically led by a physician that provides comprehensive and continuous medical care to patients with the goal of obtaining maximized health outcomes. • Emphasize relationship with physician • Financial rewards based on patient outcomes PCMH • Comprehensive Care – Team based – Prevention, wellness, acute and chronic care • Patient Centered • Care Coordination – Become the “shopper” for the patient PCMH • Accessible – Shorter wait times for urgent care – Enhanced in-person hours – 24 hour telephone or internet access • Quality and Safety – Clinical decision support tools – Evidence-based medicine Physician Payment Median Starting Range Specialty National 6 yrs Practicing Average Anesthesiology $360,000.00 $265,000.00 Cardiac & Thoracic Surgery $522,875.00 $360,000.00 Cardiology $402,000.00 $272,000.00 Dermatology $365,450.00 $234,000.00 Diagnostic Radiology – Interventional $469,800.00 $335,000.00 Family Medicine $199,850.00 $138,000.00 Gynecology & Obstetrics $279,750.00 $200,000.00 Hematology & Medical Oncology $314,800.00 $222,000.00 Hospitalist $210,950.00 $165,000.00 Neonatology $275,400.00 $196,000.00 Neurological Surgery $589,500.00 $395,000.00 Neurology $237,000.00 $190,000.00 Ophthalmology $248,000.00 $210,000.00 Orthopedic Surgery $485,500.00 $315,000.00 Plastic Surgery $382,000.00 $273,000.00 Psychiatry $211,000.00 $165,000.00 Trauma Surgery $400,000.00 $298,000.00 Urology $400,000.00 $250,000.00 Vascular Surgery $405,000.00 $259,400.00 Physicians • Slide about pay Physician Pay • Wide range in incomes – Pediatricians, family practice and psychiatrists on the low end – Surgeon, cardiologists, radiologist on high end • Physicians get paid more for “doing things” than for caring or thinking. Gross Revenues Practice Expenses $440,000 Non-physician Wages (4 FTE per physician) 88,000 41% Office rent and expenses 52,800 25% Medical Supplies 17,600 8% Malpractice liability insurance 22,000 10% Equipment 8,800 4% Other Expenses 25,800 12% Net Income 225,000 100% Private Insurance 53% Medicare 24% Medicaid 12% Patient Paid 11% 51% of gross Revenue Physician Work • The average physician worked an average of 57 hours per week • Seeing 105 patients • Giving 4 hours of uncompensated care • Average charge per patient was about $100 How are physicians paid? • Generally fee-for-service: about 89% of physician revenue comes from third party payment • The exact formula for payment has evolved over the years How are physicians paid? • Usual, Customary, and Reasonable (UCR) – Initially the Blue Cross plans did this. When a physician submitted a bill, they asked: • Above his/her median charge for the same service the previous year? (usual) • Above the 75th percentile of charge by all doctors in the area (customary) • Or justifiably higher because of a patient’s complicating illness or another acceptable reason (reasonable) How are physicians paid? • Next was the development of fee schedules – A menu of prices for each service agreed upon in advance – Huge amount of numbers to keep track of and update from year to year How are physicians paid? • This led to the relative value scale – Give each service a point value – A common service (standard office visit) was given a value of 1, and all other services are given relative point values – Then each year decide a payment per point • So if a point is paid $20, a physician providing a service that is worth 3.5 points gets paid (20*3.5=$70) – Only need to update the value per point each year Medicare and Physician Payment • In 1992 Resource-based relative value scale (RBRVS) – Calculated a point value for each service based on: • • • • Physician time Intensity of effort Practice costs Costs of advanced specialty training – The dollar value was $36.7856 in 2003 – It is $35.8228 in 2014 RBRVS • The RBRVS is a list of physician services with a relative value unit (RVU) assigned to each service. • The RVU is made up of three components: – Physician work (pw) -- the time spent, effort exerted and skills used – Practice expenses (pe) -- wages, salaries and fringe benefits, and other office expenses – Malpractice insurance (mi) – highly variable across specialties RBRVS • Physician work accounts for about 55% or total RVUs • Practice expenses about 42% • Malpractice insurance about 3% • CMS Common Procedural Coding System – CPT-4 (4th edition) • About 7,500 CPT codes are paid under this system Dallas Texas RVUs adjusted for geographic practices costs – 2012 and 100% Medicare payment rates. CPT Code Description Pw Pe – Facility Pe-NonFacility Mi Total Facility RVUs 1.34 $48.33 Total Nonfacility RVUs 1.87 $67.45 99202 Office or other outpatient visit, new, level 2 Office or other outpatient visit, new, level 4 Office or other outpatient visit, establish patient, level 2 Office or other outpatient visit, establish patient, level 4 Emergency department services, level 3 .93 .35 .88 .06 2.43 .82 1.61 .16 3.41 $123.00 4.20 $151.94 .48 .17 .57 .03 .68 $24.53 1.08 $38.96 1.50 .49 1.15 .08 2.07 $74.66 2.73 $98.47 1.34 .29 na .08 1.71 $67.68 na 1.89 0.59 na .13 2.61 $94.14 na 29.09 11.59 na 4.79 45.47 $1640.10 na 42800 Initial hospital care, per day, for the evaluation and management of a patient Bypass graft, with vein; common carotidipsilateral internal carotid Biopsy of throat 1.44 1.4 2.5 .13 2.97 $107.13 4.07 $146.80 69501 Mastoidectomy 9.21 9.2 na .84 19.25 $694.35 na 70336 Magnetic image, jaw joint – professional component 1.48 na 10.76 .08 na 12.32 $444.38 99204 99212 99214 99283 99221 35501 Sustainable Growth Rate • In 1997 Medicaid switched to a “sustainable growth rate” when updating conversion factor – Not only control individual prices, but overall spending • Each year, they establish a global budget based on total spending the previous year • If total spending exceeds the budget, then the conversion factor will get cut the next year to make up the difference