Confused, Frustrated, and Broke Texas Medicine January 2011

TMA Survey Reveals Physicians' Concerns

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Cover Story – January 2011

Tex Med. 2010;107(1):20-37. 

The words in that headline are strong ones, but they accurately describe Texas physicians as 2011 begins. They're confronted by declining revenue that threatens to drive many of them from their practices and jeopardize their patients' access to care, increased scrutiny from insurers who want to rate them on their "cost efficiency," and a confusing federal overhaul of the health care system that may fundamentally change the way they practice medicine. Add to that the need to decide what type of practice setting is best – solo, group, or employed. It's a decision that could be expensive if it's the wrong one.

It's no wonder that many veteran physicians are thinking of getting out of medicine and, in some cases, wishing they had chosen another profession.

Evidence of Texas physicians' concerns is found in the latest Texas Medical Association survey of Texas physicians, medical students, residents, and interns. Every two years, TMA conducts a physician survey to identify emerging issues, track the impact of practice and economic changes, assess physician priorities, and develop data to support TMA advocacy efforts. Survey forms were e-mailed monthly to 29,764 physicians, medical students, residents, and interns, and 3,580 responded.

As in years past, the biggest challenges for Texas physicians are concerns about declining reimbursement, rising practice costs, and economic viability. While physicians worry about low or declining reimbursement from all third-party payers, they are primarily concerned about Medicare fees.

Not surprisingly, health system reform also weighs heavily on physicians' minds. Physicians are uncertain about how the Affordable Care Act will affect their practices and patients.

In this article, Texas Medicine summarizes the major findings of the survey and interviews physicians to get their comments. Here are the major survey findings:

Biggest Challenge 

Half of the physicians who responded to the survey are concerned about the economic viability of their practices. The most frequently mentioned concern is low or declining reimbursement rates, with 23 percent mentioning low or declining fees from third-party payers. An additional 11 percent specifically mentioned concerns about Medicare fee cuts. Another group of physicians (16 percent) report the problem is not simply declining revenue, but the squeeze between decreasing payments and increasing operating expenses, sometimes severe enough to threaten the economic survival of their practices.

Physicians (19 percent) expressed concerns regarding health system reform and its effect on their practice, reimbursement, and access for the newly insured.

As in previous years, the uninsured and underinsured patients are a concern for Texas physicians (6 percent). However, it was less frequently mentioned in comparison with previous years, perhaps because health care reform and the newly insured weighed more heavily on physicians.

Liability concerns continue to abate as an immediate concern. However, physicians have liability concerns secondary to health system reform. There is concern the new legislation will overturn Texas' successful reforms.

Access to Care

There continues to be an alarmingly low number of physicians who will accept all Medicaid patients (42 percent); access is further threatened by cuts to Medicaid fees.

Fortunately, Medicare access has not yet been further damaged by the ongoing failure to resolve the Sustainable Growth Rate formula. The percentage of physicians who report accepting all Medicare patients is about the same (66 percent) as in 2008 (64 percent). This is still significantly less than the 78 percent of physicians who reported accepting all Medicare patients in 2000.

In response to the ongoing problems with the Medicare fee schedule, approximately half of physicians are considering renegotiating or terminating some health plan contracts, changing their Medicare status to nonparticipating, or formally opting out of Medicare and requiring direct patient payment.

Practice Viability

A majority of physicians (61 percent) report their income has decreased in the last two years.

In the past year, 69 percent of physicians report cash-flow problems due to slow payment, nonpayment, or underpayment of claims by insurers or government payers.

Physicians report 11 percent of their patients have high-deductible health plans with spending accounts such as health reimbursement accounts or health savings accounts. Thirty percent of patients have high-deductible plans without spending accounts.

The average amount of charity care reported per physician in 2009 was $41,000, and the average amount of uncollectible debts per physician was $70,500.

Health Plan Contracts

A little more than half of physicians (51 percent) have attempted to negotiate the terms of health plan contracts in the last two years. Among those physicians, 47 percent report they were at least sometimes successful negotiating changes to a plan's contract language or payment terms.

Thirty percent of physicians have terminated a managed care contract in the last two years. The most frequently reported reasons for terminations were payment rate cuts imposed by the plan (54 percent), followed by payment rates that were inadequate to cover practice expenses (53 percent). Almost one-fourth of these physicians (24 percent) report their termination notice resulted in new or renewed contract negotiations that often led to a new contract with no lapse in coverage.

Physicians report they have a median of three HMO contracts and 10 PPO contracts.

A large majority of physicians are contracted with each of the five major payers: Blue Cross and Blue Shield (87 percent), UnitedHealthcare (83 percent), Aetna (80 percent), CIGNA (78 percent), and Humana (77 percent).

In the past two years, 32 percent of physicians approached a plan with which they were not contracted in an attempt to join its network. Of those, 44 percent report they signed a contract. Twenty-nine percent received an offer, but it was unacceptable, and 27 percent did not receive a response.

Physician Employment

Currently, nearly three-fourths of physicians (71 percent) are full or part owners of their main practice.

Employed or contracted physicians are primarily employed by another physician or a physician group practice.

Few Texas physicians are employed by a hospital. Rural physicians are more likely to practice in a hospital; however, they make up less than 15 percent.

Approximately half of Texas physicians begin practice as employees, primarily with another physician or physician group practice. Half of them later buy into ownership of their initial practice environment.

Starting in the 1980s, the percentage of physicians who started medical practice as a full or part owner steadily declined, while the percentage of physicians who began as employees rose. Approximately three-fourths of physicians who started practice after 2005 did so as employees. These physicians are primarily employed by other physicians or physician group practices.

The percentage of physicians employed by hospitals is increasing, as well; however, only 6 percent of all physicians are employed in this type of environment.

Damage to Quality of Care

A majority of physicians (71 percent) reported that at least one instance in their practice in the past year in which the operating policies or utilization controls of a private-sector health plan adversely impacted the quality of patient care. The most frequently cited causes were limited networks (83 percent), formulary limitations (80 percent), coverage limitations or denials (73 percent), and treatment delays (57 percent).

More than a third of physicians (39 percent) report witnessing specific cases in their practice in which the policies or operations of a hospital or surgical facility adversely affected the quality of patient care. Those physicians are most likely to report inadequate facility staff (67 percent), scheduling delays (58 percent), and inconsistent facility staffing (55 percent).

Most physicians (91 percent) have practice privileges at a hospital. The hospital in which these physicians primarily practice is a private, not-for-profit (45 percent) or private, for profit (44 percent) hospital.

Physicians agree that hospital and medical staff work together to solve patient safety problems (61 percent), timely on-call coverage is generally available for all specialties (50 percent), and the working relationship between hospital and medical staff is cooperative (50 percent).

Seventeen percent of physicians report cases in which physicians lost employment, contracts, or hospital privileges because they raised issues about hospital regulatory compliance or patient care quality.

A majority of physicians (55 percent) report the hospitals in which they practice do not have any requirement that they participate as a provider in health plan or network contracts. A small group (16 percent) report there are requirements or incentives for them to participate in certain plans, and another small group (17 percent) report they are strongly encouraged to do so.

A majority of physicians (84 percent) report there are specialty hospitals, ambulatory surgery centers, or imaging centers in their area that are physician owned. Physicians agree the physician-owned facilities in their community are more convenient places for patients than other facilities offering comparable services (63 percent).

A large minority of physicians have privileges in a physician-owned facility (46 percent). The majority of these physicians (61 percent) are owners or investors in the facility.

An overwhelming majority of physicians who have ownership in a facility report it has improved the efficiency of their practice (87 percent).

Health System Reform

Overall, 59 percent of physicians have a very unfavorable opinion of the Affordable Care Act.

The proportion of physicians who have negative emotions about the health system reform law is high, while positive emotion is low. Physicians describe their feelings as disappointed (78 percent), anxious (74 percent), and confused and angry (62 percent). As they learn more about the new health system reform law, 46 percent say they are more negative about the law than they were initially.

Physicians believe the quality of health care will decrease (67 percent) and costs will go up (79 percent) under the new health system reform plan.

Legislative Issues

The top legislative priorities, rated "very important" by physicians, are lawsuit abuse and tort reform and opposing government and commercial payer intrusion.

The top state legislative priorities, rated "very important" by a majority of physicians are:  

  • Opposing proposals to participate in Medicaid as a condition of licensure,
  • Preventing nonphysicians from practicing medicine,
  • Reducing or eliminating taxes on physician practices, and
  • Medicaid fee increases.  

The top three federal legislative priorities, rated "very important" by a majority of physicians, are:  

  • Medicare payment reform,
  • Opposing requirements to participate in Medicare as a condition of licensure, and
  • Revising or eliminating some or all provisions of the Affordable Care Act.   

In an open-ended question, physicians were asked what they see as the biggest public health issue facing Texas today. The most frequently mentioned concern of physicians are related to the uninsured and/or underinsured, which includes Medicare and Medicaid patients, and the quality and availability of medical care for these and all patients. Another group of physicians expressed concerns regarding the Affordable Care Act, including expansions in Medicare and Medicaid and a lack of physicians to meet the growth in demand from newly insured patients. Access concerns were further compounded by increasing numbers of physicians declining Medicare and Medicaid patients because of inadequate reimbursement and concerns over the lack of a Sustainable Growth Rate fix.

When asked about specific public health issues, physicians rated the following as "somewhat important" or "very important": increased funding of state and local public health systems, increased funding for mental health services, and increased Medicaid reimbursement to vaccinate patients.

The top three measures preferred to address high health care costs or overutilization of medical care services are ensuring adequate access to good primary care, encouraging patients to make prudent spending decisions by allowing high-deductible insurance with spending accounts like health savings accounts, and using chart audits by properly qualified physicians to determine whether services were medically necessary before any financial penalties are imposed.

Physicians oppose legislative changes to permit a physician to delegate prescription authority of Schedule II drugs to physician assistants (PAs) or advanced practice nurses and legislative changes to allow PAs to employ their supervising physician.

To put faces on all the numbers you just read, Texas Medicine interviewed several physicians to get their perspective. We selected physicians who are in the early years of their practice and more seasoned doctors who have been at it a while. Here's what we found.

The Young Doctors: Building a Practice for the Future 

By Crystal Conde
Associate Editor

William B. "Ben" Edwards, MD, is the only physician in Garza County. For the past five years, he has practiced as a solo family physician in Post.

Dr. Edwards grew up in Belton, and both of his grandfathers practiced as primary care physicians in the small town.

"I always knew I wanted to go into primary care because I wanted to treat the whole patient and the whole family. I enjoy fostering the patient-physician relationship. Also, I grew up in a small town, and I wanted my kids to grow up in a rural area," he said.

He says he enjoys the independence and personal control a solo practice affords.

According to the TMA survey, 77 percent of physicians say personal control of clinical decisions is a "very" satisfying aspect of their current practice environment. Geographic location (75 percent), personal control of practice decisions (65 percent), patient population characteristics (55 percent), availability of facilities, equipment, and other specialties (54 percent), and investment required (52 percent) followed.

Duren Michael Ready, MD, a Temple family physician and chair of the governing council of TMA's Young Physician Section, has been in practice for seven years. He's part of a group practice within Scott & White Healthcare. In 2008, he transferred to the neurology department and focuses exclusively on management and treatment of headaches.

For Dr. Ready, working in a clinic with five partners has many perks.

"When I was getting started, I didn't have to hire staff, I had more resources available to me through Scott & White, and I had immediate access for consultations," he said. "I felt like I had a safety net that if I didn't know what the best course for the patient was, I had more seasoned colleagues who could help me."

The survey shows that 47 percent of physicians find it most desirable for most new physicians to start in an established practice with a subsequent option to buy into ownership. Thirteen percent find it most desirable for most new physicians to start in a nonprofit health corporation (NPHC) that is run by physicians.

An NPHC allows physicians, not the corporate owner, to control all medical decisions as employees of the nonprofit entity. TMA believes creating NPHCs as a means of employing physicians is preferable to requiring physicians to answer directly to a corporate nonphysician employer.

Data indicate 77 percent of young physicians (aged 40 and younger and in practice eight years or less) believe it is most desirable for new physicians to start in an established physician practice with a subsequent option to buy into ownership. Forty-four percent of young physicians find it preferable for physicians to buy into an established medical practice immediately, followed by employment by an NPHC run by physicians, at 35 percent. Only 22 percent of young physicians prefer most new physicians to start in employment at a hospital, according to the survey. Twenty percent of young doctors favor new physicians starting in a solo practice setting.

In addition, preliminary survey data reveal 67 percent of physicians 40 and younger and 65 percent of those 41 to 50 begin as group practice employees. On the contrary, older physicians are more likely to have started as practice owners. Data show 44 percent of physicians aged 51 to 60 and 55 percent of those 61 and older started as practice owners.

Survey results point to a trend in practice setting preference that began in the early 1980s. Since that time, the number of new physicians who start practice as an owner of a solo or group practice has declined. That trend hasn't resulted in a commensurate increase in the number of physicians currently employed, however, because the majority of physicians don't stay permanently in those employment situations.

The survey shows that in Texas nearly three-fourths of physicians are full or part owners of their main practice, although more than half started practice in an employment or contract arrangement.

Data show starting practice owners are more likely to report personal control over clinical decisions (94 percent), personal control over practice decisions (89 percent), geographic location (71 percent), and profitability (55 percent) as "very" important factors in their decisions about their initial practice environment. When physicians leave their initial practice settings, the "very" important driving factors are control of clinical decisions (60 percent), control of practice decisions (59 percent), and opportunities for practice growth (57 percent).

While Dr. Ready likes working for Scott & White's NPHC, he says he is not in favor of hospitals employing physicians directly.

"The hospitals don't provide care to the patients; they provide service. The doctors provide health care as part of a team. Anything that places a barrier between the doctor and patient is a potential obstacle to providing that care," he said.

He adds that if the legislature lifts Texas' ban on the corporate practice of medicine, physicians could face a potential conflict of interest in which they're obligated not only to the patient but also to the hospital.

According to the preliminary survey data, 47 percent of physicians 40 and younger oppose further expansion of hospitals' ability to employ physicians.

The magnitude of physician opposition increases with age. Sixty percent of physicians aged 41 to 50, 62 percent of those 51 to 60, and 66 percent of those 61 and older oppose an expansion of hospital employment of physicians.

A Busy Man

Aside from running a busy clinical practice, Dr. Edwards reserves one day each week to make house calls and to care for patients in nursing homes, the county jail, the local juvenile detention center, and hospice. His practice is open to all new Medicaid and Medicare patients, a business decision he fears won't always be the case.

"I'm not now limiting acceptance of any Medicare or Medicaid patients," he said. "That decision is based on the fact that I'm the only doctor in the county. I feel morally obligated to accept them."

Dr. Edwards says he consistently breaks even seeing Medicare patients and loses money caring for Medicaid patients. About half of his patients are on Medicare and Medicaid. The remaining patients have employer-sponsored health plans or pay for services.

"I don't blame physicians for limiting their practices. You can't continue to give your work away for free, especially in primary care where you're at the low end of the reimbursement scale," he said.

If Medicare fees are someday cut drastically, Dr. Edwards says he would have no choice but to limit acceptance of patients participating in Medicare. In anticipation of the cut to TRICARE reimbursement, he has closed his practice to new TRICARE patients.

"I've always assumed there's no way the government would let the payment cuts go through. If it happens, there's no way I could keep my practice going," Dr. Edwards said. "Continuing to see all Medicare patients at that point would be suicide for my practice."

He also fears the cuts would cause most, if not all, nearby Lubbock doctors to limit their practices as well, leading to a deluge of patients at his practice.

"I can't afford to get a flood of Medicare patients from Lubbock. I don't want to turn my back on them, but I can't just bleed money," he said.

Preliminary results from the 2010 TMA Physician Survey reveal that in 2010, 64 percent of physicians accepted TRICARE patients, while 20 percent declined them and 16 percent limited their acceptance of them. Additionally, 66 percent of physicians accepted all Medicare patients, while 16 percent declined them and 18 percent limited acceptance of them.

Dr. Ready says that during his years of practice, he has seen his Medicaid patient volume grow, a trend that's likely to continue. Once the federal insurance mandate takes effect in 2014, the Texas Health and Human Services Commission estimates the state's Medicaid program will add 1.2 million newly eligible enrollees, which includes adults and children with incomes up to 133 percent of the poverty level. On top of that, the agency anticipates about 500,000 additional residents who are eligible but not enrolled in the program will seek enrollment in 2014.

Dr. Ready accepts all Medicare and Medicaid patients, as well as TRICARE patients. Medicaid patients come from 100 miles away for medical care, Dr. Ready says. To promote continuity of care in the medical home, Dr. Ready says he began conducting group educational sessions for new patients.

"We talk with patients about migraines and headaches, what to do to get better, and what we expect of them," he said. "If patients sit through this and determine they're dedicated to doing what's necessary to manage their conditions, we move forward with treatment."

TMA's survey indicates that 42 percent of physicians accepted new Medicaid patients in 2010. Thirty-three percent declined Medicaid, and 26 percent limited Medicaid patients.

When it comes to Medicare, Dr. Ready says he took a financial hit when the Centers for Medicare & Medicaid Services (CMS) stopped paying physicians for consultations using the CPT consultation codes in January 2010. The consultation codes comprise 99241–99244 for office or other outpatient consults and 99251–99255 for inpatient consultations. Instead, CMS instructed physicians to bill using the new or established patient codes.

According to Dr. Ready, that change in the consultation services payment policy resulted in a more than 20-percent decrease in his Medicare billing.

"The frightening thing about the change to consultation codes is that we can't hold Medicare accountable. Medicare tells us it's best this way, and we're supposed to accept that. It doesn't make sense, and it doesn't smell right," Dr. Ready said.

Preliminary physician survey data indicate 61 percent of physicians have witnessed a decrease in their personal income from medical practice in the past two years. Twenty-seven percent have seen no change, and only 12 percent have seen an increase.

Leery of Reform

Dr. Ready is apprehensive about the future of the U.S. health care system. He describes the health system reforms as "rushed" and worries that the country won't have enough physicians to meet the demands of a newly insured population.

Dr. Edwards says he isn't particularly fond of any of the provisions of the health system reform law.

"There's really not any part of health system reform I like. Some elements look good on the surface, but I'm afraid they'll have detrimental consequences for the health care system," Dr. Edwards said.

The physicians aren't alone in their opinions. The 2010 TMA Physician Survey preliminary data show 59 percent of Texas physicians have a very unfavorable opinion of the health reform law. Seventy-eight percent of physicians describe their feelings about the law as disappointed, while 74 percent are anxious, 62 percent confused, and 62 percent angry. Only 14 percent say they're pleased with the reforms, and 12 percent say they're relieved about them.

"It's monumentally an error to say we're going to add millions of patients to the insured roles and do nothing to increase the physician supply. If we don't have enough physicians to see Medicaid patients, for instance, they'll end up in the emergency room," Dr. Ready said.

Dr. Edwards agrees. His biggest beef with the reforms is that they don't address the shortage of primary care physicians in a meaningful way. Until the government takes steps to increase the nation's primary care workforce, he says, no reform plan will be effective in lowering health care costs and providing health care coverage to more people.

"We need better reimbursement for primary care physicians. When we have enough primary care doctors, we'll be able to provide patients with medical homes and an appropriately trained primary care team," he said.

Should the reforms go into effect, Drs. Edwards and Ready worry patients will have poorer access to care because physicians will cease taking government insurance programs altogether. They also fear midlevel practitioners will seek an unsafe expansion of their scope of practice.

"I think you have to be careful when you start allowing nonphysicians to have too much leeway in their practice capabilities. At the same time, I use a physician assistant. In a supervised setting, midlevel practitioners do great work and provide a valuable service to the patients," Dr. Edwards said.

Dr. Ready is concerned nurse practitioners, advanced practice nurses, physician assistants, and other practitioners lack the breadth of knowledge necessary to provide safe, high-quality primary care to patients.

"Primary care is so broad, and even though many conditions are common, that knowledge base is hard to master without residency and medical school training. When you don't know what you don't know, you're dangerous," he said.

Crystal Conde can be reached by telephone at (800) 880-1300, ext. 1385, or (512) 370-1385; by fax at (512) 370-1629; or by e-mail at crystal.conde[at]texmed[dot]org.

The Veterans' View: Trying to Hang on in a New World 

By Ken Ortolon
Senior Editor

When Henrietta family physician David Greer, MD, decided 40 years ago to set up a solo practice in a rural community, he didn't expect to make a fortune. But now, he wonders whether he even will be able to maintain his private medical practice.

Like many other Texas physicians who have practiced for 20 years or more, Dr. Greer says declining revenues from Medicaid and Medicare, combined with the uncertainty presented by health system reform, have generated much apprehension about the future of medical practice.

"I'm in family medicine in rural Texas. I certainly didn't go into it to get rich and I don't expect to," Dr. Greer said. "But I also have bills to pay from running a business. I'm in private, solo practice, and the business aspect of it has to be addressed."

According to preliminary findings of Texas Medical Association's 2010 Physician Survey, 61 percent of Texas physicians have seen their personal income go down over the past two years, and the problem is even greater for older physicians.

While 46 percent of physicians younger than 40 reported declining income over the past two years, 62 percent of those aged 41 to 50 said their incomes decreased, and 63 percent of those 51 to 60 saw their incomes drop. Seventy-two percent of those 61 and older said their incomes had declined.

 In fact, El Paso urologist Francisco Rodriguez, MD, who has been in practice since 1976, says his income is about half what it once was, despite leaving his solo practice two years ago to form a group practice with several other El Paso urologists to try to gain economies of scale.

He says that not only have overhead costs gone up and payments for government payers such as Medicare, Medicaid, and TRICARE gone down, but so have his private health plan payments.

"We used to counteract that [low government payments] with the private insurance that was able to pay us 150 percent of Medicare or 125 percent of Medicare, according to your contracts," he said. "But now they're wising up. There's a company out there right now that's paying less than Medicare."

Dallas obstetrician-gynecologist Deborah Fuller, MD, also says her revenues have decreased as overhead has increased. And all three physicians say they have incurred cash flow problems in their practice over the past two years.

According to the preliminary TMA survey results, 69 percent of Texas physicians have reported cash flow problems due to slow payment, nonpayment, or underpayment by insurers or government payers in 2010. That compares with 73 percent in 2008 and 71 percent in 2006.

Dr. Rodriguez says he has not had to borrow money but has cut his own pay. Dr. Greer says he has had to dip into his personal reserves to keep his practice afloat, largely because of the general state of the economy as well as a snafu that occurred when he reenrolled in Medicare through the Provider Enrollment, Chain, and Ownership System.

He says he had to get his congressman to intervene to resolve that problem but only after his Medicare payments were delayed for several months.

Cutting Services

In the TMA survey, Texas physicians reported a number of actions they've taken as a result of cash flow problems, including 44 percent who drew on personal funds, 29 percent who secured commercial loans, 28 percent who laid off employees, 20 percent who terminated or renegotiated health plan contracts, and 18 percent who reduced or terminated services to Medicare, Medicaid, or TRICARE patients.

Dr. Fuller says her two-physician practice does not accept Medicaid patients, primarily because of the demographics of her practice area. So they made no change there as a result of cash flow issues. But she did limit acceptance of new Medicare patients as a result of the uncertainty over Medicare payments in spring 2010.

At that time, Congress appeared to be at an impasse over how to stop a scheduled 25-percent cut in Medicare physician fees.

"When the impasse was happening April through June, I did make some changes," Dr. Fuller said. "I continued to see my current Medicare population but I did not accept any new Medicare patients until Congress decided, in their benevolence, over the summer break to put a hold on the 25-percent cut."

While Dr. Fuller now once again accepts new Medicare patients, she limits the number of women's annual physicals she does for Medicare patients to two per day.

Dr. Greer also has limited services to some Medicare and Medicaid patients due to low payments.

"I'm in Clay County, which is a ranching county. We have an attitude that we take care of our own," he said. "So I still continue to take some Medicaid patients, but only those who are within the boundaries of our county."

He says he gets a number of calls from Medicaid patients in Wichita Falls, 20 miles away, looking for a physician, but he doesn't feel he "could run my business" on additional Medicaid patient volume.

He says he continues to take new Medicare patients, but the failure of Congress to address problems with Medicare's Sustainable Growth Rate formula has had a significant negative impact on his practice.

"We go through this every few months now," he said. "I look at it, and I am much more inclined to take a new patient who is not Medicare than a Medicare patient. The fact is we don't know if we're going to be reimbursed at a lower rate, and Medicare reimbursement is not good anyway.

"As a result, I look at the business side of it. The lowering of the payment has caused a problem and, regardless of what anyone may believe, inflation in my office still exists. The costs continue to increase," Dr. Greer said.

Dr. Rodriguez says his practice has not yet limited Medicaid and Medicare patients but they certainly are looking at that option because of the threat of reduced fees.

"You cannot practice, you cannot survive in that kind of environment. So we're going to have to really look closely at our patient mix."

Nixing Employment

Despite cash flow concerns, older physicians continue to resist the idea of physicians being directly employed by hospitals.

According to the 2010 survey, 66 percent of doctors over 61 and 62 percent of those between 51 and 60 oppose further expansion of hospitals' ability to employ physicians. Sixty percent of physicians between 41 and 50 oppose expansion of physician employment by hospitals, but only 47 percent of those younger than 40 feel the same.

Drs. Greer, Rodriguez, and Fuller say they would not consider working for a hospital but they understand that it is happening through mechanisms such as 501a nonprofit health corporations.

"Most of us in private practice fear that loss of independence if that should happen," added Dr. Fuller, who says she worries that doctors may be forced into employment arrangements if their practice revenues continue to be squeezed by government and private payers.

Dr. Greer says he is "directly and adamantly opposed" to hospital employment of physicians. "While it may appear to be good, physicians may have an ethical problem when it comes down to how best to treat the patient. In my opinion, he who pays the piper calls the tune. And these larger hospitals will be in the driver's seat when they have control of that."

Leery of Reform

Finally, physicians who have been in practice for 20 years or more seem to be highly apprehensive about the potential impact of health system reform. According to TMA's preliminary survey findings, 78 percent of Texas physicians have either a very unfavorable or somewhat unfavorable opinion of the reform law. Seventy-eight percent say they are disappointed by the law, 74 percent are anxious, 62 percent are confused, and 62 percent are angry. Only 14 percent said they were pleased with the law, while 12 percent said they were relieved.

Dr. Fuller says she thinks Congress got 60 percent to 70 percent of the reforms right, but she says the law is a mixed blessing. She likes requiring health plans to cover preexisting conditions and preventive care, but wonders where the money will come from to pay for that.

"I know there are a lot of people out there who are looking forward to having preventative services paid for," she said.

She has seen patients in her own practice who have had coverage denied by their health plans for contraceptive devices, such as intrauterine devices, as well as patients with abnormal Pap smears or mammograms who were later denied coverage for subsequent mammograms or treatment involving the cervix because it was classified as a preexisting condition.

But she says the cost of the reform law is still a huge issue.

"I don't think all of the answers about how this is all going to get paid for are out there yet," she said. "I'm concerned about what it's going to do to small businesses, and I am a small business."

Dr. Greer also says his patients are anxious about what reform will bring.

"We're just going to have to wait and see," he said. "I have companies and patients who have a lot of apprehension about mandatory coverage. I see people who run small companies who are looking at ways to get by with less, to hire fewer people so they have fewer obligations from a medical standpoint.

"Most of the patients I see look to me for the answers, and I don't have all the answers," he continued. "Very few people whom I talk to understand even the major things that are in there. I have a lot of apprehension about what we don't know."

Dr. Rodriguez says he sees a lot of uncertainty about how physicians will be impacted and their ability to continue in practice.

"That's something that only time will tell. We take care of our patients. If somebody is sick and needs to be taken care of, we're going to do it no matter what, whether they can pay or they cannot pay, whether they have insurance or no insurance. We're trained to do this. If you don't feel that way, you probably should retire. But, obviously, that's what the government is counting on. We've still got it in our very being that we're going to do whatever we need to do to take care of the patient, no matter what we get paid."

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail at ken.ortolon[at]texmed[dot]org.  


"The Private Practice Physician Is Rapidly Disappearing"

 Health system reform will usher in a new era of medicine in which physicians will largely cease to operate as full-time, independent, private practitioners accepting third-party payments. Instead, they will work as employees, as part-timers, as administrators, in cash-only "concierge" practices, or they will walk away from medicine altogether.

These are some of the findings of a new report commissioned by The Physicians Foundation, a nonprofit grant-making organization of medical society and physician leaders, and completed by Merritt Hawkins, a national physician search and consulting firm.  

The report, Health Reform and the Decline of Physician Private Practice, examines the potential effects of the Affordable Care Act on medical practice in the United States.

Louis J. Goodman, PhD, president of the foundation and TMA's executive vice president/chief executive officer, says the report offers a road map for where medical practice is headed.

"The private practice physician is rapidly disappearing," Dr. Goodman said. "Both market forces and the health care reform law are forcing physicians to find new ways of running a practice. We are extremely concerned about how this will affect patient care."

The report outlines provisions in the law that will reshape physician practice patterns and examines economic, demographic, and other forces impacting the way doctors structure their practices and deliver care.

Drawing on the perspective of a panel of health care experts and executives, the report projects that physicians will:  

  • Either work as employees of increasingly larger medical groups or hospital systems,
  • Establish cash-only practices that eliminate third-party payers,
  • Reduce their clinical roles by working part-time, or
  • Opt out of medicine altogether by accepting nonclinical positions or by retiring.    

To illustrate medical practice trends, the report includes case studies of practice models likely to proliferate post-reform, including studies of a medical home, an accountable care organization, a concierge practice, a community health center, and a small, hospital-aligned practice.

The report also includes results of a national survey to which some 2,400 physicians responded. Only 26 percent said they would continue practicing the way they are in the next one to three years. The remaining 74 percent say they would retire, work part-time, close their practices to new patients, become employed, and/or seek nonclinical jobs. Based on the survey and other data, the white paper projects health reform will worsen the ongoing physician shortage and make it harder for many patients to access a physician.

"For the sake of all Americans, it is critical that we find ways to protect the patient-physician relationship and make sure that no outside forces are interfering in clinical decision making," said Walker Ray, MD, chair of the foundation's research committee.

Additional key findings, along with the full report, are available online at

Created by the settlement of organized medicine's class action lawsuit against for-profit HMO abuses, the Physicians Foundation is a nonprofit 501(c)(3) organization that seeks to advance the work of practicing physicians and to improve the quality of health care for all Americans. It pursues its mission through a variety of activities including grant making, research, and policy studies. Since 2005, the foundation has awarded numerous multiyear grants.   


TMA Answers Your Health System Reform Questions

TMA is conducting Health Reform School meetings around the state, plus telephone conference call sessions, to help physicians understand what the Affordable Care Act (ACA), the health system reform law, means to them and their patients.

"Just like our patients, our member physicians are uncertain about what's in the new law and what it means to their practices," TMA President Susan Rudd Bailey, MD, said in explaining why TMA conducted the sessions. "It's our responsibility to bring them the facts as we know them and the implications as we see them."

The meetings have been well attended, and physicians have asked many good questions of TMA's physician leaders and staff.

Q. Does the new law affect the liability reforms that Texas passed in 2003?

A. At this time, the ACA does not appear to affect the liability reform laws enacted in Texas. However, TMA will continue to monitor future legislation to ensure that liability reform is not being affected.   

Q. When will insurance coverage be better and more regulated? Right now, physicians are heavily regulated but insurance companies are not. When will this change?  

A. The ACA enacted many new provisions to curb insurance company abuses, including prohibiting plans from rescinding coverage for patients who get sick, preventing plans from denying coverage of patients with preexisting conditions, ensuring plans invest more premium dollars in direct patient care versus overhead and profit, and giving states greater authority to scrutinize health plan annual premium increases. For detailed information about the insurance reforms, visit the TMA Health System Reform Action Center

Q. How is private practice going to survive? Small groups? Large groups? Solo practices?   

A. After analyzing the bill, TMA has written a new white paper, Ten Things Physicians in Independent or Small-Group Practice Need to Know About Health System Reform, which outlines 10 important facets of the new health law for physicians. The paper is available in the TMA Health System Reform Action Center.  

Q. Why can there not be any provision in the law for physicians to charge what they would like to charge and patients to have the ability to pay the difference?  

A. The law did not alter current Medicare or Medicaid prohibitions on balance billing. However, the American Medical Association and organized medicine have made this a top priority for the coming session of Congress.

Q. Are we going to be pushed into hospital employment?   

A. The ACA, as currently written, does not contain any provisions directly pushing physicians into hospital employment. However, some hospital systems may be exploiting physicians' concerns about the new law by touting employment as a solution. In Texas, the direct employment of physicians by hospitals is currently prohibited, with some exceptions. During the legislative session that begins this month, TMA expects hospitals and health plans to advocate the repeal of Texas' corporate practice prohibition. TMA opposes efforts to weaken the prohibition and will vigorously defend it. 

Q. What is in the health reform bill regarding federally qualified health clinics (FQHCs)?  

A. The new law appropriated $11 billion over five years to increase these clinics' capacity nationwide, either by expanding existing clinics or building new ones. Additionally, as the new health insurance exchanges take effect in 2014, there also is a provision in the law ensuring that health plans participating in the exchanges will contract with FQHCs.  

Q. How can physicians spend more on health information technology (HIT) and electronic medical record (EMR) implementation with less reimbursement?  

A. The American Recovery and Reinvestment Act of 2009, better known as the stimulus bill, included significant new funding to support HIT/EMR adoption by physicians. Beginning in 2011, physicians who participate in Medicare or Medicaid and demonstrate meaningful use of EMRs may be eligible for the funding. Achieving meaningful use can mean up to $63,750 in incentives from Medicaid or $44,000 from Medicare. Eligibility and administration of the incentive payments vary between the programs. For detailed information about the incentive payments, visit the Technology section under Practice Help on the TMA website

Q. How will health system reform affect indigent care?   

A. Texas is the uninsured capital of the nation, with some 5.6 million people – or 25 percent of the population – lacking health insurance. The ACA included several important provisions aimed at reducing the number of uninsured. Patients with preexisting conditions who are uninsured may be eligible for coverage under a new high-risk pool. For details about eligibility and enrollment, click here. Beginning in 2014, an estimated 4.5 million Texans will gain health insurance coverage either via the new health insurance exchange, from which eligible patients will be able to choose coverage from participating private health plans, or via Medicaid, which will be expanded to cover Texans with income up to 133 percent of poverty or about $30,000 year. The law does not extend coverage to uninsured undocumented immigrants living in Texas. An estimated 1.5 million uninsured noncitizens currently live in the state.   

Q. Who is going to care for all these new patients?   

A. The ACA included a number of provisions aimed at strengthening the physician and health care professional workforce, including establishing a new National Workforce Commission. Unquestionably, much more work must be done to ensure Texans' timely access to physician services once the new coverage provisions of the law take effect in 2014. In the 2011 Texas legislative session, TMA will strongly advocate expanded state funding for graduate medical education training as well as innovative initiatives to recruit and retain more Texas physicians, such as loan repayment programs.  

Q. Is there any good news for a practicing primary care doctor in health system reform?   

A. Numerous provisions of the ACA are aimed at strengthening the role of primary care physicians within the health care delivery system, including expanded coverage of preventive health service for patients covered by private health plans, Medicare, and Medicaid; enhanced Medicaid and Medicare payments for family physicians, pediatricians, and general internists; funding to support graduate medical education for primary care physicians; and initiatives to foster greater use of patient-centered medical homes. Further details can be found at the TMA Health System Reform Action Center

Q. How are the accountable care organizations (ACOs) going to work?   

A. While there is substantial interest in ACOs as a means to reshape the American health care delivery system, it is too early to tell how or whether this new payment and delivery model will work. Rules governing ACO operations in Medicare and Medicaid have not yet been published. There are also myriad legal issues that may impede their development. Check TMA's ACO resource center on the TMA website to stay abreast of ACO happenings, including soon-to-be issued Medicare ACO rules. Log on to the TMA website and click on Practice Help.   

Q. What is organized medicine doing about the fact that so many insurers continue to tie our reimbursements to a percentage of Medicare payments?   

A. Both TMA and AMA have policies discouraging the coupling of commercial contract fees with the Medicare fee schedule, but no law prevents or requires any particular payment provisions in private contracts. Physicians who have responded to TMA surveys report that they are sometimes able to negotiate changes in contract payment terms. TMA practice management staff offer legal information and education to help physicians negotiate payment rates with insurers.   

Q. Can health insurance companies deny care even if a doctor advises the patient needs it?   

A. The ACA does not specify what services must be covered, except that a list of specific preventive care services must be covered without patient cost sharing by some plans after Sept. 23, 2010. For more information on these preventive care requirements, visit the TMA website

Q. What are the Medicare cuts in the $500 billion reduction to Medicare over the next 10 years?   

A. The Medicare spending cuts include payment reductions of more than $100 billion for Medicare Advantage plans and fee reductions or reduced update amounts for almost all types of Medicare payments except the physician fees. Physician fees based on the Resource-Based Relative Value Scale (RBRVS) are not cut by the ACA, but they will continue to be subject to cuts driven by the Sustainable Growth Rate update formula.   

Q. I decided to limit my practice to surgical assistance and therefore have no medical records. What are the penalties if I don't develop an electronic medical record (EMR) system?  

A. The health system reform law contains penalties, starting in 2015, for physicians who do not participate in the Physician Quality Reporting Initiative reporting program. Accurate and efficient reporting may require the use of an EMR. The penalties will be phased in from 1.5 percent to 2 percent off of the Medicare fee schedule in 2017. The government doesn't care if you have medical records or not.  

Q. What impact will comparative effectiveness research have on practices?  

A. The ACA creates a Patient-Centered Outcomes Research Institute to fund comparative clinical effectiveness research and to publish results and develop recommendations based on that research to provide information for physicians and patients to use in decision making. Any future use of the research in modifying payment or coverage requirements is subject to public input.  

Q. How will the insurance reforms change reimbursements for surgeons?   

A. The insurance reforms in the ACA do not regulate commercial insurer payment to physicians, and the legislation does not have any immediate effect on Medicare's physician fees, which continue to be set, revised, and updated based on the relative values and geographic adjustors in the RBRVS system and the SGR update methodology. Some general surgeons who work in health professional shortage areas may be eligible for a 10-percent bonus payment for some Medicare surgical services starting in 2011. After 2015, new cost-savings measures such as the Medicare value-based payment program or the recommendations of the Independent Medicare Advisory Board may have an effect, but those effects cannot currently be predicted.  

January 2011 Texas Medicine Contents
Texas Medicine Main Page







Last Updated On

November 09, 2017

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