It has always been financially rewarding for doctors to take care of rich patients. People with more money … well, they have more money to spend on health care. But shouldn’t this more money/higher payment relationship go away in Medicare?
It doesn’t, and some recent payment reforms may be making matters worse.
Medicare is a federal program to reimburse medical costs in people who are disabled, have kidney failure, or are elderly. Under Medicare, the government determines reimbursement rates. If your favorite orthopedic surgeon takes care of Medicare enrollees, she doesn’t decide how much to charge the government for the care she provides; the government does so, based on a fee schedule.
Medicare fees are not uniform across the country. The government takes account of local cost of living, for example, in determining payment rate; consequently, Medicare fees are higher in San Francisco than in Oklahoma City. (To my knowledge, that fee differential did not influence Kevin Durant’s decision to move from the Thunder to the Warriors.)
But here’s a much more pernicious bias in Medicare’s reimbursement policies. It’s based on recent efforts to incentivize providers to constrain costs while maintaining or improving quality. Specifically, the bias results from Medicare’s “comprehensive care for joint replacement” payment model, a.k.a. the CJR. Under this bundled payment program, providers get a fixed amount of money to cover the cost of joint replacement care: not just the procedure itself, but all the ensuing costs associated with recovery and rehabilitation. I’m a fan of the basic idea behind bundled payments. They incentivize providers to increase the efficiency of care across a longer period of time than, say, reimbursement fees tied solely to the immediate cost of a specific procedure.
Here’s a problem, though. CJR payments are adjusted based on quality measures, things like complication rates, and patient satisfaction. As it turns out, patients with lots of other medical problems, and those with complicated life circumstances, are more likely to experience complications after joint replacement surgeries, and also more likely to report low satisfaction with the procedures. That means that clinicians who care for at-risk populations — like those working in safety-net hospitals that care for disproportionately low-income patients — will demonstrate worse patient outcomes, even when they provide the same quality of care.
The result? The greater the proportion of low-income patients that orthopedic surgeons care for, the less money they receive from Medicare to reward them for a high quality of care. Here’s a summary of that finding, with health care providers split into quintiles. At the top are the providers with the smallest percent of low-income patients.
Compared to orthopedic surgeons caring for the richest patient populations, those working in safety-net hospitals receive $420 less per patient from Medicare for knee replacements. Their reward is half the size of those other surgeons.
Medicare reimbursement needs to account for the challenges of caring for patients whose life circumstances are particularly challenging. Providers shouldn’t be punished for taking care of needy populations.
Peter Ubel is a physician and behavioral scientist who blogs at his self-titled site, Peter Ubel, and can be reached on Twitter @PeterUbel. He is the author of Critical Decisions: How You and Your Doctor Can Make the Right Medical Choices Together. This article originally appeared in Forbes.
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