Post-Election Health Policy:
Impact on Physicians
Bruce S. Auerbach, MD
Massachusetts Medical Society
•No stakeholder group in health care is more aware of the problems in
health care than physicians.
•We have no monopoly on this, but we experience its strengths and
weaknesses every day, in a very direct, almost intimate way.
•Physicians are both Republican and Democrat – maybe more
Democrat here in Massachusetts.
•But regardless of how we vote, where we live or where we work, we
are fundamentally conservative people – we need to feel assured
something new will work, before we use it.
•We’re not likely to take a chance on something new, just because it’s
new, because peoples’ lives are at stake. This applies to technologies,
and it applies to health policy too.
•Physicians tend to fall into 3 camps.
•A small group that wants us to go back to the good old days
•Another small group that wants us to leap into a full-blown single
•Then, there is a vast middle ground of physicians who believe
that while the health care system has its good elements, it is
somewhat dysfunctional too. They looking for the areas to
improve what’s dysfunctional without harming what works.
•Three different approaches, but what we have in common is we all
•We know that costs cannot keep rising like this forever.
•We know that while the quality of our care is higher than ever, it could
be a lot better.
•In the past, we did not embrace the imperative to control costs. But that
•In the past, we did not embrace the quality imperative as well as we
could have. But that is changing, too.
•You could argue that we should have come to this point sooner – and I
may not argue with you – but the point is, we’re here at the table. We
want to work with you to make health care better.
• Reduce variation
• IT adoption
• Payment reform
• Performance measurement
– Scientific validity
• Cost control
•We accept the stipulation that reducing unnecessary variation in health
care is critically important. It will save costs, improve outcomes, and it
may save lives.
•We accept the idea that full scale adoption of information technology –
in big hospitals and small practices – will help get us there very quickly.
•We accept the assertion that reimbursing hospitals and doctors solely
on the volume of work they do is not applicable in all settings. We need
•We accept the transparency imperative. We’re not afraid of having our
outcomes available for the public to see. It’ll keep us on our toes, and it
will reinforce the trust that must be present between every doctor and
•We accept the notion that at least some of our compensation should be
based on how well we do our jobs.
•This could be where many of us in this room may part ways.
•We insist that such performance measurement systems – and
performance based payments – must be scientifically valid.
•We do not accept badly designed systems that are literally worse
than the problem itself.
•We have proven that we will do what it takes to fight badly
designed systems. We have gone to court to correct a particularly
bad system that its sponsors have been unwilling to change on
•We don’t think it has to be perfect before it’s rolled out. You do
have to start somewhere, as my friends among the health plans
are fond of saying. But wherever we start must be scientifically
valid – and we have published detailed explanations of what that
means. They’re available on our website.
•We accept that we bear some responsibility for controlling costs. But
we don’t have as much control over costs as some would have you
•There’s an old saying that most of medicine flows from the pen of the
doctor – or at least the modern equivalent of the pen. But that’s a gross
oversimplification of why health care has become expensive.
Schroeder S. N Engl J Med 2007;357:1221-1228
•According to Michael McGinnis in a very famous article published in
Health Affairs six years ago, our health care system has only a limited
ability to reduce premature death and improve overall well-being.
•Put another way, if every American were to receive timely, error-free
medical care tomorrow, the number of early deaths in America would
not be reduced by very much.
•The top factors by far -- behavior and genetics – have seven times the
impact on health status over medical care alone.
•At our Shattuck Lecture a year ago, Steve Schroeder asked, if that’s
the case, why do we spend so little on health prevention? Good
question – we could spend days answering that.
•Since I only have 20 minutes today, I can short-cut that discussion by
telling you that if the new administration were to bestow its blessing
today on a massive funding of preventive care, the physician community
would be one of the first in line to support it.
•Not just prevention, either.
•Chronic disease management - asthma, diabetes, high blood
•Let’s look at diabetes alone: Simply ensuring that a diabetic has timely,
regular H1aC tests, and timely eye exams, would reduce blindness,
hospitalization, cardiac events, stroke, amputations, and the list goes
•However: our system rewards heroic, episodic care above all.
Preventive care gets little, and frequently, no funding.
•Our system has devalued primary care so much that many of our
young doctors don’t want to become internists, or family practitioners –
even if they were inclined to do when they started medical school.
•There are enough pediatricians – for now – but if things don’t change,
maybe we’ll see a crisis in that specialty too.
•It has gotten so bad that there is a terrible crisis in the shortage of
primary care physicians – here and across the country. More than
higher costs, this shortage threatens the terrific gains we made in
Massachusetts to insure everyone.
•If it happens here, with our medical legacy, imagine what would
happen if this experiment is exported to other states, where their
health care infrastructure isn’t like ours. It would be a disaster.
•Preventive care is actually more expensive in the short run. I can’t list
any studies proving that this will save money in the long run, but it’s
worth the gamble. And – even if we do spend more – it’s for the right
reason. To keep you out of the hospital.
Physician Workforce Study
• Internal medicine
• Family medicine
• New: Oncology, neurology,
– Emergency medicine
– General surgery
– Vascular surgery
•There is a long punch list of things physicians want addressed in the
•We are very worried about the condition of the physician workforce –
not just here in Massachusetts, but across the country.
•For years, we have seen predictions of a severe shortage of physicians
by the middle of the century. That is now coming true.
•For the last seven years, our medical society has conducted a
comprehensive study of the physician workforce in our state. We survey
practicing physicians, chiefs of hospital medical staffs, and others,
about their ability to retyain and recruit physicians in Massachusetts.
•Every year, we identified between 6 and 12 physician specialties with
labor shortages. Three years ago, we identified an emerging crisis in
the primary care labor force. Today this “emerging” crisis is here, it is
now front and center.
•But as you can see here, it is only two of the 12 specialties that are
under stress. That is why a workforce strategy targeting only primary
care will fail. This goes beyond primary care – it goes to some of the
core specialties in medicine.
•The causes are very complex, and the answer may NOT be simply
adding more physicians. That could be a never-ending spiral. We need
to look at systemic reforms that make the best use of our resources,
and encourage the marketplace to allocate our resources more
•Medicare is an example of what works, and doesn’t work, about our
health care system.
•Medicare successfully made health care accessible to every senior
citizen in America.
•By its sheer size, Medicare brings the flaws of health care system in
very sharp focus.
•One problem is rising costs. If left unchecked, Medicare could bankrupt
our federal budget and our society.
•So for the last 8 years, Congress has tried to control the growth of
Medicare spending by using a detailed formula that has stipulated a cut
in physician payment rates by about 5% each year, since the beginning
of the decade.
•These cuts are based on faulty, outdated assumptions, and would be
devastating to physician practices nationwide. The problem needs
delicate micro-surgery, but instead we had an attempted amputation.
•In every year but one, Congress intervened at the last minute –
sometimes after the last minute – to block the payment cut. Because of
federal “pay-go” rules, the cut didn’t go away, it was deferred until a
date in the future.
•This has happened year after year, and the day of reckoning was
pushed deeper and deeper into the future. And the size of that future
cut grew each time.
•This past year, the payment cut was delayed 18 months (instead of 6
months or 12 months). Finally, Congress has plans to develop a long-
term fix to this Medicare payment problem in the new administration.
•Physicians are very supportive of this effort, and we expect to be at the
table helping Congress and the administration develop a system that
•Another thing we can look at to control costs is the cost of defensive
•Tomorrow, our medical society will release a report on the cost of
defensive medicine in Massachusetts. Conventional wisdom is that
malpractice reform will make only a small dent in controlling costs.
•Our report states that defensive medicine wastes between 8% and
15% of the health care dollar. It’s a huge proportion of our spending,
and it’s more easily corrected than some of the other approaches we’re
• Capitation • PMPM rates cannot
keep up with costs
• Global • Administrative cost
• Rate Setting • Re-regulation?
• Single Payer • Systemic paradigm
shift, but which
• DON • Stifles competitive
•That brings us to overall health care payment reform.
•There is considerable interest in the physician community in examining
a new way to compensate providers for the care they provide – and a
new way for the nation to pay for it.
•Standalone solutions have been proposed in the past, and each has
•The problem with capitation was that PMPM rates could not
keep up with costs. The theoretical incentive to under-treat was
more than our society could tolerate.
•If you remember, the Institute of Medicine says that poor quality
in health care comes in three forms – misuse, overuse, and
underuse of care. Capitation encourages underuse.
•Global capitation doesn’t reduce costs … it shifts administrative
costs to physician practices, which are probably the LEAST
equipped entity in health care to deal with the issue. We think that
cost-shifting increases overall costs, worsens health status by
reducing access, or both.
•Rate setting at a global level introduces re-regulation … the top-
down control of health care has its own problems.
•Single-payer would cause a systemic paradigm shift, but would
we want or tolerate the system we would get from that shift?
•Determination of Need (DON) processes are cumbersome,
overly political and stifle competition and innovation.
Evidence Informed Case Rate Model – A single risk adjusted payment
across inpatient and outpatient settings to care for a patient with a
• May improve quality, • Only 10 ECRs developed
reduce administrative • Only in the modeling
burden, enhance stage
transparency • Limited data available to
• Patient centered, build ECRs
Consumer driven • Development time
• Performance based – Still looking for pilot sites
– Prometheus Scorecard
– Claims activity
Evidence-Informed Case Rates: A New Health Care Payment Model, , Francois de Brantes,; Joseph A, Camillus, April 2007
Commonwealth Fund Publication No. 1022
Some of the most interesting solutions are comprehensive payment
models that try to combine evidence-based medicine with aligned
incentives and reasonable cost control.
Some examples include:
the Prometheus Payment Model, promoted by Francois
DeBrantes and published by the Commonwealth Fund in 2007.
This is a single risk-adjusted payment across inpatient and
outpatient settings to care for a patient with a specific condition.
Blue Cross and Blue Shield MA
Global capitation proposal for doctors and hospitals. Will consist of a
flat fee per patient per year, age and sickness adjusted, with a bonus
for improved care.
• Quicker access to care • Details (Improved care?)
via technology • May restrict patient
• Home visits by nurses choice
• Better coordination of • Physicians responsible
care for costs they do not
• Better care for chronic control
illness • Increased administrative
burden for physicians
– Claims administration
New therapy for old woes, Alice Dembner, 01/22/08, The Boston Globe
•A global capitation proposal from Blue Cross Blue Shield of
Massachusetts, introduced last year, but with little uptake so far.
It’s essentially a flat capitated rate, with additional bonuses for
•It has drawbacks, including the possibility of restricting
patient choice, penalizing physicians for costs they do not
control, and increasing administrative burden on physicians
The Advanced Medical Home
Based on the principles of the Chronic Care model, uses evidence
based guidelines and information technology to demonstrate use of
• Relationship based • Potential for gaming of system
• Uses evidence based over or under utilization
guidelines • Potential for less provider
• Propose a fee for primary care access
management • A variation of capitation
• Purports to reduce wasteful • Potential for primary care
spending on unnecessary physician shortage
• Similar to successful European
The Advanced Medical Home: A Patient-Centered, Physician-Guided Model of Health Care; Michael Barr, MD, MBA, Vice President, Practice
Advocacy & Improvement; Jack Ginsberg, Director, Policy Analysis & Research. A Policy Monograph, American College of Physicians, 2006
Fundamental Reform of Payment for Adult Primary Care: Comprehensive Payment for Comprehensive Care; Alan H. Goroll, MD.; Robert A.
Berenson, MD.; Stephen C. Schoenbaum, MD.; and Laurence Gardner, MD, 2006, Society of General Internal Medicine
There’s a lot of talk about the advanced medical home. This
vision of care, based on the model of chronic care management,
is intuitively attractive to many people, because it appears to
promote prevention, chronic disease management, collaboration,
and communication. It appears to align the incentives of patients,
payers and providers better than other systems in existence, or
At least a half-dozen pilot medical home projects are
underway, or about to begin, in the area. Some are being
developed by physicians, many by health plans. There are
so many different approaches to this concept, and many of
them are dramatically different form each other.
I suspect that it will be a year or so before this new idea
becomes more tangible; before we have a model that can
That’s just a few approaches… there are many more.
Post-Election Health Policy:
Impact on Physicians
Bruce S. Auerbach, MD
Massachusetts Medical Society
•These comprehensive models may not be the magic solution. But they
offer the good chance at addressing what we’re talking about today:
•Reducing costs without cost-shifting
•And most important, improving health
•The key point I want to leave you with:
•Physicians are ready to step up and participate in these discussion.
We are ready to help lead our health care system into the new era.