Tuesday, May 17, 2011
With all of the attention being paid to the various challenges to PPACA currently winding their way through the appellate courts, it is easy to forget that there is other interesting work being done that could impact health care reform. The Government Accountability Office recently released a study entitled “The Effect of a Major Coverage Expansion on Physician Work Hours: Evidence from the Children’s Health Insurance Program.” The study found that there was a large negative relationship between the magnitude of a state’s CHIP expansion and trends in pediatricians’ work hours. When more children became insured by an expanded public health insurance program, pediatricians who would presumably be treating this population actually worked fewer hours, despite an increase in demand for their services. States that implemented a large CHIP expansion experienced a larger drop in pediatrician hours worked than states that implemented more modest CHIP expansions. The authors of the study conclude that a possible explanation for this is that the reimbursement rates in the CHIP program are much lower than those of private insurers. This supply-driven theory goes as follows: CHIP expansions reduced average reimbursement rates for pediatricians. Physicians control the volume and type of services they provide (they don’t take all comers). Physicians will continue to have the same fixed costs, such as durable equipment or office capacity (including the number of hours the office is open and the number of hours they work), regardless of the reimbursement rate they receive. Therefore, physicians will realign their fixed-cost decisions to fit better with the types of patients they are seeing. In this model, pediatricians would choose to work fewer hours as CHIP enrollment expands, because the reimbursement rates for seeing CHIP patients do not meet their supply-side needs. These results are consistent with an older study from the New England Journal of Medicine which showed that when universal coverage for physician services was implemented in Quebec, Canada in 1970, average physician work hours fell by about 15 percent.
These results are intriguing for a number of reasons. First of all, they have implications for how successful the PPACA will be (assuming it survives the current legal challenges) in increasing access to health care. In addition to expanding the market for private insurance, PPACA relies on expanded enrollment in public insurance to reduce the number of uninsured. To presume that increased access to public insurance, which will continue to pay rates below those paid by private insurers, will translate to increased access to health care, may be a mistake. Unless health care providers are incentivized in some way (financial or otherwise) to treat these patients, increased demand will not necessarily increase supply. As long as there are enough people with better-paying private insurance to keep health care providers busy, providers have no incentive to increase supply to meet the increased demand. After all, for most people, if you make enough to live comfortably doing the amount of work you are currently accustomed to doing, any extra work you do has to really be worth it. Children covered by public insurance programs, such as Medicaid and CHIP, are more likely to have medical problems that are complicated by less-than-ideal living or social conditions. Yet rather than pay pediatricians more to deal with these children’s complex problems and make the extra work worth it, according to a 2009 study by Ingenix Consulting, we pay physicians who treat these children more than 40% less than the national average reimbursement rate for a physician office visit. Clearly, expanded insurance coverage alone is not the answer to our nation’s health care problems.
Although the PPACA provides for an increase in Medicaid payments to primary care physicians to equal the somewhat higher Medicare payment rate for 2013 and 2014, I don’t think this is likely to be enough to incentivize physicians to take these complex Medicaid patients when private insurance pays far more for physicians to do what is often far less. In the absence of appropriate incentives to make publicly funded patients attractive to physicians, the other option would be to change the supply-side predicate that physicians do not take all comers—mandate that physicians who accept any federal money treat all comers. This is what became necessary to ensure that hospital emergency rooms did not refuse to treat patients, resulting in the wildly unpopular (amongst hospitals) unfunded mandate the Emergency Medical Treatment and Labor Act (EMTALA). Another option would be for state licensing authorities to require physicians to treat a certain number of publicly funded patients as a condition of licensure. Of course, if all states did not do this at the same time, this would result in a flood of physicians fleeing any state that implemented such a mandate.
Physicians and other providers must make some hard decisions regarding whom they are willing to treat, and for how much, if they want to avoid having those decisions made for them. I presume it would be more palatable to physicians if we reduce incentives to treat only privately insured patients by lowering payment rate differentials between privately and publicly insured patients, than to force physicians to treat all comers (or some percentage of comers). If the GAO’s suggested supply-driven model of physician behavior holds true, and physicians truly want freedom from the tyranny of state or federal mandates, they should probably be embracing the changes in the private and public insurance market that would equalize coverage for all persons currently being debated in Congress and the courts.