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Oncoming battle for reimbursement

Low reimbursements, cost controls could strain payer-provider relationship further, experts say

Editor's note: In this issue, Medical Economics takes a look at payer-related issues facing you and your colleagues. Our October 10, 2012, issue will feature related results from our State of Primary Care survey of practicing physicians and interviews with other thought leaders in this arena.

Perhaps now more than ever, the relationship between physicians and payers faces an uncertain, rapidly changing future. New technologies, evolving concepts for care delivery, and new legislation and regulations are all exerting new financial pressures.

Annie Boynton
It's a relationship that was born in the United States during the Civil War, and the two sides have been fighting off and on ever since. The fight is about reimbursements, of course, and the relationship could become even more polarized if reimbursements continue to fall, administrative hassles increase, and lawmakers look to cut healthcare spending overall.

According to a recent Medical Economics survey, more than three-fourths of physicians believe that payers have negatively influenced patient care.

Even a partial lineup of recent or pending changes affecting the payer and provider relationship is daunting—from questions about increasing denials to the inherent challenges of implementing the International Statistical Classification of Diseases and Related Health Problems, 10th Revision (ICD-10).

Trends regarding physician reimbursement, says Virginia Martin, CMA, CPC, CHCO, CHBC, of Healthcare Consulting Associates of N.W. Ohio Inc., Waterville, "are all headed down." Multiple factors are at work, she says, but a principal reason is insurers' pursuit of profits.

Charles Cutler, MD, FACP
Frank Cohen, a healthcare consultant and principal of The Frank Cohen Group LLC, Clearwater, Florida, agrees. He contends that "the cost of healthcare has gone up much less than coverage costs have."

Practices should be reimbursed based on actual cost plus a markup, he says, noting that healthcare is the only business that's run the way it is.

For example, Cohen assails the logic by which many private payers base their rates on Medicare, when Medicare ever was intended for such a purpose, Medicare rates are restrained by the budget neutrality mandate, no private payer has the same kind of cost structure as the federal government, and the federal government is in any case incapable of setting fees for every service for every physician.

"As long as medical practices choose to have business partners that are inherently dishonest and unethical," that is, commercial payers, "they will not realize the full value of what they do," he says.

"It's not going to be pretty" over the next 4 to 5 years, especially for smaller practices, adds Annie Boynton, CPC, CPC-H, CPC-P, CPC-I, RHIT, CCS, CCS-P, CPhT, a member of the American Academy of Professional Coders National Advisory Board. She predicts that practices will be more likely to merge because of economic pressures.

In the face of all this news, some observers are nonetheless guardedly optimistic.

"The tension between the payers and the doctors has been lowered a notch or two," says Charles Cutler, MD, FACP, member and chairman-elect of the American College of Physicians (ACP) Board of Regents.

Glen Stream, MD, MBI, FAAFP, president of the American Academy of Family Physicians (AAFP), broadly agrees. "There's been a significant recognition by commercial payers that they need to support primary care payments," he says.

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