Physicians on the Offense: Get Organized to Thrive in This Payment Arena

Robert Laszewski

Despite the unprecedented polarization of the nation's views on what's wrong with the healthcare system, both sides think doctors should fix it.

"If there's one thing Democrats and Republicans agree on, it's that we have to move to value-based care," said Robert Laszewski, president of Health Policy and Strategy Associates and a former insurance industry executive who now consults on the business and politics of healthcare. "Both sides count on it, because they won't have to take away anyone's benefits if you make value-based care work."

In his keynote address at the Large Urology Group Practice Association, Laszewski, a frequent speaker at LUGPA gatherings, delineated the current political and business landscape for physicians, and urged his audience to band together and create an offensive strategy.

"You need to get organized, because the guys who are paying you are getting organized," Laszewski said, citing the proposed mergers of already giant insurance companies, Aetna with Humana and Anthem with Cigna.

Even if those mergers fail to receive government approval because of well-founded antitrust concerns, the health insurance market is already highly consolidated and powerful. United HealthCare, the nation's largest single insurer, has annual revenues of more than $130 billion, and Laszewski noted that Blue Cross/Blue Shield would outstrip that figure if all their revenues were combined.

"You're caught in the middle, whatever happens."

Physicians shouldn't look to the government to help. The Centers for Medicare and Medicaid Services are also moving quickly to value-based reimbursement. The Obama administration has set a goal of tying half of Medicare spending to performance by 2018, even though the costs associated with accountable care organizations have been higher than projected.

In 2019 physicians are scheduled to face a fork in the road with Medicare: either stick with the fee-for-service model and face a host of existing and new requirements under the Merit-based Incentive Payment System (MIPS), or move to an Alternative Payment Model (APM) that is based on providers assuming substantial financial risk for outcomes but also confers a 5% lump-sum bonus on physicians’ Medicare payments for 5 years, followed by a 0.75% increase in payments each year thereafter.

"You have the choice of being in the fee-for-service system where they'll treat you like 5-year olds and beat the hell out of you every day, or you can go into the adult system, make 5% more, and manage your own future," Laszewski said. In a moment of preaching to the choir, he added that a physician's best strategy in the new environment is to join a large group practice that has the resources to succeed in a value-based environment.

Five years after passage, the Affordable Care Act is working in some ways but failing in others, Laszewski said. On the plus side, millions more people are insured, either through purchasing insurance or by the expansion of Medicaid (now extended in 30 states, though most of the Republican south is still holding out). The extension of insurance coverage means more patients are able to pay their bills.

On the minus side, enrollments of eligible members of the middle class are lagging. Once they no longer qualify for significant subsidies, they can't afford the high premiums and deductibles for plans on the government exchanges. That leaves the exchanges predominantly to enrollees on the low end of the income spectrum, and also tilts enrollment heavily toward those with chronic conditions like congestive heart failure and diabetes, who benefit most immediately from being insured.

"The shrewdest politician on healthcare is Hillary [Clinton]," Laszewski said. "She zeroes in on out-of-pocket costs being too high, and responds directly to that." Clinton is also taking a populist and popular line on drug prices, advocating for letting Medicare negotiate prices directly with drug companies, and allowing Americans to import drugs from Canada.

Laszewski called a repeal of Obamacare politically impossible, even though most Republican candidates have made repeal a centerpiece of their campaigns. Even if the Republicans win the White House and hold the Senate, he predicts they will never get the 60 votes they need in the Senate for repeal.

Moreover, the Republicans' counterproposals for fixing the system, which include repealing the Medicaid expansion ("Good luck with that," Laszewski said) and reinstating preexisting condition restrictions for anyone who hasn't been continuously insured for 18 months, may make them popular with their own party but torpedo their chances in the general election.

"I think Republicans need to be more willing to fix Obamacare, rather than trying to replace it with something just as problematic," Laszewski said.

Healthcare is going to occupy an increasing share of the federal budget in the next 40 years, and Laszewski said physicians will start feeling the squeeze soon, as the combination of healthcare and interest on the national debt propels the government's total obligations significantly above its revenue.

"We're going to be doing a lot more with a lot less money in years to come."

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