Reimbursement in medicine: One radiologist's perspective

How do we get paid? Taboo question for a doctor to ask, right? When I think about reimbursement, my head spins into a wild vortex of bewilderment and non-cohesive mush. Summarizing the problems, complaints and processes associated with medical reimbursement in a brief column is akin to teaching my 5 year-old the theory of relativity. But I know you only have three-and-a-half more minutes to read this column, so I'll stop procrastinating.

Are our services valued fairly? Are we rewarded for cutting costs and improving efficiency? Does physician experience count on a balance sheet? Is a country that has been sheltered from medical costs/prices/charges for so long able to place a value on the healthcare they receive--in dollars? Should prices in medicine be transparent? (yes) And if so, which ones?

I admittedly am young and naive. But I have been in hospitals nearly every day for the last nine years of my life (plus I am interested in this stuff), and sadly the best answers I can come up with to these questions are, "I think so," "I hope so," and "it depends."

Here is what I know regarding reimbursement in medicine:

I know that the reimbursement we receive is largely based on fees that are negotiated with private insurers behind-the-scenes. I know that the results of most of these negotiations are proprietary--and remarkably geographically variable.

I know that valuation for CPT codes at the RUC-level is partly based on physician surveys that evaluate physician time and effort required for a procedure or evaluation/management. The less time and resources it takes, the less the CPT code likely gets valued.

I know that price does not equal cost; and charges are not based on expenses.

I know that higher cost does not equal higher quality or better outcomes. In fact, (deplorably) I know that I get paid the same for a procedure whether I do a good job or a bad job--as long as it is associated with an appropriate ICD-9 ICD-10 code.

I know that some medical practices and services are not sustainable with current reimbursement rates and processes, because no matter how many lean-six-sigma master black belts you put to the task, the expenses of providing some services are higher than reimbursement. In healthcare, driving down costs and improving efficiency doesn't automatically generate higher profit. Especially if improved processes increase utilization while decreasing physician effort and practice expense resulting in decreased valuation by payers. (Healthcare is not Southwest Airlines, Zappos, Walmart, Amazon, or Toyota--despite the nauseatingly excessive comparisons offered by analysts.)

And I know that Americans increasingly are transitioning to higher deductible insurance plans and will consequently continue to become more cost-conscious about their healthcare choices.

Here is what I think:

I think what we call "valuation" at the RUC-level has little to do with value. It is a budget-neutral, zero-sum game. The "value" assigned to codes is proportionate based on the number of new codes, and those going through five-year review. There is a limited, constant pool of RVUs to use to assign value to these codes. Tests and procedures that are performed a lot often get "re-valued" (which is code for "re-duced").  But, frequency of use and presence of newer options does not inherently decrease the real value of other therapies, tests and consultations.

I think alternative compensation models, such as those based on time-driven activity based costing, may have some merit. However, exhaustive regulatory oversight and bureaucratic mandates leave many physicians stuck performing tasks for which they are way over trained. To pay physicians optimally, we must always be performing tasks (cognitively or procedurally) that require our expertise.

I think that there are a number of layers to the healthcare cost-conundrum, including FDA regulation, astronomically rising medical school tuition rates, and "creative" taxation of medical device companies that lead to higher supply prices for physicians and hospitals. Blindly cutting physician reimbursement in light of these is probably irresponsible.

I think that the standard of care has been elevated to the point that some (not all) very expensive technologies cannot be morally eliminated. But the sticker-shock will tempt some to suggest otherwise.

Here is what I have come to realize:

Fee-for-service is choking itself to death.

I realize that the current state of medical reimbursement is largely a result of an inherently inflationary contract physicians agreed to with the enactment of Medicare and its regrettably famous "customary, prevailing, and reasonable" physician payments.

I realize that young physician leaders have to develop, embrace and reinforce new payment models centered on outcomes and value. Change will come from many angles. Shared savings, price transparency, comparative-effectiveness research, and quality-improvement incentives are circling. We have to recognize and see-through our own biases--nurtured by the culture in which we trained--and recognize that we do, in fact, have a problem.

Lastly, I don't know if we should be paid more, less, or the same. I just don't know. But we must, as physicians, be engaged and offer our insight into the complexity of the true-costs associated with treating patients. And all of their variables. 

We are the only ones that truly understand.

Matt Hawkins, M.D., is a vascular interventional radiology fellow at the University of Washington/Seattle Children's Hospital. Follow him on Twitter at @MattHawkinsMD.

Prior articles by the author:
Keeping score with revenue: The 2-step-back feedback
It's time to end diagnosis fragmentation
RSNA13: Business analytics, clinical decision support take center stage for radiologists

Suggested Articles

Centene Corporation, Walgreens and RxAdvance announced this week that they’re joining forces to grow the use of a cloud-based PBM platform. 

Welcome to this week's Chutes & Ladders, our roundup of hirings, firings and retirings throughout the industry.

Microsoft is teaming up with Nuance Communications to use technology to solve a big pain point for doctors—too much time spent on documentation.