Physicians worry reform reduces fee schedule

September 1, 2013

A survey of New Jersey physicians reveals concern about reimbursement and changes to practice structures

When asked about their outlook concerning their medical practices and health reform’s individual mandate, New Jersey physicians appear to be pessimistic, according to Brach Eichler’s 2013 New Jersey Health Care Monitor. Brach Eichler conducted the annual survey among nearly 150 physicians, including solo practitioners, members of a group practice or employees of a healthcare facility, in July.

According to the results, doctors worry most about the general atmosphere of healthcare cost containment translating into reduced revenue for their practices.

“If insurance premiums are going to go down, physicians are concerned that it may have a corresponding reduction in reimbursement,” says John D. Fanburg, managing member and head of the healthcare practice at Brach Eichler.  “The Medicare fee schedule has virtually remained unchanged for over 12 years, and a further reduction will be difficult for physicians to absorb.”

Fanburg also says physicians tend to have a knee-jerk reaction to any significant change in the status quo that creates uncertainty for the future. With accountable care and other innovative payment models gaining traction, payment can be harder to negotiate, which causes some distress, especially to practices that have no experience sharing risk.

Access to care

Although more Americans will gain access to care by gaining insurance coverage, the assumption is not necessarily that physicians will be seeing more patients. Fanburg says the bigger question is what the reimbursement rates for those patients will be.

New Jersey is renown for having the highest insurance premiums in country-a ripple effect related to a guaranteed issue policy that was not coupled with an individual mandate. For example, a recent benchmark report from the Government Accountability Office found that a 30-year-old male nonsmoker in the state could pay $43,284 in annual premiums in the individual market.

The state has a population of 8.8 million, according to the Census Bureau. Its uninsured rate of more than 15% is expected to be reduced to 8.9% through the provisions of health reform, according to the Kaiser Family Foundation.

Fanburg“Most physician practices in New Jersey are small: two to five,” Fanburg says. “The smaller groups feel vulnerable to any change in status quo and more importantly, their lack of leverage in negotiating acceptable levels of reimbursement with the insurance companies.  This lack of leverage is driving these groups to investigate alternative practice structures such as sales to hospitals or sales to larger physician groups.”

In the survey, more than 63% of physicians indicated their reimbursement rates had decreased from last year.

Nearly half (45.5%) also said they were considering changing their practice structure.  Specifically, half of all those respondents changing practice structure said they plan to integrate with another healthcare organization such as another single specialty or multispecialty practice, an individual practice association, a hospital system or a joint venture.

Results also indicate:

·        Another 35.9% said they plan to hire other practitioners;

·        18.8% said they will contract with a health care facility this year;

·        15.6% plan to leave their practice to practice in another state;

·        12.5% said they were leaving their practice to join another practice, and

·        12.5% said they plan to retire. 

Fanburg also says physicians have a negative outlook because of increasing malpractice-insurance premiums, increased competition and declining autonomy.