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Physicians_II_08

Physicians_II_08 - Physicians II PAM 435 Typical Economic...

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Physicians II PAM 435 March 11, 2008
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Typical Economic Relationship Between Physicians & Hospitals Medicare Medicaid Insurance Insurance Plan A Plan B Hospital A Hospital B Physician Physician’s Practice Revenue from office visits $$$ Revenue from services provided to hospital pts $$$ Less: - rent $$$ - staff (e.g., nurses) $$$ - malpractice ins. $$$ Income $$$ DRG RBRVS Hospitals pay for nurses, technicians, medical equipment, and medical supplies Medicare patient
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10% 46% 32% 7% 7% Solo 2-9 10-19 20-49 50+ Office-based Practices Remain Small: % of Physicians by Practice Size, 2002 Source: Calculations based on AMA 2002. Non-federal, office- based, MDs involved full-time in patient care activities. Group practices Solo
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Hospital Physician Radiology, Anesthesiology, Hospitals That Pathology, Emergency Med. Purchase a MD’s Practice HMO as Employer MD Group Practice Salary Contract ($) Hospital/ Health System Physician Salary Health system collectsMD only treats that practice revenues, pays HMO’s patients. HMO all practice expenses, covers all expenses. keeps any profit. Health system may have little control over where MD admits patients Staff Model HMO Physician Salary Many Other Practice Arrangements Exist
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Physician Employment (Non-federal) 87% office-based practice 6% private hospital 4% government 2% medical school 0.3% HMO Source: Calculations based on AMA, August 2004. For 603,000 MDs who perform patient care full-time (excludes 23% unknown)
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Various Methods of Paying Physicians Insurance Company MD Fee-for-service (FFS) Insurance Company Capitation Payment depends Salary plus Pre-payment on a per- on what services possible bonus enrollee, per-month basis an MD actually regardless of what the MD performs does to the patient MD Salary to MDs HMO MD
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26.3 50 12.7 8.2 1.8 Private health insurance and self-pay FFS Medicare FFS Capitation (all payers) Medicaid FFS Charity care Source: MGMA Cost Survey. FFS From Private Health Insurers Accounts for 50% of Physicians’ Practice Revenue, on Average
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Medicare Pays MDs With a FFS System Called “RBRVS” RBRVS (Resource-Based Relative Value Scale) Introduced in 1992 Replaced “customary and usual” charge system Goals: Level the playing field between specialists and primary care physicians (family practice, pediatrics, internal medicine) Slow the growth rate of Medicare Part B spending Limit out-of-pocket payments for elderly
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Overview of Medicare’s Resource-Based Relative Value Scale (RBRVS) Payment System Patients are categorized into one of 7,500 different Current Procedural Terminology (CPT) categories for office visits, consultations, and surgery Each CPT is assigned 3 separate relative value units (RVU). See next slide. Congress sets payment for each RVU unit ($37.90 in 2005) Product of the RVUs for the CPT and the payment per unit determines how much the MD is paid.
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  • Spring '08
  • Nicholson
  • Physician, Resource-Based Relative Value Scale, American Medical Colleges, private health insurers, practice cost index

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