Imagine you’re a well-respected physician in your community. You work 40 years diligently providing care to countless patients, and when you retire, you become a part of the Medicare system that you’ve been paying into your entire career. But then your General Practitioner retires too, and you’re left to find a new primary care provider. No problem, right? You’ve been a physician in the community for decades, and there are plenty of primary care providers in town. You call one, and then another, and then another. Each time they say, “I’m sorry, we’re not accepting new Medicare patients at this time.” You’re left stunned, sitting in the fact that, despite years of paying your dues to the system, the system has effectively abandoned you.
This is what happened to a pediatrician in Colorado Springs, and it’s a problem that, according to Dr. Reagan Anderson, will only continue to grow as the years go on. Reagan Anderson is a career physician who served 2 tours in Iraq as First Reconnaissance Battalion Surgeon before retiring and starting a private dermatology practice with his father in Colorado Springs. The Colorado Dermatology Institute now has two locations, and Dr. Anderson averages up to 30 surgeries a day.
I meet Dr. Anderson at Ted’s Montana Grill. Over lunch, we discuss the Medicare system and its rippling effects on the Colorado Springs community and beyond. We sit in a booth in the back of the restaurant, tucked away, discussing the universal importance of Medicare over chicken sandwiches and bacon cheeseburgers with plenty of ketchup. I’m honest with him: I don’t have a very robust understanding of the Medicare system.
“That’s part of the systemic conundrum of medicine,” muses Anderson while the dulcet tones of Johnny Cash play over the restaurant speakers. “You’re young and healthy. You don’t care right now. But when you get sick one day, you will, and that train is coming for every person in this room,” he gestures broadly with his hands. Dr. Anderson then goes on to explain the frightening reality of American healthcare: the decisions made about the Medicare system affect every single person’s access to choice in provider and care.
If you, like me, don’t have a firm understanding of how Medicare pricing works, here’s a simplified overview.
In the United States, our medical system is driven by profit: profit for large insurance companies, large hospital systems, and Congresspeople whose campaigns are funded by these companies’ lobbying groups. Medicare and Medicaid are part of CMS (Centers for Medicare/Medicaid Services) and are government-run insurance—the largest insurance payer in America, to be exact. CMS dictates the fee schedule for all insurance companies. Every year, CMS decides how many RVUs (Relative Value Units) each office visit or medical procedure is worth. After the RVUs are assigned, Congress decides the CF (Conversion Factor), which is basically a multiplier that converts those RVUs to a dollar amount. The resulting dollar amount is what Medicare agrees to pay providers for each procedure or office visit. Once Medicare payouts are decided, Medicaid and private insurance companies adjust their payouts accordingly (more on that in a moment). Essentially, the amount that Medicare will pay for a procedure each year is decided by a series of math equations subject to the influence of politicians and big-money lobbying groups. The problem? There’s a cap on annual spending for healthcare.
Because Medicare payouts decide how much both Medicaid and private insurance companies pay providers for those same procedures, the ever-decreasing reimbursements have a ripple effect across all forms of insurance. If Medicare prices represent 100% of the decided provider payout for a procedure, private insurance companies typically agree to pay 110-120% of that price, while Medicaid averages more like 40-60%. Thus, as Medicare payouts for private practices lower, all other insurance payouts do too. Historically this has meant that private practices favor seeing Medicare and private insurance patients. However, as CMS continues to squeeze payouts for private practices, more and more of them are cutting the number of Medicare patients they accept.
“According to a study from MGMA, 58% of private practices said they’re going to limit Medicare patients because every year they’re getting paid less and less**. This year alone, private practices are getting paid 2.1% less this year than last year,” Dr. Anderson tells me. As more and more private practices (the small businesses of healthcare) have to limit how many Medicare patients they accept, there’s less and less available to those seeking care. He continues, “at some point, it’s a business decision: can I keep seeing this group of people?”
Doctors are prohibited from unionizing, which limits the bargaining power of those in private practice. Meanwhile, every year, large hospital systems with the money to sponsor political lobbyists are negotiating completely different reimbursement plans for themselves. Private practices are essentially being forced to turn to buyout from those hospital systems, which means costs for the patient are going up (often between 40 and 70% for the same treatment) while smaller businesses are forced out of the market. And ever-lowering payouts
are just the beginning of the unpredictability of our healthcare system.
“You go to a grocery store, and you buy a jug of milk, you know what you’re paying. It says right there. You pay, walk out, consume, it’s done,” says Anderson. “You come to me as a physician, and I can’t tell you what it’s going to cost. I don’t know what games the insurance companies are going to play…and I don’t know how complicated the procedure is going to be. I don’t know what your insurance is going to pay. So, what you do is you grab that jug of milk, go home, consume it, and a month later you get charged. Might be $3, might be $20, but guess what? You’ve got to pay.” He shakes his head. “The only people winning in medicine are the politicians and the commercial insurance companies who are making hundreds of millions of dollars off of this. They have the power.”
His frustration is palpable and righteous. “All we [physicians] want to do is take care of people, man. Let us freakin’ take care of people!” It’s no secret that healthcare workers are often overworked, underpaid, and burnt out. Even in hospitals, entire wings are closing all across the country due to a lack of staff and resources. “About 38% of doctors are contemplating retirement right now.” Anderson takes a deep breath and a final bite of his burger before elaborating. He explains that even outside of specialists, it’s going to be harder and harder for Medicare patients to even get in with a primary care internal medicine doctor, which actually ends up costing the system more money. Many small medical issues could be handled by a primary care provider in one visit, but if you can’t get in to see them, you end up having to visit all kinds of specialists for basic care instead of one doctor that can help with a broad scope of issues. “If you’re not very sick and don’t necessarily need specialist care, it costs the system an enormous amount of money and you time.” He lets out an exasperated sigh. “All of these factors are coming into play to create a snowball, and all of a sudden, you’re a pediatrician for 40 years, and you can’t find a primary care provider.”
The effect of all of this craziness? More and more providers, especially those in primary care who want to avoid a hospital buyout, are turning to Concierge Medicine. This style of practice is cropping up all over the country, and it’s easy to see why: rather than fighting with insurance companies and churning through patients every 5-7 minutes, practitioners can have guaranteed income and spend an hour taking good care of their patients.
“If you’re a family practice doctor, say you have a panel of 7500 patients, you have to see a patient every 5-7 minutes…with concierge, you pay them, say, $2000 a year and they promise that with 24 hours’ notice they’ll get you in and spend an hour with you. So, they see more like 5 or 6 patients a day (instead of 30-40) and only need 1-2 support staff instead of 5-6 plus a billing team, which pulls overhead way down and increases quality of care,” Dr. Anderson explains. Concierge providers don’t charge insurance; they just get paid the agreed-upon annual fee. “They get to make 2x the money, actually get to do the medicine they want to do, and spend the time with patients, but it creates the differential between haves and have-nots even further. Exacerbates inequality. But they’re doing it because they feel like they didn’t get into [medicine] to be a ‘hamster on a wheel,’ but to take really good care of patients.”
A few days later, I sat down with another physician to hear his thoughts on the question of Medicare and the plight of private practice.
We sat down in Dr. James Albert’s Colorado Springs office, which offered comfortable seating, friendly faces at the front desk, and panoramic views of Pikes Peak. The front of the office was full of patients, but nobody seemed exasperated—everyone appeared happy and well taken care of. As soon as he entered the room for our interview, Dr. Albert began to talk. He was eager to tell me his story: one that was both very different from and eerily similar to Dr. Anderson’s.
Across his decades in medicine, Dr. Albert has had two careers: one in cardiothoracic surgery and one as a vein specialist. He explained that during his time as a surgeon, he worked in private practice. Private practice cardiac surgery is now extinct. What happened? The same story Dr. Anderson told: CMS reimbursement rates dropped so low that private practices became wholly unsustainable, leaving providers with no choice but to be bought out by hospitals and patients with no flexibility to choose where they receive care.
“Hospitals manage to pay thousands of doctors hundreds of thousands of dollars each year. Let’s say there are 3,000 doctors in a university healthcare system all making about $300,000… that’s almost 1 trillion dollars lying around. How do they have that much money?” He goes on to answer his own question: by forcing small businesses into buyout, so they funnel their patients to the hospitals rather than private practice.
If you’re anything like me, you’re probably asking yourself: how exactly are hospitals doing this? The answer is, in the simplest of terms, money. When CMS sets Medicare reimbursement rates, they separate hospitals and private practice. Because large hospital groups make so much money, they can afford to lobby for two things simultaneously: policy that hurts private practices, one. And completely different payment processes for hospitals vs. private practice. It’s a one-two punch that private practices simply don’t have the money and influence to defend against. “What feels almost desperate for me is that…the softer our voice gets, the less impact we have,” says Dr. Albert.
While hospitals are busy fighting for policy that undermines private practices, big insurance companies are riding on the coattails of the effect that lobbying has on Medicare reimbursement policy. Dr. Albert explains that private practices have reimbursement agreements with big insurance companies dependent on Medicare reimbursement rates. Hence, as those go down annually, so do the payments from big insurance companies. All of these elements compound into a desperate situation for private practices, one that is leading more and more to buyouts from hospitals or private equity. As private practices are lost, patients suffer in more ways than one. When forced to turn to the hospital system, patients often have to pay 10-15x more for a procedure than they would at a private practice while receiving far less personalized care. “[In the medical system] There’s no recognition that there is value in private practice and…procedures that don’t need to be done in the hospital,” Dr. Albert says, clearly frustrated. Private practices offer patients the ability to get in with a specialist within a week rather than a month (or three). They allow patients to receive consistent care from a doctor who intimately understands their condition and personal needs. Without them, patients are hamstrung into paying more for care that is driven by profit rather than a genuine, unfettered desire to help people.
Both Dr. Anderson and Dr. Albert were extremely clear that this all comes down to one thing: the importance of prioritizing patients and providers over profit. “You can’t have life, liberty, and the pursuit of happiness if you don’t have…housing, food, safety, education, and medicine,” said Dr. Anderson as we ended our interview. “You can’t have life, liberty, and the pursuit of happiness if those things are gone.”