Designing fee schedules by formulae, politics, and negotiations

Variation in specialist fees: evidence from New Zealand insurance claims

OBJECTIVES

To examine the parity between specialties in reimbursements for surgical procedures in a private, fee-for-service setting and to ascertain whether differences exist after accounting for factors suggested by a Resource-Based Relative Value Scale (RBRVS).

METHODS

A routinely updated database covering several private insurers (n = 8294 procedures from 1997 to 2002) was used to examine differences in overall and hourly reimbursement. Multiple regression analysis was used to control for factors that might be responsible for differences in payment (location, year, sex of patient and the associated anaesthetist fee). The resulting regression residuals were compared between specialties.

RESULTS

Large differences between specialties in reimbursements were found in the overall amount paid. For most specialties, these differences were explained by factors such as time for procedure, location, complexity of procedure and sex of patients. However, hourly reimbursements for ophthalmologists were substantially higher (more than 50% above general surgery overall and 72% higher on an hourly basis). Some other smaller differences in overall and hourly reimbursement were also found.

CONCLUSIONS

These results indicate that specialist fees vary significantly but many of the differences are explainable by factors incorporated into the RBRVS. However, significant variation remains for some specialties, most notably ophthalmology. Explanations for the results are discussed, including the possibility that political factors may influence the setting of specialist fees. This raises questions concerning the fairness of reimbursements and resulting solidarity within the medical profession.

Physician relations in Canada: shooting inward as the circle closes

As economic disputes between physicians become more frequent, discussions between physicians are becoming increasingly important. Those seeking insight into how physician organizations might mediate these disputes may be able to learn from others who have had negotiating responsibilities for over a quarter of a century--the provincial medical associations in Canada. In this article we examine the structure, process, and outcomes of negotiations between physicians, with a focus on responses to new physician expenditure caps in Ontario, Alberta, and British Columbia. Early negotiations between physicians over changes in relative fees favored general practitioners because they were the dominant voting block within the associations. Despite fewer gains in the fee arena, specialists were willing to remain in the associations because all physicians generally enjoyed similar income growth. Under new physician expenditure caps, however, physicians have been unable to resolve conflicts over how to allocate income limits across specialties. Negotiations between physicians face expanding economic issues and diverging interests as expenditure caps force physicians to concentrate on total costs.

Doctors and public authorities: the trend toward collaboration

Insuring a population and managing its money require a comprehensive health care financing system. Many issues must be resolved, particularly the roles of the medical profession and its relationship with organizations of laymen in insurance carriers and in government. The spread of society-wide, third-party reimbursement produced conflicts with doctors over admission to practice, work rules, and pay in all countries. Eventually new arrangements were made to settle conflicts of interest and to ensure the harmonious operation of health care services. Policymakers and financial managers came to realize that the medical profession as a whole must be motivated to ensure the success of the system. Recently countries with statutory health insurance and direct public financing created new systems for negotiation and for joint decision making. Even some governments now agree to collaborate with doctors as virtual peers rather than to dictate rules and finance. The only exception is the United States, which will continue to have periodic conflicts until it crafts a joint decision-making system. The evidence comes from the author's first-hand field research over thirty years in the principal developed countries in Europe and North America. He interviewed informants, collected reports, and observed events for these topics primarily in Germany, France, the Netherlands, Great Britain, Canada, and the United States.

Analysis, advice, and congressional leadership: the Physician Payment Review Commission and the politics of Medicare

In 1985, Congress established the Physician Payment Review Commission (PPRC) to help formulate changes in the system used by Medicare to pay for physician services. The recommendations of the PPRC and subsequent legislative action led to fundamental reform. As a new type of advisory body, the PPRC enabled Congress to establish an agenda for physician payment reform and set it into law despite initial resistance from the executive branch. Four key factors contributed to the influence of the commission: (1) an institutional design that enhanced and integrated congressional policy formulation; (2) the quality of the information generated for legislative deliberation; (3) the open, consensual process the commission used to translate that information into policy recommendations; and (4) the strategic packaging of the proposals for reform. In the process leading to enactment of the new payment system, the commission skillfully bridged the traditionally segmented roles of neutral analyst and political advisor for legislators pursuing Medicare reform. Implementation of physician payment reform has been largely an administrative responsibility, in which the PPRC has played a minimal role. The complexity and ambiguity of some of the legislative provisions have left room for administrative officials and interest groups to maneuver according to their priorities. Thus, despite congressional efforts to design a tightly controlled system, a considerable amount of work remains to assure its technical and political success.

Universal health insurance that really works: foreign lessons for the United States

The United States has serious and worsening problems in the delivery and financing of health. The debate about reform has inspired many schemes that are persuasive in their presentation, but they are unrealistic: some cannot be enacted by Congress, others would not improve existing arrangements, most are imaginary inventions with uncertain outcomes. The most politically prudent and the most effective course is to emulate the methods used successfully and available for full analysis in other developed countries. America created its successful social security system in this fashion, and statutory health insurance should be added now. All or most groups would be required to join. Financing would come from social security payroll taxes, supplemented by government subsidies. Basic acute care services would be equally available to all. The existing insurance companies would remain as fiscal intermediaries. Doctors and hospitals would continue to work much as they do now. They would prosper from more utilization, few bad debts, and less administrative trouble. The payment and work of doctors would be governed by collective negotiations between the insurance carriers and the medical associations. The payment and work of hospitals would be governed by a mixture of government regulations and negotiations with the carriers. Costs would be controlled by coordinated decision making by the payers, the providers, and government. The system would not turn over services and financing to government.

Comparing physician fee schedules in Canada and the United States

Although Canada and the United States have fundamentally different systems for financing health care, there are many similarities between the two countries in their approaches to physician payment. The similarities have increased recently with the adoption of the Medicare fee schedule. Canadian provinces have been using fee schedules for more than 20 years. This article provides an overview of the fee schedules used by Medicare and the four largest Canadian provinces, highlighting specific similarities and differences. We conclude that, although some differences in service definitions exist, the major areas of contrast relate to what services are paid for and how fees are updated. Updating fees is important because it affects how rapidly expenditures grow.