Author Affiliations: Division of General Internal Medicine (Drs Federman, Woodward, and Keyhani) and Department of Health Policy (Dr Keyhani), Mount Sinai School of Medicine, New York, New York; and James J. Peters Veterans Administration Medical Center, Bronx, New York (Dr Keyhani).
Several strategies have been proposed to reform physician reimbursement while improving quality of care. Despite much debate, physicians' opinions regarding reimbursement reform proposals have not been objectively assessed.
We conducted a national survey of randomly selected physicians between June 25 and October 31, 2009. Physicians rated their support for several reimbursement reform proposals: rewarding quality with financial incentives, bundling payments for episodes of care, shifting payments from procedures to management and counseling services, increasing pay to generalists, and offsetting increased pay to generalists with a reduction in pay for other specialties. Support for the different reform options was compared with physician practice characteristics.
The response rate was 48.5% (n = 1222). Four of 5 physicians (78.4%) indicated that under Medicare, some procedures are compensated too highly and others are compensated at rates insufficient to cover costs. Incentives were the most frequently supported reform option (49.1%), followed by shifting payments (41.6%) and bundling (17.2%). Shifting payments and bundling were more commonly supported by generalists than by other specialists. There was broad support for increasing pay for generalists (79.8%), but a proposal to offset the increase with a 3% reduction in specialist reimbursement was supported by only 39.1% of physicians.
Physicians are dissatisfied with Medicare reimbursement and show little consensus for major proposals to reform reimbursement. The successful adoption of payment reform proposals may require a better understanding of physicians' concerns and their willingness to make tradeoffs.
Across the political spectrum, there is general agreement that the cost of health care has risen to untenable levels and is threatening the future of Medicare and the economic well-being of the United States.1,2 These concerns have prompted various proposals intended to “bend the cost curve” of health care expenditures while maintaining or improving health care quality. Physicians account for only one-fifth of health care costs, but their clinical decisions and patterns of use are a major factor in rising health care costs; thus, many proposals have eyed physician reimbursements as potential targets to promote cost savings and establish incentives to improve care.3,4
A variety of strategies have been proposed to reform physician payment.5 One widely advocated approach is the use of financial incentives, such as bonuses (pay for performance) for meeting quality standards that reflect good process of care or good health outcomes6 or financial penalties for delivering substandard care, as measured by high hospital readmission rates.7,8 Also gaining considerable attention are 2 strategies to promote greater accountability by physicians or health care systems for quality and cost: bundling payments and promotion of accountable care organizations.2,7,9 Bundling lays the responsibility for containing costs and ensuring quality on the physician or health care system bypaying a fixed amount for an episode of care or for a set of services bundled under a specific episode of care, much in the way that hospitals are reimbursed for care bundled under the inpatient prospective care system.10,11 Similarly, accountable care organizations, which are extended networks of hospitals and outpatient providers, would have responsibility for total health care spending and quality of care for a set of patients. Bundling of services and accountable care organizations are both promoted in the Patient Protection and Accountable Care Act of 2010.12
Finally, the Patient Protection and Accountable Care Act also addresses the growing need for preventive care and care coordination by inceasing Medicare and Medicaid payments to generalist physicians.12 Additionally, the Center for Medicare and Medicaid Services recently announced plans to expand multiple procedure payment reduction for imaging and therapy services.13 Combined, these strategies aim to increase the provision of preventive health care, promote health maintenance, and reduce excesive testing.14
Given the controversies in modifying payments to physicians to control costs, policymakers should consider how physicians view the different options. Physicians' experiences may help optimize the design of reimbursement reforms. In addition, maximizing physicians' approval of reforms would facilitate implementation. Although previous research has assessed physicians' views on health care system financing options, to our knowledge,15 there have been no systematic evaluations of physicians' views on reimbursement reform. We, therefore, conducted a national survey to assess physicians' opinions about different strategies to reform physician reimbursement, promote quality of care, and enhance health care savings.
In April 2009, we obtained data on a stratified sample of 6000 physicians randomly selected from among 849 213 physicians in the American Medical Association (AMA) Physician Masterfile. The AMA Physician Masterfile includes current data on all US physicians, regardless of AMA affiliation. Physicians were stratified into 4 specialty groups: primary care (internists, family practitioners, and pediatricians without subspecialty training); medical and pediatrics subspecialists, neurologists, and psychiatrists; surgical specialists and subspecialists (general surgeons, surgical subspecialists, and obstetrician/gynecologists); and the remaining specialties. Equal numbers of physicians were randomly sampled for each stratum. The study was approved by the Mount Sinai School of Medicine institutional review board.
We empanelled 7 nationally recognized physician leaders and health policy and survey research experts and engaged them in a modified Delphi process to develop content for the survey.16 We drafted survey questions and asked the expert panel to rank these items by policy relevance. To refine the questions and uncover new themes, we conducted 1-to-1 cognitive interviews with 16 physicians from 7 states in person or by telephone. Physicians were selected from a variety of practice backgrounds (private practice, salaried physicians, practice owners, and hospitalists) and specialty backgrounds (primary care providers and medical and surgical subspecialists). The survey questions were refined through this process until no new content themes and no misinterpretations of the survey items were identified. The survey was pilot tested on 15 internal medicine physicians at Mount Sinai Hospital and had an average completion time of less than 4 minutes.
We adopted the total design method to optimize the physician survey response.17- 22 This approach minimized respondent burden by using a brief (3-page, 4-minute) survey with personalized content (a personalized letter, a signed cover letter, and postage stamps) and follow-up contacts. The survey was mailed in 3 waves. The first wave included a cover letter, the survey, a stamped return envelope, and a $2 bill. Subsequent waves did not include a monetary incentive. Physicians were called after each wave was mailed to encourage them to complete the survey and to offer them the option of returning it by fax or by e-mail.
Physicians were randomly chosen to receive 1 of 2 versions of the survey. The 2 versions shared core content (eg, opinions about insurance coverage expansions and practice and professional characteristics) but differed by 4 to 6 supplemental questions, including questions about physician reimbursement. Thus, approximately half of the sample was asked about reimbursement. The first of 3 survey waves of the National Physicians' Survey on Health Care Reform began on June 25, 2009, and the third survey wave was initiated on August 27, 2009. Data collection was completed on October 31, 2009.
The survey included 6 questions about physicians' opinions regarding reimbursement and reimbursement reform proposals (eAppendix). The first question addressed equitability of Medicare reimbursements by asking physicians to express their level of agreement with the following statement: “With the current Medicare reimbursement system, some procedures are compensated too highly and others are compensated at rates insufficient to cover costs.” Response options on the 5-point Likert scale ranged from strongly agree (5) to strongly disagree (1). Next, we asked physicians to express their level of support for 3 proposals for reforming reimbursement: rewarding quality with financial incentives, bundling payments for episodes of care, and shifting payments from procedural care to management and counseling services.
Variables captured on both survey versions included time spent on clinical duties each week, practice ownership, payment mechanism (salary only, salary and bonus, from billing only, shift or hourly wage, or other), and professional society affiliation. Data obtained from the AMA Physician Masterfile included date of birth, sex, state, zip code, specialty, training level (current trainee or training completed), and type of practice (office based, hospital based, administrative, teaching, research, resident, locum tenems, or other). Zip code data were used to determine whether the practice site was rural or urban.
The analyses excluded physicians from US territories because health care reform may not be as relevant to them and physicians in training because of their limited experience with reimbursement. We calculated the response and refusal rates using standard methods,23 and we compared the characteristics of respondents and nonrespondents using t and χ2 tests and data available in the AMA Physician Masterfile. The associations between support for the proposed reforms and physician specialty and practice characteristics were evaluated using logistic regression adjusting for physician practice characteristics. For the regression analyses, the 5 outcomes (support for different payment reforms and increased payment for primary care) were dichotomized as strongly or somewhat support vs unsure or do not support. Weights were used to adjust for the stratified sampling design, and all the analyses were performed using the survey sampling and analysis procedures in SAS version 9.1 (SAS Institute Inc, Cary, North Carolina).
Of the 6000 physicians, 794 (13.2%) were trainees, 218 (3.6%) had their surveys returned by the postal service due to a wrong address, 49 (0.8%) lived in a US territory, and 5 (0.1%) were reported as deceased. Of the 4934 eligible individuals, 2441 responded, for a final response rate of 49.5%. Of the 2518 eligible physicians who received the survey addressing reimbursement reform, there were 1222 respondents (response rate, 48.5%). There were no significant differences between respondents and nonrespondents regarding age, sex, specialty group, geographic region, and office-based practice setting (Table 1).
The mean age of the sample was 51.6 years, 73.1% were men, and 77.2% practiced in office-based settings. More than half of the respondents were practice owners or partners (58.4%), and most reported accepting Medicare (82.0%); 39% received performance bonuses in addition to their salary.
Most physicians (78.4%) indicated that Medicare reimbursements are inequitable. There was little difference in attitude about the equitability of Medicare reimbursement across physician specialties (P = .07) (Figure 1). Of physicians who accepted Medicare, 40.2% strongly agreed and 38.2% somewhat agreed that under Medicare, some procedures are compensated too highly and others are compensated at rates insufficient to cover costs. Only 11.5% of physicians disagreed with the statement, and 10.2% were unsure. There were no significant differences in opinion regarding Medicare reimbursement across any of the physician variables (data not shown).
Agreement with the statement that Medicare reimbursement is inequitable by specialty group.
Of the 3 reimbursement reform proposals, physicians showed the highest level of support for the use of incentives to improve quality, with approximately half (49.1%) strongly or somewhat supporting this approach. Support for incentive-based reform was similar across physician specialties, geographic locations of the practices, practice types, practice ownership, and the physicians' mode of compensation (Table 2).
Overall, 41.6% of physicians supported shifting payments and 46.4% opposed it. Most generalists (66.5%) supported a shift in reimbursement toward counseling and management compared with only 16.6% of surgeons (P < .001 for the difference across the 4 specialty groups). In addition, support for shifting payments was less likely to be expressed by physicians in office-based practice settings, practice owners, and those with fewer patient care hours.
Most physicians viewed bundling of payments unfavorably, with 69.1% of physicians opposing it. Support for bundling payments was low across all physician characteristics, with lower levels of support expressed by office-based practitioners, practice owners, and physicians seeing patients more than 20 hours per week.
In unadjusted regression analysis, surgeons, medical subspecialists, and other physicians were markedly less supportive of shifting payments to generalists than were generalists themselves (Table 3). These associations were not appreciably altered by adjusting for practice characteristics and census division. Nongeneralists were also less supportive of incentives and bundling than were generalists, although the differences generally were not statistically significant (Table 3). Practice owners were less supportive of shifting payments (adjusted odds ratio [AOR], 0.72; 95% confidence interval [CI], 0.52-0.99) and bundling (AOR, 0.53; 95% CI, 0.38-0.76) than were nonowners. Physicians who provided more than 20 hours of patient care per week were similarly less supportive of shifting payments (AOR, 0.59; 95% CI, 0.40-0.88) and of bundling (AOR, 0.56; 95% CI, 0.37-0.85).
There was broad support for increasing pay for generalists: 79.8% of respondents expressed support and only 13.3% were opposed (Figure 2). Even among surgeons, three-quarters (76.6%) supported increased payments for generalists (Table 4). In contrast to support for the other reimbursement reform proposals, only 17.2% of physicians supported bundling. Fewer than half of the physicians (39.1%) supported such a strategy, and the least support was expressed by surgeons (21.7%).
Rates of support for increased pay for primary care physicians (n = 1222). Due to rounding, the percentages for the increased pay section do not total 100.
Although there was broad support for increasing pay for generalists, physicians in the nongeneralist specialties were considerably less supportive of this strategy, in unadjusted and unadjusted analyses, and even less so when there was a cost offset (Table 5).
In this national survey, we found that most physicians believe that Medicare reimbursements are inequitable, and yet there was little consensus on strategies to reform payment. Physicians generally showed the least support for proposals that carried the risk of reduced reimbursement, such as payments for bundled care. For physicians who frequently perform procedures, such as surgeons, there was low support for shifting some reimbursement from procedures to evaluation and management services, and there was very low support among surgeons and other nonmedical specialists for a 3% reduction in reimbursements to offset increased payments for primary care physicians.
More than three-quarters of the physicians indicated that Medicare reimbursements are inequitable, a finding that was constant across physician specialties, practice settings, and practice ownership. This observation is consistent with previously published findings that physicians believe that timeliness and adequacy of reimbursements is better under private insurers than it is under Medicare.24 They also echo the call for changes in Medicare's rate-setting policies.8,25,26 The Centers for Medicare and Medicaid Services establishes payment rates for physician services using a resource-based relative value scale but also receives advice on setting reimbursement rates from the Specialty Society Relative Value Scale Update Committee (RUC), which is composed of representatives of medical specialties. The RUC has drawn criticism for overestimating the relative resource needs of physicians in specific specialties and for specific procedures.26,27 Physician dissatisfaction with Medicare reimbursements24 and concerns about equity of reimbursements suggest that the role of the RUC in advising Medicare should be carefully evaluated. The Obama administration and health policy experts have called for the creation of an independent Medicare advisory committee.28 However, only 1 Congressional health care reform proposal included an independent Medicare commission.29 Without an independent arbiter, physicians and physician groups are likely to continue having complaints about the equitability of reimbursements under Medicare.
There was little unity regarding support for physician payment reform proposals. Half of the physicians supported financial incentives to improve quality. Support for incentives was more common and more consistent across all specialties compared with shifting and bundling payments. Actual experience with financial incentives to improve quality could have directly informed physicians' generally more positive views of these types of reimbursement mechanisms. For example, higher approval of incentives may reflect the fact that incentives are already widely applied in outpatient care, such as in managed care organizations or in the Medicare Physician Quality Reporting Initiative.30
There was even less consensus among physicians regarding shifting some portion of payments from procedures to management and counseling. As expected, those who conduct procedures were against it, and those who do more management and counseling were for it. Nevertheless, some surgeons (17%) and physicians in other procedurally oriented specialties (27%) supported shifting payments toward evaluation and management services, indicating that underpayment of management and counseling even in procedurally oriented specialties is a concern for many physicians.
Most physicians from all specialties were opposed to bundled payments (69%). Surgeons, who may have the most experience with bundling,31 expressed the lowest levels of support for this strategy. With bundling, physicians and health care systems are at greater financial risk, and uncertainty remains about who would have responsibility for controlling costs and how savings generated through greater efficiency in health care provision and better health outcomes would be divided among entities sharing in the care of a patient.31,32 Because bundled payments are likely to be implemented in one form or another,1,2 this mechanism ought to be carefully explained to physicians to promote broad acceptance and smooth implementation. Research that further characterizes physicians' experience with and concerns about bundling could provide guidance toward these ends. Of note, physicians in the West South Central census division of the United States were less likely to support incentives or bundled payments. Additional research might help determine which factors contribute to this regional variation in views on payment reform.
Reducing the fragmented provision of care through improvements in care coordination and continuity of care may be necessary before bundling, and other strategies could successfully contribute to improved health care and cost savings.7,31 To improve care coordination and increase the delivery of preventive care and counseling services, several reform plans have proposed increasing reimbursement to generalist physicians, an idea supported by most physicians surveyed in this study. Surgeons and “other” specialists, however, were considerably less supportive when the proposal called for shifting some of their reimbursement to meet the costs of increased payments to generalists, a strategy proposed for Medicare by the Senate Finance Committee.7
This study is limited by a 48.5% response rate. This rate is slightly lower than the average for physician surveys33; however, there were no differences between respondents and nonrespondents on important characteristics. Furthermore, we collected data during just 4 months, a brief period intended to capture physician views near the apex of the health care reform debate. Although physicians' opinions about strategies for expanding health insurance coverage may have evolved across time, we found no significant differences between opinions expressed in surveys received at different time points during the period of data collection. Finally, during the period of data collection, proposals for reimbursement reform were in flux as Congress tried to work out legislation. For example, the Senate Finance Committee proposed a 10% Medicare payment bonus for primary care providers with half of the cost of the bonuses offset by a 0.5% reduction in all other services. The tradeoff we used in the present study was a 3% reduction in reimbursements for non–primary care physicians. Physicians responding to this survey might have been more amenable to a lower reduction in reimbursement, such as was proposed by the Senate Finance Committee.7 The Patient Protection and Accountable Care Act did include a payment bonus for primary care but no reduction in payment for other services.
In conclusion, most physicians believe that Medicare reimbursements are inequitable, yet there is little consensus among them regarding major proposals to reform reimbursement. Bundling of payments, in particular, was opposed by most physicians. Overall, physicians seem to be opposed to reforms that risk lowering their incomes. Thus, finding common ground among different specialties to reform physician reimbursement, reduce health care spending, and improve health care quality will be difficult. Research that clarifies the tradeoffs physicians would be willing to accept in payment reform, and other concerns, may help refine the design of payment reforms and improve acceptance among physicians.
Correspondence: Alex D. Federman, MD, MPH, Division of General Internal Medicine, Mount Sinai School of Medicine, PO Box 1087, One Gustave L. Levy Place, New York, NY 10029 (email@example.com).
Accepted for Publication: March 14, 2010.
Author Contributions: Dr Federman had full access to all the data in the study and takes responsibility for the integrity of the data and the accuracy of the data analysis. Study concept and design: Federman, Woodward, and Keyhani. Acquisition of data: Federman and Keyhani. Analysis and interpretation of data: Federman, Woodward, and Keyhani. Drafting of the manuscript: Federman and Keyhani. Critical revision of the manuscript for important intellectual content: Federman, Woodward, and Keyhani. Statistical analysis: Federman, Woodward, and Keyhani. Obtained funding: Federman and Keyhani. Administrative, technical, and material support: Federman and Keyhani.
Financial Disclosure: None reported.
Funding/Support: This project was supported by a grant from the Robert Wood Johnson Foundation and also by grants from the National Institute on Aging; the National Heart, Lung, and Blood Institute; and the Veterans Administration Health Services Research and Development Service (Drs Federman and Keyhani).
Role of the Sponsors: The Robert Wood Johnson Foundation played no role in the design or conduct of the study; in the collection, management, analysis, or interpretation of the data; or in the preparation, review, or approval of the manuscript.
Additional Contributions: Helen Cole, MPH, provided project management, and Cathy Schoen, PhD; Kenneth Shine, MD; Gerard Anderson, PhD; Thomas Russell, MD; Shoshanna Sofaer, DrPH; and Lawrence Brown, PhD, provided helpful comments in developing this study.
This article was corrected online for typographical errors on 10/25/2010.
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