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Managed Care Partners - Bits, Bytes & Briefs

Managed Care Partners Summer 2012

Bits, Bytes & Briefs

Date: June 1, 2012

Single-Payer System: The Next Round?

A Cornell University study published last year found that physicians in the United States each spend about $61,000 more on yearly administrative costs related to health insurance billing than their Canadian colleagues. U.S. physicians also spend an average of 20.6 hours on paperwork compared with Canadian physicians’ 2.5 hours.

The difference: Canada’s single-payer health care system. It replaces all of the numerous payers and widely varying health insurance company forms with a single agency that focuses solely on health care financing.

With the future of the Patient Protection and Affordable Care Act (PPACA) hinging on a ruling this summer by the Supreme Court, the next stage of the debate on U.S. health care reform could focus on all-payer systems.

Vermont already has taken the plunge, last year passing a single-payer law, which by 2017 would establish a publicly funded health system with the state as the main insurer. Some lawmakers in Montana and California also have pushed for statewide single-payer systems.

According to a recent New England Journal of Medicine article, 24.3 percent of the annual costs for the average U.S. hospital are tied to administration and billing—which an NIH researcher estimated at $360 billion per year, or 14 percent of overall U.S. health care costs.

Johns Hopkins surgeon James Burdick told the journal that he believes a single-payer system would enable providers to focus more on clinical decisions rather than convoluted payment processes, thereby improving the general population’s health, enhancing patients’ experience with health care, and reducing per patient costs. 

Managed Care at Home

With a $4 billion reduction in Medicare funding to nursing homes, and with the annual cost of caring for a person at home averaging $18,000 compared with about $75,200 for nursing home care, private managed care firms are seeing a new market. A number of companies are promising states that they can save Medicaid dollars spent on long-term treatment by offering, for a fixed monthly fee per Medicaid patient, to cover all of the patient’s care at home by a team of physicians, physical and occupational therapists, social workers and others who make house calls. If the patient does require placement in a nursing home, that also would be covered by the state’s lump sum payments.

Although managed care at home is unlikely to become a cure-all, it’s a trend that is likely to continue. Long-term care patients make up just 25 percent of Medicaid recipients, but they account for more than two-thirds of Medicaid spending.

Primary Care Concerns

The number of newly minted physicians seeking residencies in internal medicine has stalled, and the percentage of those who specialize in general internal medicine is far below the growing demand for primary care physicians. Overall, only 20 percent to 25 percent of residents specialize in general internal medicine, compared with 54 percent in 1998.

A possible cause could be the income gap between primary care physicians and specialists. According to Medscape’s Physician Compensation Report, 52 percent of primary care physicians don’t believe that they are being compensated fairly. By contrast, practically the same percentage of specialists do think their pay is fair, reportedManaged Care magazine.

The Physician Compensation Report found that physicians in the Dakotas, Iowa, Missouri, Kansas and Nebraska earn the most, an average of $225,000 thanks to lower overall practice costs and subsidies to hospitals. In the Mid-Atlantic, the average income in all specialties is $195,000. The lowest average income—$190,000—is in the Northeast and the Southwest.

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