In November, 2010, when speaking to the Small Business Council of the Greater Memphis Chamber of Commerce on health care reform, I said that I believed we would ultimately see health care reform decided by the Supreme Court. 

In January, 2011, at the induction of new officers for the Memphis Medical Society, and in his first address as the organization’s new president, Dr. Jerome Thompson concluded his presentation by saying that he believed that health care reform would be decided by the Supreme Court.

In August the Associated Press reported, “Federal Appeals panel struck down the centerpiece of President Obama’s sweeping health care overhaul Friday, August 12, 2011, moving the argument over whether Americans can be required to buy health insurance a step closer to the U.S. Supreme Court.”

I do not believe that Dr. Thompson’s or my crystal ball was clearer than anyone else’s…I just think we saw different factions and politics that would make this a reality.  If this does move to the U.S. Supreme Court, there is no doubt that there will be some changes in physician compensation. The MGMA physician compensation profile says that the median first-year compensation (guaranteed) will be – primary care, $172,400; single specialty, $240,596; multispecialty, $258,677.  This is based on existing relative value units (RVUs) and on production. Will this change? There are already some adjustments under way regarding changes in RVUs, particularly among certain specialties. 

Many times we are fooled or fooling ourselves when CMS says the budget is neutral or there has been no decrease. There have been decreases and will be continued decreases because of the various adjustments made in RVUs. Ask the cardiologists what their history with adjustment to the specialty has been over the last four to five years. Also ask the gastroenterologists what they are hearing from their specialty societies of changes in RVUs and other adjustments they may expect in this coming year. Except for the many preventive procedures which are now covered because of changes in health care reform, much of reimbursement to physicians will be stagnant or decrease. Changes in productivity and in managing cost will be strong variables in physician compensation.

The current CMS policy on ACOs makes the impact ACOs will have on physician finances confusing. There are questions that physicians should be thinking about or asking. If a physician group is looking at the projected costs to start an ACO, I can’t think of a better example than a quote from an anonymous (administrator) in a recent publication of the MGMA. The comment was, “My concern is that $1.7 million for a small practice is a lot to swallow for my 250-provider multispecialty clinic.” The $1.7 million is the projected cost for the first year of an ACO. I am not sure about you, but beyond the shock of the $1.7 million, is a 250 provider multispecialty group considered small? 

ACOs are really not new. It’s just a new name and written as part of health care reform. There have been “shared savings” programs for a number of years, although I’ve seen very little shared savings passed to the physicians. A question I would ask is, “If I become a part of an ACO, how does it impact me from a financial risk standpoint?” Remember, one of the key components of an ACO is to spread the financial risk. Who is going to make the decision on allocating the cost and profits of an ACO? How do we make sure physicians who have an adverse financial impact to the ACO don’t impact other individual physicians, and what can we do to prevent that?

As I mentioned earlier, one way for physicians to add to their compensation is to increase production. This brings up what may be the most important question of all – by significantly cutting back on utilization, aren’t the big insurance companies, who are announcing record profits, denying patient access and will that not hinder physicians in their ability to increase productivity?

We need to continue to stay up to date and pay even more attention to existing and ongoing issues and be proactive or we will fall into even more decreased revenues for physicians.

Bill Appling, MBA, FACMPE, is president of Watkins Uiberall Health Care Consulting. He has faculty appointments at the University of Memphis in the Fogelman College of Economics and Business, where he teaches in the Masters of Health Care Administration program.

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