Why Care Under The Affordable Care Act Will be Unaffordable

Richard Amerling, MD

| Sep 28, 2012

Several recent articles should dispel any remaining notion that care provided under the so-called Affordable Care Act will in fact be affordable. Just the opposite is true.

The Wall Street Journal reported that when physicians sell their practice to hospitals and become hospital employees, services they provide to patients become significantly more expensive.  The reason for this, simply put, is that overhead is much higher, and third parties reimburse at a higher rate for exactly the same service.  Another way to say this is that hospitals are less efficient than a private office.  And, as I have pointed out, physicians are considerably less productive when working for a salary, as opposed to fee-for-service.  This was an entirely predictable outcome.  Yet, health planners behind the ACA pinned their hopes for cost containment on exactly this consolidation occurring.  The ACA promotes Accountable Care Organizations; groups of “providers” and administrators who will assume financial risk for caring for patients assigned to them, by accepting a lump sum payment to cover all their medical needs.   ACOs are the latest version of managed care, and will have similar problems.  They will have a strong financial incentive to cherry pick healthy patients; those with serious problems will end up in emergency rooms and hospitals, where care is much more costly.

Several recent articles should dispel any remaining notion that care provided under the so-called Affordable Care Act will in fact be affordable. Just the opposite is true.

This brings us to the most recent article from the New York Times, which shows that when hospital emergency rooms and physician practices adopt electronic health records, reimbursements for physician services goes way up.   Wait a second! Isn’t the EHR the magic wand that is somehow going to result in huge efficiencies and cost savings?  Well, not exactly.  It seems doctors and hospitals are able to use the EHR to “enhance” documentation of patient encounters and services provided, which entitles them to “up-code” and receive higher reimbursement from third party payers.  This game dates b ack to 1990 when Medicare adopted the “resource-based relative value scale,” a complex Stalinist system devised by Harvard PhD William Hsiao.  It was an attempt to codify physicians’ work product based on time, effort, degree of training, patient complexity, and other factors.  The “relative value units” for any given intervention would then be multiplied by a fixed number to assign a dollar value for that work.

To obtain reimbursement from Medicare under the RBRVS, doctors had to learn to code their encounters appropriately. (Yes, we had to take time away from our practices to attend ridiculous coding seminars!!).  To bill for a “level 5 office visit,” for example, a detailed history, system review, and physical exam had to be performed, and documented.  Of course, this is not always needed, even in complex patients, and the time required for documentation detracts from the quality of the encounter.  The RBRVS was an absurdity, and hastened the medical profession’s march down the road to serfdom.  Rather than oppose this intrusion, the American Medical Association colluded with the government to make it a reality.

With cuts and freezes, physician reimbursement under Medicare has shrunk to Medicaid levels and will decline further under the ACA.  Payment in many instances barely covers the cost of providing care.  Yet, doctors up-code at their peril.  For years, the government has conducted random audits of private physicians, group practices, and hospitals, looking for claims with inadequate documentation in the medical record.  Huge monetary settlements have been extorted based in differing interpretations of arcane regulations.  The EHR provides templates and boilerplate text to automate documentation, and can be a bulwark against such audits.  

In addition to effects on billing and payment, rigorous studies of actual implementation of health information technology show no cost savings or improvement in health outcomes, according to another WSJ article.

The ACA is an experiment in top-down social engineering of an extraordinarily complex field encompassing one sixth of our economy.  It is destined to fail, and will be expensive beyond belief, in dollars, lost opportunity, and in misery.  If only the free market were given a chance to deliver quality care at reasonable cost.  In the few areas of health care where it has been allowed to flourish, it has done just that.

Richard Amerling, MD is a nephrologist practicing in New York City. He is an Associate Professor of clinical medicine at Albert  Einstein College of Medicine in New York, and the Director of Outpatient Dialysis at the Beth Israel Medical Center. Dr. Amerling studied medicine at the Catholic University of Louvain in Belgium, graduating cum laude in 1981. He completed a medical residency at the New York Hospital Queens and a nephrology fellowship at the Hospital of the University of Pennsylvania. He has written and lectured extensively on health care issues and is a Director of the Association of American Physicians and Surgeons. Dr. Amerling is the author of the Physicians' Declaration of Independence.

Contact: richard.amerling@gmail.com, 646 637 8546

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Categories: Medicaid, Affordable Care Act , Albert Einstein College of Medicine in New York, Diabetes, Diabetes Health, Diabetes Health Magazine, Diabetic, Medicare, Medicare Spending, New York Times, Wall Street Journal

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Posted by Anonymous on 1 October 2012

This who thing is a joke... Even people in the UK purchase private health insurance through their employers so they can see a doctor without waiting months.... It's supply and demand people.. Greater demand, less supply = higher costs... Unless I missed it, you can't turn out doctors like you do widgets... But all the Harvard Educated folks that put this great plan out there know a lot more than we do when it comes to Econ 101

Posted by Anonymous on 2 October 2012

"If only the free market were given a chance to deliver quality care at a reasonable cost" ????? What planet is this person on. The free market has had every chance to deliver at a reasonable cost-it is the system we have and medical inflation continues unabated double digit increases every year and insurance co profits soar,and health care providers continue to game the system with coding, unbundling etc.

Posted by muchow on 2 October 2012

Oooo...kay. So I understand why the act isn't affordabe for DOCTORS. But are you *really saying* that you'd rather be without a law that guarantees that no person with diabetes can be denied insurance? Speaking as someone with the disease, I can tell you that before the act, it was virtually impossible to get private health insurance at ANY price. That basically meant that if you had diabetes, you better not quit your day job and set out as an entrepreneur or contract worker--which, incidentally, is a large part of the workforce these days.

You know, I feel your pain and all that, but you don't have to be a doctor if you don't want to. Meanwhile, I'm stuck being a diabetic.

It would be nice if you kept your political view out of this. People's lives are on the line, and all that's at risk for you is your livelihood.

Posted by Anonymous on 2 October 2012

I am an above average "consumer" of medical care, a MedicareAdvantage subscriber, and Medicare beneficiary. Well-controlled Type 1 Diabetes and other chronic medical conditions mean I consult my Medical Support team relatively frequently. Careful control of Type 1 Diabetes for 42 years requires pro-active self-care, continuing education and prudent cost-containment, especially since I am now a retiree.

I take issue with the purportedly professional justification for Dr. Amerlings assertions. The underlying logic sounds remarkably similar to conservative Republican positions, particularly Paul Ryan's rhetoric since Mr. Romney has yet to offer substantive alternatives.

The Affordable Care Act has assisted me immeasurably both financially (buying "luxuries" like groceries and reducing still substantial prescription co-pays). Social Security is a truly limited income.

Drug, medical and hospitalization costs have been reduced only slightly under the Affordable Care Act, yet Pharmaceutical companies, corporate hospitals and other Medical Mega-businesses still enjoy record setting profits. I strongly support the Affordable Care Act.

Concord, CA

Posted by Anonymous on 2 October 2012

I don't consider this article useful in any way to the diabetic community. It simply appears to be a carefully thought out argument as to why this doctor deserves more money. Other countries(Sweden, Great Britain, Canada, etc) manage to have high quality health care under similar programs, it's just that doctors do not make such a premium salary.

Posted by Teamhj on 2 October 2012

I completely disagree with your analysis, sir. The free market hasn't worked re. health care - haven't you noticed? Our family certainly has. I hope others will chime in on this!

Posted by jeanne lese on 2 October 2012

I look forward to rebuttals from other physicians.

Posted by Anonymous on 3 October 2012

Bravo, Dr Amerling! And let's also not forget ObamaCare's unelected, unaccountable, not-beholden-to-Congress-for-funds Independent Payment Advisory Board that can cut payments to providers even further--without recourse to the courts or any other method of appeal.

Posted by Anonymous on 3 October 2012

Since this system is so bad for some doctors, this one in particular he can can work for a salary at one of those medical schools and forget about medical parctice, after all who wants to working for a loss.

Posted by Anonymous on 3 October 2012

People with diabetes cannot be denied coverage under the affordable care act. that is the kind of law we are lucky we now have.

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