The archiving and publishing of the proceedings of the third and fourth plenary sessions of the First National Conference on Primary Health Care Access (April 20 and 21, 1990) is made possible, in part, through the generous support of the San Joaquin General Hospital Department of Family Medicine (Stockton and French Camp, California):
Greg Nycz, Wisconsin Rural Health Research Center: It’s getting late and I’m going to try to be brief here. I am going to throw out a few things that I think are relevant to the discussions that we’ve had today that we’re working on at the Wisconsin Rural Health Research Center.
But before I get into that, I have been involved with trying to get care to medically underserved populations for the past 17 years and Fred Moskol and I have been on a legislative council in Wisconsin looking at how we might go about this at the state level.
I think I would be remiss if I didn’t kind of toss out my biases on this. Earlier we talked about access problems as being geographic, cultural, and financial. I think that sums it up pretty well but ever since that Robert Wood Johnson Foundation study came out a while back, people began to start shaping the problem of access in terms of lack of health insurance. I really think that’s a mist
ake. I think health insurance is one of many tools that we can use to improve access for populations, but I think it leads us down a road we really probably shouldn’t be going down. When you think about the political process, if we start defining the problem as the uninsured problem, you’ve got organized medicine as was indicated earlier looking out for its interests and if they could just provide these individuals with insurance, demand would rise and if there was adequate reimbursement, they would be doing fine.
You also have in this country a powerful insurance lobby which is looking out for its interests. If you think about insurance and look at the current uninsured in this country, we talk about a lot of those folks being working poor. But by and large it is a poor population. If you think of insurance as protecting one from catastrophic financial risk, this isn’t a real big issue with those people who don’t have any financial resources to protect.
I think we need to look at ways of financing care for those individuals, but not necessarily providing them with insurance.
Another problem we wrestled with on this legislative council was that insurance frequently does not cover preventive services. There has been a discussion at this conference about the need to do a better job in prevention, particularly with high risk and low income populations.
The other thing you find is their time of service of deductible barriers. I found it odd sitting on a panel where we were discussing the need to get the price of the insurance product down so that it was affordable to people who didn’t have much money. One of the approaches, sometime $500 or $1,000 of front-end deductibles. You find that poor people for whom this is theoretically targeted consider $500 to be a substantial barrier, and a reason why they don’t now have insurance.
So I think there are some real flaws and some real dangers with going down the route of relying on expanding coverage of health insurance to the presently under-insured.
The other issue, from a taxpayer’s standpoint, when you take a look at who are the uninsured and you talk about the working poor and the unemployed, for the working uninsured they’re primarily located in small groups. If you take a look at the insurance industry reports, commercial health insurance in terms of what their loss ratios are for the small group market or for the individual market, I believe a couple years ago was listed as 60%-65%.
What that means is that for $1.00 paid in, 60-65 cents is paid back to physicians and hospitals in the form of purchased benefits. It’s easier to think about getting that individual into a community health center or into a physician’s office or hospital and providing the care. It’s a lot tougher to swallow when you think that one-third of your money is being taken off the top for private insurance type solution.
Those are just some biases I guess I have which I wanted to get out on the table. I would also then like to go to some of the projects we have been working on with the Wisconsin Rural Health Research Center. Think about the Medicare beneficiaries in this country who buy into the Part B or supplementary medical insurance package which provides the physicians’ services, finance 25% of it.
If you think in terms of insurance terminology, it’s basically community rated across the country so everybody in the country, if they come into Medicare at age 65 or after a work situation, will pay the same premium. Across the country we’re all paying the same premium towards 25% of the benefits and the rest is coming from general tax revenues. When you look at how that gets redistributed back across the country to those same Medicare beneficiaries, you find that the reallocation back in the form of purchased medical services varies tremendously.
I’ll just try to explain what this is. As part of the Tax Equity and Fiscal Responsibility Act, Congress started a program of reimbursing HMO’s under a risk basis for Medicare. That meant that they had to develop estimates of what the fee for service equivalent cost in the communities were to provide Medicare benefits to beneficiaries.
What this transparency shows is a national ranking of of county estimates for 1990 what the federal government is going to pay under a fee for service system. This is adjusted for the age, sex, welfare and institutional status of the beneficiary. What you see, theoretically, is not a reflection of the fact that folks in California are older as Medicare people go, etc. This is basically supposed to be adjusted for that.
I think the question I would ask, and I would be real interested in thoughts that you might have on this, is there is a redistribution going on here and you can see the Midwest. We are essentially taking resources out of those areas in terms of reduced social security checks, etc. to pay for 25% of this insurance-type program and we’re shipping them off to other areas of the country.
The medical machines on the coast, for example, tend to do a pretty good job of utilizing those services. For those of you who have been involved with recruiting, I have been told by folks who recruit doctors, that Nebraska is a real tough place to go to. I’m sure that is not totally a reflection of what we see here. We’re trying to take a look at why some of this occurs.
In trying to model why we have this variation, we find that one of the biggest indicators we have been to identify is price variation and the fact that the federal government has 200 and some old fee localities and they reimburse for the same service differently across the country. We asked what would happen if you took this information and you additionally controlled for the differences in fees paid.
Would a lot of this variation disappear? We know that for instance California, New York, and Florida, have fee localities that are generally reimbursed on the higher end of the spectrum. Places like West Virginia have prevailing rates for those services that are generally lower. So you see that kind of a red blob there in West Virginia may very well be reflective of higher medical need in terms of the mining communities, etc.
What we did then was to utilize some information from the physician Payment Review Commission and this is based on information from 1984 to 1986. What you ee is a small lessening of the effect. If you look at the New York-Pennsylvania area, California, Florida, you see they don’t have quite so many in the top quintile anymore. But the Midwest, actually the effect in Minnesota, Wisconsin, Iowa was actually enhanced. We’re interested in learning more about why this is.
I would like to pose a scenario here. This type of information was developed for the HMO risk contracting program. If you think about an HMO that starts to contract for Medicare beneficiaries, the government’s perspective on that changes from the fee-for-service practice of medicine, because the incentives are reversed.
Under risk contracting, the HMO may not provide all needed services or may provide it at a poor quality so there is more of a watchdog function that the government takes on in an HMO setting. They have to make sure that the quality is there and that they’re not undeserving the covered patients.
I often wondered if we had an HMO that basically branched out into a rural community and set up a satellite clinic, maybe contracted with two local doctors in the community which may be 50 miles away from the nearest doctor, enrolled 30% of the Medicare beneficiaries in that area, and then those two doctors left. What would be the reaction of the Health Care Financing Administration if they were exercising some sort of oversight? Would they be concerned about that?
Typically, if you lose the resource, your per capita costs of providing the service are probably going to go down because people won’t get as many services and Blue Cross and other insurance companies typically don’t get involved in this. But under an HMO scenario, I would be curious what HCFA’s position on this would be.
If, in fact, they would be interested in seeing that that HMO has an obligation to provide the service to those people in that distant community because they are being paid to do that and that the community lost their medial staff. How far should the HMO go to replace those staff? If, in fact, we would agree that the HMO has a responsibility to do that, the question that I would raise is why isn’t that responsibility generalized to what goes on in this country. It just doesn’t seem that HCFA takes an interest.
I would like to be corrected if I am wrong here but in actual access issues. Many times I don’t think there is a coordination across the different branches of the government. Maybe we can get a comment from Dr. Weaver on this. To facilitate increased access for people where there are medically underserved areas, we’ve got the National Health Service Corps working to put the clinicians in some areas while the federal government under the major financing programs sponsors reimbursement in those same areas that is well below what they would pay the same physician if they located in a different area. Maybe some of this will be improved with the Resource Based Relative Value Scale.
To summarize this national map in terms of access and volume in metropolitan and non-metropolitan areas, I have a bar graph here. This just summarizes the results for the counties. You see that non-metropolitan counties comprise 76% of all counties yet they have 89% of the counties in the lowest quintile of volume. Metropolitan counties comprise 23.6% but only 10.6% are in the lowest quintile. So there is a different bias here when you’re looking at after adjusting for the rural-urban payment differentials.
One thing I mentioned in a previous graph we talked about the Resource Based Relative Value Scale as potentially making some further changes in the cost picture. But because of the GEPSEs that were mentioned – these geographic cost multipliers – the effect is not going to be as pronounced as we saw on the volume graph because there will still be differences in cost of practice that would be based on input costs from the local area.
Another issue that was discussed at some point was physician income in rural and urban areas. This was reported in the American Medical News and it’s basically drawn from the Medical Group Management Association physician compensation survey. So it’s focus is on physicians in group practice who are members of the American Medical Association. It is a fairly large sample.
One of the things we see is that the average compensation in groups for family practice, pediatrics, and internal medicine really doesn’t vary that much by community size. But when you get to some of the specialties, there are fairly dramatic differences.
One of the things we found at Marshfield, Wisconsin, which has developed a regional clinic system, is that if we establish a larger satellite and we put a general surgeon or radiologist there, they are not able to generate the type of gross charges that you see at the main clinic because of the funneling effect that you have in a large organization. This may be reflective of some of that.
The last thing I wanted to point out in terms of the change that has been taking place. This is partial information; it’s not totally complete yet. This lists some of the regional clinic networks that have developed in the State of Wisconsin. This is going on in Minnesota , North Dakota, and pretty much in the Midwest.
We talked about managed care programs soaking up primary care providers – family physicians. I think when you see these large multi-specialty groups getting involved in satellite operations, they also have a greater need and they’re in a position where they can address some of the issues involved in recruiting much more readily than small communities.
The potential problem with this type of system is for those communities in the State of Wisconsin or throughout those areas that basically aren’t under these systems that have difficulty obtaining physicians, the competition is really tough. Fred Moskol may be able to comment on that.
I was at a patient compensation hearing in Madison a while back and one of the physicians said that unless you were tied in with the Dean Medical Center or Gunderson or Marshfield or one of these systems it was almost impossible to find physicians to come to your small community.
So while this may be very nice and helpful for those communities that tie into these larger systems, by and large the system may provide subsidy dollars for those primary care sites and feel that they can do that because they’re pulling in the referrals. And when they pull in the referral, they are generating extra revenue for the secondary and tertiary care which can then flow back to the community in the way of subsidy to get the primary care physicians out there.
The Resource Based Relative Value Scale, again, may help tilt that so the subsidy doesn’t have to be quite as great but also if it reduces the specialty revenues, the ability to subsidize will also decline.
Fred Moskol, Wisconsin Office of Rural Health: There’s another factor there, Greg, which is real subtle, but if you look at the Madison area you begin to see physicians who travel outside the Dane County area is shaded. When they return back their billings to the home office in Madison, those billings go out as if the service was provided in the metropolitan area. They’re reaping the benefit.
Nycz: Not necessarily. This is an area that we plan on talking to the Physician Payment Review Commission on, the folks who are working on boundary issues. I think it can be potentially real beneficial to small communities out there. For example, the St. Paul area (and Fred knows a couple of these circumstances) when they come across the river they get into a different state, a different carrier, a different fee locality, and the reimbursement under Medicare is grossly under what their circumstances were in the Twin Cities.
You will have to re-evaluate that position. It may be that since these are carrier rules, there may be variability in how individual carriers handle this circumstance. There may be differences between when you send a consultant out from an area to go to another area. You bill based on the consultant’s prime location. You set up a satellite. You bill based on where that satellite is located if it happens to be in a different fee locality.
We’re not sure ourselves exactly what the policy is across different fee localities and carriers. That’s something we want to research and it’s something that a lot of rural advocates are very concerned about.
This presentation was preceded by: First National Conference on Primary Health Care Access (3rd Plenary Panel, Part 2, Midtling)