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Huntoon, Lawrence MD, PhD


Dr. Huntoon, a neurologist who has a third-party-free practice in Buffalo, NY, opted out of Medicare.

I think that some neurologists are slowly but surely beginning to recognize the problems associated with “third party care,” where the patient is not the “customer” because someone else pays the bill.

Government-run medical care – Medicaid and Medicare – always fails in the long run because it is unable to defy basic laws of economics and human nature. In a free market, the “right” price for any good or service is determined by supply and demand.

Under Medicare and Medicaid, the government sets the price of all services, and, as government bureaucrats can never know everything about supply and demand, it never gets the price “right.” Many services will be under priced and some may be overpriced – although when government funds run low, the latter largely does not occur.

When medical services are under-priced (via government price-fixing), it always results in some form of rationing of medical care. Rationing of medical care takes many forms. In Canada, that can mean extended, sometimes lethal, waiting periods to receive medical care.

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Here in the US, as Medicare and Medicaid reimbursements to physicians continue to plummet, rationing will have dire consequences. Patients will face longer waits to get an appointment. Physicians will either take no new Medicare or Medicaid patients or will severely limit the number of new patients per month, possibly avoiding sicker Medicare or Medicaid patients who require more time, which is not reimbursed sufficiently. Doctors will also have less time to spend with patients, and will have to rely more on nurse practitioners and physician assistants who do not provide the same quality of care as physicians since they lack the training of real physicians.

In addition to overt price controls, government-run medicine often implements a number of other “creative” scams to reduce payments to physicians. We have seen many of these scams in the Medicare program. Consider for example, the Resource-Based Relative Value Scale, which purportedly sets the “right” price for all services relative to other services. In reality, the only thing it did was gradually reduce physician fees (as it was used in conjunction with the Sustainable Growth Rate formula for setting prices) over about a 10-year period.



People tend not to notice as much when income is gradually taken from them. Medicare instituted the so-called “correct coding initiative” (CCI), which was anything but “correct.” The main goal of the CCI was to reduce payments to physicians by improperly, and fraudulently, “bundling” separate and distinct services into a single service – so that the government could get two or three services for the low price of one.

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Next on the horizon is the “pay-for-performance” scam, which will quickly become the “payment for outcomes” scam. Note that if we paid Medicare bureaucrats based on their performance, it is likely that we would never have to pay them at all.

The goal of pay-for-performance is to implement a one-size-fits-all set of guidelines – so-called “evidence-based” – many of which will incorporate more cost-containment (“efficiency”) measures as opposed to science.

“Quality” medical care will be re-defined as compliance with government pay-for-performance guidelines. Those who comply will be rewarded with an insignificant monetary “bonus,” and those who do not or cannot afford to comply – because they cannot afford the technology infrastructure to do so – will be punished monetarily. This is the HMO paradigm – less care equals more profit – under a different name. The conflict of interest created by the HMO paradigm, of course, is now well recognized as having created financial disincentives, which led to medical care that both patients and physicians deem unsatisfactory.

Yet, we see large medical associations eagerly pandering to “trade” adoption of pay-for-performance standards for stopping the planned cuts in Medicare physician fees and doing something to address the highly flawed SGR payment scam. How can a medical fee be tied to gross domestic product? This is a truly schizophrenic economic theory – yet quite typical of a “centrally-planned” system of medical care. Physicians who participate in these government programs and advocate adoption of these unwise government rationing schemes are part of the problem.

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“But if we don't ‘participate,’ we won't be paid anything” is the common retort. My answer: If you do “participate,” you will become a “go along to get along” physician and you won't be paid either. Increasingly, “go along to get along” will mean that physicians will have to adopt more conflicts of interest with their patients (less care equals more profit) and endure increasing levels of bureaucracy, which takes time away from medical care, to comply with government programs to control costs – all of which will ultimately have an adverse impact on patient care. Not to mention, of course, that physicians will increasingly have to endure the systematic degradation and devaluation of the services they provide as government determines that they are “worth” less and less each year.

As the government reduces physician fees at least by 26 percent in the next six years, and as malpractice premiums and office expenses increase, physicians will be faced with the choice: continue down the “go along to get along” path – harming both themselves, their profession, and their patients – or pursue some form of freedom in medicine, such as opting out of Medicare, for instance. As Dr. Marc Nuwer observed in the October Neurology Today (page 28), it is going to happen pretty soon: “Eventually physicians will throw up their hands and just say they can't afford to participate in the program anymore.”

Many physicians and many medical societies are counting on Congress to stop the Medicare fee cuts as they have in the past. But with the unexpected expenses associated with Hurricanes Katrina and Rita, that is unlikely to happen. The money simply isn't there.

The AAN and other large medical associations continue to advocate lobbying Congress to provide physicians with Medicaid fees that come close to actually covering costs or “income” but the vast majority of states simply cannot tolerate any additional Medicaid burden. Medicaid is the largest budget item in almost every state budget, and it is growing at unsustainable rates; the demand for “free” care is unlimited. In an attempt to deal with the nearly unlimited demand for “free” care, the government, of course, imposes more and more stringent price controls, but that only makes the problem worse.

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Physicians are not immune to human nature. They will tolerate a lot more adversity and demands for more and more uncompensated care than any other profession or occupation. But they also have incentives to achieve a better life for themselves and their families via their skill and labor.

You may recall the pertinent motto in the former Soviet Union among laborers: “They pretend to pay us and we pretend to work.” Government-run systems simply cannot overcome human nature – the desire to better oneself through one's own labor, or where one's labor is undervalued via government price controls, by “pretending to work.”

Although most physicians are so busy that they may not have time to read and think about these factors, they will be confronted with them and will face some very hard decisions in the near future.

As for my own decision to be “third-party-free,” that was made 20 years ago when I began a private practice in neurology. It was based on ethics not fees. Speaking for myself only, I consider it professionally unethical and in violation of the Hippocratic Oath to turn over part or all of my medical decision-making to medically unqualified and untrained bureaucrats of any stripe.

©2006 American Academy of Neurology