Principles for physician payment in a single-payer healthcare program:
Stephen Kemble, MD
Updated October 2024
1. Providers of care must be paid directly by the single-payer program with no profit-seeking fiscal intermediaries.
2. Payment should be based on paying for physician time and expertise based on training, and not on a system for assigning a “value” to each procedure instead of to the time and expertise of the physician performing the procedure.
The Resource-Based Relative Value Scale (RBRVS) fee-determination system used by Medicare and most other insurers has enabled devaluation of physician expertise and substitution of mid-level practitioners with far less training than physicians because “value” has been placed on the procedures rather than on the training and expertise of the professional performing the procedure. The RBRVS has also left a large portion of physician work time unreimbursed, especially for primary care specialties.
3. Restoration of physician autonomy in clinical decision-making.
For cognitive services, physicians and their patients should have control over time allocated for care of each individual patient, and payment should cover everything a physician does on behalf of a patient with no unreimbursed patient-care time. Payment must include required time spent on documentation, care coordination, letter-writing, long phone calls, Telehealth in a pandemic, etc.
4. Payment of providers of care must be disconnected from diagnostic coding except to justify medical necessity.
This can be accomplished either with salaries for physicians included in institutional global budgets or with fee-for-service that does not involve shifting insurance risk onto providers. Up-coding is a direct consequence of use of the Hierarchical Conditions Categories risk adjuster which tied payment to diagnosis for the first time. Risk adjustment only became necessary when Medicare started paying fiscal intermediary Medicare Advantage plans with capitation, and the need for risk adjustment has been expanded with all forms of “value-based payment” including bundled payments, pay-for-performance or outcomes, capitation of primary care physicians, and the push for capitated Accountable Care Organizations (ACOs, ACO REACH), etc.
5. The Electronic Health Record must be re-focused on patient care priorities, optimizing physician work-flow, and quality improvement instead of on meeting the demands (and gaming) of the payment system.
6. Prior authorizations should be severely limited and applied only for services and pharmaceuticals prone to mis-use and/or abuse
7. Billing and collections must be vastly simplified and transparent, eliminating the need for specialized billers, coders, revenue-cycle management companies, collection agencies, etc.
Standardization of fees, elimination of patient cost-sharing, assuring payment for all time required for patient-care related activities, eliminating unnecessary prior authorizations, and disconnecting payment from diagnoses would all help achieve this goal. Eliminating capitated payment through fiscal intermediaries and/or direct capitation of physicians, with their administratively costly and burdensome requirements for risk adjustment and counter-incentives to deter cherry-picking and lemon-dropping, up-coding, and skimping on care, would also help achieve this goal.
8. Collective negotiation of fees and salaries for physician payment.
Administrative simplification and savings in a single-payer system will depend on standardization of the payment system, but unilateral control of physician fees by government will inevitably lead (as it has in other countries) to inadequate payment for physicians over time. Collective bargaining, as in Canada, is necessary to keep fees and salaries reasonable for both physicians and for the single-payer and the taxpayers who fund it. Collective negotiation of physician fees and salaries will also be necessary to secure physician buy-in for a single-payer program.
All of these principles could be satisfied with either physician salaries included in institutional global budgets (with no capitated fiscal intermediaries) or with replacing the RBRVS with a fee-for-service payment system that pays for the value of physician time and training instead of a system for assigning a “value" to each procedure. A well designed, cost-effective, and physician-friendly system could be built with a mix of both payment systems depending on whether physicians were employed by institutions or in independent practice.