New Estimate Of Obamacare’s Fiscal Impact On Private Doctor Practices

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Scott Gottlieb:

Under Obamacare, doctors have been strained by costly new regulations, intricate payment “reforms” that tie their Medicare reimbursement to complex federal reporting requirements, and mandates that they install and make “meaningful” use of electronic health records.

Add a new burden to the mix: The proportion of patients they see are rapidly shifting away from commercial health plans and toward Medicaid, which sometimes pays doctors pennies on the dollar that they were previously reimbursed under private insurance.

The data comes from ACAview, a product of athenahealth ATHN -5.2%that aims to measure the impact of Obamacare on medical practices. The project, jointly funded with the Robert Wood Johnson Foundation, is the first large-scale examination of data derived directly from outpatient medical practices belonging to more than 60,000 providers. It gives a unique insight into how the Affordable Care Act is impacting patients at the point of care.

The analysis was first released in February 2015, and this new data is an update on those initial results. It is being released today for the first time. It shows that in states taking Obamacare’s Medicaid expansion, Medicaid visits as a proportion of all visits to doctors increased from 15.6% in 2013 to 17.7% in 2014, and continues to climb, to 21.5% in 2015.

Meanwhile, in states that didn’t expand their Medicaid programs, the proportion of visits covered by Medicaid remained largely flat at 9.4% for 2013, 9.2% for 2014, and 8.9% for 2015. The results were based on a subset of 16,000 providers who have been on the athenahealth network prior to 2011 and tracked the longest.

But here’s the rub. The proportion of commercially insured patients, either through Obamacare’s exchanges or through workplace coverage, actually fell in states that expanded their Medicaid programs. In those states, commercially insured patients comprised 65.2% of all patients in 2013, 64.4% in 2014, and then fell to 62.8% in 2015. In states that didn’t expand their Medicaid programs, the percentage of commercially insured patients rose slightly, from 66.1% in 2013 and 2014, to 68.1% in 2015. It’s important to note that the number of uninsured patients fell across all states, as previously reported, from 4.6% to 2.4% in states that expanded Medicaid, and by slightly less in states that did not.

Nonetheless, this three-year trend is going to add fiscal strains to physician practices.

Obamacare is already paying close to Medicaid rates for many ambulatory procedures. Moreover, there is evidence that many of the people who are now “privately” insured under Obamacare were previously insured in the individual or group market, and got bumped off their prior commercial coverage and forced into the ACA’s exchanges. That alone is going to lower provider revenue right at the very moment when their practice costs are escalating.

Now, add to the mix the new trend unearthed by the athenahealth data. In states that expanded their Medicaid programs, the proportion of Medicaid patients visiting doctor offices as a percentage of physicians’ total patient volume is rising sharply, by almost 40% since 2013. Accepting that Medicaid pays much less than private coverage, this sharp change in payer mix will wreak havoc on doctors’ bottom lines. Even if Obamacare is reducing the number of uninsured, doctors’ total revenue is falling as a result of this mix shift.

Just how much revenue is this taking out of doctor practices? It’s hard to estimate, but here’s one admittedly crude calculation. Data shows that the average medical provider, across all specialties, generates about $1.45 million a year in total billing revenue. This is gross revenue, before any practice costs are netted against the doctor. Next, assume that Medicaid pays doctors, on average, 50% of what private insurance pays (which is consistent with prior estimates). Then assume that there are about 900,000 professionally active doctors in the United States. Finally, figure that Medicaid and commercial insurance together accounted for 80 percent of the patients that a doctor sees (roughly in line with the athenahealth estimates).

If you accept that Medicare pays close to commercial insurance rates (about 90% on average), then looking only across the insured patients who support a practice’s revenue, a shift in total average payor mix between Medicaid and commercial coverage — of the magnitude reported by the athenahealth survey between 2013 and 2015 — would already cost the “typical” doctor practice close to about $50,000 in top line revenue, even after factoring in that more of the previously uninsured are now covered (mostly by Medicaid). Figuring that 40% of practicing docs work in privately run medical offices, and the aggregate hit would come out to $18 billion in less total revenue going into private medical practices.

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Any readon why we were not shown what the median income of a doctor is (probably north of 200 grand) and why should we care about his “low”salary ?

Here it is:
http://www.payscale.com/research/US/People_with_Jobs_as_Physicians_%2f_Doctors/Salary

For that we get to spend 10-15 years beyond your high school education while piling on the debt demanded by goddam idiot liberal administrators in colleges which can exceed $50K-$60K per year, be subject to excruciating exams, limited state reciprocity, spend countless hours at night being on call worrying about your useless hypochondriac relatives and sitting by your kids’ bedsides agonizing over the stupid choices you made that got them sick in the first place and then facing the plaintiffs’ attorneys troll for every perceived slight, right or wrong- and mostly wrong.

Stick it up your backside.

John, are you of the ”doctors should be slaves” school?
Sounds like it.
But you probably don’t think those lesser-paid medical employees like attendants, orderlies, receptionists, etc., should also be slaves.
Odd, perhaps you didn’t think it through.
Doctors can’t be forced to work for peanuts unless their aids are forced to work for even less.
And because doctors are inherently smart people, they are free to go off and do something else.

@john:

That kind of marxist attitude will get you exactly the medical care you deserve. Can’t wait to see the outcomes data from the witch doctor level of care that will inevitably result when physicians are made into government slaves…..well…more than we already are with regard to government mandates in medical record keeping.

It shouldn’t surprise us, though, when women walking in to the ER complaining of backpain are surprised when informed they are about to give birth, because they didn’t know they were pregnant..and all the parents who just expect the government to pay for their breastpumps, or formula, and their infant car seats…..and the “sperm donors” who demand a 5 page government form be filled out by the physician (at no charge, of course) so the sperm donor can be off work while the product of the donation is in the NICU…..

But the physician is branded as greedy in the demented mind of the demented leftist, while the overly-demanding “poor” is viewed as righteous in their demands for others to provide everything for them.

Yeah…we’re boned…