It seems to be becoming a trend in these parts to consider cuts in Medicare. I’m going to offer a more speculative thought than a digestion of the real-life policies. What if your doctor billed you the way your lawyer billed you? That seems like it would be the set-up for a rather bad joke, but I intend it as a point of reflection.
Lawyers typically bill thier clients by the hour. Or, these days, by the fraction of an hour, with more and more firms going down to one-hundreths of an hour to measure time spent on a project. The process is cumbersome and I don’t know a single lawyer who likes it. I also don’t know many lawyers who have effectively found a way to profitably and fairly bill their clients for their services in some other way. The system is subject to a lot of gaming and auditing and it relies upon the honesty and good faith of both the biller (generally, the attorney herself) and the payer (the client or the client’s insurer). Some lawyers work on contingency, about which I’ll elaborate more in a few moments, but contingency payment is only appropriate — and indeed, only ethcially permissible — in certain kinds of cases, but there is no kind of work lawyers do for which hourly pay is inappropriate.
Doctors typically bill their patients by the service performed, and in the case of Medicare (and most private insurance) upon a complex regime of coding the kinds of treatments rendered. As E.D. pointed out on the front page a couple weeks ago, this system is also subject to a lot of gaming and auditing and sometimes despite the good faith of all involved, screwy results come out of that system. Again, the system in large measure depends on the integrity of the billers (the doctors and the other assistants working theoretically under their supervision) and in part on the good faith of the payers (in this case, the insurers and Medicare when they review, sometimes audit, and hopefully pay for the services). It seems as though medical providers have to count on devoting part of their time to playing the audit-review-negotiate part of the game, which I can confidently guess is not why most of them got in to medicine in the first place.
There are two basic reasons why lawyers don’t use a system like medical insurance to bill for their services. The first is inertia — the law is an inherently conservative profession and institutions within the law, like fee-shifting statutes in certain kinds of cases, have crystallized the compensation model that prevailed in the industry at the time those laws were adopted. The second is unpredictability. The nature of the work is such that a task that took fifteen minutes yesterday might take me four hours today. What’s the difference? Different judge, different facts of the case, different legal theories advanced by the other side, who knows what else.
Doctors face similar challenges. The regime of insurance billing has become well entrenched in the way medical service providers do business. When we talk about Medicare reform, we’re talking about changing the way those billing codes work and the amount of money moved around because those codes are invoked. And, it is not always possible for a doctor to predict what will be involved in rendering particular kinds of care. Most practices lend themselves to routinizable work that can be rendered predictable, but something like a surgery could easily result in huge complications very quickly and require substantially more effort than had originally been anticipated. My strong suspicion is that there is a spectrum of variability amongst procedures rather than only these two extremes.
Just like in law, the billing system creates a financial incentive for delegation of work to professionals holding subordinate positions and less impressive credentials than the ultimate provider. I help oversee a staff of paralegals and other support personnel. Parts of my job I simply could not do without their help; if they were not taking phone calls from nervous clients on low-value matters, preparing routine paperwork, or tracking my calendar, I would have to do all those things myself and I wouldn’t have time to devote to the intellectually challenging work that only attorneys can do. And the fact of the matter is, my paralegals bill hourly for their time, at a much lower rate than my time is billed, but there is still (potentially, if they do their jobs right) room for healthy profit on paralegal activities. Indeed, a lawyer working on her own faces a theoretical cap on how much money she can make, assuming she bills her time honestly. But subordinate staff enable that profit margin to be leveraged much higher — thereby providing more services to more clients, at a lower cost to each individual client, and ultimately greater financial compensation to the lawyer. (More money to lawyers — that’s what I’m talking about.)
Again, so too with medicine; you don’t need a doctor to take a patient’s vitals, assemble a list of complaints, guide the patient through the complex paperwork needed to properly document a file, or verify prescriptions. What I don’t know for sure, but again suspect, is that when a nurse, P.A., or some other sort of assistant renders these services, there are special codes for that and compensation comes in to the medical office for it. It seems a certainty that the incentive is there for the doctor to spend only a small amount of time with her patients personally, and instead leave the bulk of the hands-on care and face-to-face treatment to her medical support staff — a well-leveraged practice is more profitable than the doc doing it all herself.
But the difference is that in medicine, the billing is task-driven rather than time-driven as is the case with other kinds of professional services like law, accountancy, or engineering.
There is also the possibility of billing by outcome. Contingency work, which is aimed at allowing those without immediate means to pay an hourly fee to avail themselves of competent legal help, imposes a strong financial incentive on the lawyers in question to take a realistic look at the possibilities of a case and to take a reasonable assessment of whether the financial rewards will justify the work necessary to earn those rewards. After all, the contingency lawyer is only paid a percentage of what is recovered for the client. The incentive here is to do as little work as possible, by anyone, so as to get the result. I question whether most contingency clients get first-class service — while the ones with first-class damages certainly will because their cases are worth the investment of time and money, those with low to middling kinds of issues will run into the downside of the outcome-determiantive compensation scheme.
An outcome-determinative compensation scheme is, at least in my mind, wildly inappropriate for medicine. Paying a doctor for a patient’s medical outcome obliges the doctor to accomplish healing. This is not always possible; consider a patient with Stage IV or V cancer. Palliative care and hospice are appropriate kinds of treatment for such a patient. The patient’s quality of end-of-life cannot reasonably be quantified, and the outcome of death is all but inevitable. A doctor who takes on such care would either have to agree to do so pro bono or find some other way of rendering care that is not based on the patient’s survival. Contingency payment arrangements are not going to be a good option for the medical profession.
So that brings us back to the question of task-driven or time-driven compensation arrangements. If doctors were paid on a system that compensated them for their time rather than the procedures they rendered, that creates a financial incentive for doctors to spend more time with their patients rather than less. More procedures would be done by the doctor herself than by her staff — although, as the legal industry demonstrates, it may be possible to smartly incentivize the system such that the profit margin for staff care is higher than the profit margin for doctor care. So I would not predict that time-driven medical billing would significantly increase “face time” between doctor and patient.
I suspect that over time, this would cause medical practices to atomize. Doctors would find that their financial incentives pulled them away from working together and more into training and supervising staff. There would be fewer medical partnerships, more solo practices. And there are already lots of solo practices as it is.
Attracting doctors to staff hopsitals would become more financially challenging, and hospital billings would also shift. I could imagine doctors and hospitals reaching co-op arrangements of staff time exchanged for privileges, but this would probably only be worthwhile for doctors who incorporated major kinds of treatments in their practice — surgeons, mostly. This could lead to a situation analagous to the stratification of Biglaw versus Small Law, in which small firms are more financially appropriate for routine kinds of legal issues and big firms functionally the only ones who can take on major litigation.
At the same time, I suspect that such a financial arrangement would attract more doctors to the profession and spread them out over a wider geographical area and induce them to acquire broader ranges of knowledge. The incentives for doctors to practice in larger urban areas now, where they have ready access to significant hospital facilities when necessary, are powerful. Admirable indeed are the doctors who forsake the pleasures both professional and personal available in the cities to render care to rural populations and the profits presently incentivized for specialization; many lawyers, however, find that servicing people in non-urban areas and with a wide variety of needs is both a more pleasurable way to practice as well as one that they find financially rewarding.
At the end of the day, though, I am not a doctor and this is all speculation. The inertia of policy is a powerful force keeping both time-driven and task-driven compensation regimes in place where they presently prevail. It doesn’t have to be this way, is all I’m saying, and if you try the idea on for size, you might find things about it that you like, even if you ultimately discard it.
It is possible for doctors to bill based on time spent. This is relatively common for specialists who spend a lot of time diagnosing and counseling patients about complex medical issues. The amount of time taking the history and performing the exam may be relatively small (and comprise much of how one bills in a task-driven system), but if you spend half an hour subsequently explaining the diagnosis, what happens next, you can bill based on that time. We’re required to actually write the words “I spent X minutes counseling this patient with regard to diagnosis and treatment,” which is jarring and inelegant in the medical record, but it allows for proper compensation.
How much one can bill for a particular visit from a task-based POV is often determined by how meticulously one documents. As I said, the history and physical form much of the basis for billing. The more detailed they are, the more complex the interaction is considered, and the more one can bill. There’s a lot of gray in the ethics on this question, which may be fodder for another post one of these days.
And yes, we can bill for services rendered by our clinical support staff. Things like strep screens or injections don’t need to be done by me, but our office obviously bills for them. It allows me to devote my time to actual patient care, and it would be a gigantic pain (and financial drag) to do it all myself.
*snort* medical stuff is the place where things are changing most. see health care reform bill, and what it means.