The implementation of the Patient Protection and Affordable Care Act (ACA) has raised questions concerning the future of fee-for-service in outpatient private practice.
In March 2010, President Obama signed the ACA into law. This sweeping and transformative legislation was always controversial, and its enactment precipitated multiple legal challenges. A majority of the states filed joint or individual lawsuits to overturn the ACA on constitutional grounds, arguing its “individual mandate,” requiring every citizen to purchase health insurance, exceeded the powers of Congress under the Commerce Clause. In June 2012, the Supreme Court of the United States upheld the ACA in the Sebelius case, ruling that while the individual mandate indeed violates the Commerce Clause, it is constitutional if it is a tax; hence the ACA could proceed towards implementation in 2014 with the force of law.
Implementation of the ACA however, has run into obstacles as it has become known what the largely unread law actually entails. Various insurers, corporations, small businesses, and unions have requested exemptions from the ACA; by February 2013 more than 1200 entities were granted waivers. The AFL-CIO, after giving highly visible support to the ACA, has requested and received an exemption. The National Treasury Employees Union, providing insurance to employees of the Internal Revenue Service (IRS), was exempted, even though the IRS oversees the individual mandate. Astonishingly, Politico reported in April that, after passing ACA, Congress now seeks to exempt its members and their staffs. In July, the president delayed the individual mandate for businesses, but not for individuals. Clearly, there seems to be an element of buyers' remorse and less than transparent procedures for granting exemptions. No one can predict what will happen when the irresistible force of law runs up against the immovable object of citizen dissent. But no matter what happens, private practice, as psychoanalysts have known it, will be transformed.
Graham Lindley Spruiell, M.D., is co-chair of the Committee on Government Relations and Insurance and a member of the Program in Psychiatry and the Law, Beth Israel Deaconess Medical Center, Boston.
Passage and implementation of the ACA has instigated important policy debate on the public health implications of the fee-for-service model. As Julie Barnes wrote in The Atlantic, “Moving Away from Fee-for-Service”: “This antiquated model is the culprit behind exponential health-care cost growth.” Another article, published in Medical Economics, refers to the National Commission of Physician Payment Reform and asserts that that the best way to rein in health care spending is to abandon fee-for-service.
Opponents of fee-for-service claim that this method of compensation results in “cherry picking” of the most desirable patients (i.e., patients with acute medical conditions), leaving the higher costs of treating chronic patients to the ACA. Further, they assert that fee-for-service creates a two-tier system that disenfranchises those who cannot afford private insurance. It is accurate to say that under fee-for-service, clinicians are compensated on the basis of volume of services provided to individual patients, rather than on whether treatments are, from a public health perspective, evidence based and effective.
Private practice has always been the norm for the medical profession. In the U.S., the first transformation of the private practice occurred when physicians began accepting indemnity insurance. After World War II, corporations offered indemnity health insurance to attract potential employees. With the introduction of indemnity insurance, private practice came to mean a mixture of private-pay and fee-for-service. Some doctors abandoned private-pay altogether in favor of reliable reimbursements and referrals that accrued from doing business with insurers. These were considered the boom years of private practice.
Under this system of reimbursement, patients' demand for medical treatments steadily accelerated, and clinicians were happy to provide those treatments and charge accordingly. Insurers were agreeable in the beginning, as long as they could pass those added costs onto employers and ultimately patients. But eventually those costs became prohibitive and insurers began pulling back. Up to that time insurers were silent third-party payers who were deferential to the clinician-patient relationship, but this soon changed.
The Employee Retirement Income Security Act (ERISA) and managed care organizations were designed to contain costs by denying authorization for treatment if the insurer determined that treatment was not medically necessary. But as we have seen, managed care failed to contain costs as premiums for patients have soared, compared to other sectors of the economy, notwithstanding static or decreasing compensation levels for clinicians. Not only was it costing more under managed care, but patients were dissatisfied because they were being denied treatment while paying higher premiums, and there were growing concerns about confidentiality. Clinicians were dissatisfied because they had less authority over indications for treatment and over how treatment was conducted and compensated.
The dissatisfaction and failure of managed care has led to variations on the managed care theme. Some are hopeful that the Paid Provider Organization (PPO) will be successful. In the PPO model, similar to managed care, the individual clinician contractually gives up private practice to join a group practice in which reimbursement levels are set according to the calculated costs of providing treatment. For the same reason psychoanalysts were reluctant to become managed care providers, psychoanalysts are also reluctant to join a PPO, because in both cases clinicians are contractually obligated to abandon private practice.
Perhaps sensing that traditional fee-forservice may not have a future in the ACA framework, medical specialties including psychoanalysts have hearkened back to the classical model of compensation, private-pay, both as a business decision and for personal reasons. Increasingly, this form of practice is being seen as the only exit if fee-for-service is curtailed or abolished under the ACA. The idea of private-pay might be jarring to some who are accustomed to the security of the fee-for-service and assurance of referrals, and who are concerned that there may not be enough patients to sustain a private-pay practice, particularly if most patients are absorbed into the ACA.
Supporters of private-pay argue on the other hand that by not having to spend time dealing with third party regulators and regulations defying common sense, clinicians are better able to focus on individual patients in the context of the clinician-patient relationship. They are able to practice according to their ethics and conscience without intrusions by third parties. Further, they can assure their patients of confidentiality by abstaining from disclosure of personal health information to the electronic health record (EHR).
We might be approaching a tipping point, because clinicians who have adopted private-pay arrangements with their patients are remaining solvent and in some cases are earning more than what they would have earned through fee-for-service or working through an exchange. Similar to psychoanalysts who utilize private-pay, these clinicians report greater freedom and job satisfaction.
Rather than choosing between fee-forservice versus private-pay, psychoanalysts and other clinicians will likely continue fee-for-service arrangements as long as that form of compensation is permitted, but they will also be receptive to private-pay practice, hedging our bets so to speak. Excluding Medicare-eligible patients (who are obligated to receive treatment in-network if they want to use their insurance), private-pay will remain a viable option if fee-for-service is eliminated, as long as the ACA does not adopt stringent policies similar to those of Medicare, requiring clinicians to opt in or out
absolutely; or, worse yet, policies requiring all clinicians to abandon private practice and work entirely within the ACA. Because if that were to happen, it would sadly spell the end of private practice as our members have known and enjoyed it.
If fee-for-service cannot be saved and clinicians do not want to move towards a private-pay model, then it would seem to me that our choices are bleak. Either clinicians would abandon private practice and work within the network, or else consider alternative work or retirement. Assuming that most of our members are not inclined to look for alternative work or retire, assimilation may be the only choice for those members who reject private-pay.
APsaA's Committee on Government Relations and Insurance (CGRI) has adopted a dual strategy with respect to the differing interests of our members. CGRI will advocate for the maintenance of fee-for-service as an important feature of private practice. Additionally, CGRI will advocate that the ACA should reject policies similar to Medicare in which clinicians must opt in or out. Rather it should be possible to work within the ACA framework while at the same time keeping a private practice.
For psychoanalysts who want to work within the ACA framework, CGRI will advocate for research demonstrating that psychoanalysis and psychoanalytic psychotherapy are effective evidence-based treatments, and hence should be preserved in the ACA. CGRI will advocate, according to the Patient Bill of Rights, that the EHR should become patient centered and that personal health information should not be disclosed without patient consent. CGRI will also support parity (mental health services being treated equally with medical services) and will advocate for prosecution of parity violators. As reported in a previous article, Meiram Bendat, a member of the CGRI committee, has independently filed a class action suit alleging parity violations [TAP 47/2]. If there is an opportunity to submit an amicus in behalf of this suit and similar cases, CGRI will consider doing so.
For members who tend to lean in the opposite direction, away from the ACA and the EHR, and towards maintaining private practice, specifically a private-pay practice, CGRI has advocated for private-pay-provision in the Final Parity Rule and will attempt to get similar policy included in the ACA. CGRI will advocate for high-deductible insurance and expansion of medical savings accounts, so that patients are covered for catastrophic illnesses, but can pay for ordinary treatments out of pocket and are able to deduct a percentage of those expenditures. CGRI will support the notion of “patient choice” for Medicare beneficiaries found in H.R.1310—Medicare Patient Empowerment Act of 2013. Although passage is unlikely, we agree with the meaning of this language. This bill would permit “patients and eligible professionals to freely contract, without penalty, for Medicare fee-for-service items and services, while allowing Medicare beneficiaries to use their Medicare benefits.”
In short, if fee-for-service is curtailed or eliminated in the next five to ten years, CGRI will argue that private-pay should be preserved as a constitutional right of patients and clinicians to freely contract with each other, while also advocating that licensed clinicians, who have private practices, should not be excluded from participation in either Medicare or the ACA.
Editor's Note: According to the Book of Daniel, King Belshazzar called upon Daniel to interpret a message supernaturally written in Hebrew on the wall of his banquet hall. Mene Mene Tekel Upharsin literally means “counted, counted, weighed, wanting.” Daniel told the king he had been weighed in the balance (or scale) and found wanting, and that he would soon lose his kingdom, giving rise to the modern expression “the handwriting on the wall.”
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