The Case Against Allowing Doctors To Bid For Medicare Business

In today’s New York Times, Peter Bach proposes solving the problem of care over utilization by allowing doctors to bid for Medicare business. Over utilization of expensive procedures and treatments is a concern to many health researchers — who worry that we spend billions on untested or unnecessary medical procedures — and is a major hurdle to containing health care costs.

Bach, who argues that “when there are too many doctors in one area, too much money gets spent on health care,” solves this problem by proposing that the government establish “competition for doctors in oversupplied regions”:

Here is how it would work. Later this year, the agency would set a 2010 target number for each type of specialist in an oversupplied region. Then it would offer to sign up those doctors at a certain payment rate. The starting rate would be, say, $30 per doctor work unit. (Work units are a measurement that Medicare uses to set its rates; each procedure is assigned a specific number of work units.) This is lower than the $36 per work unit that Medicare pays all doctors today. If too few specialists signed up, the rate would go up, and it would keep rising until there were enough doctors for the area. In areas where there are too few doctors, Medicare could pay more than $36 per work unit, attracting not only specialists but also the primary-care doctors who are so needed in these places.

Bach notes that he “anticipate[s] a few objections to this plan” but he may be understating the concerns of some health care researchers. Allowing providers to bid for Medicare business may lead more doctors to opt out of Medicare and jeopardize patients’ care continuity. Medicare has always prided itself on maximizing patient choice — accepting all doctors — and providing stable coverage to every eligible American. Unlike private insurers, Medicare does not enter and exit different markets; it offers a reliable source of coverage that contracts with any provider who is willing to accept its reimbursement rates.

Preserving choice while addressing over utilization and market saturation is possible. In fact, the best way to reduce unnecessary or ineffective treatments is not by uprooting doctors but by incentivzing all providers to adopt best practices and instituting payment reform. This means changing the health care reimbursement system so that we pay for value, not volume, investing in comparative effectiveness research, and rewarding medical students who enter primary care residency programs.