Will the Affordable Care Act’s reduced reimbursement rates for providers serving the publicly insured make the U.S. look like Germany? Maybe. Let me explain why.
Background on health insurance in Germany
A JHE study by Hendrik Schmitz provides some insight regarding the German health insurance system and a reform in 1997.
German physicians are remunerated according to two different FFS systems…About 90% of the population are insured by public health insurance (also called statutory health insurance, SHI). It is compulsory for all individuals with earnings below a certain income threshold (49,500 EUR per year in 2011) and who are not civil servants or self-employed. It is financed by payroll taxes (social insurance contributions) and non-working family members are covered without an extra premium…Individuals who earn more than the income threshold, the self-employed, and civil servants are allowed to opt out of the statutory insurance system and instead buy private insurance.
Germany not only has global budgets for the entire health system, but in 1997 imposed budgets for individual physician practices.
In reaction to the steadily increasing health care expenditures, the German government introduced a fixed budget for ambulatory fees for the statutorily insured in 1993. Under this system, doctors receive points for each treatment according to the severity of the case. At the end of each quarter, the monetary value for each point is calculated as the value of the total budget divided by the sum of all points collected by all doctors…individual “practice budgets” were introduced in addition to the overall fixed budget in July 1997. With this reform, each physician received a maximum number of points she could reimburse for each quarter. Points exceeding the practice budget were reimbursed by a much lower point value or even not at all.
Since this is a government program, there of course have to be a number of complications.
The derivation of the exact amount is highly complicated due to exceptions, special cases and regionally different regulations. What is common to all doctors in Germany, however, is that the cap is binding and exceeding points are reimbursed to only a much smaller rate.
How does this affect patient care? One study found that physician visits at the end of the quarter are much lower than the visits at the beginning of the quarter. In essence, the physicians have gone golfing because they know their additional reimbursement for seeing any new patients will be small.
After the reform, another study finds that physicians visits to by those who are publicly insured fell relative to those who were privately insured. Hendrik Schmitz finds that:
The results are in line with a general notion in the German public that the privately insured are getting preferential treatment from physicians at the cost of the publicly insured.
Although these issues are taking place in Germany, will cuts in Medicare and Medicaid reimbursement eventually make publicly-insured beneficiaries in the U.S. second class citizens as well?