Paying Less But Getting More? Only In Health Care!
Paying Less But Getting More? Only In Health Care!
TIME Magazine reports that the White House may be considering adopting Prometheus, a payment system developed in Illinois, which “calculates compensation for hospitals and doctors based not on the specific treatments a patient receives but on the care a patient should receive ‘per episode’“:
Taking the congestive-heart-failure example, here’s how the payment scheme would work: A slightly overweight 60-year-old heart-failure patient comes in with coronary-artery disease and acid-reflux disease. According to a Prometheus algorithm, this patient should cost $20,750 a year to treat — including office visits, medications, blood-pressure monitoring and an allowance for complications. The incentive for the heart patient’s doctor to spend less than $20,750 is that he gets to keep a portion of the difference (assuming that the patient was managed properly and happy with the outcome). And the best way to keep costs low is to offer the best care: If the doctor is negligent in monitoring the patient’s condition or fails to counsel the patient fully about proper diet and exercise, that patient could have a heart attack — requiring more treatments — and the doctor would take a financial hit.
Payment reform is at once one of the most under-reported aspects of health care reform and one of the most important. The general idea is to reward medical providers (doctors, hospitals) for the quality of care they deliver rather than quantity and to move away from a payment system that pays for every single service separately. Experts estimate that just paying providers differently can save billions of dollars and drastically improve care quality.
We currently pay our health care providers on a fee-for-service basis, like a restaurant charging the customer for every spoon, fork, or condiment. If restaurants actually operated like that, they would cart out unnecessary silverware to pad the bill. But they don’t. Instead, they charge a flat fee for a dish and work hard to make sure that the food is good and the customer comes back the following week. Health reformers believe we can apply the same theory to health care providers: paying for every single service encourages overutilization and drives up health care costs, allowing the federal government to reimburse for entire episodes of care, bundling payments for certain procedures, and encouraging providers to offer more preventive treatments would not only lower health care spending, but also improve health outcomes (by reducing redundant, unnecessary or harmful treatments). Once Medicare adopts these payment methods, private payers would follow suit, the theory goes.
The key is focusing on patient outcomes, something previous reformers ignored. As TIME recalls, Medicare adopted a similar initiative in 1993, “bundling payments for hospital stays.” But, “since hospitals were paid a certain amount of money for each patient no matter how long they stayed, many patients were discharged sooner than was prudent, which transferred the burden of care onto nursing homes and created a “mini-industry of readmissions.”
The different pilot reform programs currently under consideration wed outcomes to reform, and, most importantly, allow the Secretary of Health and Human Services or the Center for Medicare and Medicaid Services to expand successful models. In a recent paper, CAPAF policy experts Ellen-Marie Whelan and Judy Feder detail the recent proposals, which I have adapted into the table below:
| House’s Tri Committee Draft Bill | Senate Finance Committee Draft | |
| Primary Care Bonus: Medicare would pay a bonus payment to primary care providers. |
5% to 10% bonus; primary care providers in under served areas would receive a higher bonus. | 5% bonus for primary care providers. |
| Medical Home Model: Certain practices would receive extra Medicare payments to provide a full array of coordinated primary care services. |
Primary care practices and community based medical homes qualify for the extra payment. | Only primary home models qualify for the extra payment. |
| Accountable Care Organization: A group of providers, including doctors and hospitals, who accept responsibility for caring for a group of patients. If the organization can perform the same services for less, Medicare and the organization split the savings. |
Both versions expand pilot programs and give extra consideration to small groups who participate. (80 % of physicians work in groups of five or less.) | |
| Bundled Payments: Medicare would pay a fixed amount for all of the services provided to a patient for a particular condition. |
Both versions propose paying a single fee to hospitals to cover the cost of the hospital stay and the immediate care (for that condition) that follows it. | |
As RAND economist Melinda Beeuwkes Buntin and Harvard University professor David Cutler explain in a new paper, not only will these reforms improve the quality of care, but they could also lead to federal savings of about $299 billion over the next decade. In fact, payment reform that “is based on the idea that good care should be rewarded more than just more treatment…could save about 8 percent of projected spending over the next decade.”
5 Responses to “Paying Less But Getting More? Only In Health Care!”
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First lie, providers aren’t all paid fee for service. DRG’s, capitation provide an incentive to manage care within financial boundaries. They have a several decade record.
The Prometheus model needs a huge inspection scheme to know what complications were avoidable vs. unavoidable. That’s just from the example given in the NYT article.
http://www.nytimes.com/2009/06/25/health/25chen.html?_r=1&pagewanted=2&hpw
Inspection does not assure quality. Reward/punishment schemes like Prometheus have a long history of distortion, Wall Street, Rick Scott’s Columbia/HCA, executive incentive stock options (over a ten year period).
Combine the Prometheus payment with bundled payments and you have an overly complex cluster _uck.
You’ll need the unemployed quants from Wall Street to model ridiculous payment schemes, especially those overlapping organizations.
If greed, fee for service money, is the problem, why will all splitting savings money work any better. It won’t. Give providers a laser-like focus on incentives/financial rewards and quality will suffer.
Accountable care organizations are vertically integrated health care. We ran this cycle with managed care in the 1990’s. It brought us Columbia/HCA and HealthSouth, two ethically challenged giants. Accountable care organizations are Glass-Steagall for health care. Get ready for “Too Big to Care.”
It’s horrific management theory, followed by massive complexity. A progressive website should be embarrassed to promote this.
Quit devising complex payment schemes. Pay providers fairly and encourage them to focus on quality.
This encourages doctors to continue acting like businessmen. Sad.
July 7th, 2009 at 6:13 pmWhat are the cnances a doc will just play the odds?
And doesn’t this plan reward drs to spend as little time as possible with patients?
July 7th, 2009 at 7:48 pmMedicare has been using episodic payment methodology in home health care for some time now, and it works a lot better than the old fee-for-service model.
July 7th, 2009 at 10:27 pmHow Congress will deform health care with changing payment systems that echo 1990’s efforts:
http://stateofthedivision.blogspot.com/2009/07/congressional-pros-to-deform-health.html
July 9th, 2009 at 2:39 pmActually, right now I am suffering from a blockage in the coronary artery and was once blocked up to 85%. I got the stent implantation which is a mesh like spring which is used to broaden the artery and hence restoring back the blood flow. You can see further information regarding stent operation from http://www.heartsite.com/html/stent.html. I got to know everything regarding my stent operation from this site. I was really unaware of such a blockage. I sometimes feel dizzy, restless, lazy , but thought that to be something related to mental ability, and hence never worried about it. Once I got my basic medical checkup at Elite health medical office in Los Angeles. The ECG report went to be something suspicious. So, they advised me to have further advance diagnosis to determine and assure regarding the problem in the heart. After my MRI , CT scan and other such scans it came to me as a shock that I was facing a problem of blockage. It was quite surprising to me, and as I was not aware of anything regarding this, I was really frightened. The doctors explained me every information regarding my health and its treatment, and suggested me to have stent operation. That was some dreadful days of my life, which I faced only because I was careless about my health. It was my luck that I somehow went for a basic checkup at elite health, but every woman out there may not be so lucky.
July 13th, 2009 at 4:22 am