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POLICY: How will you get paid? By Paul Levy

Paul Levy is the President and CEO of Beth Israel Deconess Medical
Center in Boston. Paul recently became the focus of much media
attention when he decided to publish infection rates at his hospital,
despite the fact that under Massachusetts law he is not yet required to
do so.  For the last year and a half he has blogged about his
experiences in an online journal, Running a Hospital,
one of the few blogs we know of maintained by a senior hospital
executive. Today he gives his take on pay for performance.

This is the next chapter in my Wednesday is Student Day series. Rocky, a medical student, asks below: "What is your take on pay for performance, and will it be integrated into BIDMC?"

My
economics professors in college set forth a series of theories and
formulas that described the functioning of the free market. We all knew
that this formulation was unrealistic, in that most markets are
imperfect. There is often "friction" between parties in a marketplace
that result in imbalances between supply and demand, that result in
uneven knowledge between and among buyers and sellers, or that
otherwise gets in the way of an economically efficient equilibrium
condition.

But it was not until I joined the health care world
that I discovered the extent to which an economic system could be so
convoluted that there is virtually no relationship between the value of
services provided and the compensation for those services. In health
care, there are not only intermediaries between the procurer of a
service (i.e., the patient) and the supplier (i.e., the doctor or the
hospital), but the actual pricing of specific services is often based
on the wrong premises.

I think that most people would like to
think that a doctor or hospital would be paid based on the quality of
the service provided, but that is not so. Most recently, insurance
companies have introduced surrogates for real measures of quality. They
attempt to reward providers with "extra" payments for certain
accomplishments — administrative or clinical — that are deemed to be
of value to the insurance company in the plans it offers to its
subscribers.

This is a crude system in several respects. For
one, the measures chosen do not always add quantifiable value. For
another, even when they do add value, the amount of the performance
bonus is not related to the value. For another, the bonus does not
necessarily pass through to the specific providers who deliver specific
services to patients. For another, the bonus is often not really a
"bonus" that provides extra revenue to the provider. Rather, it is
often in the form of a withholding of a portion of the fair
compensation to which the provider is entitled even if the chosen
metrics are not accomplished.

It is my hope that, over time,
insurance companies will actually base payments on accurate and
measurable levels of service quality. It is also my hope that the
current imbalance in payments between "cognitive" specialists like primary care doctors,
neurologists, and nephrologists and "procedural" specialists like
surgeons and interventional cardiologists will some day be set aright.
In the meantime, places like BIDMC live with the rules that are decided
by the insurance companies. There really is no other choice for us,
for, in the parlance of my economics professors, we are price takers.
(By the way, the same is true regarding our payments from Medicare and
Medicaid.)

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  1. We as physicians need to determine the direction of health care if medicine is to remain a viable business:
    How to Fix the United States Health Care System
    We Must Do It Ourselves
    “Problems cannot be solved at the same level of awareness that created them.”
    –Albert Einstein
    Identify the Components: Ones That Work and Ones That Don’t
    The first step to solving any seemingly daunting problems is to break it down into component parts, identify what works about the existing status; and what doesn’t. It’s crucial to learn from the past.
    As a physician and owner of a solo practice (small business) I’ve experienced the health care system from all sides. I’m intimately familiar with how Medicaid, Medicare, and for-profit insurance companies such as Blue Cross, United Healthcare, Aetna, and others work. I am also a consumer of health care services. I’ve had babies, knee surgeries, and other personal interactions with the American medical system. I have witnessed first-hand the extent to which non-citizens are receiving benefits paid for by working Americans. I am a small business owner so I’ve had to decide whether and how to offer health insurance to my employees. I, and others like me, am among the most qualified people in America to help fix the health care system because we have experienced health care from all angles: health care providers, patients, business owners, and tax payers.
    In this chapter we’ll explore what works and what does not work about the existing U.S. health care system. We’ll also address how to fix what doesn’t work and improve upon what does work.
    What Does Not Work
    Big Government Entitlement Programs
    Big Government does not work. Entitlement programs such as Medicare and Medicaid have spiraled out of control, increased our debt, and are a huge burden to existing and as-yet unborn taxpayers. Many people have figured out how to “game” the system and receive benefits they don’t deserve.
    In my county the office that determines Medicaid benefits is populated by some former illegal migrants who are now citizens. Through knowing people who work in that office and are dismayed by current practices, I am aware some staff members are dispensing Medicaid benefits to those who don’t deserve them. We all pay for this. I don’t want my children bearing the cost of the ballooning U.S. entitlement programs, as it will impact their and their children’s standard of living.
    Medicaid “Emergency Services Only” is a perfect of example of an entitlement program gone woefully wrong. Don’t misunderstand me – some of the recipients of this entitlement program truly deserve it. However, this benefit is dispensed to some citizens and non-citizens alike who drive brand new large SUV’s, and reside in single family homes – I’ve literally seen them deliver a baby at the taxpayer’s expense and drive away in a shiny brand new Cadillac SUV. They pay through these luxuries with cash earned “under the table,” not subject to income tax.
    The Medicare Part D prescription drug program is another example of an entitlement program which benefits pharmaceutical companies and wealthy Americans at the expense of middle class and younger Americans. Most beneficiaries of Part D are retired older Americans who did not pay enough into the system to cover this benefit during their working years. As a consequence working Americans and future working Americans as yet unborn will pay for this program. Pharmaceutical companies are guaranteed a “permanent” revenue stream through Part D unless the system is revoked or revamped. As drug costs increase, which they inevitably will, Part D will balloon out of control as has the rest of Medicare and Medicaid and be another source of national debt and excess tax burden.
    Big government does not work because it’s too costly to administer and it is too easy to take advantage of.
    For the first time in U.S. history we are seeing new generations’ standard of living decline compared to the generations that preceded them. This should be a wake-up call to all of us. If you live in the moment and have the attitude, “It won’t affect me,” think again. Your children or your friends’ children, or mother Earth will bear the brunt of our existing behaviors. Examine your motives. Be honest. Do you feel like you need more money or more stuff? Do you really need these things? Or do you need a healthy earth in which you and your children can live sustainably? Now that you’re making a baby it’s up to you to create the best world possible for them.
    Inequities in Wealth Distribution Harm Everyone
    As a species we have not solved the problems engendered by unequal distribution of wealth. The rich getting richer and the poor getting poorer is not simply an economic problem. It’s an environmental and moral one: It’s hard to care about the pollution you create as an individual when you’re worried about how you’re going to feed your family from day-to-day.
    Ostentatious displays of wealth accentuate inequities and engender jealousy. This sentiment leads to the emotion of rage and ultimately to behaviors of radical and violent extremism, terrorism being just one example.
    Dramatic inequity in wealth distribution is a moral problem that engenders social ills such as thievery, violence, and mistaken beliefs.
    National Health Care Administered by the Government is a Bad Idea
    Several countries already have national health care systems in Canada and Europe. This approach has resulted in a two tiered system: A “private” system in which the wealthy can receive any and all healthcare when they desire it; and a “public” system in which the average person must sit on a waiting list for a year or more to have their knee replacement or their heart surgery. Many of these countries have high income taxes on the order of eighty percent to pay for their entitlement programs. The government decides how the individual citizen’s money is spent. Do you think the U.S. Federal Government has proven it is the best entity to determine how your health care dollar is spent? That is the inevitable outcome of a “National Healthcare System”.
    A national health care system already exists in the United States. It’s called Medicare and Medicaid. These programs have failed miserably in several aspects: Lack of coverage: The number of uninsured citizens keeps rising despite the ever increasing money spent on Medicaid and Medicare. Those who are on Medicaid and Medicare are under-insured because these systems reimburse physicians at a rate of roughly twenty cents on the dollar. Most primary care physician practices’ overhead averages forty to fifty or more percent. Thus, physicians lose thirty cents on the dollar for every Medicaid and Medicare patient they see. This necessitates physicians to either refuse to accept Medicaid and Medicare; or to be forced to go out of business through lack of financial viability.
    Entitlement programs charge working Americans twice, and in some cases three times, for the benefits they provide their recipients: through taxes, through cost-shifting of high insurance premiums; and through obligating physicians and hospitals to provide free care to anyone who walks through the door, be they tax-paying citizens or not.
    Just so you’re under no illusions this is a small problem, look at the 2006 statistics published in the American College of Obstetricians and Gynecologists’ newsletter: Seven percent of obstetricians quit delivering babies altogether and another twelve percent curtailed services to accept only low risk clients. The reasons cited for this were declining reimbursement for deliveries and increase financial and emotional cost of malpractice insurance. A large portion of obstetric patients are illegal immigrants who are either uninsured or covered by Medicaid “Emergency Services Only” which pays dismally. This twenty percent reduction in obstetric services in a single year is truly astounding.
    The main reason reimbursement by Medicare and Medicaid is insufficient is because there is a tremendous disconnect between the consumers of these benefits and those paying for these benefits. The payers are middle class working Americans. The consumers are retirees, people below the poverty level, and people who are illegal migrants. There is a complete disconnect between those who pay for the system (middle class Americans) and those who receive the benefits.
    Disconnect between payer and recipient results in over-utilization of expensive services. If you don’t have to pay for something why hesitate to use it? Many people on Medicaid use the nation’s emergency departments like clinics because they don’t have to foot the several thousand dollar bill for an emergency department visit. If people are insulated from the cost of their prescription medications they are likely to use expensive heavily marketed drugs even if they have no proven benefit over older generic drugs.
    Solving the health care crisis in this country requires increasing the connection between the payers and recipients and dispensers (health care providers and organizations) of health care services.
    Profit Incentives…well…raise profits (and cost)
    Why should commercial insurance companies and pharmaceutical companies make billions in profits when there are 46 million uninsured Americans? It just does not make sense. That is the multi-million dollar question. How can, for example the CEO of United Healthcare justify taking home a multi-million dollar annual compensation package when there are children and adults in this country who go without basic health care needs such as vaccinations and access to medical providers?
    Commercial Insurance Companies:
    Increasing Transparency and Evaluating “Managed Care”
    Increasing Transparency
    How do you know you’re getting the health care benefits for which you’ve paid? Do you understand your EOB (Explanation of Benefits) you receive in the mail after you’ve visited a health care provider or pharmacy? Have you checked to see if the insurance company has paid the correct percentage (accounting for deductibles and co-pays) according to your written policy? Have you read your insurance policy?
    The average person (including me) has not read her insurance policy word for word. It’s usually a dense 50 or 60 page document written in legalese. The fine print within this document can contain many exceptions to the summary of the policy, of which you are unaware.
    Does your insurance company pay for “out-of-network” providers in strict accordance with the written policy?
    If you don’t know the answers to all these questions you may not be (probably aren’t) receiving the full benefits for which you are paying. Ask your insurance policy to account proportionally for every dollar of your premium – write to their CEO or CFO. They should at least send you an “annual report” – the company summary they mail yearly to investors. If you can’t get the information by asking, state you’re interested in investing in the company and can they send you an annual report? Money talks and information is power. We can’t do anything about rising health care premiums until we understand where each dollar goes. Once we understand where the dollars go, we can work to control the components eating those dollars.
    Part of how insurance companies have made away with so much of our money is because we don’t demand the information. If we sit passively and complain it accomplishes nothing. Do something! Start by demanding an accounting of where your money goes. You have a right to know.
    If we curtail existing entitlement programs we decrease the administrative burden of the Federal Government. There is a National body, the Joint Commission on Accreditation of Hospital Organizations (JCAHO), whose job is to regularly visit every hospital in the United States to see if they are living up to standards of safety and hygiene. Why not demand a Federal body that does for commercial insurance companies what JCAHO does for hospitals? Given that the largest portion of our national gross domestic product goes to health care it’s only appropriate the insurance companies be held accountable for responsible use of those dollars.
    Evaluating Managed Care
    Managed Care is a model that originated in the 1980’s to attempt to control heath care costs. The original intention behind it was to link quality to cost and use the scientific method to evaluate the merit of various medical treatments. It has undergone much iteration over the past three decades. However, managed care has failed to control cost. Indeed costs have risen hundreds of percentiles over the past three decades.
    Original versions of managed care involved a “gatekeeper” system in which insurance companies dictated patients must see a primary care physician before obtaining a referral to a specialist. Patients also had to jump through hoops to get basic services or tests ordered by the doctor covered. These factors caused great dissatisfaction among consumers of healthcare.
    The present version of managed care involves “Preferred Provider Organizations” (PPO’s): establishing “in-network” and “out-of-network” benefits paid at different levels. The idea behind this is an insurance company negotiates “discounted rates” with a group of physicians or hospitals then drives consumers to use those physicians or hospitals. The advent of PPO’s has also failed to result in controlling health care costs.
    Some of the greatest reductions in health care costs have come from hospitals and physicians themselves. Many physician groups and hospitals have taken the initiative to develop “Disease State Management Protocols” and “Clinical Pathways”. These are tools used to standardize care for common illnesses using evidence-based medicine and proven methods to control the cost of in-patient hospital care. These and similar efforts have produced the most dramatic control of health care costs, while actually improving and standardizing the quality of medical care delivered.
    Pharmaceuticals
    The FDA incentivizes pharmaceutical companies to develop and market “new and better” drugs because patents on drugs expire after ten years and the drugs can then be produced as generics. Pharmaceutical companies are under minimal obligation to prove their “new and better” drug really is more effective than older, cheaper generic drugs. Pharmaceutical companies aggressively market new expensive drugs direct to consumers on television and to physicians without being required to prove they are more effective than their predecessors. Why? They should at least be required to disclose data about efficacy, just as they’re required to disclose side effects of their drugs.
    Often new drugs are simply old drugs that have been “tweaked” by adding a minor chemical appendage so as to technically make them into new chemical compounds, although they don’t act any differently than their older predecessors. Some examples are “new” birth control pills touted to improve premenstrual syndrome and acne, which are variations on older generic birth control pills. Newer birth control pills sell for about $50 to $60 per month; whereas generic pills sell for about $7 to $10 per month. Both types of pills improve acne and premenstrual syndrome.
    Another example is newer anti-depressants such as Lexapro and Celexa. These drugs are off-shoots of the old stand-by, Prozac (fluoxetine). Prozac is now generic (fluoxetine) and cheap whereas these newer drugs are not. They are touted to have fewer side effects; and they may indeed have fewer side effects. But they have not been required by the FDA to prove it in head-to-head randomized double-blinded, placebo-controlled trials. Are they required to disclose this fact in direct-to-consumer advertising? Why not? Moreover, there are new concerns about all the anti-depressants and increased risk of suicidal or violent behavior.
    What is the logic insurance companies use to determine what they will and will not cover? For example, some insurance companies cover drugs to treat erectile dysfunction but they don’t offer maternity coverage, or coverage for contraception. Or they offer these benefits for additional premium. Why?
    We certainly don’t want to discourage development of new drugs by removing the profit incentive. However, companies should be required to disclose efficacy data in marketing to consumers and physicians. Drug development must become more transparent to consumers so they can make the best choices for their physical well-being and the well-being of their wallets.
    Malpractice Risk Drives Up Cost Via Defensive Medicine
    You’ve all heard the politicians and the media bemoan the fact that malpractice risk increases costs for everyone so I don’t want to tire you with repetition of this other than to summarize. The high cost of malpractice insurance and the emotional toll of malpractice suits cause physicians and hospitals to engage in “defensive medicine”. Defensive medicine is ordering unnecessary tests in order to prove the patient doesn’t have a serious illness and thereby avoid a malpractice suits. There is no evidence that defensive medicine results in better medical care or reduces malpractice suit. The only reliable conclusion drawn by studies of defensive medicine is that it increases the overall cost of health care.
    Malpractice suits have become something of a “lottery” – consumers looking for the multi-million dollar payoff. Defendants (physicians or hospitals) “win” eighty percent of malpractice suits that go to trial – usually after an expensive, drawn out, draining battle. The only people who truly win in these cases are the trial lawyers. Even the malpractice insurance companies take a hit but at least they can pass their cost onto the physician. Guess who the physician passes the cost onto?
    However, if physicians passed on the entire cost of rising malpractice premiums to patients, no one would be able to afford to visit the doctor. Therefore, they only pass on a portion of the increased cost and they absorb the remainder. As malpractice insurance premiums rise, guess what happens to the business bottom line? This is a large contributor to the exodus of physicians from obstetrics: rising malpractice cost and declining reimbursement. If it actually costs you money to get up at 3 a.m. and go deliver someone’s baby, why do it? It makes no sense.
    Money Spent on Extremes of Life
    Ninety percent of the health care dollar is spent on the last six months of life. This often involves intensive care for people afflicted with terminal illnesses who are on life support. They
    may require a tube to breathe, medication to keep their heart rate going and blood pressure normal, a tube for feeding in the stomach, or intravenous nutrition. We often die in hospitals hooked up to machines and being pumped full of drugs. We may not even be conscious. Is this how you want to die?
    Just because we possess the technology does not mean it is best for us to use it. In the past we died with dignity in our homes, surrounded by family members. You should consider how you want to die at a time when you have full mental faculties and can make an advance directive. An advance directive is a document specifying what measures you want taken to extend your life should you not be able to decide for yourself. Don’t leave it up to your family members to make the decision because no one wants the responsibility of “pulling the plug”.
    These extreme measures often consume the final dollars of a family’s savings and are a large component of Medicare expenses. This is money that could go to your children and grandchildren. It could pay for someone to go to college or someone to have a place to live. We have to decide for ourselves how much is enough and how much is too much?
    Okay, so I’ve identified this, that and the other thing that are wrong with our health care system. What is right with it? Well we have access to advanced technology, well-trained physicians and nurses, antibiotics, and the best science money can offer. Too bad such a huge number of people struggle to get basic health care needs met. How do we get out of this mess?
    Addressing the Big Four will “Fix” the United States Health Care System
    In summary there are four big offenders in producing out-of-control health care costs:
    Addressing each of these will decrease the cost of health care while preserving the advantages of technology and science, and increase access for everyone to basic health care services.
    The silent underpinning of many of these problems is risk. So how we manage risk determines the cost of our health care.
    Connecting the Payer with the Recipient
    It is crucial to connect the recipient of health care directly with the payer. The consumer needs to bear the risk of his health care decisions. The consumer of health care needs to directly feel the impact of system utilization in their wallet.
    Eliminating or reducing the scope of entitlement programs would go a long way toward reducing the burden of health care costs for the middle class. Recipients of Medicaid should be required to prove they are U.S. citizens. Non-citizens should not be eligible to receive benefits for free. They should have to pay for their health care just like the rest of us.
    If we do issue driver’s licenses or identification cards to non-citizens, it should be tied to proof of health insurance, proof of auto insurance, and proof of paying taxes.
    We need to decrease the influence of the middle man and limit the role of private health care insurers and the government. One approach to this would be for groups of people to participate in pooled risk plans in which premiums and benefits are determined impartially by an actuarial company. This could be self-directed, for example, by employees of large companies or other pooled risk groups. Alternatively the existing insurance company framework could be restructured so as to decrease the “fat” in the system. This would require government or some outside agency regulating insurance profitability. What justification is there for the CEO of an insurance company making millions of dollars while many Americans go without basic services? Insurance companies would certainly balk at government regulation.
    Consumers must demand greater transparency from commercial insurance companies regarding how their health care premium dollars are spent. Only when we understand where the money goes can we solve the problem of high cost.
    Exert Your Own Cost Control
    You have the power to control your individual health care costs. If everyone reduces her individual costs, the collective cost of health care will decline. Examine your utilization. The most expensive healthcare services are emergency room care, intensive care units (ICU’s), surgery, and advanced imaging studies such as MRI’s and CT scans.
    Examine your utilization of the system. First, if you are ill after regular business hours, decide if you’re sick enough to need to go to the Emergency Room at a cost of thousands per visit; or can your condition wait until your doctor is available during regular business hours for a fraction of the cost?
    Of course for emergencies like chest pain or hemorrhage you should proceed to the emergency room. But if you have chronic pelvic pain and have developed a worsening of pelvic pain the emergency department is not the best place to receive care for this problem. Childhood runny noses and rashes also don’t need to be seen in the Emergency department unless you’re concerned your child may be seriously ill (e.g. have a high fever, or is unable to keep food and water down).
    If your doctor recommends a test, ask why? What is the doctor trying to learn with the test? What are the benefits, risks, and costs of the test? Will this test lead to further testing or surgery? Are you asking for the test because you want to know a certain result? Is the test going provide the information you desire? Will the test give you any useful clinical information to better understand your health? You should know the answers to all these questions before submitting to tests.
    A perfect example of useless tests is “hormone levels”. Women ask me every day to check their hormone levels. If I can’t talk them out of it I usually oblige to satisfy them. However, female hormone tests do not tell us anything your own body can’t tell. For example, if you are having regular monthly periods your hormones will be “in the normal range”. The “normal range” is determined by measuring hormones of millions of “average” people to establish normal values. If you are over thirty, skipping periods, having night sweats, or have stopped having periods, your hormones will be in the “menopausal range” because these values are established by measuring hormone levels of millions of menopausal women. If you are skipping periods before age thirty, you probably have “polycystic ovary syndrome” caused by irregular ovulation. I can test your hormone levels to confirm, but this is usually a diagnosis that can be made by asking questions and doing a physical exam.
    If you are having raging premenstrual syndrome (PMS) I can test your hormone levels. They will most likely be “in the normal range” because hormone levels vary depending on time of cycle, age, and other factors. I can be of much more help by addressing your symptoms and developing a plan to manage them than I can by testing your hormone levels.
    Knowing your actual hormone levels does not help us treat hormonal disorders most of the time because treatment is based on symptoms, not on a number from a lab.
    If you have excess acne or hair growth it is likely your testosterone is high. I can measure it to be sure, but your body is telling me, by producing excess hair and acne that your testosterone level is high. Now if you have these symptoms a hormone level would be useful to exclude a testosterone-producing ovarian tumor. However, testosterone-producing ovarian tumors are exceedingly rare (<1/100,000). I will still recommend the test if I think it’s necessary based on your symptoms and physical findings.
    Be careful of independent labs that offer “saliva tests” for hormones. These are expensive and can be misleading. Saliva levels of hormones can be quite variable from time of cycle and time of day.
    Develop an advance directive while you’re at an age when you have full mental capacity and you can consider these decisions in a thoughtful manner. Write it down. You don’t need an attorney to create an advance directive. Simply writing it down in one page or one paragraph is sufficient. If you want it to be “official” have it notarized. Make sure it answers crucial questions in a clear fashion for your relatives to understand. Advise your relatives you have an advance directive; review it with them; and make sure they know its location. At the end of life do you want to be kept alive with a breathing tube, intravenous feedings, or drugs? To what extent and expense do you want your body to be preserved, possibly with your mind in a vegetative state? Do you want to be resuscitated (brought back to life) if your heart or breathing stops? What would be the criteria you would want established for any of these measures to be taken?
    Require Insurance Companies and Pharmaceutical Companies to Increase Disclosure, Transparency, and Accountability
    We must hold big business accountable for making the most of the dollars we pay them. Insurance companies should be required to present policies in clear, consistent, standardized language to make it easy for the consumer to compare policies. An objective oversight body similar to the Joint Commission for Accreditation of Hospital Organizations (JCAHO) should be established to assess insurance companies and pharmaceutical companies to determine if they hold up to their promises.
    Pharmaceutical companies or an outside agency (don’t we pay the FDA to do this?) should be required to conduct studies of efficacy of new drugs in an objective manner and disclose these results to the public along with the rest of their direct-to-consumer advertising.
    The free market system works: competition encourages innovation and fosters incentives for cost control. We want to preserve the elements of the free market system that function well, while not sacrificing accountability and quality control.
    Doctors Can Impact Cost by Using Evidence Based Medicine and Resisting the Temptation to Practice Defensive Medicine
    Doctors, nurses, and other healthcare providers can dramatically impact the cost of health care by resisting pressures to practice defensive medicine. One would not want to deny access to a necessary diagnostic test or treatment based on price. However, so many tests and treatments are ordered as “cya” measures.
    Often patients request tests that are unnecessary. Usually one can explain the rationale behind testing or not testing and advise the patient to make an informed decision. However, some people are set on the idea that they need this or that test to understand their health. In this instance it is usually counter-productive to try to “talk” the patient out of it, and just go ahead and order the test.
    In order for health care professionals to reduce the habit of defensive medicine, they need relief from the pressures to do so. A revamping of the “malpractice” system in the United States is long overdue.
    Eighty percent of “malpractice” suits are won by the doctor or hospital being sued. This means in most cases that go to trial, evidence of malpractice cannot be found. The stress and cost of malpractice suits is discouraging good people from entering the field of medicine; and causing many to leave medicine or limit their practice to “low risk” disease conditions.
    It has been suggested by consumer groups, physician groups, politicians, and government agencies that it is time to move to institutionalizing compensation for bad medical outcomes. The extent of damage and amount of compensation could be determined by an arbitration group. Funds for this should come from a number of sources: insurance premiums, lawyers, physicians, and consumers. Everyone should have to bear the cost of bad medical outcomes in order to curtail frivolous law suits and keep overall health care costs down over the long term.
    It is much more effective to use a carrot to get people to do the right thing, than to beat them with a stick. For the most part doctors are smart, conscientious – often perfectionist – people who strive to do their best; and if you prove to them certain disease management protocols improve care and reduce cost, they will use these disease protocols. Doctors have studied long and hard to become physicians and it is a life-long learning process that involves accumulating “continuing medical education credits” throughout one’s career.
    Evaluate How We Manage Extremes of Life
    You can maximize your chances of having a healthy term baby by following the advice in this book. You have more control than you may realize. Overall, though, ninety percent of the health care dollar is spent on the last six months of life. Premature babies are expensive and we should strive to reduce prematurity.
    This phenomenon has occurred because advances in technology have outpaced the study of ethics and responsibilities of a society to its members to provide the greatest good to the most number of people.
    We need to decide as a society: How do we want to enter and exit life? Do we want to die hooked up to machines in a vegetative state? Is this the best use of our precious resources? Do we want to risk leaving a legacy of health care debt to our heirs?
    You actually have complete control over this. By writing your advance directive, you remove the burden of your life’s decisions from others and take the initiative. I encourage you to write an advance directive and make your friends and family aware it exists. It doesn’t have to be long – a page or a paragraph. It doesn’t need to be written by a lawyer or notarized. However, if you take the trouble to have it notarized it may increase the likelihood it is taken very seriously.
    You must consider all the possibilities: What if you’re completely paralyzed or brain damaged in an accident? Or rendered into a coma? What type of medical interventions do you want to take place? I urge you to think about these things and write them down: Your family’s lives depend upon it.
    Only by tackling the four major factors increasing health care cost in this country can we obtain a safe, logical, cost-effective health care system. I encourage you to do your part.

  2. As an economist by training, I’m in agreement with Paul’s comments. P4P sounds good in theory but will have the intended impact in practice.
    Now here’s my question regarding “accurate and measurable levels of service quality.” What role should patient satisfaction play in all of this versus more utilitarian measures of outcomes?
    My father recently died very quickly of an aggressive lymphoma. Nothing his physicians tried was remotely useful at stopping the rapid course of his deterioration, and indeed, some of what happened, including contracted infection, may have contributed to it. But I would say that the care he and we received (at MD Anderson) was nonetheless exceptional from both a medical and emotional standpoint.
    It at least has the virtue of being easy to measure.

  3. Matt makes a perfectly valid suggestion, and one that I would encourage hospital administrators, physicians and sundry other health care providers to take into serious consideration.
    Insurance companies are big businesses… and as such, they’re full of people trying to do the right thing, but looking at the problem from a very self-interested perspective. That doesn’t mean they’re not open to suggestion. Insurance companies are simply not accustomed to interacting with health care providers from anything but an adversarial perspective. This just means that if a group of hospitals get together and come to an agreement over what are reasonable performance metrics, they’re going to have to be able to argue the case for adoption by the insurance company (try the biggest ones first… one after another until you get a taker), based on ways that it either saves them money in compensating health care providers, or it averages out to the same in compensation from the current state (but with a more rational perspective in terms of health care outcomes for the patient). Argue from a business perspective and you stand a chance of getting their attention.
    In fact, if you offer your average insurance company VP actionable data and procedures that make any kind of sense, he or she is most likely to grab it with both hands. Insurance companies don’t take a position that they “understand the health care marketplace”. They believe they’re figuring out ways to make health insurance as afforable as possible for the most members with a reasonable profit margin (think 2%… not 20%). If you can make a health insurance executive look good to their Board and their members, they’re not going to turn you away. They’ll see it as a career opportunity.
    As long as health care providers and health insurance companies remain convinced that it’s not possible to balance their needs (and the patient’s), there is no place for negotiation. Someone needs to take the optimistic stance, even if they’re convinced that most of the time it will be an exercise in futility.
    What do you have to lose?

  4. > It apparently undervalues Primary Care relative to procedures — and we all suffer the bad consequences of that. But its politically easier.
    True, it us unlikely CMS would want to be cast in the role of “rationing” healthcare.
    However, if we can better balance the composition of the RUC between cognitive and procedural specialties, CMS could maintain its neutral position AND pay discrepancy would improve. I’m not sure how feasible this strategy is, but if MedPAC continues to pressure them it may work.

  5. > CMS adopts their recommendations rather uncritically
    My personal read on this is that CMS is saying something like this:
    “Here’s how much we’re spending on physician fees – you guys figure out how you’re going to divvy it up. We’re staying out of it.”
    Its easy to imagine how or why CMS might have come to a stance like this. Imagine the howls of protest: “The Federal Government is dictating my income.” Easier for the bureaucrats to stay out of it than deal with the political fallout.
    So The Guild was permitted to come up with a relative fee schedule, and CMS fits it to the global budget. It apparently undervalues Primary Care relative to procedures — and we all suffer the bad consequences of that. But its politically easier.
    In Enthoven’s world, it’ll pay the individual provider organizations to fix this problem. But the government still won’t involve itself.
    t

  6. As a patient I likw the idea of P4P, but I see loads of lawsuits over the ratings and the lawyers are going to get rich over this one.

  7. We cannot talk about closing the income gap between the cognitive and procedural specialties without mentioning the role of the Relative Value Scale Update Committee (RUC). Their proceedings are opaque and dominated by specialists and my understanding is that CMS adopts their recommendations rather uncritically.
    It seems that these proceedings should be more transparent and perhaps an independent entity should ensure their recommendations are aligned with the preferences of the beneficiaries. (this is public money after all).

  8. Paul Levy’s commentary about P4P is very articulate, and right on the mark. P4P is a shallow manipulation by insurers and CMS . It may very well be illegal according to the original Medicare legislation that forbidded medicare from “altering the way medicine is practice”. P4P will be “credited” according to financial billing codes. Physicians and providers will most likely be audited for the accuracy of their reports. It places another layer of bureaucracy and increases the cost of medical care more than it will save. No one organization, such as BIDMC alone has enough clout, it will take all of medicine. It will also take self control for academics not to “volunter” for pilot programs. The esteem they think they develop from running these experimental programs alientates them further from the “real practitioners” of medicine
    That
    s my two cents

  9. The correction of the imbalance in payment between PCPs and “proceduralists” is not going to be solved by the plans alone. How about a coalition between the plans and the PCPs – I think the incentives are aligned.

  10. Matt, you say:
    I believe that BIDMC has enough clout and stature to define how it would like to get paid. The first step is to define the “accurate and measurable levels of service quality.” If as a provider, you could measure this and present it to the plans, you would get paid more fairly for the services that you provide.
    Not so. Sorry. There is no indication that the insurance companies or the federal government or the state government are prepared to do this yet.

  11. It’s hard to argue with your comment “It is my hope that, over time, insurance companies will actually base payments on accurate and measurable levels of service quality”. What I do question is the conclusion in which we all seem to throw up our hands.
    Charles Baker (CEO of Harvard Pilgrim) recently took part in a panel (Paul, you were also part of the panel) and said “Every plan will tell you that they would much rather have the clinicians themselves determine the rules of the game.”
    I believe that BIDMC has enough clout and stature to define how it would like to get paid. The first step is to define the “accurate and measurable levels of service quality.” If as a provider, you could measure this and present it to the plans, you would get paid more fairly for the services that you provide.
    We cannot just throw up our hands and put it back on the plans. The providers of care are uniquely positioned to measure the quality of care delivered in a way that makes sense. Why wait for someone else to do it and then complain as to how it gets done?

  12. While I would like to see every healthcare provider provide the highest quality of care, I think compensation based on “measurable levels of service quality” is a slippery slope.

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