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Musings on Payment Reform

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Charlie Baker is the president and CEO of Harvard Pilgrim, a nonprofit health plan that covers more than 1 million New Englanders. Charlie is a regular contributor to THCB, where he has authored posts on national health reform (See: “Is Massachussetts a Model for National Reform?”  and related issues facing the healthcare sector. (For example: “Shifting Costs From Public To Private Payers“). His posts also appear at his own blog, Let’s Talk Health Care.

This week Charlie confirmed a longstanding rumor, announcing that he will be giving up his position at Harvard Pilgrim at the end of July to run as a GOP candidate for governor of Massachusetts. You’ll find more about his campaign on his web site, CharlieForMA.com.

The Commonwealth of Massachusetts – along with a number of other states (including New Hampshire and Maine) and the federal government – is kicking around a number of ideas concerning payment reform.  The argument goes something like this – since the current health care system, led by the gigantic Medicare program, pays primarily on a fee for service basis.  This “do something” payment model encourages clinicians and hospitals to do “more” for patients than they might do otherwise, if they weren’t encouraged to “do something” to get paid.  Add to that the fact that fee for service – again led by Medicare – pays more for new technology than it does for existing technology, and less for primary care, and you have the primary ingredients in the recipe that’s driven our system to be technologically driven, volume driven, fragmented and very expensive.

In Massachusetts, the group that’s working on payment reform seems to think the solution to this problem is to move everyone away from fee for service and into something that’s being called, “global budgets.”  Put simply, global budgets are a new and improved form of capitation.  Let me be clear on this one – I’m actually a big fan of both.  I believed in capitation when I worked in state government, and I worked for a medical practice (Harvard Vanguard Medical Associates) before I came to Harvard Pilgrim that was built on global budgets.

And before I go any further, I would offer up the cover story in this month’s issue of Health Leaders Magazine – titled “Bundling By Decree” as a solid a representation of the pros and cons of this debate as it winds its way through the national discussion around health care and payment reform.  This article is primarily about bundling payments around episodes of care, but the issues it raises – in both directions – apply in either context.

With that said, I wonder about whether or not global budgets, at least in the short term, are the answer to our health care cost and quality problems.  For some provider organizations, global budgets work – but they work in large part because those particular clinicians believe in them, and want to practice in environments that are based on them (like Harvard Vanguard/Atrius HealthCare).  But that represents a fairly small slice of the practicing clinician community – I’m guessing 10-15 percent.  Maybe 20.  It’s also not clear to me that this issue, above all else, drives our cost/quality problem, since many other countries that spend a lot less than we do on health care and have solid clinical results use fee for service payment systems too.

As far as I can tell, those other countries that spend less than us on health care do two things differently than we do.  First, they spend less on each service than we do – sometimes a lot less.  They also have robust primary care systems.  This, in particular, is just the opposite of our approach.  Our payment policies – and as a result, our medical education system – have been disinvesting in primary care for years.

In the short term, I’m not sure global budgets solve this disinvestment problem.  First of all, it’s financial and operational whiplash for a system that’s been running on fee for service for years.  That, all by itself, will take some getting used to.  It’s also not clear that Medicare or Medicaid – which make up 50-60 of the payments to providers to begin with – would also adopt global budgets.  If they don’t, having private sector payors using global budgets and the public sector payors using fee for service is just about  the worst outcome I can think of for providers and their patients.  The mixed messages these two payment models would send about what matters and what’s important would be virtually undecipherable.

This makes me wonder if our short term approach shouldn’t focus instead on changing the message all payors send under the current fee for service system to providers by improving the way we pay for primary care.  No one thinks we can possibly deliver integrated, coordinated care if we don’t send some signals to the medical and medical education community that primary care matters.  If a young medical student can make $250 an hour in primary care – or $1,000 an hour in dermatology – or $2-3,000 an hour in cardiology or orthopedics – how hard do you think it is to get that person into primary care?  The answer is it’s wicked hard – and the declining number of students going into primary care coming out medical school for the past decade is proof positive of that.  We used to be 50/50 primary care / specialty care.  Now we’re 70/30, and some of the anecdotal information suggests that kids coming out of U.S. medical schools are now running 15/85 primary care/specialty care.

Think about it.  No one disputes the fact that primary care has a key role to play in care management and care coordination – especially as the Baby Boomers get older.  The state’s Payment Reform Commission says global budgets will take three to five years to implement – and expects that every doctor will be using an EMR as one of its requirments for success.  Will this approach really grab today’s medical students and practicing clinicians and say – ”HEY!  It’s time to invest in primary care!”  In the short term, I think we’re more likely to get more capacity, faster, into primary care by boosting, on a relative basis, the fees paid to primary care providers by the private plans, Medicare and Medicaid.

Over time, maybe everybody gets to global budgets, but in the meantime, I think we need to do more to support primary care.

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38 replies »

  1. Dear Friends: As an RN for over 20 years; clinical, administration, and business, I assure you. Our healthcare SYSTEM is broken!!! It is a convoluted administrative nightmare. Doctor shortage??? Why would somebody study for 8-12 years, go into staggering debt, only to have an insurance company tell them they cannot prescribe the medication that the patient needs…until the patient tries a cheaper medicine first. Nurse shortage?? Being at the bedside can be the most exhausting yet exhilarating experience imaginable. Nurses are held to the highest standards of education, practice and performance. There is a high burn out rate not only because of physical endurance, but the frustration of trying to work within a broken system.
    WE DO have the best healthcare in the world, but the SYSTEM is scary. Whether it’s the government, a corporation or group of individuals…FIX THE SYSTEM, and that means cut the bureaupathology. Suggestion: Technology! Here’s a thought.
    Every year people receive a card (similar to credit card) that contains their “payor amount” based on last tax return. Just swipe the card: The payment for ALL care becomes “means tested”…i.e., people with minimal/no income pay “X”percent of any bill; medications, radiology, lab, office visits, tests, surgeries, etc etc etc…..while, of course, those with higher resources pay a higher percentage. Those who can will, of course, purchase supplemental insurance. But EVERYONE will have access to healthcare, and the degree of administrative oversight can be minimized. Oh, and at the same time all health information is on the card so much less time is spent trying to ask/find health history. Just a thought. BUT, believe me, we need to FIX THE SYSTEM

  2. “I envision that in the 21st century single payer system, the patients would pay nothing for care.”
    Let’s make food free also, with no rationing. All you can eat. Would that be god or bad? Would human nature take over or would there be less food eaten than when people had to provide their own food? There might be less consumed since the lines would be few and the wait forever. But then there would be food riots. People would stop growing food since they could just go pick it up. Of course the profit in producing food would be regulated and restricted and taxed.

  3. Margalit,
    You are right, of course, but please consider the political realities. I have suggested a system the may be able to significantly lower medical losses while assuring appropriate patient care. In my experience it will do so. Trying to also take on the political and lobbying establishment will take a braver person than I.

  4. Peter & Peter,
    I think “single payer” is a misnomer in this context. The care management system that Peter Nesbitt describes doesn’t actually pay for the care. It manages the transfer of funds between the multiple payers and the contracted providers. It’s really an intermediary that aims at injecting quality and removing animosity to/from the system.
    My preference would be to regulate the system from above, instead of mediating a broken system.

  5. “The only change would be to move care management and claims payment to the single payer.”
    Having experience with the Canadian single-pay system care management is NOT with the single-payer (government), it is with the doctors and hospital boards and CEOs who all work together to stay on budget and provide healthcare to the community. Primary care docs simply bill the province for patient treatment. No layers of insurance companies or management agencies. Care co-ordination between disciplines is an on-going issue from a cross communication point, but probably no worse than here.

  6. If the patient pays nothing for care, they will all be getting care and not working. Right now my ED is full of people who would not be here in the ED at all if they were paying the bill. And they do not need to be here. They need to get lives. Make care free and you will have a clusterf**k.

  7. Margalit,
    As usual your questions test my concepts. We contracted with physicians across the U.S. From Michigan to Florida, New York to LA. We never had a national fee schedule. We recognized that physicians in various parts of the country had different existing fee schedules. We tried to ensure that all providers were paid fairly for their services Fees were not the cost drivers, utilization was.
    The insurer’s role would be the same in a single payer system as it is currently I suspect. The only change would be to move care management and claims payment to the single payer. Politically we need the insurers if we want Republicans to vote for a single payer health care model.
    The savings were retained by the employers and insurers. The employers paid the premiums, not the patients. I envision that in the 21st century single payer system, the patients would pay nothing for care. The single payer would pay all medical bills per agreements and in turn the insurers and employers would pay fees submitted by the single payer. If this system works and lowers medical losses, what insurer would not wish to participate?

  8. But Peter (Nesbitt), if the single payer contracts with all providers in the country, that implies one national fee schedule for everything. If the single payer manages all medical care standards and claims, what exactly is the role of the private insurers?
    In your experience, when you provided this single payer service, and realized all these savings, where did the savings go? Did they go to the insurers as profit, or back to the patients as rebates on the premiums?

  9. Barry and Peter,
    Barry, thank you for the questions. They are helpful in forcing me to think through my single payer ideas.
    In the single payer model all care providers would be invited to join the network. They must voluntarily agree to follow the basic guidelines and would be paid fee for service the same as any other practitioner. Logically, in a single payer model there are no competing medical networks. All patients throughout the U.S. would be managed by the single payer.
    Frankly, I haven’t thought through the implications of competing “single” payer systems such as Medicare. I have assumed that once the single payer system is in place, all insurers including Medical would fall within the system.
    Peter,in the case I am describing, all medical bills and reports went to the single payer. This agency has various billing relationships with the insurers or self insureds. In some cases it was a flat fee for service in others the fees were calculated as a percentage of the medical costs paid by the single payer for that employer/insurer. The net saving in medical costs were always calculated with the fees included.
    In my reference to law suites, there were no malpractice claims filed. You are correct about workers’ comp., of course, in most states law suites are not allowed as part of the claim.
    In my view, Medicare is simply another insurer like all the private insurers. They should relinquish all control of medical care to the single payer and all insureds would go to network doctors of their choice.
    As far as getting rid of insurers, that question is beyond my pay grade. I do understand many of the single payer elements having worked in the capacity but the insurance industry is another matter.

  10. “I think we need to do more to support primary care.”
    So, is Harvard Pilgram paying primary care docs at a significantly higher rate than other plans? If not, why not?

  11. Because we have made the system so complex, the solutions have to be manifold.
    Solution to healthcare crisis is not complex….as we have said that make PCPs as health managers, and run wellness center. Leave specialist care to private industry. There are a lot of other things that need to be done but this one is crux.
    We wrote a white paper on how to reduce cost by proactivvely reducing the number of investigations that are going on against physicians. When I started thinking of the business case, it is mind boggling how much money insurance companies and hospitals end of throwing away that could have been saved. There are many more savings like that.
    rgds
    ravi
    blogs.biproinc.com/healthcare
    http://www.biproinc.com

  12. Peter Nesbitt, on your web site you stated that the insurance company paid your agency and the agency then paid all medical expenses. Did the insurer pay you a flat fee and then was the agency responsible to pay all medical bills? Did you only manage care for workplace injuries but not other medical claims? You also said that there were no patient law suits, but your agency was providing care for injured workers, how did Workmans Comp play into this. Usually when a worker signs onto Workmans Comp they give up any right to sue. How do you see your “system” working to reduce Medicare costs when Medicare is not operated within the confines of a closed, self-insured company environment where there is just a group of independently acting patients, doctors and hospitals? How would your “system” coordinate managed care within a hospital and pay the bills? You also state that, “I do not believe that insurers can ever bring about the change we need.” Then why have them at all, they are just another layer of bureaucracy?

  13. You know, I never, ever thought I’d consider voting for a Republican for governor. But damn, do you know your stuff on health care…which is important enough to look past other positions you’ll no doubt find yourself defending.
    Now that MA has made major progress in coverage, the focus must shift to delivery system reform. Your post anticipates this perfectly, and if you can make progress on just a few of these points, you will have done a great service.
    (I suppose it goes without saying that it would be wise to avoid the behavior of certain other governors. I’d hate to see serious, structural health system reform fail due to some complete distraction)

  14. Peter — How do Independent Practice Associations (IPA’s) fit into your model? Are they competitors, part of your network or something else entirely? Do they assume financial risk or do they just agree to abide by a general set of practice pattern rules within a fee for service structure? Don’t they need to contract with multiple payers, including Medicare, to generate enough business to sustain themselves?

  15. Margalit,
    You are an thoughtful critic of my single payer system which I appreciate. I dislike the term TPA, however, when referencing a true medical management system run by medical professionals for assuring appropriate care.
    Please keep in mind that there are no additional layers of bureaucracy nor additional costs in that by creating the single payer we lighten the claims expense load on the insurers. Some of those expenses are transferred to the medical manager.
    In our experience, we found that we reduced medical losses to a degree that the management expense was a modest cost easily covered by the savings. The net savings averaged more then 30%.
    The control of utilization does not automatically imply micro management of care. In the system I have described doctors were only asked to follow a basic set of rules – there were only 10. If it appeared that a doctor was outside the rules, we may have discussed care with her or even ignored it is her record was positive. Generally speaking, doctors took our phone calls because they knew and understood that we were only there to assure appropriate patient care. (MD as hell, I hope you understand that).
    Barry, we never dictated care. That is the old system. We offered guidance and support. There was a hammer though. We could remove the doctor from the system.
    I really think that many do not give doctors the credit they deserve. Given a chance to practice appropriate care, they willingly complied. Yes, they are under pressure to practice defensive medicine and patients can be demanding. It is the task of the single payer to ameliorate those concerns.
    Very few doctors we approached declined to participate. I personally presented the guidelines to a number of large medical practices. We discussed the benefits and responsibilities. Every medical group with whom I personally spoke saw the benefits and came aboard.
    I do not believe that insurers can ever bring about the change we need. A single payer model can reduce medical costs and claims expense while not totally disrupting the system. The single payer, in my mind, should be operated by the medical community in conjunction with an extensive medical network. Who is better suited or better trained to evaluate medical data and manage care?
    Doctors can practice medicine they way their fathers did without over utilization and without having to seek pre-authorization or fearing non payment. But they have to step forward and take control.

  16. I think someone needs to listen to what MD as HELL is saying. Currently the patient comes in and demands a test or procedure because they’ve read or heard about it, and the doctor, primary care or specialist, orders it for them because a) it’s easier than arguing b) it’s no skin off the doctor’s nose and c) God forbid the patient should be that rare case where the test actually finds something.
    Re-allocating $$ to primary care is one of those things that sounds good but is ultimately naive in a system which has been used to specialist-centered care (unlike all the European systems, I might point out). The primary care docs I knew basically just served as referring physicians – got an ear problem? See an ENT. Got a kidney problem? Here’s the nephrologist I use.
    They themselves had no incentive to argue with the patient against a referral, and the specialists loved them for all the referrals, hence it became a you scratch my back and I’ll scratch yours system.
    Merely giving the primary care docs more money will not solve the systemic issues inherent in our current reimbursement system.

  17. psa – You sound like one of those specialists whose income is about to be cut. I suggest you come up with a pilot project pretty fast.

  18. I muse at the long winded commentaries and the primary report above. The author’s concept is flawed because neither PCPs or NPs or PAs have the sophistication to manage and keep complex multi-system chronic disease patients well. Accountable care will not be legislated or generated by manipulative carrots and sticks. If the government wants accountable care, pay for it…but stop the BS nickle and time waste the doctors’ time with formulary changes to benefit everyone but the doc, payment hassles, chart reviews, mass generated edicts and dictums that no one can humanly read, and threats of payment cuts.
    Pilot projects are needed.

  19. Peter Nesbitt,
    I think UnitedHealth Group offers a product called Edge that sounds very similar to what you describe. United, as I understand it, has some 95,000 providers enrolled in its Edge network. Nationwide, they do business with over 500,000 doctors.
    Doctors are notoriously independent by nature. Many seem to have the attitude of: I didn’t go through all those years of training to have a computer tell me what to do. NP’s, by contrast, are trained to follow rules and are therefore comfortable doing so.
    The other issue that concerns me with respect to utilization is the lack of consensus as to what constitutes appropriate care for numerous conditions. For example, take mammograms for average risk women. At what age to you start screening – 40, 45, or 50? At what age do you stop – 70, 75, or 80%? Do you take one view like in Sweden or two views like we do in the U.S.? For those with diabetes or heart disease, have often should the patient come in for a routine checkup – every six months, every three months, every month? There are a lot of gray areas. Finally, I’m not sure how we can significantly reduce defensive medicine without substantive changes in the litigation system that would give doctors robust protection from lawsuits based on a failure to diagnose a disease or condition as long a evidence based protocols were followed.
    The bottom line is that I think you’re on the right track, but I also think the insurers can do the same thing as long as they make a commitment to prompt hassle free payment to providers, perhaps coupled with real time claims adjudication and the verification of the patient’s insured status. With technology becoming much more important in the healthcare and health insurance sector, I think the trend will be toward larger insurance companies as the industry continues to consolidate. That said, based on experience in virtually every segment of retailing, you only need two strong competitors in each market to ensure vigorous competition.

  20. Peter,
    It looks to me that this additional “medical TPA” is being introduced into an already overly bureaucratic system just because we are acknowledging that we cannot change the adversarial relationship currently existing between insurers on one side and patients/providers on the other. I presume that the “medical TPA” will not be volunteering their services, thus it will be extracting additional costs from the system.
    The problem with healthcare is that it should be a one-size-fits-all kind of product. Everybody needs the same coverage. Being 24 years old and healthy today does not guarantee that you will not be 24 years old with leukemia tomorrow.
    We are all biological creatures with the same set of organs. The janitor at the convenience store is exactly the same as the President of the United State when it comes to needs for health care. Saying that we should have a multitude of plans for a multitude of circumstances is just plain bad science and it is terribly misleading and probably so by malicious, profit driven design.
    The various levels of indirection introduced in our healthcare system over the years are not serving the public very well. Employers, for profit insurers, various TPAs and now the medical one have goals that are grossly divergent from the consumer they are supposed to serve.
    Why don’t we just simplify things and have less moving parts instead of more?
    Why don’t we have a “single collector” model, where the government collects all premiums, based on ability, and pays the insurer based on enrollment?
    Why don’t we have one plan (the Congress coverage) for everybody, with ability to buy more if desired? Just imagine the reduction in paper work and administration.
    Why don’t we have a politically and scientifically independent body that regulates the services for all insurers, based on sound medical analysis?
    Is it because it is politically unrealistic to demand an end to undue influence on the political system by big corporations and insurance companies?
    Is it because Wall Street will not allow restructuring of the health insurance sector?
    Is it because “we the people” have no say in our national faith unless we first manage to embezzle tons of money from tax payers?

  21. I believe in single payor also…the patient.
    Have your payment discussion with the patient, not the provider. For 44 years we have had this discussion with providers. Congress is not brave enough to deal with the patient; they are a big block of voters. If the patient has skin in the game, then costs and utilization will plummet.
    At this minute as I wait for my hospital lab to get me results on my ED patients, I can tell you that if the patient was the payor, none of them would be here. If I had no lawyers lining up to tell patients I screwed up, I could save a lot of money. Let’s make the patient buy insurance against malpractice, if they want a guarantee.
    If I am no good, then take my license. If I am good, then respect my judgement and lets roll. Pay at the door.

  22. Barry,
    Correct on most points. The single payer is accountable to the insurer or self-insured employer as well as to the patients and care providers. Only when the participants in medical care see tangible benefits can we remove the friction we see in our current system.
    Lower claims cost are a major benefit for any insurer as are lower expenses. The observation that this sounds like a medical TPA is a good one but there are some differences. The role of the our single payer is more focused on assuring appropriate care through management of a willingly cooperative network of providers. The adversarial elements seen in the current system must be removed so that care managers, providers, and patients can work together.
    Cost efficient providers in this system means that they agree to follow basic guidelines which tie care to clinical findings thus eliminating most over utilization. Most doctors who over utilize do so for a variety of reasons but would cease if only someone asked them to participate with their peers voluntarily. Of course there are major benefits for the providers. They will be paid fairly and promptly and have access to patients. They won’t have to deal with pre-authorization or refusal to pay. They will be treated respectfully and always with the patient’s best interest at heart. In my experience with this type of network, the doctors valued our relationship and did an excellent job of reducing utilization. We only had to boot very few out over over 100,000 providers.
    Insurers and true TPA’s can’t manage care effectively. Just look at their record over the past 20 years. The issue is structural. Insurers and claims operations are responsible for costs not for assuring appropriate patient care. That is a medical responsibility. Without proper care we cannot control costs.
    I simply cannot see any alternative mechanism to single payer that can control utilization without rationing.

  23. Peter Nesbitt,
    It sounds like you are advocating that the single payer could be, in effect, a TPA firm with sufficient clinical expertise either in house or contracted to it to make these judgments around medical cost-effectiveness. I don’t see how you can credibly push back against doctors either before or after the fact any more than an insurer can today. Presumably, you are accountable to the self-funded employer plan or the insurer that is paying you as well as to the patient. At the same time, if Medicare physician payment information were available, I could easily see how you could build a network of cost-effective doctors, hospitals and other providers while eliminating the high utilizers or not contracting with them in the first place. Of course, insurers should be able to do that as well. Both your former firm and insurers should also be able to construct differentiated co-payment approaches that would steer patients toward the most cost-effective providers if the appropriate payment data history were available. What am I missing?
    In the case of surgical procedures that do not have to be performed on an emergency basis, I can see a role for objective infomediaries that can provide the patient with an assessment of available options along with the risks and benefits of each. This could be especially helpful in geographic regions where doctors perform many more heart surgeries, back surgeries, insert stents, etc than areas with more conservative practice patterns. End of life care is a whole separate issue as is tort reform that would protect doctors and hospitals from lawsuits based on a failure to diagnose a disease or condition as long as evidence based protocols were followed.
    The fundamental problem with global budgets, as I see it, is the difficulty in forecasting costs a year in advance unless the patient population is quite large. Even then, it’s hard. There would also be a need for substantial reserves to cover the bad years. Episode or bundled pricing for expensive surgical procedures should be more doable, but it will require the cooperation of doctors, hospitals, physical therapists, rehabilitation centers and other providers involved in the care. Since the payment would presumably go to the hospital, and many or even all of the other providers may not be employed by or owned by the hospital, it’s not an easy task either. It’s somewhat easier, perhaps, for Kaiser, Geisinger, and similar organizations that are both the payer and the provider.

  24. Nate,
    I find myself in basic agreement with several of your points. Patients must have choice in the selection of providers. But keep in mind that most consumers have little or no medical expertise and are not well suited to managing their own care. How many times have you seen an MRI ordered too soon or when not justified by the clinical findings. It is a rare patient indeed who would object.
    This is a strong argument for a single payer system in which the payer is a patient advocate with those aspects of the health care system where the patient is coming into contact.
    Single payer does not necessarily imply single insurer. But it must contain patient advocacy and a cooperative medical network in order to give insurers what they need which is medical cost containment and underwriting stability.

  25. SINGLE PAYER HEALTH CARE REFORM
    Peter, we share more than a first name in that I’m also a single payer advocate as can be seen in my many posts. In my case, the advocacy comes from having worked in a single payer system that proved the concept by reducing medical costs by more than 35% for employers after factoring in the administrative expenses.
    By single payer, I mean that we operated as a managed network in which the insurers and self insured employers paid us for medical care, not the providers directly. This allowed us to set up positive relationships with providers.
    I think that our distance from the insurers gave us a credibility with care providers that has been missing in HMO’s and other forms of claims administration. The providers certainly followed our network guidelines regarding utilization – the greatest cost driver in medicine.
    Finally, having worked in a private system I don’t believe that the government has to be the single payer. I think a semi-private, non-profit organization can build the medical network, promulgate the utilization rules, negotiate contracts and set fees, collect data, and effectively manage the care.
    While I have no experience with the political side of this question, I am willing to say categorically that without a single payer system, we will never rationalize health care and medical costs.

  26. Reforming the patient roll needs to be step one. Any other reform, be it provider or payor, can be easily corrupted with a disinterested consumer. If the patient is going to allow anything to be done then anything will be. Once the patient is fixed and acting like a concerned consumer it will be easy to give them to needed tools to stay one. Free Markets are extremely efficient at making things right. The problem is we haven’t had a free market in healthcare since the 1960s.
    Patients need a large choice of providers and a large number of carriers to choose from. Regualtions need to make sure no one provider or insurer becomes dominate or acts in a misleading manner. All reform since the passage of Medicare has gone in the exact opposite direction, congress has been aggreagating and taxing people ever since and it has failed miserably.

  27. I can’t imagine why the first step would be anything other than a significant reallocation of reimbursement from procedures to office visits. The keyword is significant, meaning more significant than the proposed 2010 Medicare fee schedule that was recently put forth.
    A reallocation hits nearly all of the major cost drivers head on, and it costs little or nothing in aggregate. I think we’ll all be pleasantly surprised with the results. Global budgets assume that we know what this stuff should cost, and I would suggest that we don’t have a clue at this point in time.
    Step two will need to address defensive medicine, because greed is not the only driver. Only actual damages should be awarded in malpractice cases unless gross negligence is proven. If we do not take the pervasive fear out of the system, we will always be struggling with cost issues.
    All of the above only addresses providers. We obviously need to tackle the cost issues caused by patients and health plans, but that’s a whole ‘nother ballgame.

  28. Charlie:
    Only a true Bostonian could use “Wicked Hard” to describe recruitment of PCP’s. I enjoy your postings. Keep up the good work!

  29. If providers can so easily manipualte fee for service why should it take more then a couple years to do the same to bundeled payments? Instead of fighting with the insurance company about pre-existing now you fight with the doctor?

  30. You have to change the patient incentives and behavior before the provider behavior will change. Payment reform only means paying less for more service. At some point that is either theft or servitude.

  31. First let me avoid confusion by saying that the “Peter” above is not me, the usual Peter, as you all know as the one with the “evangelical deus proposal” of single-pay.
    Charlie, thanks for opening a discussion that I think should have been done first before any reform proposals were brought to the table in Washington. How do we turn around this money sucking machine without just putting in more money?
    There is a healthcare billing/utilization culture in the U.S. that will be the hardest to overcome with any change that compels users and providers to do something different, especially if they have to give something up. I don’t know how you can enact global budgets UNLESS the government controls the payment mechanism for healthcare. Controlling the payment system may be able to be done through Medicare/Medicaid, but how do you enforce sticking to budgets in the private pay, bonus/profits/income system, that also politically drive Medicare spending? Even when attempts are made through Medicare to exert minor control on payments there is tremdous pushback and gaming of the system to work around the attempt – it becomes about money, politics and turf, not cost control or efficient healthcare. This system needs a stick more than it needs a carrot, as you would deny a spoiled child candy because in the end it’s not good for him. I advocate single-pay (or some form of it) because I can’t see any other way to rein in costs. The hard questions though come when we try to get to the details of how we enact and manage it, and how we get all the stakeholders truly wanting to fix the system and not just wanting to bleed the system. There seems to be broad support for primary care, which I agree with, but that only comes from putting MORE money into PC while not taking any money from everything else we do.
    Right now I would prefer NO reform legislation if it mirrors the MA “reform” because I think it reforms payers not utilizers. I’m willing to do my part and take some sacrifice, but not if that part is continuing to feed the present system that rewards execs with multi-million dollar bonuses and specialists with another shopping mall or vacation home for managing a system in failure mode.
    It has been suggested here more than once that we may not have enough of a “crisis” yet to get true reform on cost control, as we didn’t have enough push for finanical honesty control and regulation on
    Wall Street before this economic down spiral created the climate to change.

  32. many great points, but where are you getting the hourly earnings figures??? (i don’t know many cardiologists making six million a year! think the median for high paid specialists is about what you state for primary care)

  33. Charlie, thank you for an informed argument in support of primary care and how we pay providers. But let me ask a simple question. What is the leading cost driver in medical care? (I know but I’m not going to say.) We hear the 30% plus figure for the amount of wasted medical dollars, meaning I suppose, that those dollars don’t contribute to appropriate medical care.
    How are these budget changes going to affect the cost drivers?
    I think that the place to start is with some agreement about cost drivers. Then we can join the fight on how to best institute controls in some sort of rational argument.

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