Pay (Only) for Health Care that Works


Health care is expensive partly because governmental payers and insurers foot the bill for large quantities of medical services that are ineffective, unnecessary, or unproven. According to a RAND report, studies of clinical efficiency “indicate that one-third or more of all procedures performed in the United States are of questionable benefit.”

When state and federal governments set the minimum terms for insurance coverage, this problem is likely to worsen. Governmental decisions reflect the political power of providers (who want to sell more services), the sympathy felt for patients (who want to consume more services and have other people pay for them), and the desires of bureaucrats (who generally want to maximize their budgets and their importance). These interests coalesce, causing governments to aggressively mandate coverage of services that may or may not be necessary.

The health reform proposals pending in Congress require all Americans to have insurance coverage. The problem with this “individual mandate” is that Congress (or some other regulator) will have to decide the minimum amount of insurance Americans can carry. The need to set this requirement is an open invitation to aggressive lobbying by health care providers. Wanting to ensure that the minimum benefit package covers their services, providers will spend millions on advertisements and campaign contributions to persuade legislators and regulators that more coverage is better. Lobbying from providers and supportive patients explains why many states already mandate coverage of elective services like in-vitro fertilization, massage therapy, and visits to athletic trainers. Concerns about the efficacy and cost-effectiveness of treatments are washed away by a stream of campaign contributions, and sad stories about patients who can only obtain the “necessary” services if the insurer will pay for them. The result is a one-way ratchet toward richer (and more expensive) benefit packages.

A similar political dynamic explains why Medicare, Medicaid, Tricare (the health insurance system for people connected to the military), the federal employees’ health benefit system, and private insurers have spent tens of millions of dollars on non-medical services, such as prayers, for Christian Scientist patients “who choose to rely solely upon a religious method of healing.” There is no persuasive evidence that prayer treatments work. A recent large study found that prayers had no effect on the rate of complications among heart surgery patients. In fact, patients who knew others were praying for them had slightly more post-operative complications than patients who did not.

Even though prayers are obviously not medical treatments, Christian Science Practitioners charge for their services at rates comparable to those of real health care providers. In Minnesota, a Christian Science Practitioner reportedly charged the parents of Ian Lundman, an 11-year-old with diabetes, $446 for two days of prayer-treatments. (Ian died.) In Michigan, a Christian Science Practitioner demanded $1,775 after praying for someone in a coma. State Farm initially refused to pay but capitulated after they were sued.

One of the major health care bills currently pending in Congress would continue and almost certainly expand this indefensible stream of payments. It uses the language of discrimination to hide what’s going on. The problem isn’t discrimination against members of a particular religion. It is that public officials should not spend our tax and insurance dollars on services of no proven medical value.

Christian Scientist Practitioners account for an infinitesimal fraction of the cost of health care. Indeed, it is almost always cheaper to pay for prayer-based treatment than to pay for medical treatment for patients with the same illness. But, our willingness to waste tax and insurance dollars on prayer treatments is symptomatic of a larger failing. Wasteful spending abounds in health care because providers have defeated all efforts to control costs – and routinely lobby for laws requiring that they be paid for the services they render, regardless of whether their efforts actually improve patients’ health. A business that charged through the nose for repairing cars or computers would quickly find itself out of business if “one third or more [of its work] was of questionable benefit.” Why shouldn’t we subject health care to the same discipline?

Congress seems bent on imposing an individual mandate. If so, it should impose a strict efficacy requirement as well. Congress’ rule should be: No governmental payments or insurance mandates for any goods or services not proven to work. Christian Scientists and others who want ineffective, unnecessary, or unproven services will still be able to get them. They will just have to pay for them.

Professor Charles Silver holds the Roy W. and Eugenia C. McDonald Endowed Chair at the University of Texas School of Law, where he writes and teaches about civil procedure, professional responsibility and, increasingly, health care law and policy. Professor Silver is currently an Associate Reporter on the American Law Institute’s Project on Aggregate Litigation and a member of the ABA/TIPS Task Force on the Contingent Fee. He has been Visiting Professor at the University of Michigan Law School and the Vanderbilt University Law School.

Professor David Hyman is considered to be one of the country’s top health law scholars, and is the Richard W. and Marie L. Corman Professor of Law, teaches civil procedure and health care regulation. His principal research interests are the regulation of health care financing and delivery and empirical law and economics. Professor Hyman has published articles on a wide range of subjects, including medical malpractice, managed care, consumer protection, narrative, professional responsibility, tax exemption, and civil procedure.

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30 replies »

  1. the problem is that health care in plain is just to much. 1 out of 5 americans dont have coverage. so if this new bill is passed how much ? will not enough be ?

  2. IT is good to hear that companies are not pulling back on their investment in wellness initiatives but they are taking much more interest and finding solutions to provide cheap and useful treatment to patients.

  3. We don’t even need to start with defining or proving that all current therapies are effective, lets start with those that already have data to show they are not ‘better’ such as: cardiac interventions for non ACS pts, intervention for claudication, stenting for renal artery stenosis and htn….and the list goes on.
    In addition payors (including Medicare) still willingly shell-out for imaging studies performed in non-certified labs lacking quality control. It just doesn’t make sense that these examples aren’t being approached as a logical first step in cost-containment. I assure you there are billions to be saved be examining current practice behavior.
    An effective example is the limitation that CMS put on payments for carotid stenting knowing that in general, cost and utilization for treating this disease would explode if approved for asymptomatic patients. They appropriately based this decision on data that shows no benefit over carotid endarterectomy. Heck we don’t even know that ANY intervention for carotid stenosis is better than current maximal medical therapy for reducing stroke (ie based on studies almost 20 yrs old comparing ASA as ‘best’ medical rx).
    In the end though, political special interest will likely prevail unless physicians themselves take responsibility.

  4. Despite the recession, companies are not pulling back on their investment in wellness initiatives. In fact, more companies are asking employees to fill out health risk questionnaires and are providing programs to improve and manage your health.

  5. Dr. Weinstein makes a good point about the expansiveness of our ignorance in regards to proven medical effectiveness, however this should not end the conversation. The amount of downright ridiculous treatment that is carried out in many hospitals would stagger your imagination. To give you an example, right now on my 32 acute bed unit there are 4 nursing home patients who have been here for a total of 18 days waiting for a theraputic INR. There is another nsg home patient who has been here 192 days this year, gotten 185 CBCs and at least 300 doses of iv antibiotics and looks just the same as he did 11 months ago. But his Medicare B never runs out.

  6. It’s not what doctors get paid, it is their expectation of what they will get paid that is the problem. More docs with attitudes like MD,s breed higher expectations from would be medical students. If we pay less, and potential medical students know this, then we will get a different student with different expectations. If we promoted medical education differently and helped pay the costs we would attract students from a lower family pay grade with higher expectations of what are the rewards as opposed to what is the pay.

  7. No, I think going Galt is a punchline.
    I wasn’t responding to your point that primary care is hurting, since it obviously is. But unlike you, I would say the problem to address is not the payment level in primary care but the payment level in specialty care.
    In any case, my response was to this bit:
    “Compassion used to be included in the service. You cannot steal compassion at the same time you steal service.
    Medicaid just decreased reimbursement in North Carolina by 9%. Just what do you think that will do to the compassion? Just what do you think that will do to access?”
    You went on to talk about clinics for the underserved, but you clearly had more than that in mind. In your past posts, you repeatedly return to the defense of FFS and the idea that you should be remunerated for every thing you do (next, pay me per word spoken or I won’t speak!) rather than by salary or capitation or lump sum. The reference to “stealing service” above seemed to be of a piece with those earlier posts of yours, and when it was followed by a reference to declining fees I thought it was fair to say you were complaining about low payments. True, you never mentioned yourself, but I thought that wasn’t far in the background. In retrospect, I got too personal.
    It’s a pet peeve of mine when physicians complain about low incomes when they are paid 50-200% higher than physicians in other nations, there is no physician shortage in those nations and the quality is as high as here overall.

  8. jd,
    You clearly missed my point. And you did it with amazing skill. Funny you should mention Gault. Do you think that is what’s happening?

  9. MD as HELL, it is absurd for you to whine about not getting paid as much as you think you’re worth. You probably earn in the top 3%, almost certainly the top 10% of Americans. And you’re whining. In this economy.
    I hope you are planning to go Galt as soon as you find your mountain lair.

  10. Higher reimbursement for measured forms of treatment.
    The “better” (the more thorough, the more transparent, the more fully shared, the more credible) the system for collecting, evaluating & reporting data on a particular treatment, the more complete the payment for it.
    This doesn’t necessarily require a centralized authority to succeed.

  11. There are many interesting comments on my post. Thanks to all who submitted.

    One theme repeated in several comments is that we don’t know which treatments work or, sometimes, how to define what it means for a treatment to work. It seems to me that the first order of business should be attending to these matters. In what other business sector (and health care is big business) do service providers get to spend enormous sums of customers’ money on services in the absence of criteria for success?

    Shifting to a system of paying for outcomes rather than services would certainly improve matters. Prof. Hyman and I argued in favor of outcome-based compensation for health care providers before pay-for-performance was fashionable. See our article in the Cornell Law Review in 2002.

  12. The Seton Hospitals in Texas went to tighter standards on inducing deliveries and saw a 98 percent drop in billed charges for birth injuries. That is pretty astounding.

  13. This post and the comments are struggling with the most difficult and important issue in health care cost.
    As the comments demonstrate, it is not easy to specify from the top-down what should and should not be mandated or covered. In fact, it is problematic in several ways.
    Paying-for-outcomes-over-time avoids these problems. It can handle real-world complexity and failures in a way that encourages treating even the most difficult patients.
    When a patient has a specific, narrow condition (the condition specified with several parameters), then what constitutes the best outcome, 2nd best outcome, 3rd best outcome, etc., *can be specified* by a periodic (semi-annual) group voting process among practitioners (at a secure website, etc.).
    The way to pay-for-outcomes-over-time is both simpler and more flexible than you’d guess.
    It has unexpected advantages:
    It leaves choice of treatment in the hands of doctors and patients.
    It leaves treatment of a condition completely open to innovation.
    Best of all, this payment structure can be transistioned to gradually, incrementally, in a low-stakes fashion, with easy steps.

  14. I just want to hold your hand. What will you get paid?
    I just need you to hold my hand. What will you get paid. What if I had to pay you myself? What would you get paid? What would you charge if there was no insurance? Would you even hold my hand? What is the value of care?
    Compassion used to be included in the service. You cannot steal compassion at the same time you steal service.
    Medicaid just decreased reimbursement in North Carolina by 9%. Just what do you think that will do to the compassion? Just what do you think that will do to access?
    Even Goshen Medical Center, the federally funded multi-clinic entity, with the doctors that cannot even get credentialed on the medical staff, will cut back. This is the same clinic that VP Biden last summer brought and delivered personally a $600,000 grant for operations. With Goshen in the neighborhood, there will be no new private primary care investment, except urgent care centers.
    Primary care is dead. I guess you will have to hold your own hand.

  15. “I agree with most of the others here that this is well and good in principle, but that the science isn’t there yet to render a judgment on many treatments.”
    This week’s New York Magazine features a story about how Intermountain Health Care approaches that problem. Clinical committees use effectiveness data to develop protocols for member hospitals. Among other successes, the article notes tht the system reduced its rate of pre-39 weeks elective labor induction from thirty to two percent.

  16. I agree with most of the others here that this is well and good in principle, but that the science isn’t there yet to render a judgment on many treatments.
    More important, the politics isn’t there yet. No chance that providers would let this pass in the foreseeable future.
    People need to really think hard about what it means that there are only the most modest reforms to the cost of care, which will not reduce the total dollars or the share of GDP devoted to healthcare. Not only do those reforms not exist, but they weren’t even talked about seriously in the last 6 months, with the exception of the “strong” public option that would use Medicare-like rates. And that, of course, was killed. You don’t even hear about who killed it. The power of the provider lobbies has not had to really even reveal itself yet to the public. They have so many chits and tools in reserve, have kept their powder dry…choose your metaphor. Anyone who tries to take away their easy money will have their head handed to them, which is why the administration and congress isn’t really trying except in subtle, modest and indirect ways.

  17. “What is it worth simply to have the time of the doctor?”
    MD as HELL, it is worth everything. I say we pay for time and materials, based on specialty or seniority or whatever you can come up with. Maybe a bonus for success. Just like attorneys get paid.

  18. Most services require provider time. No outcome is determined wit mush of primary care. What is it worth simply to have the time of the doctor?

  19. I’ve heard commericals on the radio over and over for fertility clinics. One, with offices on the same floor as my dentist offers a guarantee – a baby or your money back after XX cycles.
    I’m guessing those folks zero in on what the best approach is for a woman and her partner and do that minus extraneous tests and other approaches.
    I’d also guess that fertility treatments aren’t covered in a lot of insurance plans — so the folks that do them are motivated to advertise and create risk-sharing plans.

  20. “Even though prayers are obviously not medical treatments, Christian Science Practitioners charge for their services at rates comparable to those of real health care providers.”
    Using the word “real” implies that CS practitioners are indeed providing medical treatment, and that is immediately after you claim that the opposite is obvious.
    But you do have a point. Proven medical care often results in lack of healing, complications and death. The difference between Christian Science and the care most people consider more valid is that those providing the latter are not generally criticized or held accountable for everyday failures. Because they are expected and accepted. I am referring to standard practice, not malpractice. Christian Science and all others who depart from the norm are held to a higher standard.
    Due to my lack of legal knowledge, but knowing that it is illegal to practice medicine without valid licensing, I don’t understand how Christian Scientists can legally practice their healing activities.
    Standards should not be higher for quacks, prayerful or otherwise. Ian Lundman might have died just the same, had he received only standard medical care, but readers would not be so appalled at the fact if that had been the case. Under that circumstance, they might have thought the death was an Act of God! How ironic!
    I do agree that huge amounts of money are wasted in the medical system, and of course that is wrong. It is one scam that leads to more of the same, from any who are so inclined.

  21. “ineffective, unnecessary, or unproven”
    Unfortunately, much less is proven in medicine than most people think. There has never been a double blinded placebo controlled prospective study of the use of penicillin in pneumonia. It was used with much success in the late 40s and 1950s because it was obvious it worked. If we start paying only for those things of proven benefit a lot of good medicine will be denied because proof of efficacy often takes many years. Proving that minimally invasive valve surgery has long lasting benefit will necessarily take over a decade. Are we to deny this therapy until then? Tamping down on overuse is the much more important component. Only by shifting reimbursement away from per procedure to an outcome oriented approach can we alter utilization in a significant way.

  22. The issue with implementing this is that there is a considerable amount of medical care which is not supported by evidence. We’ll need to spend a lot more money on clinical research and comparative effectiveness studies if they are to form the basis of what health plans should cover.

  23. It is very easy to say (and nobody would argue with) getting rid of procedures that are “ineffective, unnecessary, or unproven” – The problem occurs when a therapy, technology or drug is introduced that is SLIGHTLY better than previous therapies, technologies or drugs.
    Everyone wants the best for themselves, but who should get the drug that is 5% better- or the MRI that will only detect cancer in 1% of people.
    That is what I see on the front lines and that is what I think is driving up health care costs.
    But , absolutely, we need to get rid of ANYTHING our government pays for that is “ineffective, unnecessary, or unproven”
    Hallelujah Brother !

  24. Insightful post, but it raises questions. Take something like Caesarian sections — they “work” in the sense that they allow women who cannot safely deliver their babies vaginally to have a relatively safe and healthy birth experience. But C-section rates average around 30 percent in the U.S. — a lot higher in some parts of the country than others. The problem here is not that the procedure doesn’t “work” — it does. It’s just that it is overused.
    The same argument could be made for something like the use of MRIs or other diagnostic testing.