Hostage to a payment method that puts the interests of patients last

Another luminary-rich panel has been formed to make recommendations about how physician and other healthcare services should be valued and paid for.

The Society for General Internal Medicine launched the National Commission on Physician Payment Reform with funding from prominent healthcare foundations. The 13 commissioners represent a mix of perspectives: a former surgeon/senator, community physicians, academics, two healthcare mega-corporations, a think tank, a state regulator, and a reform-oriented advocacy organization. A group representing large employer purchasers has one seat.

The Commission’s chairman, Steven Schroeder, MD, worries that the group will end up being just another voice. “[Many commission] report[s] wind up sitting on a shelf. We want people to say at the end of this that our findings really made sense.”

He is right to be concerned.

One question is whether any panel’s recommendations, no matter how sensible, can overcome the industry’s influential opposition to giving up fee-for-service reimbursement. Another is whether, the commissioners’ good intentions notwithstanding, its composition renders it likely to comprehensively address the problem.

After all, excess has served healthcare well. A payment structure that values only appropriate care could devastate revenues for the professionals and organizations at the table.

Fee-for-service has made healthcare a merchant enterprise. Every product and service delivers a margin, and so the industry does as many as possible. The payment system’s clear incentive is to deliver more care, and more expensive care, where the absolute profit dollars are higher.

Consider, for example, the 2011 500,000 patient follow-up analysis by William Boden, MD, and colleagues to their 2007 landmark COURAGE study. COURAGE definitively showed that expensive invasive procedures like angioplasty and stenting provide no additional benefit to patients with stable coronary artery disease beyond that provided by less costly drug treatment — referred to clinically as optimal medical therapy (OMT).

The new study found that COURAGE has been virtually ignored by American cardiologists, who continue to rely as enthusiastically on stents and angioplasties as they did before the COURAGE results.

The U.S. reception of COURAGE starkly contrasts with its reception in England, where the findings were incorporated into best-practice guidelines that were disseminated to primary care physicians.

The differences between our two health systems? Britain pays its primary care doctors more if they follow the protocols that encourage better patient care at lower cost. Here, we use financial incentives — fee-for-service reimbursement — that encourage doctors to deliver substandard care if the financial rewards are high enough.

We have become hostage to a payment method that, more often than not, puts the financial interests of doctors, hospitals, and corporations above the interests of patients and purchasers of care.

Every thinking healthcare professional knows it and everyone outside the profession is confused or enraged by it.

The best doctors are endlessly frustrated by the choices they face, but many healthcare professionals are content to simply play the game and reap the rewards.

There are alternatives. In the employer on-site clinic market, many vendors now pass through all operational costs without a markup — there is supporting documentation for the purchaser — and then charge a per employee per month fee for managing the care process. Unlike fee-for-service, this model incorporates no financial incentives to deliver unnecessary services (or to deny necessary ones). In this arrangement, the purchaser evaluates how effectively the clinic vendor reduces cost while improving individual and population health status.

The vendor’s incentives are to develop mechanisms that ensure the appropriateness of care and cost within the clinic and downstream, throughout the care continuum. It is also in the vendor’s interests to provide credible data showing how much the clinics are being used, what impact they have had on the health of the group, and whether cost patterns have changed.

In other words, the focus has moved beyond a merchant mentality to facilitating better care for the patient while protecting the purchaser’s financial interests. This payment model has been so well received that many clinic requests-for-proposal now specify it as a design requirement.

In truth, the current healthcare marketplace is loaded with low-hanging fruit that can yield tremendous quality and financial improvements — big benefits for patients and purchasers — which is why this sector is perhaps the fastest growing in healthcare and why this “care-neutral” payment approach could ultimately be appreciated as a model for the system.

Even so, getting payment models like this into policy will require that patients and purchasers have as strong a voice as healthcare vendors do now. So far, it appears that the healthcare industry doesn’t see that approach as productive.

Brian Klepper is Chief Development Officer of WeCare TLC and blogs at Care and Cost.

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  • Steven Reznick

    Having read the article can I assume that Brian Klepper and We Care develop employer on site clinic models?   Everyone likes to dump on fee for service markets and point out the benefits of a British type national health program , or  capitated programs, or pre paid programs . In every one of those markets private health care options where fees are paid for service exist and thrive and individuals have free choice.

    As a practitioner I do not want to be your employee or anyone elses. I enjoy taking financial risk betting on my training , skills and experience in providing outstanding long term care to individuals and families who choose me as their physician. There is a problem with too many procedure oriented training positions and programs which develop individuals used to performing expensive and technologically advanced procedures.  Insurance companies and government health care programs have done an exceedingly poor job of setting realistic procedural reimbursement levels for these procedures and policing which procedures are appropriate and should be paid and which should not. Fix the system do not re invent it. Train physicians and nurses who wish to go into primary care by providing educational stipends and appropriate reimbursement for cognitive services, advocacy and longitudinal care. Start making the public responsible for its actions but give them the education they need through reinstituting nutrition, first aid, health lessons in our elementary and secondary schools. Revitalize our public health options in America’s communities. Give it ten years to simmer. Then lets see if we need employer on site clinics.

  • Brandon Betancourt

    “We have become hostage to a payment method that, more often than not, puts the financial interests of doctors, hospitals, and corporations above the interests of patients and purchasers of care.”

    I take issue with this statement. If this was true, then why are there countless doctors reluctantly  closing their private practices and joining larger medical groups? If being a doctor is so profitable, why do we have a shortage of physicians? 

    What about pre-auths? For most patients, their benefits won’t kick in until they get pre-authorization from the patient’s health insurance. If doctors are doing procedures that are not necessary, wouldn’t the gatekeepers of our US system not pay authorize all these procedures? 

    Lastly, it is worth noting that most primary care doctors don’t benefit financially from procedures. For example, if a pediatrician suggest that a child needs their tonsils removed, it is the specialist that performs the procedure. If my Internist suggest I need an MRI, he is not getting compensated  for the MRI that the hospital performed. 

    • sFord48

      Primary care doctors don’t do any procedures in which they can bolster their compensation.  They instead turn to running their patients through the office like cattle to make more money.

  • SidewaysShrink

    We are not all cardiologists. Some of us are in this younger generation with student loans from when the cost of medical education skyrocketed. I am a non-procedure doing specialist with no sub-specialty that would be more lucrative. You, Mr. Klepper, are writing about medicine in that misty eyed “doctors are rich” way that people do who have a martini or whatever at their country club or wherever actual rich people go to talk a out people who aren’t in the room. (This is a metaphor for a general way people talk about doctors, please don’t take it personally.) Insurance companies high profit margins are most of the problem in American medicine.
    I will never participate in your model because I am not a “vendor”. I am a professional with some the highest ethical and practice standards of any profession in America. I do not sell peanuts. Hidden in your model is a ton of paperwork to get that “credible data” to justify getting reimbursement. The most polite thing I can say is that you have some nerve treating us like widgets. Wrong crowd.

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