Health for life

Applying the brake in the name of patient care?

The Disease Management Care Blog poses a simple question: knowing that, despite the best of care, things can occasionally go wrong following surgery (for example, inpatient MRSA infections can still happen and readmission rates will never go to zero), do you really want your doctor or hospital to not be paid for the additional care that you may require?

Go to the websites of organizations like Robert Wood Johnson or The Brookings Institution and youll find impressive expert papers that extol a variety of "payment orms" designed to "align incentives," "reduce waste" and "achieve cost savings."  Dig into these orms and readers will encounter admiration for payment approaches like "prospective payment," case-based," "bundling," and "shared savings."  Youll also find a deep disdain for "fee-for-service" (FFS). 

Prospective good, FFS bad, right? 

"Not always," replies the DMCB. It depends on your point of view. Like, if youre a patient.

The DMCB explains.

The DMCB learned long ago to simplistically think of provider payments in terms of "gas" and "brake" pedals.  FFS applies gas and accelerates provider services; thats because each time a "service" is provided it subsequently generates a "fee." 

In contrast to FFS, case payment, bundling and capitation apply the brakes, because providers receive the payments up-front. Since the money is in hand, providers have an economic incentive to preserve it and withhold services.  The DMCB thinks of "shared savings" in terms of brakes because the up-front payment is essentially held in escrow until the savings (versus a targeted level of utilization) are achieved.

The simplest example of how this can be applied is to hospitalization.  If hospitals are paid for each day that the patient is in a hospital, thats FFS (otherwise known in the industry as "per diem"). 

Instead of per diems, most hospitals are paid with a different payment mechanism based on "diagnosis related groups" (DRGs). Every time a patient is admitted, that generates a payment (similar to FFS).  That payment, however, is not pegged to the number of days the patient stays in the hospital. Instead, the payment is bundled to pay for the entire hospitalization.  Thats why hospitals are always willing to admit patients (the gas) and then in a hurry to discharge them (the brakes).

Under the payment orms championed by Robert Wood Johnson or The Brookings Institution, the inpatient payment bundling would be expanded to pay for the entire case after discharge from the hospital.  Under this system, if the case had to be readmitted, the hospital and providers are SOL.  After all, why should they be rewarded for shoddy care?

Unless, of course, youre the patient.  The DMCB worries that a one-size-fits all approach to payment policy could have unintended consequences. Patients battling unanticipated outcomes would likely per that their providers be incented to give additional care.  They want to be back in the hospital.

The payment policy may be good from the point of view of health orm, but it can be bad for patient care. 

The DMCB asks if we are on the verge of another round of unintended health care consequences.

Well know soon enough when anecdotes of patients being inappropriately denied readmission begin to appear.

Paying for it is a whole new kettle....

Now that the U.S. Supremes have confirmed the Affordable Care Act as the law of the land, the Next Big Step - as the Disease Management Care Blog predicted - is the move from insurance orm to payment orm. While its politically easy to broaden entitlements to cover everyone, figuring out how to pay for it is a whole new kettle of financing fish.

In response, a whos who of Obamacaregineers are stepping up with their Phase II recommendations for payment orm.  While you ponder whether the DMCB summary below is enough or whether you need to follow the link for more detail, ask yourself whats missing......

1. Let public and private payers combine forces to "negotiate" payment rates that aim for global spending targets at a regional level.  Embedded costs for research, training and uncompensated care would be carved out and preserved separately.

 2. Use bundled payment methods for episodes of care that span rehab and post-discharge care, starting out with cardiology and orthopedics. Aim to make this payment approach the rule for 75% of Medicares budget within 10 years.

3. Commoditize medical devices, lab tests and radiology services by forcing suppliers to competitively bid for Medicares business.

4. Encourage tiered insurance products, where consumers can pick progressively lower premiums in exchange for higher out of pocket costs.

5. Leverage state exchanges to ratchet down costs on pain of being "delisted" by forcing them to compete on cost and quality.

6. Simplify administrative costs by establishing a single format for all paper and electronic forms. The latter is the default unless the consumer opts for paper.

7. Make the pricing for medical services public and outlaw gag clauses.

8. Allow non-physicians to take advantage of scope-of-practice  laws to practice medicine autonomously.

9. Close the provider self-erral loopholes that allow docs to provide "in house ancillary services," unless its under a global cap.

10 Start all the above with the Federal Employees Health Benefits Program (FEHBP).

11. Use the "safe harbor" of practice guidelines to protect docs against allegations of medical malpractice.

Whats missing is the usual emphasis on primary care and, in particular, the patient centered medical home.  While it could be argued that global targets and bundled payment methodologies will drive the inclusion of higher value/lower cost non-specialists, the DMCB is shocked, shocked that the experts and editors missed usual nod to primary care.

The DMCB will also point out that the proposal is rich in expert councils (to set spending targets), programs (as in Medicare Acute Care Episode to define the bundling), panels (for the competitive bidding and guidelines) task forces (for the administrative simplification), commissioners (to assure transparency) and, last but not least lawyers (expanding Stark to ban self-erral).  Plato, the champion of Philosopher Kings, would be proud. 

In the meantime, Ayn Rand is rolling in her grave.

Image from Wikipedia