Sunday, September 18, 2011
Fourth in the Series
The following is the fourth suggestion on health care reform included in the Commonwealth Fund report to the National Governors Association, as reported by former Vermont governor James Douglas in the May 23 issue of Modern Healthcare:
“Payment systems reforms: We need to pay for health care based on quality, not quantity. Most payment structures compensate providers for each test, procedure or visit. We should instead pay based on performance and perhaps combine payments to groups of providers to ensure the kinds of coordination needed.”
The health field has long been plagued by concepts that look good in writing and sound good in speeches, but which nobody knows how to implement.
This fourth suggestion is a case in point. Nobody could be against the idea of paying for quality rather than quantity, but the devil is in the details, as they say, and the question is how one might go about doing it.
For one thing, quality can only be measured in retrospect. So any payment based on quality is based on what quality was in some previous period, like last year. So there is always the risk that a provider’s performance will deteriorate, in which case a regular payment was being paid last year when quality was good, but a premium payment is being made this year when it is not so good.
It would also be the case under this approach that paying more for quality would be inflationary in a system in which costs are already too high.
All of which overlooks the possibility that the high quality performers probably have lower costs, as well, and could prosper with payment that is lower than what would be needed by providers offering lower quality.
One way to honor quality is to allow the insurance company to send its subscribers to providers who, in the company’s opinion, offer the most attractive combination of cost and quality. But that would mean a competitive market economy in health care and compromising the patient’s freedom of choice, neither of which we are yet ready to consider.
One last comment. Paying providers by groups makes coordination easier. It does not “ensure” it.
The following is the fourth suggestion on health care reform included in the Commonwealth Fund report to the National Governors Association, as reported by former Vermont governor James Douglas in the May 23 issue of Modern Healthcare:
“Payment systems reforms: We need to pay for health care based on quality, not quantity. Most payment structures compensate providers for each test, procedure or visit. We should instead pay based on performance and perhaps combine payments to groups of providers to ensure the kinds of coordination needed.”
The health field has long been plagued by concepts that look good in writing and sound good in speeches, but which nobody knows how to implement.
This fourth suggestion is a case in point. Nobody could be against the idea of paying for quality rather than quantity, but the devil is in the details, as they say, and the question is how one might go about doing it.
For one thing, quality can only be measured in retrospect. So any payment based on quality is based on what quality was in some previous period, like last year. So there is always the risk that a provider’s performance will deteriorate, in which case a regular payment was being paid last year when quality was good, but a premium payment is being made this year when it is not so good.
It would also be the case under this approach that paying more for quality would be inflationary in a system in which costs are already too high.
All of which overlooks the possibility that the high quality performers probably have lower costs, as well, and could prosper with payment that is lower than what would be needed by providers offering lower quality.
One way to honor quality is to allow the insurance company to send its subscribers to providers who, in the company’s opinion, offer the most attractive combination of cost and quality. But that would mean a competitive market economy in health care and compromising the patient’s freedom of choice, neither of which we are yet ready to consider.
One last comment. Paying providers by groups makes coordination easier. It does not “ensure” it.
Friday, September 09, 2011
Market Competition in Health Care
As a means of getting cost under control, market competition in health care is an idea that sounds good but the prospect of implementing it makes us nervous. When we are sick or injured, we want to think we are getting the best care available without regard to economic considerations.
But the idea persists and Blue Cross Blue Shield of Massachusetts has taken a step in its direction with its Hospital Choice Cost Sharing Plan.
Under that plan, the subscriber has free choice of hospital, but the deductible is higher at high cost institutions.
The example given in the promotion material is an MRI for which Hospital A charges $1200 and Hospital B charges $725. Subscribers getting the service from Hospital B pay no deductible, but those using Hospital A pay a deductible of $450.
I plugged in a fictitious couple to get rates and for one of the plans, the basic rate was $1297.93 per month. The same plan with Hospital Choice Cost Sharing was $1134.29 for a difference of almost $165.
That’s about a 13% reduction; probably enough to cause people to think about how much benefit there really is in getting an MRI at Massachusetts General instead of at their local hospitals.
It also illustrates the potential of pursuing health care reform at the local as compared with the national level. It is hard to imagine anything like Hospital Choice Cost Sharing being implemented by the federal government. Any such proposal would bring the lobbyists out in droves and tempt politicians to decry the attempt by an evil administration to put dollars before patients.
As a means of getting cost under control, market competition in health care is an idea that sounds good but the prospect of implementing it makes us nervous. When we are sick or injured, we want to think we are getting the best care available without regard to economic considerations.
But the idea persists and Blue Cross Blue Shield of Massachusetts has taken a step in its direction with its Hospital Choice Cost Sharing Plan.
Under that plan, the subscriber has free choice of hospital, but the deductible is higher at high cost institutions.
The example given in the promotion material is an MRI for which Hospital A charges $1200 and Hospital B charges $725. Subscribers getting the service from Hospital B pay no deductible, but those using Hospital A pay a deductible of $450.
I plugged in a fictitious couple to get rates and for one of the plans, the basic rate was $1297.93 per month. The same plan with Hospital Choice Cost Sharing was $1134.29 for a difference of almost $165.
That’s about a 13% reduction; probably enough to cause people to think about how much benefit there really is in getting an MRI at Massachusetts General instead of at their local hospitals.
It also illustrates the potential of pursuing health care reform at the local as compared with the national level. It is hard to imagine anything like Hospital Choice Cost Sharing being implemented by the federal government. Any such proposal would bring the lobbyists out in droves and tempt politicians to decry the attempt by an evil administration to put dollars before patients.
Saturday, September 03, 2011
Why Universal Coverage is so Hard
On the face of it, the idea that everyone ought to have health insurance seems to be such a good one that it makes one wonder why getting it accepted is so hard.
A clue is provided by an obscure story that appears on page 12 of the September 2 issue of the New York Times.
It seems that for some time now, Grady Memorial, Atlanta’s safety-net hospital, has been providing dialysis care to a number of indigent patients, many of them illegal immigrants. Faced with financial losses, the hospital shut down its outpatient dialysis program. Of the 38 charity patients receiving care, 13 were accepted by other providers and Grady, under pressure, contracted with Fresenius, a private company that advertises itself as the largest dialysis services provider in the world, to care for the remaining 25. The contract was for one year, ultimately extended to two.
Now Grady wants out and when the patients involved recently appeared for their three-times-per-week treatment, Fresenius turned them down, told them to wait until their condition became acute, and then go to the Grady Emergency Room, which would have to accept them for treatment.
It is a nasty story and it is a shame that anyone gets treated that way, but the interesting point is that the provider system, in this case Grady Memorial, has been funding expensive care for illegal immigrants for two years and their refusal to do it any more is an important enough story to make the New York Times.
The story illustrates the extent to which the uninsured get care; albeit not always conveniently or in pleasant circumstances. The fact that they get care prevents the kind of heart-rending stories about patients unable to get care that might get people excited about the issue.
On the face of it, the idea that everyone ought to have health insurance seems to be such a good one that it makes one wonder why getting it accepted is so hard.
A clue is provided by an obscure story that appears on page 12 of the September 2 issue of the New York Times.
It seems that for some time now, Grady Memorial, Atlanta’s safety-net hospital, has been providing dialysis care to a number of indigent patients, many of them illegal immigrants. Faced with financial losses, the hospital shut down its outpatient dialysis program. Of the 38 charity patients receiving care, 13 were accepted by other providers and Grady, under pressure, contracted with Fresenius, a private company that advertises itself as the largest dialysis services provider in the world, to care for the remaining 25. The contract was for one year, ultimately extended to two.
Now Grady wants out and when the patients involved recently appeared for their three-times-per-week treatment, Fresenius turned them down, told them to wait until their condition became acute, and then go to the Grady Emergency Room, which would have to accept them for treatment.
It is a nasty story and it is a shame that anyone gets treated that way, but the interesting point is that the provider system, in this case Grady Memorial, has been funding expensive care for illegal immigrants for two years and their refusal to do it any more is an important enough story to make the New York Times.
The story illustrates the extent to which the uninsured get care; albeit not always conveniently or in pleasant circumstances. The fact that they get care prevents the kind of heart-rending stories about patients unable to get care that might get people excited about the issue.
