Sunday, September 08, 2013
A Remedy for Cost
We claim to be highly concerned about the high and rising
cost of health care, but we are slow to do anything about it.
The August issue of the journal Health Affairs included an
article reporting on a program in California in which Calpers, the insurance
company serving government employees and retirees, offered beneficiaries a
health insurance policy that classifies providers into two groups – one
charging higher prices and the other lower prices. For
services obtained from the low cost group, the regular co-pay and deductible provisions
of the policy apply. For the high cost
group, patients also pay the difference between amounts set by the policy and
what the provider charges. The goal was
to reduce cost by providing patients with a financial incentive to seek out providers
that charge the lower prices. In the
article, two researchers at the University of California at Berkeley reported
the results of a study they had conducted to see whether and to what extent the
program had achieved its objective.
The results were significant. The study focused on hip and knee
replacements and each year studied the more than 400 patients who participated
in the program and obtained those treatments.
During the first year after the program was implemented, services
obtained from the low price group increased by over 20 per cent compared with
the previous year. Prices charged by the
low price group went down 5.6 per cent and by the high price group 34.3 per
cent. The researchers calculated that
the program saved Calpers $2.8 million in 2011.
I have long believed that threatening high cost providers
with a loss of patients would be an effective way to get them to become serious
about cost reduction – more so than offering them financial rewards for doing
so, as Medicare is doing. The Calpers
experience seems to bear that out.
One would think that others would be quick to adopt the
Calpers program, but apparently the fear of market forces in health care
remains strong enough to prevent taking advantage of them – or at least to slow
down the process to a crawl.
Tuesday, September 03, 2013
EHR “Savings”
Promoters of the electronic health record (EHR) tout cost savings
as one of its benefits.
The August 26 issue of Modern Healthcare reports the
emergence of a new category of health professional called the Medical
Scribe. It seems that doctors find it more
cumbersome to make their notes in digital form than in handwriting and so they
are employing individuals (Medical Scribes) to sit alongside them and enter
their findings and decisions into a computer as they interview and examine
patients.
The article reported the experience of one Dr. Michael
Merry, an Internist/Pediatrician in Freeport, Illinois. Before the EHR he could see 25 to 30 patients
per day. With the EHR that dropped to 20
to 24. Now that he is using a Medical
Scribe, he has “nearly returned to his pre-EHR productivity rate.”
So the “savings” turn out to be negative, consisting of the
addition of the cost of the computer system, the computer software, and the Medical
Scribe.
Having the information available in digital form potentially
may permit savings elsewhere in the care process, but according to the article
Dr. Merry is a member of a group practice and it is hard to see how he or his
group would benefit economically.
It all goes to show the folly of imposing information
technology on an industry that is neither organizationally nor culturally
positioned to benefit from it.
Monday, September 02, 2013
Critical Access and Politics
The Balanced Budget
Act (BBA) of 1997 authorized States to establish a State Medicare Rural
Hospital Flexibility Program (Flex Program) under which certain facilities
participating in Medicare can become CAHs [Critical Access Hospitals.
Quoting the US Department of Health and Human Services, “Some
of the requirements for CAH certification include having no more than 25
inpatient beds; maintaining an annual average length of stay of no more than 96
hours for acute inpatient care; offering 24-hour, 7-day-a-week emergency care;
and being located in a rural area, at least 35 miles drive away from any other
hospital or CAH (fewer in some circumstances)…. Certification allows CAHs to receive cost-based
reimbursement from Medicare, instead of standard fixed reimbursement rates.”
The ostensible purpose of this program was to save hospitals
in remote, thinly populated areas that were too small to survive under regular
Medicare reimbursement rates.
As originally conceived, relatively few CAHs would be
certified, but in government programs it is hard to avoid politics, so the
program included a loophole which allowed state governors to certify hospitals
without regard to the distance criteria.
The possibility of becoming eligible for cost-based reimbursement proved
irresistible and so there are now over 1300 CAH’s and the cost to Medicare has
passed $2 billion per year.
Now Medicare wants to clamp down, particularly on those
hospitals that do not satisfy the criterion of being located within 35 miles of
another hospital. The Obama
administration’s 2014 budget wants to decertify the 70 CAHs that are within 10
miles of another hospital, saving $40 million.
I can hear the screams from here.
