Thursday, May 07, 2009

Provider payment considerations

An article in today's Boston Globe about a state commission reviewing changes in the way doctors and hospitals are paid for delivery of care (from fee-for-service to a global payment) has prompted a huge number of comments on the newspaper's website. Here's mine:

Assuming this is the right thing to do, it would represent a shift in actuarial risk from insurance companies, which maintain cash reserves for such things, to doctors and hospitals, which do not. Does the Commission propose to make a change in accounting rules for insurance companies, so that their required revenues -- from the people and companies who pay for insurance -- are reduced to compensate for this shift?

Also, does the Commission have proposals to change the design of insurance products so that consumers know in advance that their choices might be diminished -- that they will be encouraged or directed to be cared for by physicians and hospitals within the orbit of the provider receiving the "global payment?"

The point is that, if this is the right way to go on payment for health care services, you need also to fix the insurance side of things to garner immediate savings for the public. You also need to let the public know what the new environment will be for their care so doctors and hospitals are not caught in the middle, the way it happened during the last experiment with managed care. If the Commission does half the job in its recommendations and leaves the rest to be fixed in the future, it will leave us will a lot of unintended consequences and will undermine the good that might otherwise come from a new payment scheme.

Beyond this, many of my colleagues at other hospitals have pointed out the importance of including mental health in this picture, if we are to go down this route. In the past, mental health services have often been "carved out", leading to underpayment and relegating these diseases to second class status. Dennis Keefe, CEO of Cambridge Health Alliance, states it elegantly:

The results of these systematic underpayment practices on mental health and substance abuse services is what we are seeing today in the Commonwealth; i.e. a growing and continuing shortage of bed capacity; bed capacity that greatly varies across regions and the State; poor access to these services within communities, particularly for the uninsured/underinsured; all of which results in the continued marginalization of services to this population when compared to individuals having other "medical" needs. This, to me, is particularly ironic, as I have often asked the question to groups and others, "who amongst you does not have a friend, colleague, or family member who has not had to cope with mental illness and/or an addiction"? I have never seen a hand go up......


Anonymous said...

I think this concept of a fixed dollar amount per patient is brilliant. As a test population, perhaps the state could trial it for a year with the governor's office, legislatures and state employees. If that test population goes well it could be rolled out statewide.

On a side note, can we encourage that regardless of party each voter in Massachusetts vote against the incumbant? How about a write in campaign for

Somebody Else
1 Anyplace Drive
Village/Town/City, Massachusetts

Anonymous said...

In theory this comprehensive "global" care works. But the reality is something different. I think they should look very carefully at the trial that went wrong in the 80's. That didn't work for a variety of reasons that are very, very hard to correct.

Medical Quack said...

I can see where this will be a very hot topic and wonder how it will all shake out with being able to come to some sort of program.

Good point on the reserves maintained by carriers, something most are not aware of, but hope they are in fact solid.

Not only is there the matter of pay difference between hospitals, but specialties and family practice that could use some work as we have specialists doing very well, but on the other hand, the family practice doctors are finding it hard in many areas to make ends meet and if this is to be the continued business model to where our healthcare starts, compensation at that level certainly deserves to be looked at as well.

Anonymous said...

What do they call the person who finishes lowest in class in medical school? DOCTOR!

The long-standing practice in this country is that the best get paid more and customers decide who they want to provide a particular service. The danger of the cost-driven and politically created health-care systems is that it will result in something like the UK system where the quality of medical care, and even the treatments that a patient may be allowed to have, depend on where you live; "The Post Code Lottery".

It's ok to go to the PCP who couldn't find a position better than a clinic in West Podunk for a sprain or a some infection that will run its course in a few days. It's altogether different if that PCP, or some bureaucratic regulation, restricts my access to the best possible diagnosis and treatment for a problem that could affect quality of life, or life itself.

I'm satisfied with the Medicare process. If it is going to be changed then the same rules should apply to all, including legislators and those in the health care field.

76 Degrees in San Diego said...

It works here.....but...the physician group needs very good management. The hospital partner needs to be constructive with a growing process. Physicians in most all specialities need to be willing to consider capitation. Reflexive resistance hurts all.

charlie said...

Paul - You and I have discussed this before, and I share your concerns - especially with respect to benefit plan design. This is usually the missing link in the payment reform discussion - and it really makes a difference. If the providers are being paid and incented (is that a word?) to do one thing, and their patients - our members - are being incented through their plan design to do something else, no one will be happy. You're right to raise this issue. I offered a few others as well at

David Harlow said...

Paul -- Good point re: insurers not needing to maintain reserves under a global payment scheme ... perhaps Charlie and others will rebate reserves out to long-term subscribers .... And who will providers go to for a backstop against their financial exposure under such a plan? Is AIG still in this business? Are their rates affordable?

Anonymous said...

I dont think that physicians and physician groups should be made to take on risk. The insurance companies and their actuaries spend their lifetimes calculating risk. The physicians have no background/training. so why should be be bundled with the risk? inevitably, we will "lose" and the insurance companies "win". California experimented with capitated care in this way in the 1990s, and many medical groups folded, the public was unhappy, and capitation started to die off. Why would it be any different in Mass?
-BIDMC medical faculty doctor