Getting Beyond Fee-For-Service

Brian Klepper

Posted 12/02/13 on Medscape Connect’s Care and Cost Blog

ALP_H_BK_0010The catchy title of a recent Harvard Business Review Blog post, The Big Barrier To High Value Health Care: Destructive Self-Interest, suggested that the Institute for Healthcare Improvement (IHI) is forging arrangements that can overcome fee-for-service reimbursement’s propensity to drive excess. As the honest broker, IHI could advocate for arrangements of mutual self-interest based on the right care, better outcomes and less money. Employers and unions would get lower costs, with improved health and productivity. Health systems and health plans would win more market share (at their competitors’ expense), realizing longer term relationships that could facilitate sustainability as market forces intensify.

The substance of IHI’s description was less satisfying, though. Their principles – common goals, trust, new business models, and defining roles for competition and cooperation – are obvious ingredients in any workable business arrangement. But the authors never talked about the money. That left plenty of room for skepticism by those of us who have heard more than one CFO ask, “Why should we take less money until we have to?” What, exactly, is the incentive for health care organizations to moderate their care and cost patterns?

Continue reading “Getting Beyond Fee-For-Service”

Moving Beyond Merchant Health Care

Brian Klepper

Published 4/05/12 on MedPage Today

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.

Continue reading “Moving Beyond Merchant Health Care”

Medicare Providers Don’t Want Less Revenue

Roger Collier

Posted 2/9/12 on Health Care Reform Update

The Congressional Budget Office’s January issue brief on the failure of almost all of more than thirty Medicare demonstration projects to cut costs generated considerable discussion. Judging from the reactions of some health care policymakers, the CBO’s findings came as a surprise.

They shouldn’t have.

Aside from the fact that the results of virtually all of the demonstrations had previously been published, the failure to reduce Medicare spending is exactly what should have been expected.

Let’s take a look at the three payment models used by CMS for the demonstrations:

  1. Regular Medicare reimbursement plus a guaranteed no-risk fee or bonus for participating
  2. Regular Medicare reimbursement plus a fee or bonus dependent on performance
  3. Bundled payment for demonstration services

Continue reading “Medicare Providers Don’t Want Less Revenue”

Who Will Pay For the Doc Pay Fix?

Merrill Goozner

Published 11/25/11 in the Fiscal Times

Holiday cheer and bipartisan bonhomie are still possible on Capitol Hill.

For evidence, one need only look at the so-called “doc fix,” where Congress every year overrides a previous effort at health care cost control to ensure physicians get paid at least as much as they did the year before.  Expect another present to arrive at physicians’ offices sometime between Thanksgiving and Christmas, now that the Super Committee has failed to permanently resolve the issue as part of Medicare’s contribution to long-term deficit control.

Continue reading “Who Will Pay For the Doc Pay Fix?”

Bundled Payments Bomb. Why?

Tom Emerick

Posted 11/10/11 on Cracking Health Costs

We all know the biggest shortcoming of our current fee-for-service  health care system — the incentives are all wrong.  One reform idea has been to move toward bundled fees in which all expenses for a procedure are paid in one global fee. That is theoretically an excellent idea. While that is working very well in some care centers for specific procedures, it may not be scalable.

The PROMETHEUS Payment project was kicked off about three years ago to test bundled payments.  A recent press release by the Rand Corporation reports the test did not succeed…  “Researchers say that adoption of the bundled payments approach was slowed by both technical and cultural difficulties.”

At one time Medicare thought DRG payments to hospitals would curb spending.  It didn’t work obviously.  Problem is that form of payment lead to DRG creep, i.e., ratcheting up the diagnosis to get higher payment.  in short, one of the problems with this style of payment reform is diseases and diagnoses are subjective in the extreme.

One of the biggest problems is that doctors are mainly still paid for each procedure.  How do you divide the pot?

What is certain is that the best care around is in clinics where doctors are paid salaries, not fee-for-service.  See Mayo Clinic, Kaiser, Cleveland Clinic, the veterans health system, and a few more.  (Yes, that’s right the VA system is one of the best today.)  The same principle is true globally too.

Anything we can do to boost salaried doctors will make major strides in the right direction.

Employers can and should drive as much business as possible to centers whose doctors are salaried, especially for major complex cases.  As you’ve seen in my previous posts, that can save money and save lives too.  The more of that employers do, the more other clinics will  reform themselves.

Tom Emerick writes at Cracking Health Costs, and consults with large employers on approaches to more effectively manage the care and cost associated with high risk patients. He is the former VP of Benefits for Walmart.

Payment Transformation: From Volume to Value

Jaan Sidorov and Vince Kuraitis

First posted 7/7/11 on eCareManagement Blog

This is the 2nd installment in a series on the Strategic Realignment among Physicians, Hospitals and Payers

In our introductory posting, we suggested that a huge shift is underway in the health care industry.  Decades of hospital-physician cooperation are not only eroding, we suggest this trend could accelerate.  Instead of a natural clinical and economic affinity with hospitals, we foresee the potential for physicians forming a new dyad with insurer-buyers.

In this post, we will examine what we and many other commentators view as inevitable: the demise of volume-based payment systems and how the drive for greater value will cause physicians and insurers re-examine their normally antagonistic relationship.

Continue reading “Payment Transformation: From Volume to Value”

Changing the Game on Health Care Costs

Robert Laszewski

First published 4/10/11 on Health Policy and Marketplace Review

Last week, I posted that I was disappointed in Paul Ryan’s health care budget proposal because it lacked cost containment ideas other than the usual conservative reliance upon the market and defined contribution health care.

In my last post, Why ACOs Won’t Work, I argued that the latest health care silver bullet solution, Accountable Care Organizations (ACOs), are just a tool in a big tool box of care and cost management tools. But, like all of the other tools over the years like HMOs and IPAs, they won’t be used as they were intended because everybody—providers and insurers—can make more money in the existing so far limitless fee-for-service system.

How do you make the American health care system efficient?

You change the game.

Continue reading “Changing the Game on Health Care Costs”