Saturday, July 25, 2009

The Times points another arrow at fee-for-service medicine

Fee-for-service, fee-for-service, fee-for-service. Gradually the healthcare debate is centering on this major driver of runaway healthcare inflation. Atul Gawande and David Leonhardt have helped shine the spotlight on doctors' incentives to provide unnecessary care; Peter Orzag and Barack Obama (see "p.s." at link) have seized on their examples and language.

Today, the New York Times is front-paging a new poster child for putting doctors on salary. Gardener Harris profiles Bassett Healthcare, "a modest hospital of 180 beds" in Cooperstown, NY, to demonstrate that you don't have to be the Mayo Clinic to improve outcomes by realigning incentives, a.k.a. putting doctors on salary:
Bassett — like the Cleveland Clinic and a small number of other health systems in this country — pays salaries to all of its doctors. No matter how many tests or procedures are performed, they take home the same amount of money. Medical costs at Bassett are lower than those at 90 percent of the hospitals in New York, while the quality of care ranks among the top 10 percent in the nation, surveys show.
As at the Mayo Clinic and other treatment centers that have eschewed fee-for-service, the payment structure goes hand-in-hand with coordinated, integrated patient care:

Michelle Griffiths, 41, of Edmeston found a lump on her breast six years ago. During cancer care at Bassett, Ms. Griffiths’s appointments to see her oncologist and primary care doctor are often scheduled on the same day. One doctor will sometimes accompany her during a procedure performed by another, and each has her complete medical history.

“The communication amongst all of my doctors is impressive,” said Ms. Griffiths, who works as a database administrator for the insurance company New York Central Mutual. “They always call each other or shoot each other e-mails.”

Such coordinated care is a hallmark of integrated health systems with salaried doctors, like Kaiser Permanente, the Mayo Clinic, the Veterans Administration and the Cleveland Clinic.

Harris also highlights the political conundrum: everyone seriously engaged in healthcare reform knows that fee-for-service is a major inflation culprit. But as in the Aesop's fable in which a group of mice agree that they should hang a bell around the cat that's been gobbling them up, no one knows how to "bell the cat":

“Everyone knows that the Bassett model is the right model,” said Senator Charles E. Schumer, a New York Democrat involved in negotiations over health care legislation. “The question is, How do you get from here to there?"
In response, I wonder why the unanamious recommendations of the Massachusetts Special Commission on the Health Care Payment System are not getting more attetention. The Commission's central proposal takes direct aim at fee-for-service, proposing a five-year transition to "global payment systems" that pay doctors and hospitals per patient, with performance incentives, and adjustments for region, income, clinical risk and other factors. The recommendations appear to have broad, if cautious and equivocal support. The Times' Kevin Sack reports:
Top state legislators said that they recognized the political challenge in enacting such a plan but that Massachusetts’ circumstances demanded it. Senator Richard T. Moore, co-chairman of a joint legislative committee on health care financing, said he expected to hold hearings on the recommendations this fall. The committee’s other leader, Representative Harriett L. Stanley, said, “It’s going to be a very long haul, but it’s a trip worth taking.” [snip]

Interest groups with heavy stakes embraced the proposal, but warily.

“Hospitals want to be part of this historic endeavor,” said Lynn B. Nicholas, president of the Massachusetts Hospital Association. But Ms. Nicholas added that “the success of moving to a global payment system is not a foregone conclusion” and expressed concerns about how risks would be adjusted and how start-up costs would be covered.

The president of the state medical society, Dr. Mario E. Motta, also urged caution. “A big transition like this has never been done on such a broad scale,” Dr. Motta said, “so it must be done very carefully, deliberately and
In Massachusetts, turning the battleship toward global payment systems appears to be recognized as a necessity if the 2006 reform plan that's already achieved near-universal coverage is not to bankrupt the state, as it's beginning to do. (Of course, the state has only taken a baby step toward reforming the payment system.) Will federal legislation have to follow the same road - extend coverage first, deal with the resulting financial emergency as it takes hold?

1 comment:

  1. Global capitation as it is described in the article is not a new idea. As a physician in Massachusetts for the past 18 years I have seen several health care plans in the 1990s attempt to use this model. Secure Horizons was a senior program which took the place the Medicare and promised the preventive care to its enrollees. What was not disclosed to do patients is that the doctor had a strong financial disincentive to withhold referrals, expensive prescriptions, skilled nursing facility care and hospital care.

    As I heard it described to me by a Kaiser Permanente physicians/salesman. "If you make a referral for Mrs. Jones to the dermatologist, consider it like you reached into your back pocket, took out your wallet and stapled a $100 bill to that referral form.” After all, with global capitation the primary care physician keeps any leftover funds as his fee.

    After many patients found out about this perverse of for incentive the program finally died out.

    Imagine having to beg your primary care physician for the care you think you need. Some patients would even feel guilty about asking for referrals because they new it was taking money out of their physician’s pocket. Others did not want to come in for visits because they knew the doctor would be reimbursed nothing for the visit.

    I cannot even begin to address the questionable decisions that I observed by my fellow physicians at that time.

    For those wishing to control cost, I applaud, but this idea will fold under the light of day