July 24, 2008
Reforming How Physicians Get Paid
Physicians should be put on a prospective payment system, where they get paid a set fee for each patient and each condition they treat, not a fee for every test or procedure they order. That recommendation, which parallels the system set up for hospital payments several decades ago, comes from former Center for Medicare and Medicaid Services adviser Peter Bach of Sloan-Kettering Memorial Hospital in an op-ed in today's New York Times.
While Bach correctly points out the perverse incentives that fee-for-service medicine establishes for physicians who own their own diagnostic and procedure clinics, his suggested reform is a half-measure that won't solve the deeper problem: the failure of many physicians to use best available evidence to inform their medical practice. Indeed, prospective payments may encourage some doctors to skimp on needed care, which can actually increase costs to the system in the long run.
He also doesn't address the issue of specialty care. Most serious conditions involve patients getting handed off from their general practitioner to specialists. Would the entire case come under the prospective payment? If so, would the primary care physician be reimbursed for managing the patient's complicated journey through the medical system, or would each specialist get a prospective payment? If the latter, it's hard to see where the proposed reform would lead to significant savings -- or better health care.
The evidence is overwhelming that the best and most cost-effective care comes from organizations like Kaiser Permanente and the Mayo Clinic where physicians are on salary and operate in teams. In the auto industry, Toyota taught that lesson to General Motors decades ago. Arnold Relman, the former editor of the New England Journal of Medicine, made teamwork a central motif of his call for reorganizing medical practice in his most recent book, "A Second Opinion."
On Tuesday, the Century Foundation announced that it has set up a panel of prominent physicians, bioethicists, and health care policy advocates led by senior fellow Maggie Mahar to propose ways of holding down health care costs and improving quality. I hope they take on the reorganization of physician practice, even though their initial list priorities did not include it.
Every high technology business depends on skilled workers to deliver high performance. The best performing organizations have carefully thought through how they organize and pay those skilled workers. In medicine, that process has barely begun.
Getting rid of the piece-work system is only a start, and prospective payments isn't the answer. Ultimately, very complicated and expensive cases are insurance problems, not situations whose outlier costs can be controlled through incentive schemes aimed at better individual case management.
Here's just a partial list of some of the questions that need to be addressed: Should specialty group practices be integrated into larger organizations that encompass all medical specialties, where a team of physicians is available to review every complex case? Should there be two- or three-to-one spread between the incomes of physicians with differing skills? Should physician ownership of facilities to which patients get referred ever be allowed?
I'm sure that researchers more familiar with the daily practice of medicine could come up with a half dozen more questions worth considering. There is no magic bullet fix for the lack of coordination that leads to improper care and waste in American medicine. Only thoroughgoing reform of how medicine gets practiced in the U.S. will get at the tangled roots of health care's high cost and low quality.
Posted by gooznews at July 24, 2008 08:09 AMI believe some in Congress had the idea to begin paying medical oncologists to spend more time with their patients and less for very expensive, very aggressive treatments.
The Medicare Modernization Act (MMA) of 2003 changed how the CMS paid for medical oncologists' services. It called for rewarding medical oncologists to communicate with patients and to spend more time dealing with patients' chronic health conditions caused by infusional therapy.
Medical oncologists would be reimbursed for providing evaluation and management services, making referrals for diagnostic testing, radiation therapy, surgery and other procedures as necessary, and offer any other support needed to reduce patient morbidity and extend patient survival. In other words, being paid to think rather than just dispense drugs.
Before, medical oncologists received no reimbursement for providing oral-dose therapy to patients. This had been the principal barrier to the availability of oral-dose protocol. The advent of oral agents ultimately meant that medical oncology had to change its identity, prior to the chemotherapy concession.
The MMA bill offered patients benefits they did not have before, mainly coverage for oral chemotherapy drugs. More might have been achieved if the American Society of Clinical Oncology (ASCO) and other fraternal groups had lobbied as much for the oral chemotherapy drug issue as they did for office-practice expense reimbursement. They fought long and hard to retain the chemotherapy concession.
The MMA bill tried to remove the profit incentive from the choice of cancer treatments, which were financial incentives for infusion-therapy over oral-therapy or non-chemotherapy, and financial incentives for choosing some drugs over others. Patients should receive what is best for them and not what is best for their oncologists.
While the MMA bill was trying to pay medical oncologists for being doctors again, instead of being in the retail pharmacy business, some private payors still go along with the chemotherapy concession.
Posted by: Gregory D. Pawelski at July 24, 2008 10:35 AMThanks, Greg, for your always insightful comments. Oncology is just one of the silos I was referring to. The same dynamic, always with different specifics, operates in every medical specialty. Any payment-related gimmick that attempts to disrupt a sub-system will be prone to gaming by players with a stake in the outcome. That's why we need over-arching physician practice reform, not magic bullets.
Posted by: Merrill at July 24, 2008 01:45 PMWhat, no mention of single payer health reform?
"The Americans will always do the right thing... after they've exhausted all the alternatives"
Winston Churchill
Merrill-
Thanks for mentioning our working group on Medicare reform.
I agree with virtually everything you are saying about physician payment. It needs to be restructured. While the working group discusses reform, I'll be reaching out for people like you to comment--I hope you'll weigh in.
Also, if it's not too complicated, I would like to set up a blog where I can post every week about some of the issues the group is discussing (the discussions will be taking place online) and ask for comments.
In the press release we mention "rethinking Medicare’s fee-for-service system to reward doctors for quality, not volume".
What we plan to begin by talking the Medicare Payment Advisory Commisions's (MedPac's) recommendation that Medicare a close look at its fee schedule for physicians.
MedPac is urging that Medicare pay more for "cognitive services" (which involve listening to and talking to the patient) in a "budget neutral way." This could mean lowering the payments for some procedures--particuarly if we're not sure that they are effective--while raising payments for primary care, palliative care, care management etc.
MedPac chairman Glen Hackbarth also has recommended that someone other than RUC (the panel, dominated by specialists, that now recommends revisions in Medicare fees) should be helping to revise the fee schedule. He suggests that perhaps a panel of doctors who work on salary and do not work fee-for-service would be appropriate.
MedPac notes that patients who live in regions of the country where they see more specialists do not enjoy better outcomes, better quality, or higher patient satisfaction. It emphasizes the importance of primary care. It strikes me that today, the way we pay physicians stresses how much work is involved for they physician: labor, time, mental stress, risk, as well as the amount of education needed to learn how to do the procedure. This is all fine, but pretty physician-centered. Why not look at the procedure or treatment from the point of view of the patient, and pay more for procedures that do the most good? (This is just Maggie speaking; this is not something anyone in teh working group has talked about.) If we did this, we would pay quite a bit more to doctors who managed to get patients to stop smoking.
MedPac also recommends paying more for primary care physicians and specialists who treat chronically ill patients (suffering from diseases like diabetes) if they create a "medical home" for the patient. To do that, the practice would have to meet stringent requirements including using health IT and providing 24 hour access for patients (so they don't have to go to an ER on week-ends or in the middle of the night. Someone in the practice would always be on call.)
But adjusting fees is just the first step. Ultimately, MedPac recommends getting beyond "fee-for-service" payment altogether. This is what we mean when we say that the working group will discuss how to pay for quality not volume.
Here, MedPac recommends "bundling" payments to physicians and a hospital for a particular episode of care. MedPac recognizes that this will be complicated. But it also realizes that mulit-specialty organizations where doctors are on salary often provide the best outcomes, and the most efficient care. In healthcare, higher quality and reduced spending go hand in hand.
Some memebers of the working group are already working on the idea of "accountable organizations" or "accountable systems" and "paying for value."
Since we press release came out, we've added three new members to the group: Robert Berenson, M.D., senior fellow at the Urban Institute, John E. Wennberg, M.D. MPH, founder of "the Dartmouth Reserach" and Lawrence Casalino, M.D., University of Chicago, who has been doing some very interesting work on Medicare and value-based payment that he talked about at the New America Foundation conference on "Sustainable Medicare" last week.
Finally, in its June report, MedPac recommends requiring that physicians fully disclose all financial relationships--which speaks to the question of referrals. We'll be talking about that too.
Posted by: Maggie Mahar at July 26, 2008 12:38 PM