The U.S. devotes a much
larger share of its national income to health care than any other
country in the world. However, the gross over-spending has not
yielded the healthiest population (OECD Health data, 2009). Our
economy is continually growing at a lesser rate than healthcare
spending. The need to restrain this unsustainable growth in health
care costs is often overlooked in favor of reform focused on
expanding access to care. Attention must be focused on restructuring
the payment process with the goal of reducing costs without
sacrificing quality. With an aging population comes chronic
conditions that require efficiently coordinated care. About 10
million Americans require long term care, 42% of which are under 65
with disabilities or chronic illness (Rowland, 2009). It is also not
uncommon for chronic patients to receive duplicate testing,
conflicting treatment advice, and expensive prescriptions from
multiple practitioners. The Medicare system was a fee-for service
payment plan, until a prospective payment was introduced. A
contributing factor to the problem has been the trending of hospitals
and insurers to better cover acute episodes rather than preventative
or ongoing care. For example, the average length of stay is down from
less than 8 days in the 1970s to 4.6 days in late 2000’s. In a
similar trend, gross outpatient revenues as a percentage of all
hospital revenues was 37% in the mid-2000’s as compared to 16% in
the 1980’s (HPAM-GP 1830, 2012).
Currently the health
care system’s financial incentives are not structured to reward
effective and efficient care. Payment systems pay doctors, hospitals
and providers for services (fee for service). Oddly, when care is
efficient, the savings go back to the payer, insurance companies or
the federal government rather than the hospital. These factors, in
addition to malpractice responsibilities, generate incentives to
provide more services and more expensive procedures, which increase
costs but not outcomes. George Halvorson, CEO of Kaiser Permanente,
says, “Providers have a huge economic incentive to do a lot of
procedures. They have no economic incentive to actually make us
better” (Halvorson, 2007). Poor quality of care leads to expensive
hospital readmissions. It is reported that 20% of patients are
readmitted within 30 days, 34% within 90 days, and 56% within a year
(Jencks, Williams and Coleman, 2009). Consumers are also responsible
as individuals to choose insurance plans based on their own knowledge
of expected needs and value of coverage. Generous plans attract
disproportionately high-cost populations, so they must raise premiums
or cut benefits leading to eventual market failure. Under current
open-ended health insurance policies, individuals are insulated from
the true costs of their care, leading to ex post behaviors and over
consumption. Similarly, there is a general lack of objective evidence
about new technologies to allow patients or physicians to make a
fully informed decision about the value of each option (Social
Security Advisory Board, 2009). New procedures are often expensive
and encouraged by insurance plans, as they will pay regardless of
value. This principal-agent problem gives rise to decisions being
made based on the physician’s past experience, which may not be
suitable. Finally, in a system where the payer is not the consumer,
billing 3rd party payers is a time consuming and expensive process.
In the United States, accountable care organizations (ACO’s) take a
collaborative approach to health care. A coordinated network of
hospitals, primary care physicians, and specialists work together,
usually in association with a healthcare insurer, to improve care
delivery and control costs. Typically, ACO provider partners assume
responsibility for meeting care quality and cost goals, and earn a
share of any savings. Providers have to report on numerous quality
metrics and establish/maintain quality assurance programs in order to
participate in shared savings incentives (Instamed, 2012). As ACO’s
move to comprehensive payment plans, risk-adjusted premiums will
emerge to insure the sickest patients are not excluded. In fact, the
improvement in coordination and quality of care of these sickest
patients is a great potential source of shared savings. Comprehensive
payment systems, which feature a “Per Member Per Month” system
charge a single payment to cover all services in the defined
timeframe (Blue Cross Blue Shield Association, 2010). Previously,
technology did not support the needed access to data, but due to the
growth in the IT field, it is now possible. To encourage
coordination, bundled payments were used in which a single payment is
made among all the providers for all services in a specific episode
of care. Another technique used to generate more accountability for
quality of care is Pay for Performance, where payment is tied to the
physicians’ performance based on a defined set of quality measures.
This model evaluates performance and pays for higher quality of care.
However, providers may only focus on measureable statistics, which
could diminish the overall quality of care. As the Information
Technology sector continues to improve, the tracking of comprehensive
data allows for better analysis and delivery of more coordinated
care. Patient-centered medical homes (PCMH) are increasingly using
Health Information Technology to aid in clinical decisions (Miller,
2011). Primary care physicians can manage all aspects of patient
care, make evidence-based decisions, and seek to involve patients as
active participants in their own health. Providers are better able to
treat patients on a personal level with more emphasis on preventative
or on going care.
Consumer driven health plans (CDHP’s)
are another way to reduce cost and generate savings. These plans
sensitize patients to cost and increase patient control over health
dollars by utilizing high deductibles paired with tax-deferred health
savings account (HSA) and catastrophic coverage. This strategy is
focused around an informed patient decision-maker, which requires the
patient to be active in seeking readily available information. While
CDHP’s intervene on moral hazard, they attract the healthiest
consumers, and thereby pull them out of the collective risk pool. By
aligning financial incentives to reward more effective and efficient
care, as well as exposing consumers to costs of care and focusing on
coordinated care models, ACO’s seem to be the most promising new
approach to health care. By using new information technology they
take a data driven approach and encourage patients to be proactive.
However, fundamental to the success of any ACO is an adequately sized
and trained workforce. Physicians have recently gravitated towards
specialization, meanwhile there are intensified demands for primary
care physicians (PCP’s) due to rising prevalence of chronic
disease, proliferation of evidence-based guidelines and low
reimbursements. This limitation must be addressed in addition to the
looming question of how risk-adjusted premiums will be designed to
accurately reflect the health of an individual. Finally, ACO’s have
substantial capital needs, which significantly limit the number of
hospitals and health systems that can adopt this strategy. To achieve
the quality improvement and cost reduction needed to ensure the
long-term stability of the health care system, reform must promote
greater accountability for cost and quality of care. By focusing on
the needs of patients and linking payments to outcomes, these
delivery system reforms will help improve the health of individuals
and communities and slow cost growth.
Works Cited:
http://healtheappointments.com/
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