Health Care Payment Reform

Mayo Clinic supports the Senate health reform bill but seeks more action on how care is paid For, as per today’s Wall Street Journal.

Physicians and patients both may benefit from the launch of a new database that informs the rates that health plans will pay for out-of-network services.

The successor to the Ingenix database is expected to emerge in mid-year.

The American Hospital Association is examining how health care payment reform can actually happen. In an interview on the Health Affairs blog, AHA CEO Rich Umbdenstock says fee-for-service must go away in favor of some type of fixed payment.

A draft report has been prepared by a task force on payment reform:

And basically it doesn’t argue whether or not that’s the direction in which we’re headed.  What it examines is how we build the bridges to get from here to there.  And how can we figure out how it’s going to work in different communities because different communities are more or less integrated than one another already, and certainly the vast majority of communities are less integrated.

Exactly where payment is headed is not clear to AHA (or anybody), but the general direction is becoming obvious:

We do believe we’re going to move toward more of a fixed payment system, whether it’s bundled payments per procedure, or whether it’s something broader on an episode or time basis, or potentially all the way back to where we were in the nineties with capitation.

It is frustrating for many people to watch health reform debate sidestep address cost containment in a meaningful way, but big changes are often best accomplished in incremental steps.

In a post on Commonhealth, Richard Lord, president and CEO of Associated Industries of Massachusetts, laments that Congress has not learned an obvious lesson from his state’s 2006 health reform: If coverage expands without cost containment, the result is unsustainable.

He points to the importance of scrapping fee-for-service medicine:

Maybe Massachusetts will have to lead the way on the cost issue after all, just as we did with access. I am heartened by the near total consensus here that we need to move away from our current “fee for service” payment system, which rewards providers for volume, toward global payments that would providing greater incentives for efficiency and quality care. Obviously there would be significant advantages to a national approach to reshaping our health care payment system: apart from competitiveness and consistency issues, federal action would avoid Medicaid and ERISA constraints. But if Washington lacks the political determination to confront this issue head on, I am hopeful that Massachusetts will once again lead the way on cost containment – without which all of our great accomplishments will not be sustainable.

All eyes on Massachusetts, please! That state has already gone where the rest of the country is headed, so look there for lessons borne of experience.

The New England Journal of Medicine (online only) reports on a poll of Massachusetts physicians regarding their perspectives on the state’s 2006 health care reform legislation.  The main result of the legislation is increased insurance coverage; state legislators are currently trying to figure out how to control the  higher costs associated with that achievement.

Important findings: 70 percent of physicians support the 2006 legislation.  Almost half (46 percent) want to see additional changes; of those who want additional changes, expanding coverage (34 percent)  is the most frequently cited priority, followed by addressing costs (23 percent) and increasing reimbursement (13 percent).

I was encouraged to see that 37 percent of physicians believe the law has improved the quality of care provided in MA, while only 12 percent feel that quality has declined.

Lead author for the article–full text is available free–is Gillian Steel from Harvard School of Public Health. She and her co-authors write:

Massachusetts has the lowest proportion of uninsured residents in the United States. Our results show that there is widespread support among Bay State physicians for the law that led to this high level of coverage. At the same time, physicians believe that it has contributed to some problems with health care in the state.

Examination of physicians’ views on care for their patients provides little evidence to support criticisms that the law is negatively affecting the quality of care that most physicians deliver. With regard to their own practices, a sizable minority of physicians indicate that the legislation has increased their administrative burden.

Physicians’ views concerning the effect of the law on the state’s health care environment are more mixed. Most believe it is helping the formerly uninsured, but that positive view is coupled with a majority belief that the program is driving up the cost of health care in the state. In addition, physicians are divided about whether it has imposed pressures on the state’s primary care capacity.

Taken together, these findings suggest that it is possible both to provide near-universal coverage of the population and to have a system that most physicians believe improves care for the uninsured without undermining their ability to provide care to their patients. At the same time, the Massachusetts experience provides evidence of trade-offs in other areas of the health care system, including rising health care costs and, for some patients, challenges in obtaining access to primary care.

The current issue of Health Affairs addresses an important precursor to health care payment reform: the need to change Medicare governance so that the nation’s largest health care payer can make changes without undue political influence.

The article, “Medicare Governance and Provider Payment Policy,” written by Hoangmai Pham and Paul Ginsburg from the Center for Studying Health System Change and Mathematica’s James Verdier points out:

It is… appropriate for political debate to drive major policy directions in Medicare—such as when hospital prospective payment replaced cost reimbursement. But constituencies such as particular subgroups of hospitals can exert disproportionate influence, in turn spurring detailed legislation or rule making that is inconsistent with broader policy goals. Whether through Congress, the White House, or directly through lobbying CMS staff, such activity can undermine the integrity, equity, and predictability that new and complex payment reforms require to garner buy-in from stakeholders and work effectively.

The authors consider two options for changing Medicare governance:

• creation of a new Medicare payment policy board
• elevating Centers for Medicare & Medicaid Services to Cabinet status and requiring the Medicare Payment Advisory Commission to analyze “the implications for costs, access, and quality of any legislation directly affecting Medicare payment policy that is reported from committees of either House, just as the CBO provides budget cost estimates on spending legislation”

Both ideas are worth exploring, and the time is now.

Francis Crosson, a top executive in the Kaiser Permanente system and the vice chair of the Medicare Payment Advisory Commission, is an important advocate for the accountable care organization model of health care delivery.

Writing in the Oct. 1 New England Journal of Medicine, Dr. Crosson reiterates his call for a “stepwise” approach to increase the prevalence of integrated delivery systems:

…two interacting sets of changes need to occur: movement away from fee-for-service payment of physicians toward prospective payment, and multispecialty integration of physicians combined with hospitals to form new “accountable” systems of care.

Speaking at the National Press Club last week, Mayo Clinic CEO Denis Cortese listed several attributes of organizations that deliver  what he considers to be “high-value care.” The Health Affairs blog recounts his message:

• patient-centric cultures
• high levels of physician engagement in leadership and change
• high levels of teamwork, collaboration, and coordinated care
• more “connectivity” and sharing of electronic medical records and information
• use of “the science of health care delivery” meaning systematically looking at how patients flow through an organization in order to reduce waste and standardize processes to reduce errors.

He also offered an incremental approach to move all health care providers in that direction:

Let’s set a goal that in three years Medicare is paying for value. In those three years, let’s create a process where we define what we mean by value. We start setting up the metrics — the outcomes, safety, and service compared to the cost – and let’s start being transparent about where everybody is on that scorecard.

Dr. John C. Lewin, chief executive of the American College of Cardiology, shares his view of health care payment reform in this Q&A in a blog post on The New York Times website.

A snippet of encouragement from Dr. Lewin:

The good news — and the reason why I’m excited about health care reform — is that the best health care in this country often tends to be very affordable. The whole discussion about bending the cost curve can be resolved by setting new incentives in payment that reward better outcomes with evidence-based medicine.

Everyone interested in health care payment reform should become acquainted with the Center for Payment Reform.

Its policy papers include Promoting Appropriate Payments for the Value Provided by Primary Care and Care Coordination:

Payment reforms must recognize the value provided by primary care in managing the health of individuals and populations. We will not create a delivery system that is patient-centered and well-equipped to deliver high quality care while controlling costs without changing payments to recognize the value of care coordination and the management of patients, particularly those with complex chronic illnesses.