Taking Doctors' Profits Out Of Medical Care Decisions

RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. Good morning, I'm Renee Montagne.

ARI SHAPIRO, host:

And I'm Ari Shapiro.

One key factor driving up health care costs is the payment system for doctors. The more procedures they perform, the more they get paid. The health industry calls the practice fee-for-service. Many consider it a perverse system that lacks incentives to hold down costs. But the legislation working its way through Congress may not do much to change it.

NPR's David Welna has the first of two reports on the search for more cost effective health care.

DAVID WELNA: At President Obama's most recent White House news conference, this was his succinct diagnosis of the nation's health care ills.

President BARACK OBAMA: We spend much more on health care than any other nation, but aren't any healthier for it.

WELNA: The remedy the president prescribed, though, was not health care reform. It was health insurance reform, a term he and fellow Democrats have lately begun using to describe Congress' effort to overhaul health care regulations. But one Democrat warns the problem goes well beyond health insurance. Tennessee House Member Jim Cooper says the real issue is a system bent on telling consumers more is better.

Representative JIM COOPER (Democrat, Tennessee): The message of our medical system has been to sell, sell, sell, buy, buy, buy. And the real message should be: What's really going to help me live longer and healthier?

WELNA: And with the fee-for-service model for health care, Cooper says doctors have little reason to discourage the demand for more and more health procedures.

Rep. COOPER: I liken fee-for-service medicine to the situation, if we paid lawyers by the word, or by the paragraph, we would have the longest legal documents in the world. And essentially, that's what we do with our doctors, but most of us don't realize it.

WELNA: Maine Senator Olympia Snowe agrees with Cooper. Snowe is one of three Republicans working with three Democrats on the Senate Finance Committee to forge a bipartisan health care bill. She wants legislation holding doctors and hospitals accountable for both the cost and quality of their treatment.

Senator OLYMPIA SNOWE (Republican, Maine): The fact is, right now, we encourage volume over value. And so we've got to really analyze what is the net outcome, you know, in procedures, in the testing, in the care that is provided, you know, individual patients, and by whom.

WELNA: Other lawmakers though say incentives for cutting health care costs should be directed more to the patients themselves. Wyoming Republican Senator John Barrasso is also an orthopedic surgeon.

Senator JOHN BARRASSO (Republican, Wyoming): I don't see anything in this legislation that actually goes and gives incentives to individual people to stay and live a healthy life, nothing that's aimed at helping people individually and is giving incentive to that person to eat less, exercise more and quit smoking.

WELNA: Even outside experts say that while the health care payment system encourages waste, it's not clear what the fix is.

Ms. KAREN DAVIS (President, Commonwealth Fund): I think the truth of the matter is we don't know exactly what would be the best way to reform payments.

WELNA: That's Karen Davis, a health care expert who's president of the nonpartisan Commonwealth Fund. Davis says the legislation pending before Congress does offer some incentives for more cost-effective health care. Medicare would crack down on excessive hospital readmissions. There would also be bonus payments for Medicare providers to improve the quality of their health care, and pilot projects would be funded, as well.

Ms. DAVIS: There are pilots for medical homes for primary care. There are pilots for accountable-care organizations, which certainly cover the continuum of care. But there are also pilots for bundling hospital payment, and I think all of those are very important to lay the groundwork for fundamental payment reform.

WELNA: Arkansas House Democrat Vic Snyder, who's also a physician, says he still has hopes for the health care legislation before Congress, which he calls a work in progress.

Representative VIC SNYDER (Democrat, Arkansas): Whatever the final version is -and we'll have this discussion maybe after the president's ink is drying on the document. Then we'll say, well, was it a little nudge? A big nudge? But it will be a nudge in the direction of more efficient delivery of health care services in a way that rewards quality, fairly reimburses providers.

WELNA: And recognizes, says Snyder, that the fee-for-service model is unsustainable.

David Welna, NPR News, The Capitol.

SHAPIRO: Tomorrow, we will look at a unique venture in Minnesota that's designed both to cut costs and to improve quality. Transcript provided by NPR, Copyright National Public Radio.