Soon the Special Commission on Payment Reform (set up by the legislature as part of healthcare reform) will be proposing changes to how Massachusetts pays for healthcare services. Currently Massachusetts’ payment system is no different from any other state, and the entire US is having problems controlling health care costs. Our payment system pays for illness and volume, and it needs to change.
Right now, we pay doctors, providers, and pharmacies predominantly on a fee-for-service basis. That is, if they see you, they get paid. If they see you a lot, they get paid a lot. If you are in the hospital, get sent home, and then have to return for the same problem, the hospital gets paid again. We pay for volume (the more a provider sees patients, the more they get paid), and we pay when you get sick. This is the problem that needs solving. To move from paying by volume for illness, to paying fairly for prevention and wellness.
We don’t now pay well for prevention. We don’t pay doctors anything special for keeping you well, and we often don’t pay for them to check up on you at all! We don’t pay for them calling you, or talking to another doctor about you. We pay providers only when you go in to see them.
As a patient, how do you know if you need that MRI for your back? Only about 25% of MRI’s give any helpful information on back problems. Many physician groups have built MRI labs, and the MRI your physician orders might give him another clue about your back (only 25% of the time), but it also might be paying for the cost of the new lab (100% of the time).
So, our US health care system pays for volume. It pays for illness. What it doesn’t pay for is keeping you healthy. It pays less for prevention and primary care. It doesn’t pay doctors to coordinate care or to provide care in the least costly appropriate setting. To solve this problem, the Special Commission is talking about “global payments”, or “bundled payments” for primary care.
Just like in the early 90’s a form of capitation is being considered to help control healthcare spending. Global payments have similar financial incentives to capitation.
There are many forms of capitation, but a more global form is the flat, monthly payment to insurers or providers, to cover the cost of your total care. Its goal can be as simple as lowering costs, or limiting the overall risk to an insurer. It can be an incentive to do more primary care and prevention, because if you are not sick, the insurer can keep the monthly payment. The less you are sick or treated the more reserves an insurer can accumulate.
Few want to go back to the capitation of the early 90s. Many policy makers consider it a failure. Consumers rejected it; businesses rejected it because their employees didn’t understand it and hated it. Doctors and providers rejected it because it sometimes transferred too much of the financial risk onto them, without the proper payments and investment in wellness, prevention and coordination of treatment between providers. It failed partly because “saving costs” took priority over adequate care. Patients worried that they were being pushed out of hospitals too quickly. People believed they were being denied services in the short run and felt their health took a back seat to cost cutting. Whether this is true or not, the collective “memory” of capitation is such that few want to reproduce it.
The Special Commission on Payment Reform is about to recommend changes that will then go to the legislature. The process has been open and transparent to many of the varied groups involved in healthcare. As recommendations are sent to the legislature, the broader public must be made aware of these potential changes. It’s important that the public be engaged now and this becomes a public conversation about the future of health care payment and delivery. Global payments, just like the capitation of the 90’s, could become a payment model that focuses primarily on cost containment, and squeezing money out of the system. What we need is a system that provides better care that keeps us well. And we need a payment system that reinforces and strengthens a healthcare system that delivers that better care.
We must have a reform that has incentives built which will:
• Make a priority of prevention, wellness, and primary care services, even if that means we pay more for those services.
• Increase equity in payment by the major providers. The state, Medicaid and Medicare need to pay their fair share of the costs of coverage, and the current cost shifting to employer provided health insurance must be reduced. Currently, Medicaid payments are the lowest, and providers turn to other payers to make up the difference. More equity in payer contributions must be part of any reform.
• Any payment system must adjustment for patients’ health status and the socio-economic needs of different populations. We most consider the needs of our teaching programs and guarantee the financial health of our hospitals and physician groups. It should support the important and cost-effective role of our safety net, community hospitals and health centers, and provide adequate access to primary care services. It must be thoughtfully designed, implemented gradually, and evaluated along the way to stop any unintended consequences.
• We must work on administrative simplicity, both for the providers, and the consumers of health care. As we make this change, it must be transparent, simple, clear, and consistent across as much of the system as possible.
• If we can design a system that restrains costs while increasing wellness, then some of the savings that insurance companies will see should go back directly to the consumers and businesses that pay these premiums. As we did with healthcare reform, we need to make sure there is shared responsibility and shared savings.
• Finally, we must include doctors, providers and consumers in the process, as we evaluate how, and what, we pay for. If we do not include consumers and those who are on the front line of healthcare delivery, we will repeat the mistakes made in the capitation movement of the early 90’s. The goal is not simply squeezing money out of the system. The goal must be to improve our Commonwealth’s health.
Celia Wcislo is a board member of the Massachusetts Connector Authority, Assistant Division Director for 1199SEIU United Healthcare Workers East, and an Executive Board member of the Service Employees International Union.
This program aired on April 30, 2009. The audio for this program is not available.