Payment Reform: Panacea Or Debacle? A View From Middle Massachusetts

I’m by no means saying Dr. Wayne Glazier is perfectly representative of Massachusetts doctors. But he’s president of a middling-large group of 180 doctors in the middle of the state — the Central Massachusetts Independent Physicians’ Association. And he has about five years of experience — some positive, some not — with the sort of risk-sharing global payments that the Patrick administration is now proposing as the centerpiece of the next phase of health care reform here.

In that model, doctors are paid a set annual amount for each patient rather than for each procedure. At the end of a year, if they’re within the budget and meet quality standards, they can win bonuses; if not, they risk penalties.

As we chatted the other day in Dr. Glazier’s office in a cleverly converted Worcester factory, I found myself really hearing for the first time that when Massachusetts doctors say, “We support the idea of change, but this plan is no panacea and the devil is in the details,” they’re not actually expressing general support for the governor’s proposal, tempered by some reservations. That’s how I and others have tended to cover the administration’s public hearings on payment reform: Most in favor, some warnings.

Rather, the dominant message I take from Dr. Glazier is one of concern. It’s not kneejerk resistance to change. It’s a view from the medical trenches that says: 'I honestly don’t see how what you’re proposing is going to contain costs. But I do see some very real dangers.' Here are seven of his top concerns, lightly distilled:

1) Global payments don’t get the patient involved in containing costs.

The consumer needs to get involved. The current situation puts us in a very bad spot. My patient says 'I want to go to UMass for my surgery,' and I say, ‘You can go to St. Vincent’s, it’s cheaper,’ and the patient says, ‘I don’t want to go there, I want to go here.’ So now I have to be the cop and say, ‘If you go to St. Vincent’s, we’ll save all this money.’ What does the patient care?

Our patients are going to the more costly places but we’re the ones holding the bag on this, so what can we do? We have no option. If you’re going to take on risk you have to be able to manage that risk, but if you don’t have the tools to manage it, it’s a losing proposition. That’s the concern.

2) No one even knows how much things cost.

There’s no transparency in medicine. If you said to me, ‘I need a mammogram, where’s the best place at the lowest cost?’ I don’t know. You call up your health insurer and ask, ‘How much is a mammogram?’ They won’t tell you.

The doctor’s pen controls the health care costs, but if the doctor’s pen doesn’t know what things cost, how can he manage? That’s the problem.

And as a patient, you don’t have the information to make your decisions. If you buy a car, you can look at all kinds of information like MPG, warranty. When you buy an operation, all you get is “Well, I’ve heard of that hospital, I know it’s a good place, they advertise a lot, they must be good.”

3) The problem with risk-sharing is the risk

We’re struggling with this risk-sharing. Every year when we renew our contract with Blue Cross, the biggest challenge is always to figure out a way to stay afloat if you lose money. If you take risk and you lose, and you owe Blue Cross $5 million, how do you pay that back? You have to go to your members and say, ‘Okay, guys, write a check for $10,000 each.' That’s not too easy to do.

We’ve been taking a percentage of the risk, not full risk. It’s a way to take the risk without going under. The problem with the Blue Cross Alternative Quality Contract [a model touted by the Patrick administration] is that it’s a full-risk contract, so you’re on the hook for everything. That’s why we struggle.

In five years of risk-sharing, some years we’ve done very well and some years we break even. We have reinsurance for the patients who get really sick and go into the hospital for months and cost millions. It’s the ones who are kind of in-between, not really sick but in the hospital longer than they would be ordinarily — if you have a lot of those you can get killed, and you have no control over that.

We also have no control over patients who say, ‘I want to go to Mass. General or the Brigham.' And physicians don’t want to be in an adversarial position. I’m here to help you and if you really feel like you’re going to do better at MGH, I’m not going to put a roadblock in there. This is why I say, ‘Until the patient has some skin in the game, how is it going to work?’

4) Without full information, how can we take full risk?

Information Technology is the key to this whole thing, because if you don’t have a good information system you can’t manage the risk. All our doctors are on electronic medical records; the problem is that there are like 500 medical IT vendors, none of the medical records talk to each other, the hospitals don’t talk to each other. We’re moving in that direction but we have a long way to go.

We’re sent reams of paper about our patients — but it could be they’re telling me my patient was in Mass. General three months ago, so what am I going to do now? It’s very complex to figure out what’s going on in real time. I’m trying to say that for us to do a good job with risk management and not lose our shirts, we have to have enough information to manage effectively.

Insurers want to shift the risk to the providers. If they don’t take the risk, what is it they do?

5) How do you operationalize it?

What I think they should do is pick out the 10 most expensive diagnoses, what Blue Cross spends the most on — congestive heart failure, hip surgery — then go to an organization like ours and say, ‘We’ve identified congestive heart failure as the most expensive item we pay for, so we want you to manage this. Come up with a bundled payment. Get your cardiologists, internists, your primary care people to to come up with a logarithm to figure out how to manage this, and let’s try a pilot that makes this work. You keep the costs down, the doctor doesn’t go bankrupt, rather than diving into this.

Because in the trenches, how do you manage? A guy comes into the Emergency Room with chest pain. Do you say, ‘Here’s your check for $1000 a year on Jan. 1, for anything else over that don’t come to us’? It doesn’t make sense. How are they going to operationalize it? That’s a big problem.

6) Benchmarking is everything.

So the idea is, they give you a ‘global payment’ budget, The budget’s based on what you did last year. It doesn’t take into account your patient mix. We got shafted one year. We had all these pediatricians with relatively healthy patient populations, so suddenly our benchmark was much lower. We were taking the same amount of risk but the benchmark was lower, so we lost money.

When you start out in an Alternative Quality Contract-type arrangement it’s based on what your budget was last year. So if you’re a bad actor, your budget’s going to be really high. If you’re a good actor it will start out really low. I was at a meeting with two prominent medical groups from Minnesota: one did extremely well under an AQC, the other did terribly. What’s the difference? It’s all about who you’re benchmarked against.

7. More consolidation to come

The biggest problem I see now is that the AQC can force doctors into giant mega-groups, because in order to manage this risk you need huge amounts of money, so independent doctors won’t be able to do it. So pretty soon Massachusetts will have three or four big groups tied to hospitals. So who’s going to lower costs? Hospitals are the centers of higher costs. Who’s going to lower costs?

We could go away. I’m a small business. I employ a lot of people. If I go away, these jobs go away. As we get these consolidations, some doctors are going to leave the state because they’re going to say, ‘This is not what I signed up for.’ And the people who stay may say, ‘I’ll work for Partners and let them call the shots.’ The independent model will be forced out, which may not necessarily be cost-effective.