Tufts Medical Center CEO: Give Us A Uniform Rulebook, No More 'Bags Of Cash'

Outgoing Tufts Medical Center CEO Ellen Zane
Outgoing Tufts Medical Center CEO Ellen Zane

Last week at the state cost-trend hearings, outgoing Tufts Medical Center CEO Ellen Zane proposed a radical idea: a "common fee schedule across all health plans." We asked her to expand on it, and she does so below, clearly and with some deliciously frank turns of phrase, such as: "There should be no more special deals outside of the base fee schedule, which I have always described as 'bags of cash' funneled through to hand-picked providers through various schemes."

The hearings on providers, payers and costs last week were enlightening for what they showed about the attitudes of different participants in the market. Overall, I think providers showed they are willing to lead major changes in how they provide care and how they are paid for it.

I would like to see a similar willingness to change on the part of insurers, and in my testimony at the hearing I briefly touched on what I think some of those changes should be. I believe these changes could eliminate millions of dollars in administrative costs. If all insurers could agree to – or were required to – apply one set of rules to the way they pay providers, we would have millions more available for patient care or reducing premiums.

Let’s start by examining the premise that insurance companies always put forward: that only 10 percent of the health care dollar goes to administrative costs. That only looks at insurers’ administrative costs – it ignores the millions upon millions that providers pay to interpret the myriad insurance rules that determine how much we are paid for each service.

Imagine a sport in which players were expected to adapt to a totally different rulebook every time they played in a different stadium – and that over the course of a season they played in tens, if not hundreds, of different stadiums. On top of that, imagine the referees are entitled to change the rules in the middle of a game. That’s what it’s like for providers trying to interpret how to bill insurers. To keep up with all this takes football fields of billing folks (just to extend the sports analogy) at my hospital, and at every other hospital in the state.

So how do we create a more level playing field? First of all, I proposed the establishment of a base fee schedule for all of the many services provided by doctors and hospitals.

The base schedule would be public, and we might need government intervention to set it, at least at first. I am not suggesting, however, that we eliminate negotiations between payers and providers. Beyond the base rate, payers and providers would still negotiate over “inflators” or payments above (or below) the base fees. Inflators could take into account a variety of factors – teaching status, case mix, Medicaid mix, other factors – that would be up to the providers and insurers to hash out. These inflators would then be applied to the base rate for each service – which is infinitely simpler than how the process works now. While different insurers would have different inflators, the way they apply to the base would be the same.

Inflators would also be made public once they were finalized – adding transparency into the market. I believe this transparency would put a pressure on insurers and providers to negotiate reasonable rates that has never existed before. There should be no more special deals outside of the base fee schedule, which I have always described as "bags of cash" funneled through to hand-picked providers through various schemes. Those practices should stop.

Insurers have been demanding that providers rethink issues as fundamental as how they deliver care. They’ve been asking us to take considerable financial risk on patient outcomes. Providers have been open to doing that, and more. I think it is not too much to ask insurers to take on very doable process changes that could save enormous sums of healthcare dollars. The question is, are insurers ready to play ball?

This program aired on July 5, 2011. The audio for this program is not available.

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Carey Goldberg Editor, CommonHealth
Carey Goldberg is the editor of WBUR's CommonHealth section.



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