Just about every health care reform proposal includes payment reform as an important part of its platform. Most of the proposals come from organizations representing providers. Not much is heard form the other side of the exchange.
Two stories recently highlight the need for payment reform from the consumer point of view.
Number one. My son recently visited friends in New York City. An unfortunate accident landed him in the New York University hospital for two days. He is 23 years old and has his own very good insurance.
Several weeks after he returned home, he received a bill from one of the doctors that treated him in the hospital. Apparently the insurance only paid him a bit more than $200 of the $800 bill. Because he was an out of network doctor, he could and did bill for the balance.
Number two. A Participant called our plan recently. His daughter was travelling with her mother to visit her grandmother in a southern state. She too wound up in the hospital. The family belongs to an HMO and so the HMO paid the Emergency Room bills and the follow on hospital stay. But they are having difficulty with the follow up care. HMOs routinely do not pay for services provided by out of network providers.
These examples represent the most frequent type of complaints that we hear from members and why payment reform should matter to consumers.
Before I explore these two stories more detail, I wanted to outline why providers, academics and some large purchasers are advocating for payment reform.
Generally there are several themes that run through the various proposals and I offer links to many of them here.
- The current system does not properly incent the delivery of high quality care.
- It does not provide adequate incentive or reimbursement for care management, including not just chronic condition management but even longer tem follow up care to episodic care such as joint surgery.
- The current piecework pricing system encourages over utilization of some services and undervalues other evaluative and consultative services.
- There needs to be some sort of reward system for high quality and efficient providers.
While the proponents of these ideas are sincere, I think the proposals mask the real frustration with the current payment system.
Because no one really wants to pay for health care, we all end up paying too much. And too many providers wind up on the short end of the deal. It is the middle men (and women) who make out.
Let’s turn back to my earlier examples. A feature of our current payment systems is the notion of network doctors. These are not network doctors as envisioned in payment reform proposals for more coordinated care, medical homes, etc. No, the only relationship that most of these doctors have with each other is the contract language that they agree to with some third party payer, usually an insurance company. But it could be just as easily a “back office” network manager.
In fact, as my son and our plan participant experienced, providers who have relationships with each other may not have relationships with the same insurance company. Networks today are not about delivering care, they are about getting paid. Because there are so many different payers in the market place each wants the best deal for themselves. That system inherently produces winners and losers. Some will pay more than the cost of service, some will pay less. But who loses?
Providers spend far too much money cutting deals and chasing payments. Payers spend far too much money trying to avoid paying for health care. Consumers too often are caught in the middle of the tug of war without understanding why.
The system screams for a more rational approach.
And while we are at it, why not provide proper incentives for quality care, good care management and appropriate medical care.