Payment Reform – don’t put me in the middle

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.

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.


2 Responses to Payment Reform – don’t put me in the middle

  1. Country Doc says:

    Many good thoughts here. The current system is completely irrational and administratively top heavy. Physicians are just as displeased with PPO/HMO contracts as everyone else. This is why more and more are rejecting the current model all together and even opting out of Medicare to start cash only or direct medical (concierge/retainer) model practice.

    One more thing to think about. What is the quality health care you would reward? Is it the physician that gets everyone’s cholesterol within the normal range? Is it the physician that has ordered a hemoglobin A1c for 90% of his diabetic patients within the last year? Do you find a way to reward the doctor that spend a few extra minutes with his patient holding their hand while they deal with the loss of a spouse or that spends twenty minutes with a patient trying to get them to agree to get a colonoscopy only to fail? How do you avoid physician’s cherry picking the young healthy and compliant patients?

    Quality health care is not just about the numbers and this will be the downfall of P4P programs. Many quality physicians that focus their care on the underserved will look terrible if you analyze their stats while cold and uncaring suburban doctors will just keep on getting richer.

    • jimmy1920 says:

      I think that P4P metrics should be left in the hands of the provider organizations. Whatever is agreed to, I think that docs should get the same payments regardless of who ultimately pays the bill.
      thanks for your comment

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