It is difficult to stand by and watch the slow-motion train wreck which is our current health care financing system. The Wall Street Journal reports that Medicare is proposing sweeping changes to hospital reimbursement in keeping with their new emphasis on “pay for performance.”
Medicare has proposed to cut payments to all hospital facilities by between 2 and 5%. This money would purportedly be used to fund an incentive pool which would then be distributed to hospitals showing the most improvement or which surpass certain quality thresholds.
Pay for performance is a philosophy of reimbursement which, ideally, establishes quality guidelines and creates incentives to improve quality by paying more for services which exceed these standards. While this approach has a certain amount of folk appeal, it is fraught with enormous difficulties, not the least of which is the development of the standards themselves, and Medicare and third-party carriers’ obvious conflict of interest as both payer of services and arbiter of what qualifies as “quality” in those same services.
The real intent of these programs is cost reduction, not quality improvement, which can be easily discerned from Medicare’s own statement:
The agency he said the program is designed to be cost-neutral to the government, and could even save money if congress decides not to require redistribution of all the withheld cash.
Gee, I wonder why they would do that? Can you say “earmarked pork”, boys and girls?
It is would seem pertinent that Medicare’s own studies on pay for performance show that it has little or no effect on either quality or cost-containment. The fact that this program does not improve quality, of course, will not prevent the government from instituting it as a blunt club to purportedly improve quality. The train just keeps rollin’ on down the tracks, full throttle. Casey Jones, you’d better watch your speed…
One can foresee a host of significant problems with this particular proposal. 50% of all hospitals had a net profit less than 3.75% in 2005 — and therefore would almost certainly be forced to operate at loss. This will put them at severe financial disadvantage to even implement the quality improvements which Medicare supposedly seeks to encourage. It should be noted that many of these hospitals are smaller facilities serving rural areas, and it seems likely that at least some of these would be required to close, severely restricting access to care for many people in rural areas. For you non-MBAs out there, running a business which costs more money to run than it brings in does not a good business model make.
But let’s for a moment assume a perfect world: spurred on by new government standards, all hospitals immediately improve their quality to meet the new Medicare standards. Therefore, they would get all of their money back, and nobody loses, right? Not so fast. Medicare is notorious for constantly moving the goalpost, and when faced with the dearth of hoped-for cost savings, would almost certainly make the standards increasingly more difficult to meet. The standards will become detached from real improvement in quality — if they ever hoped to achieve this even at the outset — and would increasingly become the bureaucratic nightmare that current documentation and coding standards have become for physicians.
Also unspoken in this proposal are the additional costs to the hospitals of added administrative expenses required to document and report compliance with Medicare’s quality standards in order to receive better (or actually, the same) reimbursement. The net effect would be far more money siphoned from actual patient care into administration and paperwork.
Medicare officials said they would monitor the program closely and adjust it as necessary, and at the same time to expand the quality criteria used to determine whether hospitals earn back the lost revenue. “We want to make sure we’re not causing some unintended or perverse consequences.”
That scraping sound you hear is the moving of goalposts.
The history of Medicare is a history of regulatory tyranny which invariably results in “unintended and perverse consequences.” When your local hospital closes, after this proposal is implemented, be sure to write your Congressmen and local Medicare officials to express your deepest appreciation for their efforts to improve health care quality.
7 thoughts on “Train Wreck”
Health care consumers had better wake up and engage over this issue. Complacency will lead to our undoing.
Better yet, all of us who can, need to be focusing our attention on how to stay out of the system, as much as possible, through diet, exercise and other lifestyle habits and not expect father figure government to be a magic elixir.
I would like to be able to go to the doctor and dentist and get my body serviced every 10,000 miles. When I go to the doctor it is a clinic and if I need more than that… well I just try not to need more than that. I have to query my dentist about costs – last time I had my tooth pulled because I could not afford the root canal to save it. I teach high school and work as an apartment manager and I pay my taxes but I can not afford health insurance – well I could, I had a private policy Blue Cross. But when I realized that it covered almost nothing and I would be better off medically indigent I dropped it. My son has healthy families but as soon as he turns 18 he is out in the cold as I was at his age. I WANT UNIVERSAL COVERAGE AND I WANT IT 25 YEARS AGO.
I’m reluctant to comment here because I don’t want to cross our host, who I sense has opinions way different from mine about how best to address America’s healthcare challenge. I left a comment a couple of days ago at the link left by that first commenter but have yet to receive any reply. Anyone interested can go read that.
My personal take is this: the professionals should be highly compensated according at whatever “market” standards indicate. Physicians, of course, should be at the top of the stack, with advanced, in-demand specialists getting the most. (And I do like Dr. Bob’s idea of their working by the hour just like everybody else.) Next are layers and layers of professionals from specialty nurses and technicians all the way down to housekeeping, laundry and food service workers whose “market” rates should compare with the broader (non-medical) economy.
The administrative overlay, however, is way out of control. The coding nightmare that Dr. Bob has outlined so well, the tons of paper required by insurers, government regs and lawyers, and finally the profits that have to be added to all the rest of actual costs…all this is ripe for trimming or eliminating.
I don’t hear people in uniform and their dependents complaining about the quality of their health care, except for that flap about Walter Reed and the conditions of VA hospitals, those woefully neglected repositories of qualified patients who often have no place else to go, although I personally know two veterans who are quite happy with their care, one of whom is an insulin-dependent diabetic.
This discussion is too complex for a comment thread, but here are some items I have been thinking about.
â–ºShould the sale of health care be a profit-making enterprise?
â–ºHow is dental care different from other types of health care?
â–ºHow important is portability?
â–ºIs it possible (or desireable) to uncouple health care from employment? (I say yes to both, by the way. Do a search for “job lock” and see what comes up.)
â–ºWhile you’re Googling, check out “medical tourism” as well. How do India and Thailand furnish advanced medical procedures priced so low that it is possible to travel half way around the world and still come out cheaper? You think it’s just real estate, lower wages and a differnce in the economies?
â–ºAre insurance compnies being billed for actual costs for services and products or do hospitals add a “mark-up” in order to stay afloat? And remember, the non-profits charge those “market” rates as well…Why, I can’t decide, if they are “not for profit.”
Your pity party notwithstanding, I have much sympathy for you and others who struggle with the costs of health care and health insurance. I see this often in my practice, and treat many of these patients at no cost.
But there is, of course, no free lunch — health care in the 21st century is complex, highly advanced, and very expensive. There’s nearly unlimited demand and very limited resources.
The bottom line is there’s only two options: you pay for health care (directly or indirectly through salary diversion in employee-provided insurance), or someone else pays for health care. Your vote is clearly for the latter.
The inevitable consequence is rationing. Under our current system we ration health care economically — you only get it if you (or your employer) can afford it. When someone else pays for health care, it gets rationed by access. Universal coverage is not universal access.
BTW, the teachers I know all have excellent health care coverage through their school districts, although their salaries are dismal. Something smells fishy to me in your story…
What a great comment — very thought-provoking (especially the first question!). And BTW, you’ll never offend this host by offering differing opinions on how to solve this health care mess.
I may, time permitting, address some of these questions in another post.
Thanks for your input, as always.
The guy may teach at a private school where they have a different set up. Usually teachers will take a cut in pay or benefits to work there, as the kids tend to be better behaved.
If we got rid of the insurance companies and most of the administrative layers and their profits, that money would pay the bills for a lot of uninsured. Also, I read that 20% of all patients use 80% of all resources — let them pay for that crap out of their own private insurance, and give everyone preventative care at a much lower cost. Everyone I know with good insurance runs to the doctor when they get literally a very slight cough — what a waste of resources!
People with money seem to think health care cost are relative over time, and they are not. Used to be, a man could work at a gas station and could afford a small house, car, stay-at-home wife, and a doctor who made house calls. Those days are gone. Minimum wage barely pays for anything anymore, and every decent job requires some sort of degree or trade school.
And more kids are born to parents who are freaked out meth heads, etc, so those kids don’t stand a chance without outside assistance.
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