If we ever hope to get spiraling health-care costs to come back down to earth, everyone involved is going to have to change how they do business. That means not only Congress, but us taxpayers, the insurance companies, the hospitals, and yes, the doctors.

The other day President Obama went into the Lion’s Den – the American Medical Association – with a message that may not have been greeted too warmly by docs, but is extremely encouraging because it realistically addresses one of the reasons we pay more for care in the United States. Rather than trying to cut health costs by simply paying doctors less (doctors: cue rotten tomatoes), the President said we can save money by changing how we pay them, so that the incentive is on the quality of our care, not the quantity.

Right now, doctors get reimbursed from insurers – whether it’s a private Blue Cross insurance plan or a public Medicare insurance plan – for every office visit, test, procedure or pill. So the more doctors do for you (the more consults, the more return visits, etc.), the more they get paid. This isn’t questioning doctors’ motivations, but it’s just how the system is built by rewarding more treatment, not better results.

“(We have) a system of incentives where the more tests and services are provided, the more money we pay,” the President told the AMA’s Chicago gathering Monday. “And a lot of people in this room know what I'm talking about. It is a model that rewards the quantity of care rather than the quality of care; that pushes you, the doctor, to see more and more patients even if you can't spend much time with each; and gives you every incentive to order that extra MRI or EKG, even if it's not truly necessary. It is a model that has taken the pursuit of medicine from a profession – a calling – to a business.”

By flipping the incentives, many health experts say we can save real money and best of all, end up healthier. If, doctors, labs and hospitals were paid a flat fee, for example, for managing an illness – say a diagnosis of heart disease – then their incentive would be to work together to get you well, rather than each of them maximizing their reimbursements by doing their own thing.

“We need to bundle payments so you (doctors) aren't paid for every single treatment you offer a patient with a chronic condition like diabetes, but instead are paid for how you treat the overall disease. We need to create incentives for physicians to team up – because we know that when that happens, it results in a healthier patient. We need to give doctors bonuses for good health outcomes – so that we are not promoting just more treatment, but better care.

“With reform,” the President added, “we will ensure that you (doctors) are being reimbursed in a thoughtful way tied to patient outcomes, instead of relying on yearly negotiations about the Sustainable Growth Rate formula that's based on politics and the state of the federal budget in any given year.”

And just as important, by building reform around the patient, we’ll finally have real emphasis on preventing disease, rather than treating it. Right now doctors cycle a patient through their office about every 20 minutes. By getting bonuses for good health outcomes, doctors would spend real time with you up front to figure out your lifestyle and how to change it for the better.

Really, when was the last time your doctor had the time to really talk to you about how to get more fiber and less fat in your diet, or how best to quit smoking? Or when was the last time you felt like you were allowed to tell the doctor about that odd cough or your sleepless nights, knowing you were there solely to get your allergy medicine refilled?

Studies show getting more care doesn’t make us better. A recent article by Surgeon Atul Gawande in the New Yorker found just that. Health-care spending in McAllen, Texas, is nearly twice as much as in El Paso, Texas, some 800 miles away, but the folks over in McAllen aren’t any healthier or better off. And Dartmouth researchers found similar results by looking at Medicare spending in different parts of the nation – those living in high-spending areas like Miami (about $16,000 per person) were no better off than lower-spending regions like San Francisco, which spent half that.

It will undoubtedly be a challenge to move our health care system to the practices that work best, and we’ll need the buy-in of America’s doctors to do that. But if everyone is willing to change how we do business by just a little – Congress, insurance companies, doctors and all the rest of us – we might find ourselves with a solid foundation for real reform that brings down prices and get us better quality care.

comments (9)

Comments

1 Posted by Pat Smith at 06/18/09 05:19 PM

Wishful thinking! Been there, done that! Human nature: if you've already been paid, you won't give one more thing/one more minute/one more thought. By "flat fee" you mean HMO - come on, of course you do! And after three years suffering an HMO, I can testify: no one gives anything after they've been paid. NO THANKS!

2 Posted by Tara Daves at 06/25/09 02:11 PM

In principle I agree that care and reimbursement should be patient-centric, not procedure-centric. One must keep in mind, however, that the practice of medicine is not a charity, it is a business. Doctors choose their profession, hopefully, not only because it will allow them to live by giving them a wage, but it also should be fulfilling on many levels.

My doctor, doing my annual exam, noticed that I didn't feel good, and had to take me into a different room, shut the door, and whisper to ask me what was wrong (turned out to be an ear infection causing dizziness)- because her staff is paid to report "unbilled" care to the insurance companies. THAT IS JUST WRONG in every sense!! And I'll be the first to stand on my soapbox and scream, "THE SYSTEM IS BROKEN- FIX IT NOW!"

However, because CONSUMER REPORTS has trained me over many years to look at things from all sides and carefully evaluate the pros and cons of my choices, I REFUSE to stand behind a multi-trillion-dollar plan that I cannot even read or evaluate because it's too ethereal. But I can, with all certainty and conviction, state: "More government IS NOT THE ANSWER!"

3 Posted by John Nill at 06/30/09 12:17 PM

I agree with your comments stated above. As a CPA and a former Governmental auditor, the Federal Govt cannot run anything efficiently. What needs to be done is 1. Cap Malpractice Lawsuits so Doc's are not forced to order unnecessary test to cover their diagnosis. 2. Have the Govt. pay their fare share of existing plans - Medicare and Medicaid which are only pay about 20% of the costs. 3. Fund Medical Schools for more Doctors. In other words. CUT COST with no new level of bureaucracy. CONSUMER REPORTS YOU REALLY MISSED THIS ONE.

4 Posted by Heather Baker-Sullivan at 07/01/09 01:25 PM

Why is CU not getting behind HR676 and S703, or at least asking consumer to urge their reps to get the financial facts on the legislation by demanding an accounting from the Congressional Budget Office?

5 Posted by Therese Peck at 07/01/09 02:24 PM

I agree we should cap malpractice lawsuits but if and only if doctors are willing to police their own profession. What percentage of doctors are responsible for what percentage of actual malpractice judgments? They all pay the inflated premiums for the resulting malpractice insurance. How much of the judgments/settlements for malpractice are based on the need to cover future health care costs, which we all assume will continue to skyrocket.
We can't keep robbing Peter to pay Paul but if we don't correct the whole system so it focuses on health CARE not COST as the primary target we'll never be happy with the result.

6 Posted by Gary Atkins at 07/02/09 02:43 PM

I agree with some of all three comments as of this date, and all has hit some very important points especially with regard to government efficiency. I offer this in addition.

Ex.: The average per session cost (1 of 36) for cardiac rehabilitation in 2005 was $130. Yet CMS only covered $38.10, at the time. Further, you could not charge the patient any more money, bundle any other services together, and required that an MD be present during therapy not on call to the ER that may be only feet away.

None of this is required by the American Association for Cardiovascular and Pulmonary Rehabilitation (AACVPR – which is the peer reviewed guide), including the presence of an MD during these therapies. At the same time, a famous heart center charged an average $124 per session reimbursed by private insurance an average $97 – an expected calculation by most individual coverage.

It is clear that the government policy is to dive to the lowest common denominator eliminating the greatest number of patients leaving the hospital to cover its cost elsewhere. It is little wonder that doctors and hospitals attempt to cover their end not only to protect themselves from litigating predators, but to simply cover cost.

Reform is inevitable, and some mandates may be necessary. But the usual federal government interference may only serve to drive the cost of healthcare up, and to relegate state’s insurance commissioners to that of meter maid.

7 Posted by Joel Phares at 07/04/09 04:52 PM

CR's website is a farce, as implied above. CR does not even address the issue of malpractice (tort) reform. Appropriate comensation for true errors that result in injury will not go away. What needs to be addressed is the mountain of frivolous cases and outright fraudulent cases brought for no other reason than to make money. (I still do not understand why insurance companies do not back this measure. It seems they would have a financial incentive to do so). The fact that Congress and CR are not debating or even addressing the issue shows they are not truly serious about reform, just another band-aid and another intrusion of government into your life. As long as physicians live in fear of rampant lawsuits, unnecessary tests and procedures will continue, in the form of "defensive medicine," higher malpractice rates which get passed on to consumers in the form of copays, deductibles, and premiums. Also, to Ms. Peck, you will never get any meaningful statistics and "police enforement" you seek unless there is a leash on the attornies. Any self-reported hospital or physician statistics become lawsuit fodder no matter what they show. The rhetoric about payment for quality, etc. is just government-speak for reducing physician compensation even more. It declines every year and the "quality payments" are one more excuse. It is political "low-hanging fruit" for Congress to do cut physician reimbusement. The overall numbers of physicians are too few to affect re-election and patients think physicians are overpaid since they are paying so much in the form of premiums, co-pays, etc. I assure you this is not the case but it would take even more space to make this point. That's all for now.
CR shape up and address the politically difficult issues!!

8 Posted by Steve Chwastiak at 07/08/09 09:19 AM

My wife, who is a diabetic, picked up a sliver in her foot, which has no feeling. She went to the emergency room to have it removed. She was told to make an appointment at clinic that handles foot problems. The clinic only saw patients on Friday, 4 days away. They gave her an appointment in 2 weeks. Her foot became very sore even though she normally has no feeling in it. She went back to the emergency room and the doctor hat she had seen caled the clinic to make sure that they saw her sooner. On Friday, the clinic doctor had to lance the wound which was now very infected. On the following tuesday, the sliver was removed but the wound was very large and home visits by a nurse were needed for several weeks while the wound healed. The hospital costs were nearly $8000 and home nurse visits and other costs were another $4000, all for a sliver removal.

9 Posted by Dennis Dey at 08/22/09 10:27 AM

I agree with the comment that scathes CR for not addressing the need for malpractice (tort) reform.

Defensive medicine costs an estimated 30 billion of dollars each year in unnecessary tests and consultations. Many of the tests, consultations and referrals that are so widely critizised as unnecessary are the result of defensive medicine and not greed. Contrary to popular belief physicians are NOT usually paid more "for every pill and every test" they order. However physicians can be severely penalized for every test or pill they DO NOT order because of the allegation of failure to diagnose or treat in the course of a malpractice suit. As we know in some states the settlements go into the tens of millions. A strong incentive for many to "be on the safe side" and "do everything".

Doctors then are rightfully afraid that any bad outcome will be scrutinized by malpractice attorneys eager to point out an ommission. Who can blame them?

Another fact is: even in the most capable hands there will be bad outcomes and as long as there is no tort reform the sick patient is going to be the hot potatoe. This will only get worse as cost cutting efforts attempt to limit referrals and tests.

You can't have reform if you don't address the 400 pound gorilla called the tort system which helps a few attorneys to earn millions while sinking the ship of american healthcare for all of us.

The good thing about tort reform: it would cost nothing and would start saving money immediately without reducing any access to services. And with the doctor's minds freed from malpractice worries the quality of care might even improve at the same time.

I don't know a malpractice lawyer who has ever cured anyone. Think about it, CR and politicians alike. Lawyers (including those working for CR?) and their close friends the politicians don'like to hear it. This however makes it no less true: There cannot be a meaningful health care reform without tort reform.