The Heart of Fee-For-Service — the CPT code

profitCurrent Procedural Terminology codes (CPT codes) are what makes health care fee-for-service work.  The codes function to increase profits for health care providers.  Fee-for-service is widely cited as a root cause of high cost in the US health care system.  The bottom line is: health care providers work to make money by performing CPT coded services whether the service is needed, whether quality is delivered, and whether a lower cost service would work just as well.

The American Medical Association (AMA) is dominated by surgeons and specialists who do procedures.  When the AMA first published a book of CPT codes in 1966 insurance companies were happy to have some basis on which to pay claims.  In 1983, for the same reason, Medicare adopted the codes.  But, what originally seemed like a good idea, like Dr.Frankenstein’s monster, turned out badly.  

The AMA followed simple economic principles and fractionated the health-care market with more and more codes until there are now thousands.  Every little thing a health care provider can imagine is now a billable service.  Fractionation of a market maximizes profit, and it really worked for doctors but not for patients, insurance companies or the government.

CPT codes in the US have driven fee-for-service to high levels, in fact, that was the purpose.  Now, the question for US health care:  how to get rid of fee-for-service and CPT codes as the gateway to payment?  How to change the incentive system for the benefit of patients and the national budget?

An auto-assembly worker is not paid according to every little procedure — using a wrench (APT code Q70506), installing a radio (APT code F402305) or looking up an exhaust pipe (APT code C403843).  No they don’t use Automobile Procedure Terminology, they get paid by the hour with some incentive pay for quantity and quality of the work. There is no reason health care providers should be paid in a different way.

CPT codes or something like them might have a place inside an organization to assess productivity or simply to know what health care providers are doing.  The old saying “measure to manage” is indeed true.  The mistake is to connect procedure codes directly to payment.  Diagnosis, outcome, and patient satisfaction should have input into the payment equation as well.

The way to purchase health care is in the aggregate, like the price of a car, the whole enchilada, or the total amount of care a person might need for a year.  The US needs a system of care whereby a patient, a business or a government can purchase  health care BY THE YEAR.  The incentive is turned around — a profit is present when the cost of care is lower.

Is there opposition to this idea?  Of course.  Health-care is a huge business.  Reorganizing health care takes different forms in different countries.  In the US the idea is the Accountable Care Organization (ACO).  It’s an organization big enough to actually deliver all the care a person might need in a year and big enough to manage the financial risk.  This is not a Mom and Pop operation, this is a huge business almost like an automobile manufacturer.  We need this type of care, we need cost containment, we need industrial medicine!  The US health care system is like a Dr. Seuss car when we really need a Ford.

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