Archive for category Fee-for-Service

Maryland’s Global Hospital Budgets — a start

marylandmapMaryland and Medicare started a global payment scheme for hospitals January 1, 2014, and data on the program are now being reported (NPR and NEJM).  Some success is noted for reducing unnecessary procedures and blunting the rise in costs for Medicare and the 28 Maryland health insurance companies.

Maryland is a small state but has 6 million residents.  They have had a cost control system for hospitals for the past 40 years — up until now all insurance companies, except Medicare, paid the same amount for any given hospital service — Medicare paid less.

The “Maryland All-Payer Model” adopted in 2014 had 2 basic elements:  1)  Hospitals would be paid the same rate by all payers including Medicare and 2) Hospitals would be paid a global fee rather than the previous “fee-for-service” model.   The global fee is adjusted to some degree by quality targets.  There is no adjustment for number of services.

Maryland healthcare overall was ranked 17th by the Commonwealth Fund within the 50 states and District of Columbia.  But, the hospitals were ranked much lower at 33rd in the category of “Avoidable Hospital Use & Costs”.  The All-Payer Model was designed to target the unnecessary services by hospitals.

The Hospitals liked the plan because Medicare would be contributing more money and they could get the same revenue without driving so hard to perform services (like cardiac catheterizations).   The insurance companies liked the plan because it reduced risk and potentially could reduce cost — they could make more money.

Doctors are not very happy because they make money by charging fee-for-service associated with many of the services (like cardiac catheterization) — fewer services, fewer charges.  Likely, a number of hospital physicians will look for positions elsewhere as services are reduced.

The program seems to be having some effect:  the growth in Medicare service continued to rise but was reduced by about 1% whereas nationally the growth increased by 1%.  From a patient standpoint the rates of potentially preventable conditions in Maryland made big improvements (except for catheter-related urinary tract infections and foreign bodies left in people after surgery which both had a big increase for unknown reasons).

The obvious future direction is to gradually reduce the payments to hospitals — to mitigate a potential huge windfall profit.  Hopefully, quality monitoring will be expanded to make sure the hospitals are not just “studying for the test” and ignoring other areas with less scrutiny.   It seems Maryland and Medicare have taken an important step away from fee-for-service.  Hopefully other states will follow suit.

It is interesting to note that Colorado will have a ballot question next year to move to a single payer for health care in that state.  Similar to Maryland, but circumventing insurance companies all together.  Perhaps we are seeing the start of efforts to get rid of fee-for-service which is a huge driver of excess cost in the US health care system.

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Advance Care Planning — one more CPT code

cptbookThe AMA has 7,800 codes for all types of medical services.  Discussion of end-of-life care has been considered part of routine primary care.  Now, the medical-industrial-complex wants another fee for the service of discussing this topic.

The service in question is “Advance Care Planning“.  Certainly, a good idea — a health care provider should be talking with patients about end of life issues.  We all die, that seems obvious, but someone should ask: “when it does happen where do you want to be, who would you like to be there, and have you told someone about your wishes for medical care at the end?

Virtually anybody can ask those simple questions.  Sure, getting up the nerve to ask the questions is hard for family members.  And, sometimes there is no family to discuss the questions or the answers.  Like other issues of health care, the primary care provider should broach the questions and record the answers and facilitate discussions with the people close to the patient.  It’s not a question that needs repeating at every visit, but periodically as conditions change.    Is the discussion important?  Absolutely.  Soap operas are not where the answers exist.

There is an undercurrent of distrust.  The distrust is because the medical profession seems so motivated by profit they may do unnecessary treatments when death is near.  Thus, to avoid unnecessary treatment a person must clearly state what medical services are wanted at the end of life.

The issue is clouded by the huge shift in the doctor-patient-relationship over the past 10 years.  The doctor who might see the patient in the primary care outpatient clinic is not the one who will see the patient at the care center, or the oncology clinic or be the admitting physician at the hospital.  Unless the patient, family and friends have a clear grasp on what the patient wants the information may be lost or be misrepresented.  It would be incorrect to think the medical record will be universally available — it’s not now and will probably not be that way for decades (if ever).

An equally difficult problem is the “grey area” between care that works and futile care.  “Is this the end?”   The care provider who is asked that question is really on the front line, not the primary care provider who discussed the issue 10 years before.

The elephant in the room is the cost of care.  And, the fact many people do not have the resources to pay tens of thousands of dollars a month for care when their income is just Social Security.  Very few people say “do everything”.  But, can a person with no resources actually say “do everything” and expect that to happen?

The bottom line:  the new CPT codes pay for something a primary care provider should already be doing so the additional cost is not needed.  If the discussion is not happening then it is a case of poor quality primary care.  Paying more never makes low quality care better, it just makes poor quality care more expensive.

An end-of-life discussion with a knowledgeable provider tends to set expectations in a reasonable range.  Satisfaction with medical care is often about meeting expectations, so this is important for the patient and the care providers.  It also should set expectations for friends and family — after the patient dies they are the ones who decide if expectations are met.

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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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Medical Care and Control Theory

sweatshopPiecework maximizes human productivity.  Make more things, get more money.  Garment workers and physicians both have been paid under this system — it’s great if the payment per piece is high but miserable if the price is low.  Because piecework itself is no guarantee of quality inspectors were invented to reject low quality products.  Thus, the little piece of paper in your new shirt pocket “Inspector 23”.

What if you went to a doctor’s office and had to be inspected before the doctor was paid?  You had to have that little piece of paper “Inspector 23” to submit an insurance claim. That’s never going to happen but you get the idea.   The doctor is paid by the number of services but the service should meet a quality standard.

This example is just the tip of the iceberg.  Medicine is discovering process control without much input from the well established engineering field of process control.  It’s sad, and perhaps a little arrogant on the part of medical administrators and law makers, to ignore the extensive work on process control.  People do not like to be considered as little boxes in a system diagram — understandable — but a failure to think in this way is wasting trillions of dollars.  The time for change has arrived.

PieceworkThe black box of medical care is what happens with the doctor-patient interaction.  1) A patient enters the office, operating room or x-ray office then health care happens then 2) the patient leaves.  As it stands now the physician is paid by the number of services performed so the possible process control at points 1 and 2 are wide open.  Nothing is measured, nothing is controlled, and quality is not guaranteed.

Control Theory

Now, consider modern process control with 5 control points, a measurement point and feedback to control the input to the black box of health care.  What is in the black box?  Perhaps just one health care provider.  Or perhaps many health care providers. Instead of a black box it might be a grey box with lots of individual elements.

Parallel SystemPerhaps the box contains whole specialties or perhaps many hospitals within an accountable care organization across many states.

At the highest level of abstraction the feedback loop is intended to minimize cost but at the lowest level the feedback loop is intended to maximize quality.  To make sure throughput is maintained the providers need to be paid by the number of services performed but the flow of patients is choked off if quality is not adequate.

This is rocket science.  But, as Einstein says, a system “should only be as complex as needed”.  Health care is very complicated and at the present the garment industry is not the model the world should be using.  Simplistic ideas of supply and demand are not adequate to make a rocket fly nor to control cost in a health care system.

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More Clinic Visits for Diabetics — use the phone

stringphoneJune 3rd 2015 Kaiser Health News reported the ACA seemed to cause more provider visits for management of diabetes “More Patients, Not Fewer, Turn To Health Clinics After Obamacare”.   This is both good and bad.

The “good”:  more attention to a patient’s condition is likely to result in better diabetic management, fewer complications, fewer hospitalizations and longer life.

The “bad”:  since clinic visits can be billed to insurance, clinics make appointments and make money for each visit.  The payment for visits rather than outcome is expensive and a known problem in US healthcare (fee for service).  Diabetes can be managed over the phone in many, if not most cases — but there is no money for the provider in that approach.  Phone care has a much higher value for the healthcare system and the patient; but, low-cost high-quality (high value) care is not getting the incentive.

The care of diabetics is further compromised by the pharmacy.  A key piece of equipment for a diabetic is a glucose meter.  The manufacturer almost gives away the meter so they can make huge profits by selling the disposable test sticks.  The sticks are not interchangeable, not generic, sold in small lots, each lot sold with a co-pay, each lot requiring a visit to the pharmacy, and the use of gasoline to make the trip.  If you don’t have much money the speed-bump turns into a mountain.

The solution:  every few years mandate a generic test stick that manufacturers of glucose meters must support.  “Uncouple” the meter maker form the test stick maker.  And, sell the sticks in lots that last for at least 90 days, and that are sent to the patient by mail.   Adjust the payment to providers so that they must contact diabetics by phone to adjust medications at least 2 times per month in order to bill for a medium or high level clinic visit.  Also, each provider must obtain patient satisfaction data to prove the adequacy of service.

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Addendum:  Here is a link to an interesting court case about glucose meters

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Urinary Retention — 1 in 10 men over 70

urologybillboardOne ER visit is a red flag — more ER visits for the same problem become an example of  poor quality health care.

Urinary difficulty is something older men don’t like to talk about.  But, 1 in 10 men over the age of 70 will end up in the emergency room with urinary retention — an uncomfortable situation where they can not pass urine.  Urologists are aware of this frequent problem — see the billboard story.  It is a serious problem;  in third world countries it may be fatal.

The usual cause is enlargement of the prostate preceded by symptoms of slow and frequent urination.   Sometimes there are few symptoms until a painful inability to pass urine forces a rush to the emergency room.

The usual medical approach is to insert a tube (a catheter) into the bladder to relieve the pressure, start a medication to help urination, and 3 days later to remove the catheter.  50% of men can then pass urine adequately (for a while).  The quality issue is that 50% have a recurrence within a week — so is another ER visit the answer?

A friend of this blogger landed in the ER a total of 4 times with urinary retention.  Why is the ER the center of after-hours treatment for this problem — once identified as an issue why is the health care system making it a recurring emergency?

The solution is Urologists need to own the problem and provide adequate patient care 24 hours a day once a catheter is removed.  Yes, own the problem, not turn off the phone and let the ER solve it.  Does that mean the urologist must be at the clinic 24 hours a day?  No, but there must be an arrangement for immediate care — no waiting in the ER, no ER charges, no secondary consultations.  An arrangement with a 24 hour urgent care center may be enough but some back-up plan and patient education are essential.

The majority of men with urinary retention end up having a surgery to ream-out the prostate (TURP).  According to healthcare-salaries.com a suburban US urologist makes $500k to $1M each year.  This is another example of the decoupling of cost and quality caused by involving multiple providers with no common financial risk.

A proactive patient who has a catheter removed should ask the urologist “what is the plan if this does not work?”  and “is there some alternative to the ER since you have already evaluated me?”.  At least find out how to get in touch with the on-call urologist!

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High Medical Cost in Winter Havens — unnecessary testing

mctestswithlegend

Snowbirds:  watch out for high medical costs in Florida, Texas, Arizona and California.  According to Elisabeth Rosenthal in the New York Times 2/1/15 “Patients Find Winter Havens Push Costs Up”.  She points out providers in Florida are the worst offenders — the same place notorious for Medicare fraud!

Ms. Rosenthal highlights one patient from New York wintering in Florida who had a checkup for his pacemaker but did not have any new symptoms.  Many in-office tests were ordered by the substitute cardiologist — tests the patient’s regular cardiologist said were unnecessary.

To be very blunt:  cardiologists, and other providers, who order in-office tests make a lot of money from those tests.  Many studies show providers who profit from tests do more tests than providers who don’t profit from tests.  A medical license is not a license to take advantage of patients or Medicare — profit motivation seems to blind some providers to this distinction.

The lure of profit is made greater by a patient not having any new symptoms, not having any record of previous tests, and not having plans for follow-up visits.  It is like the patient has a sticker pinned on their back:  “TEST ME”.   The choice for the cardiologist is simple: either pay the nurse to spend time getting out-of-town records OR make money by repeating tests.  Make money, right!

Suggestions:

  • If you are on vacation and have a sudden health problem your best bet is an urgent care center.  They can send you to a specialist, if needed.
  • If you have health problems and will be spending several weeks or months away from home:
    • Talk to you primary care provider:  they may want you to call in and give a report on the phone (diabetes is a good example).  If so, no office visit may be needed while away.
    • Get enough medication to last the trip.  Or, get prescriptions with refills at WalMart or Target and have the prescription transferred to a store near your winter location.
  • Identify a doctor to see in your vacation area before you leave.  Ask friends or other people who winter in the area for a recommendation.  Call the distant provider office and get a FAX number so records can be sent.
  • If your primary care provider thinks you need a health care visit while you are away then make an appointment and have your records sent before you leave home — also take a paper copy!
  • If tests or surgery are recommended then call your regular doctor’s office to see if they agree.
  • Give any provider you see your regular provider’s name, address, phone number and FAX number (a business card is good).  Request that results of visits, tests or hospitalizations be faxed or sent to them — and make sure it happens.  Fill out a release of information form while you are at the office or other facility.

Bon Voyage!

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