Posts Tagged lower cost

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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Shared Decision Making — shared with whom?

sharing

What is Shared Decision Making (SDM)?  It is a process for patients to make good decisions about tests, medications, surgeries and just about anything health care providers might suggest.  What it is, and what it is not — some examples:

A patient has frequent headaches and has a visit with a provider.

Scenario 1:  The provider says “a CT scan of the brain is needed, so get that done and come back for a follow-up visit.”  (Old school, doctor knows best)

Scenario 2:  The patient wonders if a CT scan of the brain would be a good idea to make sure there is no brain tumor.  The provider says “sure, the nurse will schedule it tomorrow.”  (Consumerism, do what the patient wants)

Scenario 3:  The provider says “there are a number of options including a trial of migraine medications or getting a CT of the brain.”  Then the provider gives the patient a handout that lists independent sources for additional information.  And, says “I will call you on Monday, after you have had a chance to review the information so we can decide what to do”  (Shared Decision Making)

Group Health Cooperative in Washington State has made a big push to support SDM.  The Group has made information available on the Internet to assist the patient for many common situations.  91% of patients who used the system found it “very important” or “extremely important”.  Click to see an Example of shared decision-making by Group Health Cooperative.

Pros and Cons:

  • The process takes longer than just doing what the provider says
  • Usually the SDM comes to a decision the patient will support, so they will follow instructions and treatments more than an average patient.
  • As long as the information reviewed by the patient is based on evidence based guidelines (well researched advice) then good decisions are possible.  And, usually the decisions are less invasive and less costly.

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