Doctor’s fees, Medicare and Value

Two interesting reads on controlling costs and maintaining quality of care.

Ewe Reinhardt discusses the problems with our current reimbursement system and his thoughts on changes:

Medicare raised physician fees only 7 percent (an average of 0.75 percent a year), while the Medicare Economic Index (or M.E.I.), which tracks costs incurred by medical practices, rose 34 percent (an average of 3.3 percent annually).

Even so, Medicare’s spending on physician services per beneficiary rose 61 percent, an average annual compound rate of 5.4 percent a year.

The bulk of this increase in medicare spending therefore was on procedures, both diagnostic and therapeutic rather than the evaluation and management. This explains the  low rate of increase in the incomes of primary care people–the ones most of us rely on for management or our problems. Correcting the imbalance in incomes between these doctors and proceduralists is the challenge for the future and is discussed by Reinhardt.

The traditional working assumption had been that, in treating their patients, physicians are impervious to such financial incentives. Many, most likely, are. But a growing body of research has chipped away at the general validity of that assumption – hence the growing disillusionment with the hallowed fee-for-service method of compensating physicians.

He also discusses the Rivlin-Ryan plan for medicare reform:

Under the Rivlin-Ryan plan, the problem of paying the providers of health care would no longer be visible and for government to solve. Instead, it would be the product of private and presumably secret deals between private health plans and the providers – and, indirectly, the elderly, who would be made to bear the risk of rising payments to providers.

Another approach is taken in an article in the New England Journal of Medicine, “What is Value in Health Care” and “Measuring Healthcare Outcomes.”

Achieving high value for patients must become the overarching goal of health care delivery, with value defined as the health outcomes achieved per dollar spent. This goal is what matters for patients and unites the interests of all actors in the system. If value improves, patients, payers, providers, and suppliers can all benefit while the economic sustainability of the health care system increases.

Value — neither an abstract ideal nor a code word for cost reduction — should define the framework for performance improvement in health care. Rigorous, disciplined measurement and improvement of value is the best way to drive system progress. Yet value in health care remains largely unmeasured and misunderstood.

Read the article for the author’s suggestion for incorporating value into the patient care question.

Medicynical Note: Unless we  find a way to incorporate value (bang for the buck) in medicine we’ll spend ever increasing amounts on health care; have more people uninsured as they can’t afford care; and continue on the path to explicit financial rationing of health care–and system failure.

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