THCB UPDATE Get email updates of new posts and industry news.April 10, 2006
POLICY: Can the real HSA fan, please stand, please stand up?
Greg Scandlen commented on the Grace-Marie Turner article, and as he’s a big player in the HSA wars, I thought I’d reply back in the main blog rather than in the comments. Greg and his ex-AMA buddies have their nice little "consumer" organization -- you did realize that a consumer organization should be founded by ex-insurers and doctors, don't you? After all they are the people with consumers’ best interests at heart! (Stop singgering in the back there…)
Greg seems to think that I believe that "every dollar currently spent on health benefits was necessary and efficient." Not quite sure that he's been following this blog closely, such as some of my "criticisms" of physicians, that caused a minor fuss over my use of the term “waste motion” to describe 30% of the healthcare system’s behavior. I of course fervently believe that there’s huge waste in our system, but only a small small fraction of it is in the admin back and forth that happens between insurers and physician offices. That is the part of the “waste” that he thinks HDHPs and HSAs are going to drive out of the system. He is of course wrong, and if he had ever used a HDHP from a major insurer, he’d know.
Unfortunately for the physicians living in their HSA dreamworld, the way that high deductible plans actually work is simply to change who is paying the first few thousand dollars from being the insurer to being the consumer. The fact is that the PPO network and the pricing set up by the insurer is going to continue to be the main vehicle by which assessments against the consumer’s deductible are counted. So the hopes and aspirations of doctors to charge consumers directly without having to submit a claim to the insurer are going to be dashed, unless the consumer is dumb enough to pay up front, and try to get it back from the insurer later. Greg says that “Using an insurance mechanism to pay for routine care is hugely inefficient. It involves massive administrative costs from both the insurer and the provider” and he’s right (Hint: capitation or salaried physician systems don’t have that problem!) But HDHPs are just going to mean that the providers have to come after the consumers instead of the insurers for their money. Unless he really believes that a) consumers are happy to forgo the PPO deals the insurer has cut and pay larger amounts out of pocket, or b) insurers are going to happily count whatever charges providers can get away with against the insured consumer’s deductible, and then be happy to pay any amount above that. No way that’s going to happen….insurers are not that dumb. And if you look in Sunday’s Miami Herald, you see a great example of how this works in practice. And the provider in that case, believe it or not, has it somewhat right:
During the conversation, the billing person mentioned that if Stamm was uninsured and paid in cash at the time of her visit, she would have been charged $125. ''So why can't you just give me the walk-in rate?'' Stamm asked. That wasn't possible, she was told, since they had to go to the trouble of billing her and attempting to collect.
So what are the consumer’s choices? Go out of network, and have the full amount counted against some mythical huge deductible that they’ll never reach. Go out of network and pre-negotiate the cash rate, which won’t be counted against a deductible at all. Or go in-network and take the pre-negotiated PPO rate which they learn from their EOB. The provider will not know whether or not the deductible has been reached without filing a claim with the insurer, and they’ll go through the same bullshit they do now with the insurer deciding to allow the claim or not, and deciding what the patient should pay. Then eventually the provider will have to come after the consumer for their share. So essentially all this movement does for providers is give them the added role of collection agents. Come to think of that, collections is probably a good business to get into!
The alternative is that the insurer will sell a high deductible policy, pay every dollar after the deductible, and just take it on faith that providers and consumers/patients will only send them the post-deductible bill, and that they’ll be scrupulously honest about the bill they’ve run up below the deductible at usual, customary and of course totally reasonable rates. Get real, people. The insurer has to count up to the deductible somehow! And that means administrative waste!
Meanwhile the rest of Greg’s comments are, I’m afraid, as equally muddled.
And first dollar coverage encourages needless spending. This needless spending can be curbed by rationing, or by demand-side behaviors. We tried rationing with managed care, and it works pretty well to hold down costs, but it was pretty unpopular. So now we're trying to affect the demand side -- getting people to make their own trade-offs.
Even his fellow travelers at Cato admit that most of the “needless spending” happens well past the deductible, (not that they have a solution for it). But apparently we’re only going to get at that with by impacting the demand on the first few thousand dollars of an individual’s spending, even though the literature and common sense show that there’s no market mechanism for that, that the reduction in services received is equally for necessary as well as unnecessary services, and that of course this disproportionately impacts those with lower incomes. But hey let’s do that anyway. It won’t make much difference overall. And while Greg thinks that we may have tried rationing via managed care, we didn’t try it properly (perhaps he missed Enthoven’s rants on the subject), and the insurance industry has shown in the last 5 years that it’s much better at risk-selection and raising prices than doing care management. (I’m in favor of rational versus irrational rationing, but that’s a different discussion).
Meanwhile, I’m still fascinated to discover what the HSA promoters really do believe, beyond those in their number who like making money off heavily underwritten, high-margin HDHPs. In her interview with me Grace Marie was going on about all kinds of non-HDHP related activities. Greg says:
HSAs are not the be-all-and-end-all of health care reform. But they are an enormous step in the right direction, and they will help bring about other changes like a demand for reliable information from consumers, greater accountability on the part of providers, and new more efficient ways of delivering care.
And he wants to promote HSAs in Medicare too! The first part of his plan, which is to convert Part B premiums and the deductible for Part A to one larger deductible, may not be too bad an idea, so long as there is continued help for those for whom the increase in deductible would be a real hardship (those with lower incomes but not dual eligible). After all that concerns private spending on Medicare recipients.
It’s the public spending on Medicare recipients that I’m concerned about. As far as I understand the plan, if a Medicare recipient who chooses to moves to a HDHP gets the difference between what they spend and the average, put as cash into their private account. “Any savings to the Medicare program would be converted into a cash deposit to the beneficiaries’ HSA account.” It’s bad enough HDHPs destroying what’s left of the community-rated risk pool in the individual market, and giving employers an excuse to get out of providing health benefits. But that process was well underway anyway, so honestly it’s not that big a deal — not that I’m going to stop calling its advocates on it.
But now Greg wants to remove money from the Medicare risk pool to give it to healthier than average Medicare beneficiaries.
The per capita premium and deposit would need to be risk-adjusted at least for age and geography, much as CMS currently does for Medicare Advantage plans.
Well here as a tax payer I must object. Every time Medicare has split its risk pool so far, it’s basically handed over more money than “sickness” to the private sector plans. And don’t take my word for it (although common sense and the retreat of private plans from the Medicare program when payments were cut in the late 1990s should be proof enough) because the GAO has said so twice. (Read down here for the details). And now Greg wants us to allow the healthy people to pull out actual cash, leaving proportionately more sick people, more demand, and less money in the traditional program for the taxpayer (or as the current Administration's accounting would have it, the taxpayer’s children and grandchildren) to pay for. Thanks.
Funnily enough Greg’s being hanging out with Grover Norquist lately (Apr 4 entry here). That whole notion about drowning the Federal Government in a bath tub must be catching. This goes to the whole notion of deliberately destroying a risk pool, except that unlike in the case of the private insurance market where the poor uninsurable sucker gets stuck with the problem of having to deal with the extra costs, this is one that the taxpayer will pick up. I thought these “conservatives” were in favor of lower taxpayer spending! (OK, I know in real life they just are in favor of lower taxes for the very, very wealthy…but that is their rhetoric).
I would still love Greg, Grace-Marie or anyone to take the challenge of explaining how I’ve got my math wrong (read down in this example) when I say that handing out cash into private accounts from a common insurance pool means that someone else has to pay in to the pool to provide care. It’s an explanation we commies have been waiting for, and we’re still waiting. Just because the private market doesn’t really have large community rated pools any more doesn’t make the theory wrong, and when they want to do this to Medicare, they are talking about a large community rated pool.
And if they don’t really believe that HSAs/HDHPs are the “the be-all-and-end-all of health care reform” what the hell do they believe? They don’t seem to talk about much else. Don’t they have an overall policy solution for the market. Their rivals in the single payer and the managed competition crowd do. At least those two groups are having a rational disagreement about how to cure the same problem, and have been saying the same thing since the 1980s. Of course, in our bizzarro world they never get any attention, and the pro-HSA crowd is ruling our political rhetoric.
April 10, 2006 in Policy | Permalink
Comments
Matthew- both the managed competition and the single payer crowd fail to state specifically how they will reduce utilization. PNHP feel that the 'administrative waste' alone would cover 'the uninsured'. But, as we have talked about here before, the problem is reducing healthcare utilization by the 'high users' of healthcare services.
The goal of CHDP/ HSA should be a move toward transparency... and perhaps the time when (like your homeowners and car insurance) you leave insurance 'out of it' for small expenses. Where is your outrage at the folks who pay cash for small repairs or a new windshield, instead of putting in a claim toward their deductible?
There is a new report (from Deloitte health solutions center) that has HSA increasing at 2.1%, while all other plan types are increasing premiums by over 7%. Time will tell if this is sustainable, but you cannot argue with this fact.
HSAs, like technology, are a tool that can be used to help address the health care system problems. I am copying below, more 'consumer'-friendly concepts from my earlier post.
1. change law so that providers can choose to set prices at, below, or above Medicare rate for medicare services. Make that information available to the public. Competition and human nature would make it that perhaps some very good docs might set their prices higher and some bad ones lower. Also, new docs might start out lower to get more patients when starting up.
that would be real consumerism
2. for the very low income people, healthcare services should be paid for in a tax credit for services provided. Documentation and processing as required for the current tax processor, the IRS. To incentivize, make the benefit indexed to care provided in certain neighborhoods (poor, inner city, rural) to increase competition for caring for people in certain areas.
3. Pass broad AHP legislation and break the oligarchy of the few big insurers that currently exist.
4. Pass the healthcare choice act which would make insurance much more portable.
5. For the top 5 diseases in terms of cost to system, establish baseline care that ought never be given and baseline patient behavior that ought not be tolerated. For example, doctors should not give certain drugs to people with kidney dysfunction and patients with diabetes should never smoke. Benefits (to both docs and patients) should be in part dependent upon making good decisions for care.
doc information should be made public
6. encourage point of care payment for nonurgent medical care which would promote cost disclosure.
7. The VA system ought not be the model for US healthcare. Just ask most veterans. Usually good care, but hardly responsive in most cases.
8. Health courts to increase access of care for those with certain conditions.
Posted by: Eric Novack | Apr 10, 2006 7:00:32 AM
It is also time, I believe, for the monthly addressing of Medicare's 'low overhead'.
1. PNHP calculates medicare overhead as total cost/ admin cost. The Kaiser Foundation report correctly points out that, because, in general the Medicare population is much sicker than the commercial insurance population, you cannot directly compare overhead in this way. Rather, if you calculate overhead as 'overhead per enrollee', medicare overhead comes much closer to commercial overhead.
2. Medicare does not count the admin costs shifted to providers (docs, hospitals) in its overhead calculation.
3. Medicare-related fraud is a problem (just like the states know how to 'game' the feds out of medicaid money using the rules the feds devised, hospitals and providers do the same thing. Medicare overhead would go up if they devoted much greater resources (like commercial insurers) to reducing inappropriate spending.
But I think Matthew just likes getting me going on a Monday morning...
Posted by: Eric Novack | Apr 10, 2006 7:08:11 AM
Great comments Eric (I mean that), but the question is how do you take money out of a large pool of money and then claim that the difference won't have to be made up somehow. This kind of talk from the HDHP true believers suggest more than just a point of debate, but an active campaign to mislead.
Posted by: elliottg | Apr 10, 2006 7:41:27 AM
I think HSA's are unnecessary and serve to muddy the debate, but high deductible plans are sensible. With respect to Medicare, I think it makes sense to combine Part A and Part B and have one large deductible of, say, $2,500 per person with no refunds or deposits into HSA accounts. While I don't know what the real numbers are, suppose 60%-70% of the Medicare population could handle a deductible of that size because they either have the resources to cover it or are healthy enough to not need it in the first place. Another 20% is Medicaid eligible and would be covered by that program. That leaves 10% - 20% who might need some help. As I suggested in a prior comment, if we had an income based means test, taxpayers could pay the deductible for this group on a sliding scale. The subsidy would be tracked by CMS and would become a claim against the beneficiary's estate after the death of both the beneficiary and his or her spouse, if any.
Separately, I strongly support explicit rationing. I wonder if any of the experts on the blog can offer an estimate of how much could be saved on care currently performed that would not be performed under the explicit rationing models used in other countries. On the other hand, I don't support what I would call artificial rationing like limiting the number of hospitals or imaging centers than can buy MRI machines.
Finally, for the high cost cases of say, over $100K, I support case management to provide coordination and, perhaps, push back against care that may be unnecessary or inappropriate but rewards the provider with additional revenue, at least in non-Medicare cases.
Posted by: Barry Carol | Apr 10, 2006 8:13:27 AM
HSAs could be a more viable option if they eliminated the following problem: the huge out of pocket exposure that so many of these plans contain. Many HSA's come with a deductible of $2700 and an out of pocket maximum of $5000, and this is simply too high. Now the Bush administration is proposing to raise the amount that can be contributed to HSAs as much as $10,500 per year.
An option would be to make a $1100, $1500, or $2000 decutible, and then 100 percent coverage. Many HMO policies have a maximum out of pocket of $2000.
However, there is one big fallacy the proponents of HSAs have not yet realized: a lack of real pricing transparency. Try calling up a hospital and get a quote for procedures, and most will not release the information. Despite all the bad publicity about their pricing practices, hospitals continue to gouge the uninsured.
To avoid this, one has to find those doctors who are willing to help their patients that pay cash and give them discounts.
In fact, the best thing any HSA or high decutible PPO plan consumer can do is to pay their doctor's bill upfront, and then submit a copy of the bill and office notes to the insurance company. In most cases you will be paying a lot less. Unfortunately, few hospitals will do this, but there are some good doctors that still care about the health of their patients.
Posted by: Anonymous | Apr 10, 2006 8:20:53 AM
transparency is a problem... but will not be solved by legislation. People and employers will begin demanding better cost information as time goes on with HDHP. I am not sure what the magic number is in terms of market penetration, but it will occur.
As a practicioner, once all of the insurers post prices online, I no longer need to participate, and I can reduce my overhead expenses by setting prices at levels I deem reasonable. If that idea became widespread, then costs would decrease for most Americans.
Elliot- perhaps a THCB reader who is an insurance underwriter will help me with the answer. But here is a component-- insurance companies are diversified with regards to their lines of business and sources of income (just look at the new UHC and Blues banks). Underwriting is done across product lines. In some years, payouts will be greater than others and costs go up for everyone. Insurers make money in the end by taking income (premiums, other sources of income, investment income) and subtracting payouts and other costs.
By looking at payouts, the underwriters help set prices in a way to perhaps guide people toward certain types of plans.
The market will help determine what those costs are. HDHP are one tool. I do not think that a one size fits all system is the answer.
National single payer will devolve, alomst immediately into a match between competing special interests for dollars for treatment dollars (as apparently is already happening in Massachusetts).
But I would like some more input from industry experts. And a way to prevent the problem I just mentioned in the case of 'single payer'.
Posted by: Eric Novack | Apr 10, 2006 9:08:24 AM
Eric, you are wrong about the budget limiting process of single payer and Managed competition...as I've explained here before. I'll be back to explain AGAIN later (after I finihsed my newsletter and walked the dog!)
Posted by: Matthew Holt | Apr 10, 2006 9:31:26 AM
Matthew, I’m much more preoccupied with the practical ramifications of HDHP than the policy argument; not because I don’t think it’s important, but because unless you, the consumer, are willing to invest a current CPT (Professional Edition) and bone up on the National Correct Coding Initiative, you're going to over pay. The claims that have come across my desk are rife with errors, another patient choice, perhaps: either pay the overcharge, fight it, or have it pop up on your credit report. The entire argument i.e. transparency is a sham, and there is little doubt in my mind that, Consumers for Health Care Choices, “the voice of the consumer,” knows about this rip off from the get go. They’re just hoping the consumer won’t catch on.
I’ve responded more fully over at http://www.signalhealth.com/node/640
Posted by: Lin | Apr 10, 2006 9:31:27 AM
OK, time for Eric rebuttal
1)>>"both the managed competition and the single payer crowd fail to state specifically how they will reduce utilization."
Maybe PNHP doesnt tell the whole truth, but they're way closer to doing that than the HSA crowd, and their admin savings argument might well be enough to cover the unisured in our current system. But here's how single payer works in reality. The government sets a total budget for health care, after the various political fights between the factions supporting more money for defence, education etc, etc and/or lower taxes. That amount is translated either into a global budget (UK), or a fee schedule which is either capped (Canada) or proportinally reduced as more servies are provided (Germany). note that in tough times the total amount provided to the healthcare sector CAN be reduced in this scenario (as in both Japan and canada did in the 1990s).
Managed competition hasnt been tried anywhere in a global sense, but the theory says that individuals will buy annual care from a choice of HMO-like insurance plans/provider alliances (think Kaiser) that all provide the same mandated benefits. (No underwriting, all using community rating, risk adjust ment between plans, etc, etc) If you want a better class of waiting room from your plan, you pay more for your annual premium. But once the money is paid into the plans, that's all they've got to work with, and they will align their incentives with their providers. The plans that provide the most cost-efficient care within the Federally mandated benefits will see their market share increase compared to the others, giving every plan/provider organization the incentive to provide the most cost-effective care (usually by improving clinical processes). Now of course this will need regulation and oversight to make sure that plans aren't scrimping, but it's no conicidence that Kaiser is one of the few provider organizations that cares about the cost-effectiveness of new technologies and new services.
So managed competition doesn't say how much money should be spent on health care per se, but it creates the incentives that make plans/providers both respond to consumer demands (the criticism of single payer) and reduce the amount of unneccessary care and muda (the criticim of FFS and HDHPs).
>> 2.Medicare does not count the admin costs shifted to providers (docs, hospitals) in its overhead calculation.
This is true, but NEITHER DO PRIVATE PLANS. Eric knows full well that the adminstrative BS of dealing with private plans is just as great as that of dealing with Medicare, and with the private plans 20% of the dollars have already got stuck at the insurer as opposed to Medicares 3% (or 9% if you want to count each medicare "life" as 3 commercial "lives"). And it's not just Eric that knows this. This Health Affairs article last year said that "Overall,billing and insurance-related functions represent 20–22 percent of privately insured spending in California acute care settings."
So not only are the costs of administration much greater at the insurer level, they are at least equally bad at the provider level.
Now OF COURSE Eric and even (believe it or not) Sally Pipes are right that if it's to be a successful universal system the currently written Mass law will devolve into some type of government underwritten system. That's because someone needs to do the cross-subsidization required for universal insurance, and asking employers to pay $300 a year isn't anywhere near enough, and ony a small fraction of the uninsured (maybe 20%) can genuinely afford the $5,000 a year it costs.
And of course whatever system we have there will be continued political war over what we pay for what to whom. But in a genuine universal care system we won't be sticking it to people based on ability to pay, but as Elliot points out, we'll ration care based on need, and have a more efficent system that can deliver relatively more care for relatively fewer dollars--after all that's what happens everywhere else--as Anderson and Reinhardt showed in that famous Health Affairs article called It's the Prices, Stupid"
Posted by: Matthew Holt | Apr 10, 2006 11:33:24 AM
Now you're talking Matthew!
PNHP (I'll put Rashi Fein's proposal in The Health Care Mess into this category- read final chapter) creates a new bureaucracy that will easily outstrip any savings from the admin side.
And 'need' is very interesting, as those in favor of single payer or managed competition are just as unwilling as the other side to broach even a single disease or condition that will no longer be covered or have firm limits.
So- where will you cut back? obesity? smoking? sky divers? alzheimers? diabetes?
As they say in 'Monsters Inc.' - "your silence is very revealing'.
Propose a global budget. Tell me what you will do with the capital purchases for equipment that hospitals and therapists and doctors have made? Tell me how you will handle 'alternative therapies'-- from acupuncture to chiropractic? dental care is also important when it comes to health-- will that be included? Will you change the medical liability system? How will you fund medical education?
I will make a case that many CDHC promoters, in admitting that it is a piece of the puzzle, are being MORE honest than some in the single payer crowd.
I know of Kaiser's success in California and some other markets. If it were really a no-brainer, then it would have expanded further over the past 40-50 years.
I remain steadfast in my belief that big government bureaucracy is not the answer to healthcare. Do you want the decisions for funding for diseases put in the hands of senate and house subcommittees controlled by members of either, or any party?
Posted by: Eric Novack | Apr 10, 2006 12:14:09 PM
"While I don't know what the real numbers are, suppose 60%-70% of the Medicare population could handle a deductible of [2,500] because they either have the resources to cover it or are healthy enough to not need it in the first place."
La, la, la, all my friends have money, so I will suppose that everyone has money. Healthcare policy is easy when you make up your own facts!
The median income for a woman over 65 is $12,080. For men, it's just over $21k. Most old people are far from the "$2500 in disposable income" end of the distribution and much closer to the "eating cat food" side. They're poor.
And they're not automatically eligible for Medicaid just because they're pathetically poor. I know it makes you feel better to believe they are, but the fact of the matter is that they are not. Elibigility requirements vary from state to state and from condition to condition--74% of federal poverty is the magic number in most states. You know what 74% of poverty is? $6900-9200. And before you get into "but that can't be true! My well-off friends have plenty of parents on Medicaid," I'd like to point out that genuinely low-income people don't have money to pay eldercare lawyers to make them eligible for Medicaid. Your friends are lucky they're wealthy enough to hire experts who can make them look poor.
For some reason, in spite of all evidence to the contrary, spoiled rich people persist in believing that when poor people get sick, they should have to pay outrageous sums of money in order to stop being in pain. In spite of all evidence to the contrary, spoiled and ignorant people persist in believing that it's somehow the mark of responsible policymaking to take a hard line on sick people, and make sure they're bankrupt as well as in physical pain.
I am being very hard on you. This is because the policy you are advocating is unworkable and cruel, and I want you to be ashamed of it. People with an inkling of knowledge about the medical system and the world that most Americans live in will think you are either a horrible human being or an out-of-touch idiot if you advocate this policy. If you have any human decency, you should be very upset with the people who are telling you that this policy is the least bit responsible or reasonable.
These high-deductible plans destabilize our healthcare system and, more importantly, inflict incredible human suffering in order to solve an utterly insignificant problem--the problem of poor healthy people who go to the doctor too often.
"Risk-segmentation," "personal responsibility," "underwriters help[ing] set prices in a way to perhaps guide people toward certain types of plans," are all ways of saying we need an inefficient healthcare system whose primary benefit is that it works really well for the well-off by screwing over the sick and anyone who may at some point in their life miss a single insurance payment. They are spouting a pack of lies that the way to fix our healthcare system is to keep poor people paying premiums, but out of doctor's offices. It's vile and it's a lie.
Posted by: theorajones | Apr 10, 2006 12:17:44 PM
Eric.
I am very very dubious that the huge bureacracy you're so scared off can take anything like the amount of money out of the system that private insurance currently does. The reason that PNHP uses the tag line that Blues of Mass has more admin staff than the whole of the Canadian health system depite having one sixth the population is because it's true! And with your views on insurers you cannot possibly believe that they are run for the sake of the overall systems efficiency.
But you've got to stop on this "who makes the decisions"
As you know, every society makes the decisions that you are talking about in its health care system every day. Even this one! Medicare covers some things, doesn't cover others. The UK pays for some stuff, not for others. All of these decisions are made in some political way by some combination of private/public entities....
and while some of the proponents of various causes won't use the rationing word, I will. We need to cut prices and services, and rationally ration the care we give (and I know that we both agree that excessive end of life care is a place to start)
However the difference between us is that I want to either devolve this decision to the medical profession under a global budget OR have a national IOM type body do it, as happens with the NICE in the UK.
The good news is that there is so much bad care process in the US that we can still provide equally good or better outcomes for less money without having to restrict diabetics, snowboarders or paragliders from getting access to health care. But that of course depends on driving out the inefficent care, a la Wennberg's work.
Posted by: Matthew Holt | Apr 10, 2006 12:47:57 PM
Theora- I'd offer you a valium, except that the government decided that all benzodiazepines should not be covered under medicare part D, since they are dangerous for the elderly.
I think you were combining my post and Barry's, so I am not sure which one (or both) of us is a horrible human being or an out of touch idiot. Please specify.
Perhaps you want to tackle my earlier post questions? Since I presume you do not consider yourself in the aforementioned category of human beings, what would you cut? And please do not say that there is more than enough money to give everything to everybody forever (that's what they're doing in France, where there is a 22% unemployment rate for those under 26 years old).
Posted by: Eric Novack | Apr 10, 2006 12:54:08 PM
Response to theorajones:
I am not going to engage in name calling, but I do want to make the following comments:
First, I said up front that I do not know what the actual numbers are as to the percentage of the Medicare population that would need financial help in satisfying a $2,500 annual deductible. I have also said in previous comments that I am not a practictioner in the healthcare field. That said, any comments I post are offered in good faith with a genuine interest in learning more about this important issue that I am keenly interested in.
Even if the actual percentage of the Medicare population that would require financial aid is closer to 60%-70% vs 10%-20%, I still think it could be beneficial to the system overall in making people more sensitive to the fact that resources are finite. Furthermore, if I did not make it clear previously, the $2,500 deductible is also the out of pocket maximum as I would have Medicare pay 100% of covered costs above $2,500. Therefore, the sickest 10% of the population that accounts for 70% of the cost in a typical year would actually be better off financially than under the current system. Of the 90% of the elderly that account for only 30% of program costs, millions of even low income people are medically healthy and will not consume much in medical resources.
Second, the income statistics cited by theorajones do not give anywhere near a complete and accurate picture of the economic well being of the elderly, especially compared to other segments of society.
Take, for example, a reasonably healthy elderly couple that owns its home free and clear. Approximately 75% of the elderly are homeowners and most of those own their home debt free. Assume their children are fully grown and on their on, and they are retired so they no longer have job related expenses like commutation, lunch and dry cleaning, etc. Freed of all these expenses means they can support a middle class lifestyle on a far lower income than a young family with a large mortgage, children to feed and educate, and job related expenses. They also are not paying the 7.65% (employee share) payroll tax on their social security, pension or investment income. If they so choose, if retired, they have the option of moving to a retirement community where there may be few job opportunities but plenty of very low cost housing options.
While the statistics cited indicate that about one-third of the elderly rely almost solely on social security for their income, 67% have other resources from pensions to investments to jobs. With respect to investment income, in today's low interest rate and low dividend yield environment, One could have a balanced portfolio of 50% stocks and 50% Treasury bonds or savings certificates of $250,000 but throwing off only $7,500 annually in investment income. Add in homes which, especially on the east and west coast could easily be worth $300-$500 thousand. Thus, it is quite possible (and probably not uncommon) to have substantial assets but modest cash income. This is why I don't think it is unreasonable to make any subsidies to help pay the deductible an eventual claim against the estate. If the estate is non-existent or even modest (say, <$100K), no repayment would be required.
If you want to suggest that my approach is unworkable or even idiotic, fine. What's your solution to the problem of rapidly escalating healthcare costs?
Posted by: Barry Carol | Apr 10, 2006 4:21:11 PM
"What's your solution to the problem of rapidly escalating healthcare costs?"
It seems to me, as a physician, that there are really three different healthcare systems, each with different economic imperatives and that any attempted solution is doomed to fail if it does not take these three different systems into account. The three systems are:
1. well care involving regular office visits, screening tests, preventive care, etc.
2 catastrophic care: auto accidents, inherited diseases, cancer
3. end of life care: care for people who have no hope of recovering. For example, senile dementia never gets better; it only gets worse. Providing complex medical care to these patients is extraordinarily expensive.
In the well care health system, needs are predictable and limited. A variety of financing systems would work and markets can operate as envisioned.
The catastrophic health care system has predictable needs (how many will have accidents, how many will get cancer), but the costs are astronomical and rising all the time. This is where health insurance really operates like insurance, however. Anyone could be struck by these problems, virtually no one could pay out of pocket and all of us want to be protected. The problem here is that new technology is extremely expensive, and there is essentially no limit as to what the costs might be. Even so, parameters could be developed to control costs. We could make a decision as a society that there is a limit to how much money we are willing to spend to save one person.
In the third healthcare system, though, all bets are off. The cost of this system is staggering and growing by leaps and bounds. No one gets better, extraordinary amounts of healthcare resources are diverted and essentially no value is provided. Billions of dollars are spent simply making hearts beat and lungs function.
It is this third healthcare system that is bankrupting us and fixing it will require rationing care. In other words, we have to draw the line beyond which we will not continue to spend money. It isn't "end of life" care per se; it is "prolongation of life" care beyond the point where there is any hope of recovery.
Each system will require a different method of cost control. The well care system can operate like a free market and most people can pay out of pocket.
The catastrophic system should cover everyone. Virtually no one can afford the costs of cancer of a serious accident.
The "prolongation of life" system can only be managed with rationing
I note that none of these systems can be ameliorated by the received wisdom of healthcare administrators --- that there is waste that can be pruned from the system.
Posted by: Amy Tuteur | Apr 10, 2006 5:07:55 PM
Bravo Dr. Tuteur! It sounds like what you call end of life care is even more costly than I thought.
If the Social Security Administration can very efficiently send us a statement every year telling us how much we have paid in taxes so far and what our projected benefits might be, why can't Medicare make executing a living will or advance directive part of the process of signing up for Medicare at age 65? Why can't it be a requirement upon entering a nursing home or shortly thereafter?
Failing that, as I have suggested in the past, doctors should have wider latitude to apply common sense depending on circumstances without having to worry about being sued.
I also think it is sensible, as they do in the UK, to do a better job of quantifying how much a procedure or drug therapy is likely to cost per what health economists call a quality adjusted life year or QALY. In a world of limited resources, should we really be giving advanced alzheimers or dementia patients kidney dialysis or $50,000 biotech cancer drug regimens?
With healthcare already consuming 16% of GDP, the highest in the world, it may not be much longer before taxpayers say ENOUGH and demand, not a single payer system, but a thorough reexamination of our strategy and approach toward end of life care.
Posted by: Barry Carol | Apr 10, 2006 5:53:00 PM
I am glad to see someone's read a bit of the literature on healthcare management and policy. Steve Beller thought I should talk a little about this topic, but Barry has beaten me to it. But I am glad it was he.
I think $50K/QUALY had been the threshold in the UK.
A year in a nursing home costs $150/day X 365 days/year = $55K/year here in the USA and might provide .5 QUALY. I think our society's judgement on this will run in the neighborhood of $110K/QUALY. Maybe a bit more or less, but about this.
How about a "transparent" contract that says "We will provide medical treatments up to $125K/QUALY" for $500/month premium"? This has the advantage of being able to keep up with technology -- as new treatments get cheaper, they get covered "automatically". It has the disadvantage that no treatment that hasn't got at least decent data on it will be provided. Or might not be. You will be "denied care" when it comes to experimental treatments. But it seems to me better than making a list of what will and what won't be covered.
What does the transparency crowd think of this?
t
Posted by: Tom Leith | Apr 10, 2006 7:27:40 PM
Transparency crowd thinks that it is a grave, immoral and abominable depravity to charge vulnerable individuals x3, x10 or x100 of what insurers pay. I do not want to hear anyone who opposes transparency say "our hearts are in the right place".
Get a grip of your cost structures and learn to price.
Posted by: The Medical Blog Network | Apr 11, 2006 1:49:23 AM
Tom, I think up to $125K per QALY for $500 per month premium sounds fine and reasonable to me. It is long past time that we tried to establish some rational construct for allocating scarce, finite resources. I might add the caveat that wealthy people should probably be allowed to spend their own resources on whatever they like (which could have some research value in areas like experiemental treatments) as long as they don't crowd out the ability to provide more cost-effective treatments to people of average means.
Keep those posts coming. It is obvious that, unlike me, you are an expert in this field, and I'm learning a lot quickly from you and numerous other posters on THCB.
Posted by: Barry Carol | Apr 11, 2006 2:06:05 AM
One of the things I find most distressing about some of these discussions is how much they focus on "economic man" and how little they focus on actual people. The issue of QALYs at the end of life is a case in point.
The decisions about rationing care at the end of life are moral decisions, not economic decisions. The issue is not how we can derive the most benefit from the money we spend on healthcare; the issue is how can we distribute limited resources with the most JUSTICE.
A just distribution of healthcare dollars means that we must give everyone a chance to reach the age of 80 before we give 80 year olds the chance to reach 90. Justice dictates that our limited healthcare dollars must be spent on child health before elderly health. It means that our limited healthcare dollars must be spent on those who have the power of cognition before it can be spent on those of have lost such power.
Justice also dictates that we must consider the problem as if we (administrators, doctors) are in a Rawlsian "original position" in regard to healthcare insurance. All too often we operate with the knowledge that we have great health insurance, the $5 co-pay for your brain surgery insurance. How tenable would your ideas about healthcare financing, QALYs, etc. be if you knew that you would actually have to live under that system?
Posted by: Amy Tuteur | Apr 11, 2006 4:15:42 AM
Dr. Tuteur, I'm in general agreement with most of your QALY post, though I suppose reasonable people could have some disagreement about how to define social justice. I, for one, would feel comfortable living under a QALY system as long as the cost part of the equation were calculated at Medicare or insurance company contract rates and not chargemaster rates (comment meant to be serious, not humorous).
I completely agree with putting children ahead of the elderly and giving people a chance to live to 80 before 90. I think that issue could be handled by valuing even a healthy year beyond age 80 and something less than 1.0 QALY and a year beyond 90 at a steeper discount to 1.0. With respect to the cognition issue, the same answer applies. Maybe a life year for a patient with advanced alzheimers or dementia should be valued at 0.1 QALY or even zero.
I know many people are extremely uncomfortable trying to assign numerical economic values to human life. However, if the objective is to provide as much useful healthcare to as many people as possible at a cost that the society can afford and sustain, I think something like the QALY approach offers the best hope of approaching that goal.
Posted by: Barry Carol | Apr 11, 2006 6:04:12 AM
> I think up to $125K per QALY for $500 per month
> premium sounds fine and reasonable to me.
It may or may not be reasonable -- I'd have to do more research.
I was asking about whether it looks transparent. If an Enthoven/Holt "standard package of benefits" were presented in these terms, do you think healthcare consumers could be educated to understand what they have bought? I realize this is orthogonal to the question of price transparency at the case or procedure level, but Dimity already knows how to solve that if he's really interested doing something besides throwing bombs.
> A just distribution of healthcare dollars
This has to do with whose dollars they are
> means that we must give everyone a chance to reach
> the age of 80 before we give 80 year olds the chance
> to reach 90.
This has to do with the allocation decision, and the amount to be allocated. QUALY drives strongly in the direction you want. Pre-natal care and immunizations are cheap and their effects are felt for "80 years". They would get funded first so to speak. Liver transplants for 80-year olds are expensive and their effects are not likely to be felt for five years. They would get funded last, if at all -- there might not be this many "healthcare dollars" to distribute.
> The issue is not how we can derive the most benefit
> from the money we spend on healthcare; the issue is
> how can we distribute limited resources with the most
> JUSTICE.
> Justice also dictates that we must consider the
> problem as if we (administrators, doctors) are
> in a Rawlsian "original position" in regard to
> healthcare insurance.
Who says "justice" and "distribute limited resources" are in any way related? Rawls doesn't -- he wants to set up a system of laws that do not a priori preclude anyone from acquiring resources. And Rawls very much insists on a view of man as Homo Economicus. For him, altruism is but one of many values to be considered, and might not be the most important. I would have expected you to bring up Cohen or Dworkin or Sandel since they are more likely to see healthcare as a sort of "social good" and rather less like a service for sale strictly.
> Maybe a life year for a patient with advanced
> alzheimers or dementia should be valued at 0.1 QALY
> or even zero.
Hospice should never be subject to the QUALY calculation. Everyone, no matter how bad off should be kept warm, clean, hydrated, and fed so long as the body is capable of absorbing the nutrients. This is the great moral question of our day -- whether there is anybody who should not have nursing home care. A liver transplant is another question. Even a ventilator, in my view. I used nursing homes as a quick data-point to figure a minimum, that's all. If "we" are going to pay for nursing home care (and I think our society must, but not on Rawlsian grounds) then that seems a useful datum.
> How tenable would your ideas about healthcare
> financing, QALYs, etc. be if you knew that you
> would actually have to live under that system?
I am living today under a much worse system, and millions of people live under a system much like the one I have very briefly and crudely sketched. Apparently they like it pretty well.
Can you describe a system other than "trust each doctor to make the Utilitarian Calculus correctly for each and every act available to her at each moment"? Under what circumstances will you "deny care"? If people have a "right to healthcare" how will you avoid being sued when you do deny care? Can you reduce your methodology to the language of a contract or statement of policy so that we may have this Practically Perfect judgment everywhere and always, be able to predict the required revenues, and be able to spot the occasional self-interested doctor?
It seems to me Dr. Tuteur that the only system you are willing to work in is the one that gives you total autonomy and requires of me an open-ended committment to pay for (in an oligopolistic market!) whatever services and supplies you say will benefit your patient. These days are over. We had a system like this until 1984 when, after two or three decades of abuse, we partially fixed the price term in the equation. Now we must work on the quantity term, and we must be able to answer the questions I have asked above. Finally, it must be sufficiently understandable (whether done publicly or privately) to survive our political process.
t
Posted by: Tom Leith | Apr 11, 2006 8:54:11 AM
"It seems to me Dr. Tuteur that the only system you are willing to work in is the one that gives you total autonomy and requires of me an open-ended committment to pay for (in an oligopolistic market!) whatever services and supplies you say will benefit your patient."
On what basis do you say that? As it happens, my personal preference in single payer.
Apparently this is also part of the "received wisdom" that animates healthcare administrators. This wisdom is wrong on almost every count:
Doctors do not want total automony. They only want autonomy in decisions for which they are legally liable. So, for example, if you want to limit access to a specific trial or treatment, you must put your money where your mouth is and take legal responsibility for it. I notice that precisely zero administrators, consultants, etc. are willing to take legal responsibility for their healthcare financing plans.
I certainly don't advocate unlimited spending on healthcare or unlimited payment on your part. My comments above make that explicit. I strongly believe that treatments that complex and expensive medical care at the end of life must be stringently rationed.
I'm a physician and not an expert on Rawls. However, I invoke the "original position" to mean that the people who make decisions about healthcare should act as if they are the people who might have the worst access in the system and plan accordingly. They ought not to be people who have access to terrific healthcare and are simply planning a system for the "less fortunate."
"Who says "justice" and "distribute limited resources" are in any way related?"
Not me. What I said is that limited resources must be distributed in a just way, not in a way that maximizes utility. There are many ways to maximize utility, only a few of them are just.
Finally, I am struck by the hostility toward physicians. It's surprising and disconcerting because doctors ARE the system. Everything else is ancillary. I don't mean that doctors are better than everyone else, just that the healthcare system cannot exist without them. I would think that the last 20 years of healthcare administration would have made administrators, consultants, etc. a lot more humble. You've been given free hand to do everything you wanted and you have not accomplished any of your central goals; healthcare is more expensive, access is less available and dissatifaction with the system has increased.
Healthcare administrators should give serious thought to the possibility that their central premise is completely wrong; there is not "waste" in the system that can be pruned. They've tried and failed; it's time to move on.
Posted by: Amy Tuteur | Apr 11, 2006 9:39:36 AM
Regarding Tom's question abut whether consumers could be educated to understand the benefits package they bought if structured in QUALY terms, I think they could be. It would probably require some hypothetical but real world examples that relate age to required treatment to cost including a couple of examples under which care would likely be denied. Also, examples of how the QUALY value is adjusted depending how many ADL's the person cannot perform without help, if any, and whatever other factors may be relevant.
For price transparency at the procedure level, if Medicare is setting price expectations in the market now and insurers are bargaining up from Medicare rather than down from chargemaster, it seems reasonable for hospitals to lower the chargemaster rate to something like 10%-20% above the private insurance level and then be prepared to offer a courtesy 10%-20% discount to self-payers who pay promptly or quietly and unofficially inform self-payers that they are only expected to pay at the same rate as the insurers if that's what they need to do to avoid upsetting the insurers yet treat self-payers fairly.
Posted by: Barry Carol | Apr 11, 2006 10:51:43 AM
Thank you for settling the centutries old quest to define justice by simply announcing that justice demands the type of health care system you desire.
Posted by: Alex | Apr 11, 2006 12:25:56 PM
I did not say justice requires single payer. What I said is that I see precious little discussion about justice when it comes to healthcare financing, and much more talk about maximizing utility.
What upsets and frightens me is that I see precious little discussion about PATIENTS and how the administrative decisions affect them.
The fact is that heathcare "administration" has made healthcare worse for patients. I'm not talking about the administrative nightmare that is healthcare, although that is extremely burdensome. I'm talking about the fact that you can't get a nurse to help you in a hospital unless you are having a cardiac arrest. I'm talking about the fact that seeing patients more "efficiently" means spending less time with them, time that would be spent answering questions, consoling, etc. The patient experience is demonstrably worse, and we haven't controlled the cost of healthcare or increased access.
I submit that the current paradigm of healthcare reform needs change. Ask anyone who has experienced a serious illness recently, and they will tell you that the healthcare system is failing in its basic mission. The paradigm must shift to rationing care and away from increasing "efficiency". Patients are suffering and that should be everyone's first priority.
Posted by: Amy Tuteur | Apr 11, 2006 1:00:32 PM
Bravo, Amy.
Administrators and wonks of all shapes need to be reminded daily how their decisions affect individual patients/consumers and physicians, and how lucky they are to not be legally liable for what they do every minute.
To Tom:
"Packages of benefits" are not mutually exclusive with fair line item pricing.
Transparency of a package means being clear on what is/is not covered before it is purchased. The problem with packages is that devil is always in details (this drug but not that one) and insurers always look for ways to back out of their commitments based on some fuzzy contract language. Which is precisely why they are so tightly regulated. But they should have a duty to explain to consumers what they are selling, what is in and what is out.
Maybe the right approach for packages / insurers is transparency of decision-making / policy-setting. But this could be even harder than line-item transparency. Price is a number. Policy is something that can be mis-understood and mis-construed.
Posted by: The Medical Blog Network | Apr 11, 2006 1:26:34 PM
"Finally, I am struck by the hostility toward physicians. It's surprising and disconcerting because doctors ARE the system. Everything else is ancillary. I don't mean that doctors are better than everyone else, just that the healthcare system cannot exist without them. I would think that the last 20 years of healthcare administration would have made administrators, consultants, etc. a lot more humble. You've been given free hand to do everything you wanted and you have not accomplished any of your central goals; healthcare is more expensive, access is less available and dissatifaction with the system has increased."
That's a loooong quote from your post, and I quote it because I think it is worth reading and rereading.
I agree with you 100%.
What I would suggest is that the "administrators, consultants, etc." are not in place solely because they walked in one day and said hello. They are there in large measure because of a vacuum of physician leadership on these issues over the past 40+ years. In fact, a too-typical response by physicians to businesses that complain about rising costs is still a shrug and a bill in the mail. (I'm a benefits manager for a company that spends in excess of $200 million annually on health care. This year, anyway.)
It only took Moses 40 years to get out of the wilderness (*). OK, so health care costs are more difficult. But it would be nice to have more constructive help from physicians. We should be allies because our employees are your patients.
(*) Yeah, I know, Moses never actually made it out of the wilderness.
Posted by: John Fembup | Apr 11, 2006 2:32:20 PM
John- I agree. I say on my show regularly (and to my patients in the office) that one of the most pernicious things doctors can say is "I just want to be a doctor".
Being an active player in policy matters.
Pretending you do not care about the finances of the system until you expect to be paid for your services, does not, and will not work.
Excellent Moses reference so close to Passover!!
Posted by: ERic Novack | Apr 11, 2006 2:50:58 PM
Following is my attempt to summarize this thread using snips and drawing conclusions.
The thread focuses on comparing 4 economic models for providing healthcare coverage and controlling costs:
1. HSA/HDHP
PRO
•Greg Scandlan: HSAs ...are an enormous step in the right direction, and they will help bring about other changes like a demand for reliable information from consumers, greater accountability on the part of providers, and new more efficient ways of delivering care.
• Eric: a move toward transparency … reduction in 'administrative waste' alone would cover 'the uninsured'... HSA increasing at 2.1%, while all other plan types are increasing premiums by over 7%.
CON
• They are certainly no panacea
• Matt: It’s bad enough HDHPs destroying what’s left of the community-rated risk pool in the individual market, and giving employers an excuse to get out of providing health benefits … Just because the private market doesn’t really have large community rated pools any more doesn’t make the theory wrong
• elliottg: how do you take money out of a large pool of money and then claim that the difference won't have to be made up somehow.
Matt: They shift the first few thousand dollars from being the insurer to being the consumer ... The insurer has to count up to the deductible somehow! And that means administrative waste! ... And first dollar coverage [in HAS/HDHP] encourages needless spending.
Anonymous: there is one big fallacy the proponents of HSAs have not yet realized: a lack of real pricing transparency … hospitals continue to gouge the uninsured.
• Lin: The entire argument i.e. transparency is a sham … Consumers for Health Care Choices… knows about this rip off from the get go.
• Transparency of cost and efficacy are problematic
2. Managed Competition. IMO, a better concept, which is related to managed competition, is how to redirect competition . It boils down to whether competition should be redirected by (a) eliminating provider networks and encouraging informed, financially responsible consumers to choose the best provider for each condition; (b) encouraging integrated delivery systems with incentives for teams of professionals to provide coordinated, efficient, evidence-based care, supported by state-of-the-art information technology; or (c) basing selection of particular healthcare services on local population needs and core competencies of the providers.
PRO: A common objective, as Matt pointed out, is to reduce the amount of unnecessary care and muda (inefficiency), as well as using risk-pooling and reducing underwriting, etc.
3. Single payer (promoted by PNHP – Physicians for a National Health Plan)
PRO: Matt: Maybe PNHP doesn’t tell the whole truth, but they're way closer to doing that than the HSA crowd, and their admin savings argument might well be enough to cover the uninsured in our current system.
CON: Eric: It fails to state specifically how it will reduce utilization... It will devolve, almost immediately into a match between competing special interests for dollars for treatment dollars
4. Rationing
PRO - Rational/Explicit Rationing
• Matt: And first dollar coverage [in HAS/HDHP] encourages needless spending. This needless spending can be curbed by rationing, or by demand-side behaviors. We tried rationing with managed care, and it works pretty well to hold down costs, but it was pretty unpopular. So now we're trying to affect the demand side -- getting people to make their own trade-offs.
• Barrie: I strongly support explicit rationing….how much could be saved on care currently performed that would not be performed under the explicit rationing models used in other countries.
• Matt: in a genuine universal care system we won't be sticking it to people based on ability to pay … we'll ration care based on need, and have a more efficent system that can deliver relatively more care for relatively fewer dollars
• Amy: I strongly believe that treatments that complex and expensive medical care at the end of life must be stringently rationed.
CON - Irrational/Artificial Rationing: Barrie: On the other hand, I don't support what I would call artificial rationing like limiting the number of hospitals or imaging centers than can buy MRI machines.
QUALY (QALY)
And then we have QUALY, the quality-adjusted life-year measure that is used in the UK to make explicit decisions about what healthcare interventions are “worth” covering using cost-effectiveness analyses that estimate the cost needed to obtain a unit of health benefit. Though far from a perfect metric, QUALY does offer a mathematical method useful in many situations for determining whether a particular procedure/intervention will result in enough benefit (physical and psychological) to the patient to justify paying for it. Although it can be used with any of the 4 models above (as can P4P), it seems to be especially pertinent to rationing, i.e., pay only for the services whose QUALY justifies it.
PRO
• Barry: It is long past time that we tried to establish some rational construct for allocating scarce, finite resources. … I know many people are extremely uncomfortable trying to assign numerical economic values to human life. However, if the objective is to provide as much useful healthcare to as many people as possible at a cost that the society can afford and sustain, I think something like the QALY approach offers the best hope of approaching that goal.
• Tom: Hospice should never be subject to the QUALY calculation. Everyone, no matter how bad off should be kept warm, clean, hydrated, and fed so long as the body is capable of absorbing the nutrients. …Can you describe a system other than "trust each doctor to make the Utilitarian Calculus correctly for each and every act available to her at each moment"?
CONCLUSIONS:
So, where do we stand? What economic models would control healthcare costs in a sustainable way?
Well, in order to answer this, we still have to address one more thing, i.e., what are the implicit objectives? Following are some apparent to me; is our society truly willing to:
• Do whatever it takes to provide universal coverage and high-quality care for everyone?
• Control spending, i.e., no increase in the percentage of GDP spent on healthcare?
• Evaluate the clinical outcomes of every provider and make effectiveness and cost transparent?
• Invest in wellness/prevention programs
• Invest in evidence-based medicine and decision-support tools that improve care by reducing errors, omissions, unnecessary procedures and tests, overly expensive procedures for which there is more cost-effective interventions?
• Hold consumers at least somewhat accountable for their behaviors, by, for example, charging more or withholding care if purposeful self-destructive actions causes them physical that need treatment?
If so, then any conclusion must benefit the working poor, elderly, chronically ill, and other who are currently suffering the most from our current healthcare system. As such, here’s what I conclude from our current thread:
• Of the 4 economic models discussed, sustainable improvements in healthcare, which are consistent with the implicit objectives above, can best be achieved by redirecting competition in a way that increases efficiency and effectiveness across the board, and rationally rations care using QUALY or some related metric. HSA/HDHP currently suffers too many negatives for the working poor, even if transparency were resolved. And concerns about the bureaucracy, waste, and integrity cast doubt on U.S. government run single payer system, although if these issues could be resolved, it might be work.
• No solution is sustainable unless a very strong wellness and continuous quality improvement component is in place and strongly enforced, through incentives (e.g., P4P for providers and rate reduction for consumers who live healthy lifestyles and comply with care regimens), and may even punitive actions. This would require widespread use of evidence-based practice guidelines, along with ongoing study of outcome measures (not just process metrics), and new breeds of decision-support HIT. Failure to do this will result in the continuing decline of care effectiveness and the continued inefficiencies and mistakes that increase costs. This is consistent with our Wellness-Plus model and simulations.
Posted by: Steve Beller, Ph.D | Apr 11, 2006 3:09:29 PM
To John,
"What I would suggest is that the "administrators, consultants, etc." are not in place solely because they walked in one day and said hello. They are there in large measure because of a vacuum of physician leadership on these issues over the past 40+ years. In fact, a too-typical response by physicians to businesses that complain about rising costs is still a shrug and a bill in the mail."
No, I don't think so. Physicians are not the source of soaring health care costs, and therefore, modifying their behavior is not the solution. That is the point I have been trying make over and over again. There are a number of factors responsible for soaring healthcare costs and they require political and moral decisions. For example: Should we subsidize research into expensive technology and then pay for it when it comes into use? Should we allow drug companies to charge anything they want for medication without any regard to their actual costs? Should we undertake the staggeringly expensive care of those in persistent vegetative states or victims of senile dementia?
The healthcare system is currently absurd in the extreme. Those at the end of life are sucking up billions of dollars in unrestricted care and healthcare administrators are trying to figure out how they can force doctors to process increasing numbers of cognitively able people faster, taking less time on each and being reimbursed less.
That's why I am emphatic in my insistence that administrators have a moral obligation to consider the effects of their decisions, not the effects on doctors, but the effects on patients. I am not saying that we don't need administrators, since doctors do not have the time to be administrators. What I am saying, bluntly, is that administrators have done a terrible job of it so far. They haven't controlled costs; they haven't improved access; and they've made the patient experience substantially worse. It's time for a paradigm shift.
To Steve:
Thank you for taking the time to summarize so many positions. I disagree with you on one major point.
"No solution is sustainable unless a very strong wellness ... component is in place..."
This is also part of the received wisdom and it is also wrong. Wellness is vastly overrated as a cost saving measure. It sounds heartless, but dead patients cost a lot less than living patients, so extending life is not likely to save money. Extensive screening programs that identify early diseases (think mammography for breast cancer or PSA testing for prostate cancer) cost a lot of money, require multiple additional tests and surgical interventions and have, at best, an equivocal effect on morbidity and mortality. In other words, lots of money is spent for very little benefit.
The situation is even worse for HIV screening. HIV drugs cost a fortune each and every month. Each asymptomatic patient identified early is responsible for hundreds of thousand of dollars of expenditures, and in the end likely will require all the expensive care that they would have required if they hadn't been diagnosed early. There are moral imperatives for screening diagnostics, but there are no economic benefits.
The supposed cost saving from "wellness" are illusory, also. With the exception of cigarette smoking and excessive alcohol consumption, it is far from clear that efforts at wellness will change disease patterns or reduce costs. This is wishful thinking; we want to believe that we have the power to keep ourselves healthy, but there is no evidence that we do.
The bottom line is that if we want to control healthcare costs, we have to confront tough political and moral decisions. Claiming that substantial amounts of money can be save by increasing "efficiency" or promoting "wellness" just delays the day of reckoning and erodes the current healthcare system in the process.
Posted by: Amy Tuteur | Apr 11, 2006 4:48:43 PM
I sincerely appreciate your challenge to the wellness concept, Amy.
> It sounds heartless, but dead patients cost a lot less than living patients, so extending life is not likely to save money.
True. The fewer resources spent to extend end-of-life of the terminally ill, the more money is saved. The wellness model we propose is consistent with this, and includes recommendations for lower cost alternatives such as home care And it is where something like QUALY could come into play. You see, in some cases, “wellness” may mean the most reasonable thing to do is treating a patient compassionately and with dignity to improve end of life quality, rather than just focusing only on extending the length of life at all costs. This is one of those tough political and moral decisions we must confront, i.e., when does increasing quality of life supersede increasing length of life. QUALY forces us to surface the underlying assumptions and make them explicit, thereby bringing the issue of cost-effectiveness into the moral/political debate.
There are different ways to define a focus on wellness. Pumping huge sums of money into screening programs that offer little benefit is not a feature of our Wellness-Plus Solution. Instead, it focuses on sustained improvements in healthcare safety, effectiveness, efficiency, affordability, timeliness, and availability achieved by:
• Knowing each person’s health risks and needs thoroughly
• Knowing the most efficient and effective ways to prevent, treat and manage each person’s health problems
• Consistently used this knowledge to promote each person’s health and well-being.
It aims to promote a high performing healthcare system that achieves better access, improved efficacy, and greater efficiency, particularly for society's most vulnerable, including low-income people, the uninsured, minority Americans, young children, and elderly adults.
While I'm not in a position to debate the relative value of PSA, mammography, and HIV screenings, I can say that consumer education, prevention, and compliance programs have shown very promising results. Nevertheless, there’s a lot more we have to learn and do before the typical patients have the knowledge, skills, and motivation to keep themselves healthy.
And, if you’re interested in the results of a simulation model comparing the wellness model we propose to the non-wellness model currently implemented in our healthcare system, we found that only the wellness model results in continuously improving care quality resulting in fewer deaths from errors and omissions and lower costs!
So, I'm not sure we’re defining “wellness” the same way. I certainly do not want to operate under any illusions nor delay meaningful change in our current healthcare system, and am I firm believer in basing decisions on knowledge supported by valid evidence. In any case, I would be most appreciative of any further comments since they help make sure we’re focused on the right things!
Steve
Posted by: Steve Beller, Ph.D | Apr 12, 2006 5:03:44 AM
I noticed that Kate Steadman, on her Healthy Policy blog, referred to the comments section of this thread as a "great conversation" which it absolutely is.
It appears, at least to me, that there is a fair amount of common ground around the need for explict rationing of end of life care and the use of QUALY metrics or something like it to make rational, systematic, and, hopefully, consistent decisions across the system.
Single payer advocates have focused mainly on eliminating the administrative cost and profit of insurance companies to free up money to cover the uninsured but never talk about the need for rationing in trying to make the sale. However, there could be a significantly larger opportunity in tackling the end of life care issue.
Let's say a stringent rationing approach to end of life care using QUALY metrics could survive our political process and were applied to Medicare and Medicaid which are effectively single payer systems for the large populations that they serve, though I know lots of people buy Medigap policies or still have previous employer coverage to supplement Medicare.
Assume further that enough money were ultimately saved to provide vouchers to the uninsured sufficient to buy coverage comparable to Medicare. Since insurance company overhead and profits are currently being paid for by employers buying (or self-insuring) coverage for their employees and indivduals buying policies in the private market and not by Medicare or Medicaid, Medicare should be able to offer coverage to the under 65 population using 0-64 age bracket community rating at a very competitive price based on expected average cost per person insured. To make sure the government does not unfairly and deliberately underprice the product, they could be required to live under the same break even rules as the Post Office and raise rates as required. If they are as efficient as many claim and fraud is not a big problem, they should be able to undersell the private insurers and maybe even put them out of business. Private insurers, for their part, could be required to operate within the same 0-64 community rating scheme and would have to provide end of life care on terms at least comparable to Medicare and Medicaid but would be free to offer higher QUALY limits for a higher premium if they think they can sell them at a price that makes sense as well as high deductible plans if they think they can make that work without draining the risk pool of funds required to pay for the high cost cases.
Separately, one point on QUALY: due to significant differences in costs (mainly related to wages and real estate costs) around the country, QUALY limits would have to differ somewhat by region to reflect that just as Medicare payment rates do now.
Posted by: Barry Carol | Apr 12, 2006 7:24:38 AM
The assertion that wellness is not economically beneficial seems intuitive, but basically incorrect. There is "compression of morbidity" even though its exact magnitude and effect is debated. Compression of morbidity means that we don't necessarily live longer, but die more quickly after more healthy years so that time spent disabled is reduced. From an economic perspective the point at which people switch from accumulating wealth to decreasing it (retirement for many, but not all) is arbitrarily defined by social constraints in today's economy while in previous years, it was dictated by physical constraints (health issues). This means a wellness model might mean people have to work more years to pay for their increased years of health, but that's a trade-off most would make.
Posted by: elliottg | Apr 12, 2006 7:32:37 AM
"No, I don't think so. Physicians are not the source of soaring health care costs, and therefore, modifying their behavior is not the solution."
Doctor, I'm sorry, but you miss the point. You complain about "administrators, consultants, etc." and then refuse to participate in any constructive manner to change or influence what is going on. You "don't have time."
Thus you illustrate my point.
One of the signal failures of our health care system is the failure of physicians to exert real leadership--coupled with a determination to blame only others. You "don't have time". And because nature always abhors a vacuum people of whom you disapprove have taken the leadership - yet you decline to lift a finger from your keyboard to do anything about it. You "don't have time".
Sadly, you are not alone.
Sorry, that's how I see it.
Posted by: John Fembup | Apr 12, 2006 7:36:59 AM
Forgot to mention the only reason that tradeoff has to be made at all is that productivity improvements have been woefully lacking in healthcare. Soon those productivity improvements will be forced upon the industry. It will be interesting to see who takes/gets credit for the inevitable improvement that will follow.
Posted by: elliottg | Apr 12, 2006 7:38:02 AM
Edited to add:
Obviously, any vouchers to help the uninsured buy coverage would have to be subject to an income based means test using a sliding scale with strong disincentives to prevent employers from canceling coverage that they now offer.
Posted by: Barry Carol | Apr 12, 2006 7:39:44 AM
John:
"Doctor, I'm sorry, but you miss the point. You complain about "administrators, consultants, etc." and then refuse to participate in any constructive manner to change or influence what is going on. You "don't have time.""
No, I'm not missing the point, I am vehemently disagreeing with the point. It is NOT the job of doctors to administer the financial side of the system. It is YOUR job to do that. Doctors are taking care of the patients, and the last thing that they should be doing is taking time away from treating patients (which only they can do) and work on something that you can do.
Your claim is simply another version of "blame the doctors". You are not blaming them for not being more efficient; you are blaming them for not be more involved in administration. Either way, it is an abrogation of YOUR responsibility to manage the system, which is ostensibly what administrators are paid to do.
The problem is not the doctors. I don't mean that doctors are perfect; I mean that they are not responsible for the disaster that is healthcare today, and nothing you compel the doctors to do is going to substantially change the problem. I know that it is an article of faith among administrators that if only doctors could be managed or motivated in some way, there would be substantial cost savings. You've tried that. It hasn't worked. It's time to get a new paradigm.
To Steve and others:
The wellness issue is just another attempt to punt. The cost savings of "wellness" are outrageously overrated, not to mention that there is little medical evidence that "wellness" could be improved all that much.
At this point, it is wishful thinking to suggest that the problem of rationing technology and services is going to be avoided by the money saved from changing doctor behavior or increasing "wellness". There will be no solution to this mess unless we as a society (and those who are administrators) confront issues like these:
Are we going to continue funding the development of expensive new technologies and then make them standard of care?
Are we going to continue to allow drug companies to charge whatever they want, without regard to their costs and under the government protection of extended patents?
Are we going to continue to allow unlimited, complex and expensive medical care at the end of life?
Increasing "efficiency" or increasing "wellness" just side steps these issues.
Posted by: Amy Tuteur | Apr 12, 2006 8:50:40 AM
"No, I'm not missing the point" "It is NOT the job of doctors to administer the financial side of the system. It is YOUR job to do that." "nothing you compel the doctors to do is going to substantially change the problem"
Whew. One of us is having a bad day. I'm not talking about "compelling" doctors to do anything. I simply pointed out the vacuum of physician leadership in health care policy. I am surprised that your reaction is so bitter. And so devoid of willingness to cooperate to find better ways.
One does not have to manage a hospital or health plan or HHS to provide significant leadership. George Marshall once said "If you get the strategy right, a major can write the battle plan". That is what I am talking about.
So, Doc, it's up to you. The nation needs physicians who will help lead us out of this wilderness. If you prefer to take care of your patients and not be involved with policy leadership, so be it. You have a lot of company. That was my point, after all.
Posted by: John Fembup | Apr 12, 2006 9:52:18 AM
Amy:
I thank you for hammering away with your points of view. They are becoming clearer each time.
You say: At this point, it is wishful thinking to suggest that the problem of rationing technology and services is going to be avoided by the money saved from changing doctor behavior or increasing "wellness".
I agree. But since the wellness-plus approach of which I speak has never been attempted, there’s no way to say for certain how much rationing would be needed, or if such wishes can come true. And yes, we should be discussing rationing, as we have been.
But I think it’s a big mistake for us to conclude that rationing is THE ANSWER, although it may be part of a comprehensive solution. I say this because, should we fail to increase the effectiveness and efficiency of our healthcare system in a major way, then costs will continue to rise, resulting in ever more stringent rationing. This is because rationing doesn’t address a fundamental problem see, the the Knowledge Void. That is:
• IF we knew the most cost-effective ways to prevent and manage illness and to treat every patient,
• AND if we used that knowledge to implement top-quality care very efficiently,
• THEN patients would remain well longer, recover faster, manage chronic illness with fewer complications, have fewer problems from errors and omissions, receive fewer unnecessary and ineffective or overly expensive tests and procedures, etc.
Now, THAT would have a tremendous positive affect on costs, not to mention people’s well-being! Could it delay or eliminate the need for rationing? I don’t know, but it would certainly control costs.
That’s what I mean by the need to focus on wellness-plus: prevention/maintenance + continuous quality improvement. We “quality improvement” as using evidence-based interventions and advanced HIT to generate sustainable increases healthcare safety, effectiveness, efficiency, affordability, timeliness, and availability. This is what our society should be trying to achieve, along with developing better economic models and redirecting competition. Anything less is unconscionable.
This is one place that physician leadership, discussed by John, is so important. While I can’t point fingers at any one group for the healthcare crisis — since the problem is a broken economic and political system, not bad people — the lack of leadership by providers is a major stumbling block since providers have both the power and ethical responsibility to influence the kind of change necessary, but haven’t for a number of reasons. It seems that our current healthcare system prevents many providers from having the time they need to do a top quality job with their patients, but things are unlikely to change unless they somehow find the time to lead the charge for change and embrace that change.
Anyway, consider these answers to your excellent questions:
Are we going to continue funding the development of expensive new technologies and then make them standard of care? Answer: Technologies that improve outcomes and lower costs, or have a “reasonable” positive affect on life quality as determined by QUALY (or some other useful metric), should be funded and become standards. A good example would be affordable, evidence-based, decision-support tools, but not expensive technologies yielding minimal value.
Are we going to continue to allow drug companies to charge whatever they want, without regard to their costs and under the government protection of extended patents? Answer: As we have discussed in other threads, there needs to be policy changes. I suspect that QUALY could also be applicable here, i.e., calculate a reasonable price to pay for a medication based on its benefits to life quality and the cost of the med’s development, and have that price be related to each person’s ability to pay.
Are we going to continue to allow unlimited, complex and expensive medical care at the end of life? Answer: We addressed this earlier, i.e., use QUALY and lower cost alternatives such as home care, rather than open-ended heroic measures. Where wellness comes in is that the system would keep people healthier longer and get them better faster for less cost using the most efficient and effective interventions and processes, thereby reducing expenses during their lifetimes. This seems to be consistent with elliottg’s compression of morbidity.
So, the solution to the healthcare crisis should include a wellness-plus approach and should address the thorny issues of spending our limited resources on expensive technologies, drugs, end of life care, etc. It’s not an either-or matter.
BTW – I wish there were more innovative economic ideas like the one Barry presented: Enabling Medicare to coverage at a very competitive price to the under 65 population based on community rating. WOW! Is that really possible?
Steve
Posted by: Steve Beller, Ph.D | Apr 12, 2006 1:07:53 PM
Steve:
"• IF we knew the most cost-effective ways to prevent and manage illness and to treat every patient,
• AND if we used that knowledge to implement top-quality care very efficiently,
• THEN patients would remain well longer, recover faster, manage chronic illness with fewer complications, have fewer problems from errors and omissions, receive fewer unnecessary and ineffective or overly expensive tests and procedures, etc."
I respectfully disagree. Your prescriptions are predicated on assumptions that are unproven.
1. You are assuming that there are more cost effective ways to prevent and manage illness. I really doubt it and I have certainly seen no evidence to demonstrate it. This is the faulty paradigm that has harmed healthcare without improving it. It is possible that we are currently managing and preventing illness in the most cost effective way possible considering are state of knowlege.
2. You are assuming that there are more "efficient" ways to deliver healthcare. No, no, no! It HAS been tried and it does not work. Moreover, I have seen no evidence that it would work.
3. You are assuming that patients will remain well longer, etc. etc. No, no, no, no, no, no! There is absolutely no evidence that this is the case and there is plenty of reason to believe that it is not. Every person that lives longer ends up costing more. Everyone dies eventually and very few people drop dead.
Why do you think we have this crisis anyway? It's because we can have turned certain death into chronic illness. Diabetes used to be a death sentence. Now we have insulin, and insulin pumps and dialysis and kidney transplants: absolutely enormous expenditures. Kidney disease itself used to be certain death, but now we can maintain people indefinitely on dialysis at ever increasing expense. Cancer is turning into a chronic disease right before our very eyes. I currently have two dear friends who have stage IV cancer (one ovarian, the other breast) who have lived more than a year since their diseases recurred. Stage IV disease used to be certain death and relatively quickly, too. Both of my friends have been on multiple medications in the last year (when one medication fails, they switch to a new one), have had multiple PET scans, hospital admissions and complications. I am thrilled beyond words that they are still here, but each of them has accounted for 100's of thousands of dollars of care in one year alone.
The savings are simply not there, and 20 years of insisting on it without results should have made it painfully clear. What will it take to convince people that we need to look elsewhere for savings?
Posted by: Amy Tuteur | Apr 12, 2006 2:18:49 PM
The financial link between insurer and provider needs broken and HDHPs can do that. Physicians should treat patients and insurers should insure them, except for the exchange of information there is no reason for the two to have anything to do with each other. Insurers should scrap PPOs and go back to paying a percent of RBRVS published for the patients to see. Patient can see any doctor they want and pay any price they want for medically necessary care. Patient pays the doctor then submits the bill to their insurance to get reimbursed at the specified RBRVS %. This would also drastically reduce utilization and force patients to think more about their care. Patients would question treatment plans, generic availabilty, and pricing again if they paid for it initially.
Posted by: Nate Ogden | Apr 12, 2006 10:15:26 PM
Dimitry says:
> Get a grip of your cost structures and learn to price.
(Donning Hospital CEO hat) I don't have to get a grip on my cost structures because I am an oligopolist, and I have learned very well to price as any self-respecting oligopolist prices: I set my list prices just a tad higher than I think anybody might possibly pay, and then negotiate down from there with anybody who can make sense of the price list. In the absence of government interference, this is the way pricing works in this kind of market, and it gives me great freedom to pursue the kinds of projects I find worthwhile. Don't like it? Go buy and operate your own hospital. Its a free country.
Amy Tuteur says:
> On what basis do you say that?
Mostly on the basis of your saying that you left the practice of medicine years ago when the clash between what you "felt" your patients "deserved" was more than they were evidently willing to pay for (either outright or through an insurance premium) finally became apparent.
> You've been given free hand to do everything you
> wanted
This is flatly false -- I do not know where to start with it. I will point out again that Managed Care is mostly illegal now.
> It is NOT the job of doctors to administer the
> financial side of the system.
What does it mean to "administer the financial side of the system"? You have already said it does not mean "get me all the resources I and my patient want". So what does it mean? If I am doing my job, will it have any impact on yours at all? You have said you favor a single-payer approach -- what should this single payer do besides pay? Anything? Act as a monopsonist with respect to drugs and materials, but not labor?
> [doctors] are not responsible for the disaster that
> is healthcare today, and nothing you compel the
> doctors to do is going to substantially change the
> problem.
So, who exactly is it that prescribes $200K treatments for Stage IV cancers, kidney dialysis, antibiotics in the face of viral infections, transplants, and the rest? Who determines what exactly is The Standard of Care? And how do they do it? Who sees to it that these standards are adhered to? (hint: it has fallen to the courts because...) Who sets the RVUs on ambulatory care? Madam Doctor, it is doctors who do all these things, and control the state medical boards. But what do the state medical boards do? What I and Eric Novak call for is Physician Leadership instead of Physician Whining about how it isn't our fault and we can't fix it. Nobody is in a better position to fix it. I think you are trying to have things both ways when you say "doctors are the system" and "doctors are helpless" in the next breath. Perhaps "a doctor" is helpless, but "doctors" certainly are not. And I notice that many, many of the people advancing health services management whose work I most admire are doctors. But their work is not well-received by other doctors.
> Administrative efforts in "controlling costs" have
> been an utter failure. Perhaps less money should be
> spent on adminstrators and more on actually taking
> care of sick people.
You make two assumptions here:
1) That things wouldn't be even worse but for the efforts of health services managers. We do not have PPS, Stark laws, CON laws, Correct Coding Initiatives, UR, and the rest because of a merely theoretical possibility that doctors might be tempted towards profiteering off of or pandering to price-insensitive patients at the expense of others.
2) That health services managers do not take care of sick people. But for the efforts of health services managers, we would not have any idea about practice variations, patient safety failures, how to grade risk, and so-forth. Health services managers do indeed take care of sick people: and not only the sick people who can afford to come and see us, but also those who can't. We also take care of well people by helping them finance the risk of sickness. As you say, doctors don't have time to do these things. And it seems to me few are inclined: it doesn't pay very well and everybody is mad at you all the time.
> It is possible that we are currently managing and
> preventing illness in the most cost effective way
> possible considering are state of knowlege.
The research on practice variation proves that "we" certainly are not managing and preventing illness in the most cost effective way possible considering are state of knowlege. Ditto your comment #2.
Your point about multiple hundreds of thousands spent to treat Stage IV cancers is well-taken. If care could be managed (and it is mostly illegal to do so now) we could use something like QUALY to decide, depending on whether we're a payer or a pharma either:
1) Whether a treatment will be paid-for at all, or
2) How to price a course of treatment so that it
will be paid for.
i.e. -- If drugs are driving the cost of treating the Stage IV cancers (I do not know) then the drug manufacturers could price so as to bring the total price of treatment within the $/QUALY threshold.
Something kind of like this was tried in the 1980's and now it is illegal in most places. Patients (and their doctors) hated it, and can easily out-vote healthcare managers, reducing their roles to that of administrators. Which is where we are right now.
In the current system, an individual oncologist would be forced to say: "Gee, if I give you another couple of years, it means aggregate medical spending grows too fast, and because of community rating this means fewer people will be able to have access at all, which will cost many lives and much suffering. I'm sorry, but for the sake of somebody I have never met and cannot name, I decline to treat you."
This is the world of a health services manager and policymaker: they make the decisions when they establish frameworks. Most understand very well the moral consequences and the best face them quite squarely. Unfortunately, patients and legislators tend not to.
I do not mean to come across as hostile towards doctors: mainly I want them to step-up and behave again as a Guild. I want them hip-deep in establishing the frameworks, but I insist they actually do it. If not, then non-physicians will do it for them: and that is a fact.
One thing about my point of view is that I haven't got a particular axe to grind. I will work with docs, hospitals, governments, benefit managers, or "insurance companies" equally, and I work hard to understand the economics of each segment. I have so far not worked in the drugs & devices end of the industry, and don't have a particular desire. I have aspirations to work in the policy arena. If I am successful, it means I will be making life and death decisions -- many more of them than the typical physician ever will, but all in the abstract. If you think I am not nervous about this, you are wrong.
t
Posted by: Tom Leith | Apr 13, 2006 12:26:41 AM
"you left the practice of medicine years ago when the clash between what you "felt" your patients "deserved" was more than they were evidently willing to pay for (either outright or through an insurance premium) finally became apparent."
What my patients "deserved", hmmm. I did not intend that to mean a personal decision on my part. I mean an ethical decision on everyone's part. I challenge you to make any sort of ethical argument that patients deserve LESS time with a physician, that they deserve FEWER nurses in the hospital, that they deserve to have MEDICAL decisions made by people who have a financial stake in denying care and who carry no legal responsibility for their decisions. That is what has happened in the past 20 years. The money that provided these services has been diverted to pay administrators and the cost of healthcare has not gone down and access has not gone up. Where is the value?
"So, who exactly is it that prescribes $200K treatments for Stage IV cancers, kidney dialysis, antibiotics in the face of viral infections, transplants, and the rest?"
Well, that's nerve! Are you suggesting that current moral and legal guidelines offer a choice? The fact is that society (through its political, legal and moral decisions) MANDATES such care. Haven't I been arguing for days that body politic needs to face up to these issues and stop mandating that doctors provide every possible service in the face of death?
"I will point out again that Managed Care is mostly illegal now."
Did it work when it was legal? No, it didn't.
"Health services managers do indeed take care of sick people: and not only the sick people who can afford to come and see us, but also those who can't. We also take care of well people by helping them finance the risk of sickness."
Until you are willing to take legal responsibility for your decisions, you are not taking care of anyone. If you are so sure that what you do is necessary and important (and works), step up to the plate and take responsibility for it. Mandating what physicians can and cannot do is not taking care of people; over the last 20 years these mandates have been DENYING care to people.
I find it ironic, to say the least, that administrators whose central paradigm is that doctors must be given financial incentives and punishments to make the system more "efficient" earn their salaries by taking money that would have been used for patient care. Administrators have financial incentives to deny care and none to provide it. Why are you so quick to believe that doctors prescribe care in order to make money and administrators are above such ugly and self-serving practices? Certainly not on the basis of any evidence.
"I do not mean to come across as hostile towards doctors: mainly I want them to step-up and behave again as a Guild. I want them hip-deep in establishing the frameworks, but I insist they actually do it."
Really? Right now doctors and nurses are giving less care to each patient, and millions of people are not getting any care at all, and you think that doctors should be diverting ANY of their time away from patients? Over the last 20 years, the amount of time spent on dealing with insurance companies, hospital committees, hospital administrators, etc. has skyrocketed. This has been at the expense of patients and has NOT saved money and has not improved access.
I have been pounding at this point over and over again. Nothing in our experience shows that changing the behavior of doctors saves substantial amounts of money and a lot of efforts to change doctors' behavior has simply wasted money. Remember pre-approval? I used to be required to get "pre-approval" for my patients to deliver their babies. No one was ever denied (obviously), yet I wasted time every day talking to insurance functionaries. Those functionaries got paid for chatting on the phone with me. My patients gained nothing, absolutely nothing and money was spent needlessly.
The savings are simply not there and all the wishing and hoping does not make it so. Why should doctors get "hip-deep" in creating a system that has not improved patient care and has not saved money and has not improved access?
Posted by: Amy Tuteur | Apr 13, 2006 4:39:38 AM
I wrote:
• IF we knew the most cost-effective ways to prevent and manage illness and to treat every patient,
• AND if we used that knowledge to implement top-quality care very efficiently,
• THEN patients would remain well longer, recover faster, manage chronic illness with fewer complications, have fewer problems from errors and omissions, receive fewer unnecessary and ineffective or overly expensive tests and procedures, etc.
And Amy responded: I respectfully disagree. Your prescriptions are predicated on assumptions that are unproven.
Of course these assumptions are unproven, Amy … The problem is that they have not been proven NOR disproven. Testing these assumptions requires a major change in the healthcare system, one that has never taken place. It requires replacing assembly-line care with personalized care including enabling providers to spend adequate time with their patients and having the tools they need to help make decisions about delivering the most cost-effective care for each patient resulting in the best possible outcomes at the least possible cost, as well as the things presented below.
Amy wrote:
1. You are assuming that there are more cost effective ways to prevent and manage illness. I really doubt it and I have certainly seen no evidence to demonstrate it. This is the faulty paradigm that has harmed healthcare without improving it. It is possible that we are currently managing and preventing illness in the most cost effective way possible considering are state of knowledge.
2. You are assuming that there are more "efficient" ways to deliver healthcare. No, no, no! It HAS been tried and it does not work. Moreover, I have seen no evidence that it would work.
I actually agree with the bold sentence: Based on our current level of knowledge, providers are doing the best they can. The problem is that the medical literature is fraught with examples of how there is a very serious knowledge void that prevents us from knowing the most cost-effective way to treatment each patient. Here’s a small sampling from the three pages examples:
• An estimated half of all surgical operations and other medical procedures lack strict scientific evidence of their effectiveness and safety and common procedures are prescribed that are not proven effective — up to 85 percent lack adequate scientific validation. In other words, healthcare providers often don’t know what treatments work best for a particular patient.
• Stakeholders do not have enough information about the quality of care — outcomes data about what works and what doesn’t — to enable them to make appropriate decisions. They are concerned that their decisions are based on limited or poor quality information.
• Even when good information is available to support healthcare decisions, it often isn’t being used to improve care quality because the unaided human mind, no matter how competent, simply cannot focus on all the necessary details nor possess all the knowledge needed for continually making the best clinical decisions. Specialization and traditional information technology do not solve this problem.
I can also give examples from my own experiences as a patient and as a healthcare practitioner.
Please realize that nothing I’m saying is in any way meant to diminish healthcare professionals who, like you, have always wanted what’s best for their patients. But being humans, with human limitations and fallibilities who are operating in broken system, it makes their jobs that much more difficult; and the same goes for administrators.
Anyway, I do believe that as providers gain new knowledge, they will use it to improve care efficiency and effectiveness. This can best be accomplished by linking practitioners with researchers who collaborate and use HIT to perform lab and field outcome studies; establish and evolve evidence based practice guidelines; disseminate and implement the guidelines; and get computerized assistance in making diagnostic and treatment prescription decisions personalized to the particular needs of each patient, as well as managing and coordinating plans of care. It also means putting the policies and processes in place to ensure providers have the time and money they need for continuous quality improvement.
The problem is it has NEVER been attempted. So, I disagree with your second statement that based on the past 20 years, we have tried to increase cost-effectiveness and failed. No, no … What the system tried to do is control costs through failed economic strategies the worsened care quality because they focus on finding ways to deny care without much regard to a patient’s quality of life (and I assume we agree about this).
Amy wrote:
3. You are assuming that patients will remain well longer, etc. etc. No, no, no, no, no, no! There is absolutely no evidence that this is the case and there is plenty of reason to believe that it is not. Every person that lives longer ends up costing more. Everyone dies eventually and very few people drop dead.
I agree in part: The sooner people die and the fewer resources spent on keeping them alive, the lower their lifetime medical costs. But I think you’re talking about end of life care, not wellness/prevention, maintenance of non-end-of-life chronic illness, nor catastrophic care. In that case, a total price of treatment within the $/QUALY threshold model, like Tom mentioned, makes good sense to me.
As far as the effectiveness of comprehensive wellness/prevention and maintenance approaches keeping people well longer, there needs to be adequate investment in and research of such wellness programs before we can validly claim how cost-effective they are. I know it’s been working for me; I’ve been able to control Type 2 diabetes for the past 16 years with exercise and diet alone. Why can’t it work for others? We just have to learn better ways to teach and motivate consumers.
Amy wrote:
Nothing in our experience shows that changing the behavior of doctors saves substantial amounts of money and a lot of efforts to change doctors' behavior has simply wasted money. Remember pre-approval?...No one was ever denied (obviously), yet I wasted time every day talking to insurance functionaries….My patients gained nothing, absolutely nothing and money was spent needlessly.
What you’re actually saying is ineffective pre-approval is ineffective and costly. True. But this thread is discussing alternative, innovative strategies to the managed care methods of the past. And there’s good reason to conclude that wellness/prevention + CQI (including HIT support, collaboration, and evidence-based knowledge) + rational rationing (with QUALY) + redirected (managed) competition + incentives (e.g., P4P and patient-compliance rewards) + a high-fidelity system are key components of a viable solution for sustainable decreases in costs and improvements in outcomes. All I’m saying is we should try, for the first time, this rational, compassionate, patient-centered approach. And provider leadership is important.
Steve
Posted by: Steve Beller, Ph.D | Apr 13, 2006 8:12:51 AM
> I challenge you to make any sort of ethical argument
> that patients deserve LESS time with a physician
I can make a perfectly sound ethical argument that people do not "deserve" any time with a physician.
> Did [managed care] work when it was legal?
> No, it didn't.
Kaiser and Mayo are the counter examples. Except in a few instances, managed care was fought every step of the way by physicians and their patients. I say that in the main, it wan't really tried. I do agree with you that after the actual management of care was outlawed, the concept was corrupted into the management of "cost" only.
> Until you are willing to take legal responsibility
> for your decisions, you are not taking care of anyone.
I am willing absolutely to take legal responsibility for my decisions. I note it is the physician controlled state medical boards that decide what is legal when they set the standards of professional practice and that the way they do this shows a strong tendency to protect their autonomy and incomes. That they have been less successful lately does not change this.
> I have been pounding at this point over and over
> again. Nothing in our experience shows that changing
> the behavior of doctors saves substantial amounts of
> money
So you are saying there is no such thing as physician-induced demand, and that therefore the CON laws were useless? There is some good evidence to the contrary. You are saying that moving to PPS and making physicians for the first time conscious about cost expectations did not save a substantial amount of money? The falsity of this proposition is even easier to prove. I think you are simply wrong about this.
> a lot of efforts to change doctors'
> behavior has simply wasted money.
While this is not evidence that every attempt to change doctors' behavior is an evil waste of time, it is absolutely true.
> Mandating what physicians can and cannot do is not
> taking care of people; over the last 20 years these
> mandates have been DENYING care to people.
It is ironic that you complain on the one hand about managers having done it yesterday, but advocate their doing it tomorrow.
> The fact is that society (through its political,
> legal and moral decisions) MANDATES such care.
Are you saying that doctors are not professionals after all; that they are rather highly trained slaves to their patients, and must do whatsoever their patients demand? This is precicely where the "healthcare is a right" argument leads.
You say the body politic needs to face up to these issues, and with respect to the financing side, I quite agree. But! As far as I can tell, legally and morally a physician is free to decline to provide any service she chooses so long as she is above board about it. In what ways (specifically) is this not true?
t
Posted by: Tom Leith | Apr 13, 2006 9:44:56 AM
Starting with the most recent comment, I do disagree with you, Tom, about the legal (specifically liability) implications of not offering a treatment. There is no legal precedent that says (and the current state of medical liability makes it impossible to do so) that a doctor has protection from liability by listing all possible treatments for a condition and then refusing to offer any of them. Surgeons can say that they are not qualified to perform a certain operation, but I do not think this holds true in quite the same way for the range of medical specialties like endocrinology (eg. diabetes), pulmonology (eg. chronic lung disease due to smoking), cardiology (eg. heart disease).
To that extent, I believe that Amy as a point with regard to control over the system.
Beyond that, however, I find myself constantly baffled by people who share Amy's point of view of blaming the system on the administrators.
Amy, this is not so much a digression rather than a 'meandering', but please offer your opinions about my next few statements:
1. doctors (and using generalities allow this whole blog to exist) have been systemically unable to establish 'unacceptable' care guidelines for common conditions. You know as well as I do that while there is usually more than one right way to address a problem, there are definitely wrong ways.
2. doctors are 'penny wise and pound foolish'. While complaining about declining remibursement from private payers and medicare, few of us have been actually willing to 'cut the cord'. Remember that medicare reimbursement is about 10% less (not accounting for inflation) than in 2001, and still nearly all docs participate (myself included).
3. doctors, by saying that THEY are victims, do not endear themselves to the public. Competing for more significant 'victimhood' in healthcare is a losing proposition pr-wise, politically, and long-term for doctors.
4. by supporting a single-payer system, you wish to formally (and forever) cede control over the healthcare system to bureaucrats.
5. Medical care, as delivered by doctors, nurses, and the many other hard working members of the healthcare community on all levels, does not occur in a vacuum outside of the realm of local, state, and national policy. Put another way, are the doctors in third world countries, Russia, Cuba, less caring than the doctors in the US? Of course not. But the system in which we provide healthcare matters. And if you believe, as I do, that doctors are one of the most important pieces of the system, then it is imperative that doctors take an active role in every facet of healthcare delivery, including policy.
Posted by: Eric Novack | Apr 13, 2006 11:12:17 AM
I feel sick.
I feel like divorcing myself from every aspect of a system that has led to this debate. I feel like closing down for a month, trying to recover what it was that made me want to do this in the first place. Then opening back up and expecting fair payment for services as rendered. If someone comes to see me, spending an amount of time necessary to provide best-of-my-ability care--irregardless of whether they're wellness, catastrophic or in need of compassionate end-of-life care--and then charging an amount necessary to ultimately make what I think I am worth.
If no one comes to see me, then I will try something else. Maybe I will become a professional blogger or a 9-to-5 utilization reviewer for BCBS (if you can't beat 'em...)
I wonder if this is not the way to reform the healthcare system. Have all physicians simply go back to their roots. Shut everyone else out of the exam room. Focus on patients. And expect payment for services rendered.
Someone else--government, employers, hospital CEOs, insurance companies, health policy types, internet gurus--can figure out all of the rest. If I am happy enough doing it, I would be more than willing to take on my part of the charity care that is necessary to take care of our citizens and volunteer a significant amount of time in the free clinic as well.
Seems like a means of reform that might actually be doable. The "who cares who the payer is" reform.
(You have no idea how close I am to making such a decision. This is not meant to be a joke.)
Posted by: G. Hinson, MD | Apr 13, 2006 1:26:48 PM
Tom:
"So you are saying there is no such thing as physician-induced demand ...There is some good evidence to the contrary. You are saying that moving to PPS and making physicians for the first time conscious about cost expectations did not save a substantial amount of money? The falsity of this proposition is even easier to prove. I think you are simply wrong about this."
Here's what I am saying (statistics from Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group):
This is what happened to various components of healthcare expenditures as the cost of healthcare rose from $700 billion to $1.8 trillion
hospitals 17% to 32% delta of 188%
physicians 22% to 22% delta of 0%
drugs 6% to 10% delta of 170%
admin. 6% to 8% delta of 133%
That suggests to me that hospitals, drugs and administration are taking up a greater percentage of healthcare dollars while doctors are not.
"It is ironic that you complain on the one hand about managers having done it [denying care] yesterday, but advocate their doing it tomorrow."
Indeed, I am complaining that managers who have a stake in denying care should not be responsible for these decisions, and I am advocated that the body politic should make these decisions.
"As far as I can tell, legally and morally a physician is free to decline to provide any service she chooses so long as she is above board about it."
A physician is free to decline to provide a service, but must arrange for another physician to provide it. There is no way (legally or ethically) to deny services.
Eric:
"doctors ... have been systemically unable to establish 'unacceptable' care guidelines for common conditions. You know as well as I do that while there is usually more than one right way to address a problem, there are definitely wrong ways."
That is because of the nature of medicine. People are not cars; we don't know everything about the way the body works so we cannot write algorithms that will reliably apply to 100% of the patients.
I'll give you an example. Shortly before I left the HMO where I worked, a patient who was 25 weeks pregnant came to the hospital with pain along the inside of her left leg. The most important thing to rule out in this setting is a DVT (blood clot in her leg) because it is potentially fatal.
There are 5 main criteria for diagnosing a DVT and the patient had none of them. Nonetheless, something about the situation did not "feel right" to me. I called the radiologist and asked for her leg to be scanned. The radiologist declined to do it saying that because she did not meet the diagnostic criteria, he might not be reimbursed for the procedure.
After much yelling back and forth I told him I was going to write in the chart that he personally was denying her the scan. Afraid of the potential liability. he backed down. The patient had a blood clot extending from her left ankle into her pelvis. Had she left the hospital without treatment, she almost certainly would have died.
Medicine is, in essence, pattern recognition. All the years of study, observation and experience give good doctors "clinical judgment". Unfortunately, no amount of guidelines can substitute for judgment.
"While complaining about declining remibursement from private payers and medicare, few of us have been actually willing to 'cut the cord'. Remember that medicare reimbursement is about 10% less (not accounting for inflation) than in 2001, and still nearly all docs participate (myself included)."
Well, you know what they call doctors who cut the cord? They say they practice "concierge medicine" and they are reviled on this website and elsewhere.
"doctors, by saying that THEY are victims, do not endear themselves to the public. Competing for more significant 'victimhood' in healthcare is a losing proposition pr-wise, politically, and long-term for doctors."
Absolutely! Doctors are not the victims; the patients are the victims.
"by supporting a single-payer system, you wish to formally (and forever) cede control over the healthcare system to bureaucrats."
Doctors have already lost control of healthcare and the patients are suffering for it. At a minimum, single payer will increase access.
Posted by: Amy Tuteur | Apr 13, 2006 1:32:17 PM
Amy Tuteur said:
> the cost of healthcare rose from $700 billion
> to $1.8 trillion
What you had said was: "Nothing in our experience shows that changing the behavior of doctors saves substantial amounts of money". I provided counter examples. You changed the subject.
> There is no way (legally or ethically)
> to deny services.
I shall research this. If it is really true, then the laws should be changed because it is not ethical to make a slave of the doctor. A law having this effect is in my view entirely unjust.
> At a minimum, single payer will increase access.
Probably. But it won't do anything for doctors in the aggregate. The pie will probably get sliced differently, but it will not grow as a fraction of expenditures.
t
Posted by: Tom Leith | Apr 13, 2006 3:31:37 PM
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