You bring your car to the mechanic to check a warning light. You pay the bill, assuming the problem is fixed. But before too long, the light comes back on and you’re headed for another trip to the garage — and another bill. You’re left wondering why you’re shelling out more money for an issue that should have been resolved the first time.
The way we pay for medical care has a few things in common with that experience. And, over the coming months, D.C. lawmakers are set to turn up the heat on the debate over how we pay for medical care as Congress considers changing the current physician payment system. The issue has been simmering for years, but we remain hopeful Congress can find a resolution to benefit patients and providers.
For decades, under our traditional fee-for-service model, doctors and hospitals have been rewarded for the amount of care provided, not for results of that care. We spend more per person on health care than anywhere else on earth, yet the outcomes of that care don’t measure up to what we spend. Still, we keep spending.
Next year, millions more Americans will have insurance coverage under the Affordable Care Act. It’s a welcome step, but it also adds cost into an already strained system. Unfortunately, the ACA itself does little to address rising costs.
Until we reduce the cost of care, we limit our ability to make health care better, more effective and more affordable. The implications go beyond health, ranging from slowed economic growth to increased national debt. Most importantly for American families, whose savings on average can cover only five weeks of family expenses, health care costs represent increasing financial hardship and risk to family stability.
As patients, most of us want to have the highest-quality care at the lowest cost. Most doctors, nurses and health care administrators work hard to provide it. It is part of why we’re called to do what we do, but the fee-for-service payment system has become a larger obstruction to these basic goals. As the system has evolved, “more care” has been established as an end in and of itself. This volume-based approach to medicine adds unnecessary costs and still does not give patients what they want. It also fails to link treatment to need or patient outcomes.
The good news is there are emerging payment models that do. Value-based payment models are not yet the norm, but they are working today in many pockets of the country. Whether used by a single provider or by many in a particular market, these models have already proved flexible enough in size and scope to show very encouraging results. During the course of 20 years and in collaboration with our provider community, HealthPartners in Minnesota has used a wide variety of tools to support a transition to payment models that focus on improving quality and aligning payment to reward those who deliver high quality most efficiently.
Fewer preventable admissions and readmissions, increased use of lower-cost care facilities in lieu of the emergency room, expanded use of generic drugs, and reductions in unnecessary lab tests are just a few notable improvements. In addition, health plans and providers can partner more effectively to improve care coordination, disease prevention and better chronic illness management. Since much of the piloting of this work is complete and powerful tools are already established, broader implementation could produce results even faster than they have in Minnesota.
With this tangible progress, an important question remains — how might we expand on this success? As Congress looks to retool the system for physician reimbursement through Medicare, elements of value-based payment reform are under bipartisan consideration. A move to this payment model by the largest payer in the health care market — the federal government — could be the game-changer needed to lead the entire industry to a system that rewards results over volume. We strongly support the shift from fee-for-service to value-based payment and applaud the bipartisan effort in Congress to achieve it.
Given other trends in play, the momentum behind value-based payment may be difficult to stop. For example, as consumers continue to pay more of their own health care costs, we expect their demands for proof of value to strengthen. It is one thing if your insurance company pays the bill, but another entirely if you do.
Change won’t be easy. It will require a commitment to more cost transparency, more public reporting of data on quality and providers assuming some financial risk for not meeting established goals. These are newer concepts in health care, but there are working models in place for all.
Working through these challenges will undoubtedly make us better at what we do. Despite the temporary difficulties, the benefits of replacing “more” with “better” far outweigh our reliance on a system that costs far too much and delivers too little.
Patricia Smith is president and CEO of the Alliance of Community Health Plans and Mary Brainerd is president and CEO of HealthPartners.