Congress last week approved President Barack Obama’s budget, and in doing so eased the path for passage of healthcare reform, one of his administration’s principal domestic initiatives. The Senate Finance Committee is getting down to the hard work of actually writing the healthcare reform bill that will, possibly by early summer, be the focal document for debate on the issue. Building on a series of roundtable discussions with key stakeholders and months of concentrated staff effort, the committee met in executive session April 29 to begin the process of selecting among alternative ideas.
On the table: Everything, except how to get health insurance to the currently uninsured. That central issue deserves and will get independent treatment before being folded into the comprehensive legislative proposal.
Specific proposals under review are enumerated in “Transforming the Health Care Delivery System: Proposals to Improve Patient Care and Reduce Health Care Costs,” a document released by the committee April 28. It’s worth reading. The Committee’s staff has winnowed fewer than 20 discrete Medicare reforms from a menu of more than 100 developed by the Congressional Budget Office last December. Reforms under consideration fall into five general categories:
— Payment Reform: Improving Quality and Promoting Primary Care
— Payment Reform: Fostering Care Coordination and Provider Collaboration
— Health Care Infrastructure Investments: Tools to Support Delivery System Reform
— Medicare Advantage: Promoting Quality, Efficiency and Chronic Care Management
— Public Program Integrity: Combating Fraud, Waste and Abuse
The committee proposals on payment reform will, whether or not they effectively impact quality or cost, add substantial complexity to providers’ reimbursement analysis and planning, as well as substantial overhead costs in the form of new mandated reporting. They’ll also provide a decade of employment for reimbursement consultants, as the additional Medicare payment system complexity will require significant strategic and operational adaptation (as well as staff retraining). Hospitals and physicians are likely to have some meaningful portion of their Medicare payment rates dependent upon quality indicator reporting and performance; other institutions will have similar quality requirements; there will almost certainly be financial rewards for implementing (or holdbacks for not implementing) various HIT elements, including electronic health records; coverage policies are likely to become more complex as a result of the improved targeting of therapies made possible by comparative effectiveness research efforts. All of this will need to be understood in detail once a bill is finalized; for now it is all directional: Be forewarned.
But will the reform effort result in meaningful changes — better quality, lower cost?
If you believe that the overall quality of care can be meaningfully improved through financial incentives to providers, you’ll like what the committee is likely to produce.
On the other hand, if you think that providers are already overburdened by paperwork and overheads, and that the system would work better if more of their time and resources was freed up to actually deliver care, you’ll be appalled.
If you believe that electronic health records are the key to eliminating waste and error, that comparative effectiveness research results can meaningfully change physician treatment decisions, and that “pay for performance” is an administratively feasible concept, you’ll see some potential for progress in the committee’s agenda.
One thing, however, is undeniable: There is nothing the committee is considering that can reasonably labeled as “transformational” or “disruptive.” Everything being considered is an extension or derivative of initiatives that have been part of the conversation for years.
Here’s my overall assessment. The Finance Committee — and the Obama administration — are focused on achieving quality and cost reduction through the introduction or strengthening of financial incentives. They believe that monetary rewards and/or penalties (pay for performance on the basis of reported standardized quality measurements), together with supportive infrastructure (HIT and electronic health records) and information (comparative effectiveness research), will drive provider behavior in the desired direction.
And they will — to a limited extent. But the new incentives come with new costs, in the form of technology acquisition and quality report preparation, submission and monitoring. Do we really believe that the healthcare system will be reformed by adding new overheads to already bloated administrative costs of both providers and government agencies?
There is another perspective that needs to be considered. Perhaps we would achieve more if, instead of focusing on strengthening incentives to achieve quality — a focus that directs us toward incremental adjustments to existing institutional structures and payment methodologies — we concentrated on eliminating barriers to quality improvement? That concentration would lead us to consider more significant institutional and payment system reforms. Certainly, other things being equal, physicians and hospitals would choose to provide good as opposed to poor quality of care. If care isn’t good enough, what is it that is preventing the desired improvement?
What sorts of policies might come out of a focus on removing barriers to quality and/or cost control? One would be a restructuring of the basic comprehensive general hospital business model; there are few institutions in any other business segment that are able to survive with the inefficiency of resource utilization that characterizes the U.S. hospital industry, from community institution to tertiary care center.
Another might be a wholly new approach to professional education and to licensure of caregivers; we are paying medical specialists to perform hundreds of thousands of procedures that could be done just as well but far more cost-effectively by specially trained patient care technicians; we are absorbing extraordinarily high costs for tens of thousands of emergency room visits (with long waits) for care that could be provided just as well or better (with no wait at all) in properly staffed drug-store walk-in clinics.
Yet another might be replacement of fee-for-service payment systems by alternative systems that pay for comprehensive disease management, broader capitation, etc.
Some of you will recognize the proposals in the preceding paragraph as being derived from Clayton Christensen’s “The Innovator’s Prescription“— perhaps the most stimulating and thoughtful recent analysis of what is wrong with our healthcare system and what to do about it. I’m not advocating Christensen’s program; some of it is appealing, some not so appealing. But he’s definitely on to something — real healthcare reform requires real change, not tinkering at the margins.
I’m increasingly convinced that leadership for the real changes we need is unlikely to come from the government. Our institutions are designed and our political culture is adapted for incremental change — the kind of change at the margins that can improve things a little, but frankly not a lot. It is the private sector that is capable of generating the elements of major sectoral transformation, and it is the private sector that can initiate the processes required to remake our health care system. I’ll address how that might happen, and the reimbursement issues that might arise from it, in a subsequent post.