Transforming How Doctors Get Paid

• Innovations in the way doctors and hospitals are paid aim to ensure that patients get the most effective care at the best cost.

  Michael L. MillensonDec 16, 2013
• The American medical system has been broken for so long that humorist Mark Twain and Harvard economist Joseph Newhouse agree on what needs fixing.

Fee-for-service payment brings “potential overservice,” says Newhouse. Twain, writing in his autobiography about the doctors’ house calls of his childhood, observed that the “universal custom of the physician…is this: to keep on coming and coming, long after the patient has ceased to need him — and charging for every visit.”

Nearly two centuries separate those two observations, but the challenge remains to steer a middle course between incentives that encourage too much care and ones that push toward too little. Increasingly, the health system is moving toward the type of solution that Newhouse advocates, known in shorthand as “value over volume.” Changing reimbursement to reward cost-effective, high-quality care has been endorsed by the Institute of Medicine and a bipartisan National Commission on Physician Payment Reform. It is also the keystone of bipartisan Congressional proposals (a rarity) intended to permanently alter how Medicare pays doctors.

Question:

If you could scale up one remarkable health care idea, what would it be? 

Answer:

"Care should be delivered through provider-led delivery systems that treat a defined population and have at least some financial risk for the amount and quality of care they deliver to that population. Patients would have financial incentives to be treated within the system they elected. Such entities should be able to improve care coordination and efficiency."

- Joseph P. Newhouse, PhD, the John D. MacArthur Professor

of Health Policy and Management, Harvard University

Some of that change is already starting to occur, in bits and pieces, from private insurers and Medicare alike. In Massachusetts, where private insurers have been particularly aggressive, the impact on patient care can be seen at Boston-based Atrius Health, an alliance of six medical groups. About half its one million patients already have insurance plans that link reimbursement to specific cost and quality markers.

These measures apply to the entire pool of patients covered by any particular plan, not to any individual patient, and the financial risk and reward are directly borne by Atrius Health and its 1,100 doctors, not by any individual physician. That, says Newhouse, reduces the risk of “underservice.” With reimbursement changing so that more care doesn’t automatically produce more revenue, Atrius Health is also changing. It’s pouring resources into a concept known as “population health.”

The idea is to measure and manage the care of all patients, while intervening in a targeted way toward carefully defined subgroups, such as the population of diabetics. The objective is to keep people as healthy as possible as long as possible. The bottom line is care that’s simultaneously better and less expensive.

Dr. Richard Lopez helps direct that strategy as the health system’s chief medical officer and, as a practicing internist, sees it with his own patients. Early each Friday morning Lopez sits with his nurse and rapidly goes over a list of his diabetic patients that has been culled from Atrius Health’s electronic medical record. Diabetics frequently have multiple problems in addition to blood-sugar control, so the population of “all diabetics” is broken down even further.

“One week we sort it by cholesterol, one week we sort it by blood pressure,” Lopez says. “We look at the patients who are not in control and we make a plan. It takes one or two minutes per patient.” The patient might be paired with a nurse practitioner for more education, get a follow-up call, be sent to a nutritionist, be referred to a specialist or be asked to come in to Lopez’s office.

In Twain’s day, doctors waited to be summoned to the home of the sick. Today, the patient mostly comes to the doctor, but it is still the patient who must decide to seek care. With population health, “you’re not just taking care of the patient in front of you in the exam room,” says Lopez, a 30-year Atrius Health veteran. “You’re looking at the whole population and reaching out to diabetics [and others] who in the past did not come in regularly. This way they don’t fall between the cracks. There’s a continuing interplay.”

Chronic diseases collectively account for nearly three-quarters of U.S. medical costs. The effect of population health management on patients with high blood pressure (hypertension) illustrates its potential. Nearly a third of U.S. adults have hypertension, and the percentage almost doubles for those 60 or older, according to data compiled by the American Medical Group Foundation. The condition contributes to deaths, disability and more than $130 billion in direct health care spending annually. Atrius Health has increased the share of its hypertensive patients whose blood pressure is under control from 67 percent, slightly above the national average, to 80 percent, among top performers.

For patients, that translates into fewer heart attacks and strokes, fewer trips to the emergency room and fewer days spent in the hospital. Atrius Health calculates it has also avoided $14 million in medical costs, a significant portion of which would have gone to its doctors. But Lopez has no second thoughts. “We think this is the way health care ought to go,” he says.

Physician compensation at Atrius Health reflects the changes in organizational compensation. Pay for primary care physicians is based on the number of patients in their “panel,” productivity and measures of the quality of care and the patient’s experience. Nationally, a survey by ECG Management Consultants found that a majority of physician groups have altered doctor compensation to include those same types of quality measures, which are often being used by payers to evaluate the entire group.

Unlike providers, patients may neither understand the benefit of collaborating in care coordination nor have any financial incentive to do so. Atrius Health has nearly 30,000 Medicare patients in an accountable care organization (ACO), a type of arrangement with provider incentives designed to support high-value care but no incentives for patients. Medicare and private ACOs cover some 20 million lives, according to a Leavitt Partners estimate. Atrius Health has another 25,000 patients in the Medicare Advantage program, which uses incentives for providers roughly similar to an ACO but also includes incentives for patients to stick with the Atrius Health network. Medicare Advantage covered 14.4 million people in 2013, according to the Kaiser Family Foundation.

Newhouse says he would strengthen the financial incentive to patients in ACOs to stay inside the network. At the same time, he acknowledges that fee-for-service medicine won’t vanish anytime soon. In part, that’s because not every physician group can replicate what Atrius Health has accomplished. “We can’t shift the entire delivery system to this because not every group has the expertise,” he says.

Nonetheless, the trend is clear. Says Atrius Health’s Lopez: “This level of care goes from being an initial trial effort to the way medicine is practiced.” 

Affordable Care Act is a RIGHT not a previllage!

Most civilized nations provide health care coverage for it's citizens. America is finally moving in a direction where it's citizens will have access to health care outside of their employer. The health care law we have is far from perfect, a single payer plan would have been better. The Supreme Court to my surprise did the right thing in upholding the law.  Therefore today is a historical day!  The health care decision announced this morning by Supreme Court and the Individual Mandate Survives: The individual health insurance mandate is constitutional, the Supreme Court ruled today, upholding the central provision of President Barack Obama's signature Affordable Care Act.

The Affordable Care Act, including its individual mandate that virtually all Americans buy health insurance, is constitutional. There were not five votes to uphold it on the ground that Congress could use its power to regulate commerce between the states to require everyone to buy health insurance. However, five Justices agreed that the penalty that someone must pay if he refuses to buy insurance is a kind of tax that Congress can impose using its taxing power. That is all that matters. Because the mandate survives, the Court did not need to decide what other parts of the statute were constitutional, except for a provision that required states to comply with new eligibility requirements for Medicaid or risk losing their funding. On that question, the Court held that the provision is constitutional as long as states would only lose new funds if they didn't comply with the new requirements, rather than all of their funding.

The president, for his part, used his address to detail the policy prescriptions within the law -- an implicit recognition that the administration has done a poor job selling it to date.

"It should be pretty clear that I didn't do this because it's good politics," Obama said. "I did it because it's good for the country." Barack Obama also addressed the court's decision to uphold the most controversial component of the bill, the individual mandate, arguing that it was essential to making the rest of the reforms work. He acknowledged that he himself had once opposed the idea, only to come around. The president added that conservatives, including Romney, had supported the concept in the past.

The biggest and most obvious remaining hurdle for the ACA is the uncertainty between here and 2014 in particular if Mitt Romney wins and Republicans wind up with unified control of Congress, there’s every possibility that he law could still be entirely repealed meaning none of the 30 something million Americans expected to gain coverage under the law get it. But even if that doesn’t happen: what remains is a lot of trench warfare. The Court supplied the states with even more room to fight against reform than they already had.  Insurance companies and other interest groups can appeal to regulators in the executive branch or to Congress to defeat specific provisions they don’t like — and that hasn’t changed today. Those two things could, together, wind up undermining the law, especially under a President Romney, even if the votes aren’t there for full repeal. But again the particular roulette wheel that began spinning when Republicans took to the courts to invalidate the Affordable Care Act has come to a stop. And the Richters have won. They can finally uncross their fingers. 

One last point to focus on now we are about to face with the largest middle class tax increase in history of our country, levied just because you breath.  This consequence will always form the questions around "is this the most intelligently designed legislation or not". Clearly it does not address the underlying causes of health care inflation. It does greatly empower the IRS to collect this tax.  The idea that you pay really high premiums because of the uninsured is BS and Obama, Pelosi and Reid know it but lack the integrity to be honest about it.