The following is excerpted from the recent paper by Jon Shreve, “Changing Expectations in Healthcare.”
Increases in medical costs in the United States have steadily outpaced inflation, and now such costs comprise more than 16% of GDP. Left unchecked, they are projected to grow to 20% in 10 years. Uneven quality, lack of integrated care, outdated information systems, and the wrong financial incentives have all contributed to the rise.
The basis for paying for healthcare must shift to one that rewards healthy outcomes and that provides financial incentives for following evidence-based medical practices. Such a shift is difficult in a system dominated by fee-for-service pricing with little or no accountability for performance. Several past and recent innovations may be useful in future reforms.
During the 1990s, physicians were often paid for the number of patients they treated rather than the volume of services they generated. The capitation approaches used often were not refined or adequately supported, which in part led to the managed-care backlash. Still, medical cost trends were at a lower level than they have been before or since. This was a far from perfect but nevertheless elementary example of beginning to pay providers at a level consistent with our expectations for them.
Another solution, risk-adjusted episodic payment, envisions payers like insurance companies paying all hospitals or medical professionals fixed amounts per episode of care, depending on the condition being treated.
Recent movements toward pay for performance or medical home head in this direction, but without a change in the underlying compensation scheme, each additional service generates an additional fee.
Whatever form it takes, restructuring the payment system can motivate healthcare providers to perform—and payers and patients to pay for—only those procedures consistent with the best medical evidence and the needs of the patient. A system driven by results allows physicians more time to focus on the treatment they deliver rather than the quantity of services they provide.
For more, see earlier posts about access and quality.
This post is excerpted from the new paper by Jon Shreve, “Changing Expectations in Healthcare.”
Increasing access is not the only goal of real reform; improving overall quality and efficacy is also an important goal. Simply pumping more money–or people–into the present healthcare system does nothing to improve the underlying quality of care. Provider practices and patient demands that result in low-quality care are not only bad for the patients involved, they also force on all of us a kind of rationing driven by the inefficient use of resources.
What follows has been excerpted from an essay by Jon Shreve, the first portion of which ran yesterday.
For many years, conventional wisdom assumed that barriers such as price or underwriting restrictions accounted for the large number of uninsured Americans. Remove the barriers, the reasoning went, and the problem would disappear. So there was reliance on subsidies to lower the entry cost to access—from government for low income individuals, from employers for employees, from the young for the old.
A number of states have introduced low-cost options for low income people (sometimes at four times the federal poverty level), only to capture a very low percentage of the uninsured. Even free expansions of Medicaid have often experienced take-up rates of only 60% or less. Others imposed restrictive rules on medical underwriting and/or community rating, with similar results—little change in the uninsured rates. Our own research of health consumer behavior shows that offering an affordable insurance option to the uninsured does not necessarily compel them to purchase insurance.
What follows has been excerpted from a new paper, “Changing Expectations in Healthcare,” by Milliman Principal Jon Shreve.
Widespread evidence that our healthcare system is in need of substantial reform continues to mount. Most of this agreement centers on issues of access to affordable health insurance, the need to improve the quality and efficacy of care, and the costs associated with our present system. In order to achieve meaningful reform, a solution must address all three problems.
Of course this is easier said than done. While there may be general agreement on common goals for healthcare—increased access, improved quality, and reduced costs—there is no such agreement when it comes to how we accomplish these goals. If comprehensive healthcare reform is to occur, it should start with a clarification of the fundamental expectations for those involved in healthcare, and then incorporate policies designed to meet these fundamental expectations. Such expectations can help the healthcare system coalesce around interrelated responsibilities for patients, for care providers, and for payers.