Wednesday, June 17, 2009

Fee For Service


Not too many years ago, as the many-layered onion that is physiciandom brought tears more and more constantly to my eyes, I said, "What the hell, I give up. If this is all just a way to break us down and put us on salary, bring it on. Just tell me how much I'll get, and I'll decide if I want to keep doing it."

Paperwork propagating like potatoes; rules compounding themselves like viruses; payments receding like ice-caps. There's no doubt it affected my enjoyment of my work, steadily plunging the pleasure, the honor, the gift, and the psychic rewards of being a surgeon deeper into the bulb of the allium, harder to find without crying. And yet such thoughts find little if any resonance with the public. Fee for service, it's said, is the root of the economic evils of our health care system. I don't entirely disagree: what we have now is the worst of all possibilities.

There are many ways in which health care doesn't follow other capitalistic models. Attempts at controlling costs have included, for instance, both restricting and increasing the number of doctors produced in medical schools. Neither worked. To date, disguised and dressed in many pretty outfits, the main tool for cutting costs has been reducing payments to physicians and to hospitals. At best, results are mixed: forced to work harder and harder to maintain income, many doctors (speaking) have burned out and quit in their prime. Turned into bean-counters, those that stay have adopted methods that frustrate patients: cramming more visits into an hour, charging for phone calls, etc... Ancillary charges are outrageous: a friend recently wrote me about a $3,500 CAT scan, a charge of $850 for a simple automated blood test. (Not that anyone but the uninsured actually pays them: in some sort of dance macabre, insurers reimburse ten or twenty percent of those fees and the rest is smoke.)

(In a related note, I read that President Obama's doctor isn't happy with Obama's health reform proposals. In the article the good doctor says neurosurgeons get $20,000 for "cutting into the neck" of his patients. Now, I have no idea what goes on in Chicago, but I'd propose that, if twenty grand is an actual fee, like the $3,500 CAT scan, the reimbursement is a small fraction. In this post I don't want to get, yet again, into the frictions between surgeons and real doctors; but such a claim suggests a certain amount of hyperbole in the discussion. On the other hand, he implies he's for a single-payer plan; on that, we agree!)

Pay for doing stuff is the wrong incentive, so we are told. It leads to over-ordering of tests, over-doing of procedures. Can't entirely disagree. Read Atul Gawande in The New Yorker, or Buckeye Surgeon in Buckeye Surgeon. But if it's a problem, what is the solution? Salaries, says Atul. Better docs, says Buck. And me. With the right incentives.

I've said before -- to hoots and snark -- that I don't think many physicians are in it primarily for the money. But I do believe that, as in most other professional pursuits, people willing to work hard and who produce superior results have an expectation of some sort of recognition. Which includes income. And that's precisely why I said above that what we have now is the worst of all possibilities; fee for service with no incentives for quality, no differentiation among bad, mediocre, and excellent providers. For doing a colon resection in half the operative time (saving thousands in OR costs), sending a happy patient home two or three days (or more) sooner than average (saving thousands in hospital costs), with a lower rate of complications, I got exactly the same reimbursement -- from Medicare, from any insurance company -- as the surgeon who did none of those things. If, to a payor, a colon resection is a widget, the only criterion for payment for which is agreement to accept the latest slice in compensation, why bother to do those things? (Getting patients home quickly requires, among other things, making rounds two or three times a day, which most docs no longer do -- but which I always did. Faster operative times result from many things, among which are attention to detail, making sure in advance that what you need is in the room, keeping the team informed of what's coming next. Even helping move the patient and clean the room. Not seen frequently. Since I retired.)

A high percentage of doctors are human beings. That means they often respond like other people. Incentives and disincentives have an effect on behavior. Which is among the reasons "effectiveness research," or whatever the proper name for the effort (the blocking of which is desired by several legislators on the rive droit) to identify best treatments, makes nothing but sense.

I suppose it gets tiresome to read such treati. The bottom line is I think a system works best when there are incentives -- positive and negative -- to do the right thing. Some will, no matter what. (Of those, some have hung it up...) Salaries (at least those with no opportunity for adjustment based on performance) encourage laziness; capitation encourages the withholding of care. Fee for service which makes no allowance for differences in quality encourages abuse. And burnout.

Based on the snippets coming from the halls of Congress, I'm pretty well convinced that whatever so-called reform we get will fail substantively to address the real problems in our system: insurers, excessive or inappropriate "care," reasonable reimbursement across all fields of medicine, costs. And, for the life of me, I can't understand why.

Well, of course, I can.

15 comments:

Adjuster Mike said...

Since I believe you would endorse a single payer system, how would said system address the pay-for-quality concerns of this post? It almost seems as if that is a conundrum that no one has a real answer for.

I believe that innovation among providers is necessary to assist consumers in determining quality. Other than checking to see if a doctor has any disciplinary action on file with the board of medicine, and word of mouth among peers, how does a consumer know in advance who the quality docs are?

Recently I wanted to find a new dentist in my area. I went to my insurance company's website and did a provider search. All I really got was a list of names. How in the world do I know who is good and who isn't? One answer is the web. I tried to find websites for the dentists, and of all the ones I Googled, I could only find one. That's who I decided to use.

There are so many questions, and yet it seems like there are so few good answers.

Beach Bum said...

One problem with trying to measure quality and effectiveness is that you have to pay someone to do the measuring. Admin costs would go up.

Sid Schwab said...

Mike: I don't think a single payer system would make pay for performance any harder than one with insurance companies. In fact, Medicare is already doing it. It's just that the parameters are pretty lame; but it's a start. The issue is the concept of pay-for-quality; there are lots of problems that would need to be overcome, but the payer has little if anything to do with it.

As to your questions about how consumers judge quality: I've always said that if you have a primary care doc that you trust, his/her recommendation of a specialist might be the most important. Not that all motives are pure...

BB: if such a plan were effective, the costs generated to implement it would be far offset by the savings it generated. IMHO, anyway.

Buckeye Surgeon said...

nice. wb.

Adjuster Mike said...

I think you should start cutting health care costs right here on this blog by sponsoring an Ask The Doctor column.

Or to take it a step further, if you're bored in retirement, join up with one of these telemedicine practices.

Are you still able to write prescriptions?

Sid Schwab said...

Yep, still have an active license.

Robert said...

Sid, I am a 3rd year medical student, and I am worried about what the future is going to be for this profession. It's fairly obvious that when/if the government controls the insurance industry completely that they will also set the wages for doctors. It also seems like most people are completely unsympathetic to the plight of doctor compensation, which means to me it would be very easy politically speaking to cut the wages severely. At some point the pre-meds are going to realize it's not worth it, once the sentiment changes, we will no longer have a quality pipeline of people willing to train. Those people will go industries with less regulations on their income ie law and business. It's also about autonomy, which was one of my big reasons for signing up. What kind of bureaucracy are we going to have to navigate to get things approved with a national insurance? It just seems like the government is setting this up and stepping over the doctors, and saying here is the new system if you don't like it tough. And support for tort reform, but no caps on damages according to Obama's speech to the AMA? So are they also going to nationalize malpractice insurance, or are doctors going to be left holding the bag on that also? I'm intrested to hear your thoughts.

AlisonH said...

Sid: did you see this? http://www.latimes.com/features/health/la-fi-rescind17-2009jun17,0,5975386.story?page=1&track=rss

It's a little off track from your post, but desperately in need of being put out there. The LA Times has been doing a series on insurance companies and attended this congressional subcommittee meeting that a lot of the rest of the media seems to have missed. THIS is part of our health care crisis: private insurers not being required, like HMOs, to cover pre-existing conditions, and therefore going back 20 years in people's records to find anything possible not reported on their applications in order to dump them. And then you have people who have paid their premiums but then are left high and dry when they become ill, and doctors and hospitals going unpaid. While those executives pay themselves many millions that should have gone to patient care.

Meantime, my hospital bills this past winter came to $400,000. My insurance paid half that and it was accepted. My extremely qualified surgeon deserved every dime they paid her and then some, and I was surprised at how low her pay was compared to all the other expenses on the bill that came.

Sid Schwab said...

Robert, you are expressing concerns I've had as well, and have written. It's hard to know where it's headed. The system is already, as I see it, deselecting highly motivated people.

One thing to keep in mind is that payments to docs are already pretty much controlled by "the government:" medicare sets fees, other insurers follow suit. The difference between what medicare pays and what other insurers pay has narrowed considerably.

That's one of the reasons, among many, that I'm for single payer: physicians already have little influence over reimbursement.

On the other hand, medicare has not been entirely unresponsive: fees have risen is some areas. Docs do have influence, used properly.

Dealing with only one payer would be a huge time-saver for docs, and a money saver as well, at least in terms of overhead.

Also, as I've written, the models for physicians' lifestyle is changing as well. With hospitalists becoming more and more ubiquitous, it makes the demands on other docs far less; and the hospitalists practice in an entirely ordered schedule. In other words, compensating to some extent for the lowered pay is a less demanding lifestyle.

Sid Schwab said...

Alison: I hadn't seen that article, but I'm already working on a post that's relevant to it.

Anonymous said...

Glad to see that I could read your opinion on this. It's not a surprise that most physicians feel the same way. This healthcare reform plan is ridiculous, and a miss shot.

Anonymous said...

@Sid - glad to find this blog. I'm in the middle of dealing with an insurance company who won't pay out for emergency medical care that I needed. I've started to educated myself on the issue.

@Robert - is the potential situation for doctors so dire that they will go bankrupt for providing care? The reason I ask that is because that right now is the plight of the uninsured, such as myself.

Anonymous said...

Dr. Sid,
1.) In a pay for performance type set-up that rewards things like "good outcomes" and quick dismissals from the hospital, won't doctors just cherry pick younger, relatively healthier patients to maximize their positive outcomes and ensure they get paid. Won't docs possibly shy away from treating/operating on patients who are unlikely to have a good outcome but have no other reasonable options (eg. certain mets cancers, etc)?

2.) How will non-compliant or self destructive patients factor in to this "pay-for-performance" set-up of physician reimbursement?

3.) How much of an effect does a shorter operation time have on a patients recovery (eg. 1 hour vs 2 hour colon resection)?

4.) Is basing payments on shorter surgery times ethical, considering we don't know if surgeons will make more mistakes in their haste?

5.) How can serious "healthcare reform" include cuts in reimbursement & not include med malprax tort reform?

6.) Do you see any hope for a free market solution (similiar to the attached link)? http://online.wsj.com/article/SB124476804026308603.html

7.) Do you think limiting some of the govt regulations on health insurance (see attached link)would allow more competitive pricing? http://www.americanthinker.com/2009/06/government_wont_allow_fair_com.html

8.) Is all this reform even worthwhile if it persuades the "best & brightest" to pursue other vocations? (There is only 1 neurosurg in a large portion of my state. A free healthcare card is not useful if there is noone there to treat them)

Thanks for considering my questions.
Regards,
Precordial Thump

Sid Schwab said...

P. Thump: good questions, all.


1.) In a pay for performance type set-up that rewards things like "good outcomes" and quick dismissals from the hospital, won't doctors just cherry pick younger, relatively healthier patients to maximize their positive outcomes and ensure they get paid. Won't docs possibly shy away from treating/operating on patients who are unlikely to have a good outcome but have no other reasonable options (eg. certain mets cancers, etc)?

It's already happening, to some degree, especially when such things as mortality rates are released to the public with no criteria for comparison. On the other hand, there are ways to compare apples to apples, by "scoring" co-morbidities. It's not simple, but I think it's doable. Anesthesia, for example, already does it to an extent, assigning levels of complexity to their billings.

2.) How will non-compliant or self destructive patients factor in to this "pay-for-performance" set-up of physician reimbursement?

That's less of an issue for surgeons, but a significant one for primary care. Again, I'd assume there are ways to score such things. The emphasis would have to be on the extent to which guidance is given, and followup arranged, as opposed to cooperation by the patient.

3.) How much of an effect does a shorter operation time have on a patients recovery (eg. 1 hour vs 2 hour colon resection)?

I've written about that in this blog. On average, I'd say the difference is more in cost than in outcome. However, in older and sicker people there's no doubt that the longer the operation, the more difficult and complicated the recovery.



4.) Is basing payments on shorter surgery times ethical, considering we don't know if surgeons will make more mistakes in their haste?

I'm not sure "ethical" is the issue; nor is fast surgery "hasty" surgery. It's about total costs generated. There are ways to shorten hospital stays, and to shorten operative times that don't involve "haste" or short cuts. Until there were objections from surgeons on the short end of the stick, one of the local insurance companies gave bonuses to docs that had lower overall costs per diagnosis.

And, as I said, the bottom line is outcome. That, ideally, is factored in as well. Sacrificing results for lowering costs wouldn't be rewarded.


5.) How can serious "healthcare reform" include cuts in reimbursement & not include med malprax tort reform?

I don't think it can. I just didn't go into it in this post.

6.) Do you see any hope for a free market solution (similiar to the attached link)? http://online.wsj.com/article/SB124476804026308603.html

I don't know if I'd call that a "free market solution," at least in the way Congressional republicans have used the term. I'd call that sensible approach using known methods to improve employee health, and I think it's part of a total solution. "Free market," to me anyway, suggests the idea that competition among insurers will solve all problems. Which, clearly, it hasn't.

7.) Do you think limiting some of the govt regulations on health insurance (see attached link)would allow more competitive pricing? http://www.americanthinker.com/2009/06/government_wont_allow_fair_com.html

I'm no expert on regulations. It's another "free market" question. I don't think deregulation has worked in any areas in the last few years. I don't think insurers, for the most part, have patients in mind: their business model (as I'll be saying in tomorrow's post) is about collecting money, investing it, and trying not to give it back to consumers/providers.

8.) Is all this reform even worthwhile if it persuades the "best & brightest" to pursue other vocations? (There is only 1 neurosurg in a large portion of my state. A free healthcare card is not useful if there is noone there to treat them)

As I've said, it's already sending good people out of the profession, as it currently is. A system that rewards excellence might be able to reverse the trend.

Anonymous said...

Who created the fee for service payment system? Is is a Medicare model that insurance companies have simply copied, or the other way around?

Don't you think if people knew what various tests and procedures cost they might a) comparison shop and b) consider whether or not they really need it? I know I did when my doctor ordered a sonogram (while saying he didn't think it was necessary) because I was having irregular periods. I have an HSA and find I think a lot more about what things cost and how to spend that $ compared to friends with "all you can eat" insurance plans. I know this does not address the other issues such as pre-existing conditions, but I think having some skin in the game would go a long way toward curbing needless expenses. It just seems like common sense.