2 posts tagged “american medicine”

The payment system in the US is complex. There are multiple payers, uninsured patients, concierge care, CMS, e/m coding, CPT, ICD-9 (soon to be 10), EMR, CPOE, and a multitude of other nuances that make the alphabet soup of American medicine. Confused by it all? You are not alone. It seems that solutions to the current mess just make the situation more of a mess.

Perhaps the hottets topic in medicine is Pay for performance (P4P). While P4P has gotten lots of attention, as well as taking much fire from critics, it is not the only way to pay physicians. To help you through the quagmire I have set up a table of some of the more common forms of payment:

Do you have more? I would like to hear other payment criteria I have missed.

In my last post on E/M coding, I spoke about the mess that is the payment system in American Medicine. My main points were:

1. It is a system of “codes.” Your payment for any given visit or procedure depends wholly on your ability to code properly.
2. The level of billing for most physicians depends not on the complexity of care given, but the level of documentation in the record.
3. Physicians risk inadvertent medicare fraud if they bill more than they document.
4. The result of this is a “gaming” of the system to get paid enough without risking committing fraud.
5. The entire process of billing is independent of the quality of the care given.

Most of the problems with cost and quality in American medicine are caused by this billing system (in my opinion). As one of my favorite sayings says: your system is perfectly designed to yield the outcomes you are currently getting.

A discussion of the current situation leads to the question: how did we get to this point? The system did not appear out of the air; no one was forced to accept it at gunpoint. The change was slow.

I have heard that if you drop a frog into a pot of hot water, it will try to jump out. If, however, you put the frog in warm water and heat it up slowly, you end up with a cooked frog. In the same way, what seemed to be a reasonable system has gotten terribly out of control and is now cooking us (I can smell the basil). By looking at how we got to our present state, perhaps we can come to some answers as to how to get out of the current mess.

I think it is helpful to look at several factors that have contributed:

Problem 1: Procedure-based billing

Medical billing is based on procedures. A procedure is a captured event - either a visit to the doctor, a test performed, or a treatment done. Payers determine the value of each of these procedures prior to them being accomplished and agree to this list with the physician. Each physician has a fee-schedule based on the procedures they commonly do and what the insurance companies will pay.

The only way to show that a procedure was actually done is to document it. This is the reason for the inexorable tie between documentation and pay. The third-party payment system demands evidence that the office visit, lab test, or surgery actually happened. In a system where the patient directly pays the physician, this would not be as necessary, as their experience of the office visit, lab test, or surgery would be evidence enough in most cases.

Several inevitable financial realities result from this:

1. The higher-paid procedures will inevitably be favored by physicians over lower paid ones
2. Doing more procedures will be favored over doing less
3. Since the fee-schedule is set in advance, there is no differential given to the quality of the procedure done.

Let me be clear: I am not saying that doctors are all about money. Plenty of doctors have gone into lower-paying sides of medicine and have passed up ways to make more money for the sake of “doing what is right.” Yet each medical office is a business that needs to sustain itself. In these days of decreasing reimbursement, the focus is more and more on survival than maximizing profitability. That is why the number of physicians going into primary care are decreasing.

Problem 2: Technology

It is probably not coincidental that the boom in medical technology accompanied a system that favored those procedures financially. Medical advances that amazed the public came in several areas:

1. New surgical/invasive procedures - such as coronary bypass and organ transplants
2. Diagnostic procedures - MRI, CT, PET Scans
3. Treatments - “Blockbuster” Drugs (Statins, ACE Inhibitors) prevent heart disease and new chemotherapies cure more cancers

In a system that rewards treatment rather than prevention of them, the economic pressure again lead to increased success of the procedure-based specialist and the increasing number of drug companies, device manufacturers, and medical diagnostic companies jumping on the “gravy train.”

It is important to note that the office visit is considered a procedure, just like a heart bypass, colonoscopy, or MRI scan. The reimbursement for these procedures is obviously very different (by orders of magnitude). While this seems to be intuitive, since the technology used varies greatly, should it be the case? Should reimbursement be based on use of technology or the value of the procedure itself? Isn’t it more valuable to have physicians who make diagnoses using the least resources possible?

Problem 3: Third-party payers

Problems came with the rise of technology. If this were an all-you-can-eat buffet for healthcare, then there would be no problem with the increasing number of procedures. The problem is that this is a la carte - meaning that the more we do, the more we pay for. Rapidly rising healthcare costs caused those who pay for healthcare to look for ways to slow this rise. This is what brought on the beloved thing called managed care.

Implicit in the term managed care is the fact that care previous to that was mis-managed care. Care, however, was not what was the focus of the management. Cost management was the primary goal of managed care. They did this through denying of payment for anything they deemed unnecessary. Eventually this lead to the use of authorization, in which the physician would receive permission from the insurance company to order a test or give a drug.

The use of authorization and care-management was the first time when people started looking at the value of procedures and the quality of care. Disease Management and Evidence-Based Medicine became the backbone of the insurance industry’s strategy to cut cost. The goal was not, however, to improve the quality of care; the goal was to cut cost and maximize insurance company profits.

Just a thought: I wonder how big a contribution to the problem is the fact that health insurance companies are publicly-traded companies. Since they ultimately answer to the stockholder it seems to me they are not just driven to be profitable, they are driven to maximize profit. Isn’t this in conflict with what is best for the system?

Problem 4: Bad Data

If the goal is to have an efficient healthcare system, one of the most important things to correct is the data that is being used. Since the majority of physicians have no way of assessing the quality or cost of the care they give, the job has fallen to the only group with any data: the insurance industry. The claims data (data based on billing) they have is useful at tracking utilization of medical resources. This is why they entered the arena of care-management: they were the only ones with the data.

There are several obvious problems with their data:

1. It is retrospective data - it reflects procedures already done and so is difficult to use to help make decisions prospectively.
2. It is inaccurate - When I have gotten information from insurance companies about my medical quality, they have been right about half of the time (when I compare the data to that in my EMR).
3. The insurance industry has a huge financial interest, so it is difficult to maintain objectivity when simply denying payment will increase their profits.

Until EMR becomes more than a documentation tool and EMR adoption becomes widespread, the ability to act on anything but claims data will severely stand in the way of any hope for change.

Acting on These Problems

I am sure that this list is not complete (and I would greatly appreciate other suggestions), but it does suggest some possible routes to change the system in a positive way:

• Look at other ways to reimburse medical care outside of the procedure model. Efficient use of resources and following evidence-based guidelines should be encouraged. A de-emphasis on procedures and an emphasis on the value of the care given would lead to more good care and less unnecessary procedures.
• Reassess the placing of preventive care and disease management in the same category as technical procedures.
• Third-party payers’ incentives need to be in line with what is best for the system. The goal of the healthcare system is to enable effective and efficient care. The current system encourages corporate profits and under-utilization of resources. I find it curious that people say that there is not enough money for widespread EMR adoption, while it seems that pooling the salaries of the CEO’s of insurance carriers would cover a significant percent of this expense. The money is there - it is just going to the wrong places.
• For “managed care” to fall back to the hands of those in charge of the care, they need to have the data with which to do this. IT adoption is crucial to allow this change to happen. It will put information in the hands of those who can really effect change.

Tags: EMR, EHR, Healthcare, Billing, Medical