The ACP Advocate Blog

by Bob Doherty

Thursday, September 20, 2012

Behind the lines of socialized medicine

Obamacare can be described as a lot of different things, but it surely is not socialized medicine.   No self-respecting socialist would favor having the government write checks for 16 million people to buy coverage from private (and often for-profit) private health insurance companies.  Plus, the Affordable Care Act maintains the employer-based coverage system from which the vast majority of Americans will continue to get coverage.  Heck, it doesn’t even have the public option favored by liberals! 

I write this blog today from a country that has the real thing: Canada!  ACP’s Board of Governors is meeting this week in beautiful Vancouver, British Columbia.   Coincidentally, one of the policy resolutions being debated this morning by the governors is a call for ACP to support a single payer system, like Canada’s.  (Resolutions can be introduced by any ACP chapter, so the fact that this resolution is being discussed does not mean that it is, or will become, ACP policy.  Plus, resolutions adopted by the Board of Governors are advisory to the College’s Board of Regents, which has the final authority to set organizational policies.)

So what can we learn from Canada?  I wouldn’t say that my brief visit here makes me an expert on Canada’s socialized healthcare system.  But so far, I haven’t seen masses of extremely ill patients desperately queuing up in long lines to get health care from beleaguered doctors and hospitals, even though this is the image conjured up by critics of Canadian healthcare, such as this description from a conservative Canadian physician  “Thus, at a time when Canada’s population was aging and needed more care, not less, cost-crunching bureaucrats had reduced the size of medical school classes, shuttered hospitals, and capped physician fees, resulting in hundreds of thousands of patients waiting for needed treatment—patients who suffered and, in some cases, died from the delays.” 

Actually, the Canadians I’ve seen in this Pacific Northwest coast city seem pretty darn fit and healthy! But casual observations, of course, aren’t really a fair way to evaluate Canada’s socialized healthcare system.  It is certainly possible that lurking behind a seemingly healthy and contented Canadian population is a system that is denying needed care and causing unnecessary suffering and death. 

So instead of casual observation and conjecture, what does the evidence tell us about Canada’s experience and how does it compare to the United States?

The highly respected, non-partisan Annenberg Public Policy Center runs a website, www.factcheck.org, that factually evaluates the evidence behind competing public policy claims.  It’s short answer to the question “Is health care better in Canada?” is that “ Wait times are longer in Canada, but health and doctor quality don’t seem to suffer.” 

More specifically, the Annenberg Center reports that “A study by the Commonwealth Fund, a nonpartisan research foundation that promotes improved health care access and quality, showed that 57 percent of adults in Canada who needed a specialist said they waited more than four weeks for an appointment, versus only 23 percent who said so in the U.S. For emergency physician visits, 23 percent of Canadians and 30 percent of Americans said they could get in to see the doctor the same day, but 23 percent of Americans and 36 percent of Canadians waited more than six days. Wait times for elective and non-emergency surgery were even more disparate: Thirty-three percent of Canadians reported a wait time of more than four months, but only 8 percent of Americans had to wait that long. In another study, 27 percent of Canadians said that waiting times were their biggest complaint about their health system, versus only 3 percent of Americans.”

But wait a minute, does Canada’s longer waits for some specialty care result in poorer clinical outcomes and poorer health?  No, says the Center, because “on most measures of patient-reported physician quality, Canada comes out slightly ahead of the U.S. . . Fewer reported physician errors, lab errors, medication errors and duplicate tests north of the border, and Canadians report more satisfaction with their doctors. General health is also better up north, according to the World Health Organization: Life expectancy and healthy life expectancy are both higher in Canada; infant mortality is lower, and maternal mortality is significantly lower. There are fewer deaths from non-communicable diseases, cardiovascular diseases and injuries in Canada, though marginally more deaths from cancer. It’s not clear how much of the divergence is attributable to medical care, rather than other standard-of-living differences between the two countries . . . But these statistics simply don’t support the notion that universal, single-payer health care is crippling the health of Canadian citizens compared with that of U.S. citizens.”

And the Center reports that both the Canadian or U.S. healthcare “score low on health measures compared with other industrialized nations.  “In the Commonwealth Fund’s overall ranking of health system performance, Canada came in fifth and the U.S. came in sixth, out of six countries. On the other hand, the WHO’s 2000 World Health Report gave Canada a slightly better review, ranking it 30th for overall health system performance – above three of the other countries from the Commonwealth study (Australia, New Zealand and the U.S.) but below the other two (the U.K. and Germany). All of these countries, except the U.S., have publicly funded health care, as does every major country in the WHO’s top ten.”

My take-away is that Canada’s system, like the U.S, has strengths and weaknesses.  Canada isn’t the healthcare Nirvana that some liberals believe it to be, but neither is it the healthcare hell that conservatives describe.  It is a system that covers everyone, with lower administrative costs and at a much lower overall cost than the United States, with longer waits for some care than U.S. residents are accustomed to, but with comparable (and in some cases better) outcomes.  The U.S. provides coverage to only 85% of its residents, leaving 46 million without health insurance.  We don’t wait as long for care as our northern neighbors, but our outcomes are no better (and in some cases worse) and it costs us much, much more.  Obamacare would take us a step closer to Canada, in the sense of extending coverage to 92% of U.S. residents, but through a decidedly non-socialistic model of subsidized private and public health coverage, at a much higher cost.

Today’s questions:  What is your view of single payer healthcare and the Canadian healthcare system?  Do you foresee it ever being adopted by the U.S.?

Thursday, September 13, 2012

FFS: What fee? What Service?


The debate over fee-for-service physician payment often is misunderstood to be about the technicalities and relative merits of the RUC, relative value units, P4P and the SGR.  It isn’t—instead, it’s what the fee itself represents (and who decides), and what the service being provided actually is (and how it’s described).

Let me explain.  As I blogged last week, analysts across the political spectrum agree that the health care system needs to move away from fee-for-service, although the reality is that FFS is likely to remain as a component  of new payment models, albeit in a very different form.  They say that we have to change the process for determining the fee itself, and how we define the service being provided to a patient—to one that reward “value” not “volume.”  But how a physician, or payer, or patient defines value may be very different.  Consider the following:

What fee?  From the standpoint of many practicing physicians, the “fee”—to their chagrin-- is what the government allows them to charge, when what they really want is the ability to set their own fees.  Their mindset is that no one else is qualified to determine the value of their service.  No one else—not the government, not MedPAC, not the RUC, and certainly not a “relative value scale” originally developed by Harvard professors-- knows how hard they work, what it costs to run their practice, or how  much value that their own patients place on their care.  They would like to scrap the price controls, scrap the RBRVS, scrap the RUC, scrap the SGR, scrap limits on balance billing, and let every doctor set his own fee and let patients decide if they are worth it.

But from a payer’s perspective, the fee is a very different thing—they want to get the best value for the dollar spent.   Since third party payers are responsible for paying most of the fee, the payer’s interest is getting the highest quality it can at the lowest possible fee.  They accordingly use their purchasing power to drive fees toward the level that gets them the best bang for the buck.  In the case of private payers, they exercise their purchasing power through contracts negotiated with physicians. In many cases, the private payer has such a big share of covered lives that physicians have little choice but to agree to their fee schedule and contractual limits on balance billing.  In the case of government, regulation and rate-setting are how it uses its purchasing power to get the best possible deal for taxpayers. 

Government has other interests in deciding what the fee will be: trying to make sure that the payments are fair and don’t advantage some physicians or specialties or localities over others, protecting beneficiaries from excessive out-of-pocket costs, having some consistency in what the government pays, and using fee setting to achieve specific policy goals, like increasing Medicare and Medicaid payments to primary care physicians to get more to participate or adjusting payments based on performance.

From the patient’s point-of-view, the fee usually comes down to a simple calculation: how much do I have to pay out-of-pocket, can I afford it, is the cost predictable or am I going to be stuck with a huge bill?  Some of them may be able to pay more, but I don’t see a lot of patients telling their doctors please, please charge me more because I think you are worth it.  It’s not that they don’t think their doctors are great and worth every penny.   It’s just that it goes against human nature to pay more for something if you can get it for less—or have someone else pay for it!  Plus, most patients already are paying about as much as they can afford out-of-pocket, so they really aren’t interested in proposals (like getting rid of balance billing limits) that would allow doctors to charge them more.

What service?  From the physician’s point-of-view, the “service” is the expertise, skill, time and compassion she brings to a patient encounter. So the service rendered really isn’t an “office visit” or “colonoscopy” or a CPT code –it’s the physician herself!  

But from the payers’ perspective, the service is something that can be described consistently across clinicians, be documented, audited, reported and coded properly.   They want to be sure that the service being billed by Dr. Smith is roughly equivalent to that by Dr. Jones, so that their subscribers are getting approximately the same service for the same premium.  They want to be sure that the actual service rendered is the same as the code descriptor says it is.  They want to be sure that the physician can provide documentation to support the service that was billed. They rely on tools like the RBRVS and the CPT coding system to try to establish such consistency and auditability.  And the government, in particular, has a statutory mandate to reduce fraud and abuse so that taxpayers don’t pay for a service that is different than the one billed to the government (that’s called program integrity).

From a patient’s point of view, the service isn’t an office visit per se.  It is the doctor’s expertise—but it is also much more than that.  It is how much time the doctor spends with them.    It is whether they have to wait 45 minutes “because the doctor is running late.”  It is whether their doctor clearly explains what is wrong with them and what can be done about it.   It is when and how well the doctor communicates about a worrisome test result.   It is whether they are herded or heard when they ask questions.  It is whether their doctor helps them get well.  Their values can’t be readily captured by CPT code or a so-called relative value unit.

The point is that each of these three perspectives—the physician’s, the payer’s, the patient’s—on what is the fee (and who should decide) and what is the service that is being provided (and how is it described, billed, documented, and validated) reflects their own particular place in the health care system. As such, their interests will inevitably clash.  This is really what the fight over relative values, the SGR, documentation requirements, and balance billing is all about—each one trying to align fee-for-service with their own interests, the physician’s in being able to control his or her own fees, the payer’s in getting the most bang for the buck, the patient in getting care that is centered on their needs at a fee they can afford.   

Of the three, it is patient’s interests that ultimately must be paramount.  As policymakers drive physicians and the system to new payment models (including changes in fee-for-service), they need to ensure that the fee paid gets the patient the best value possible—great outcomes delivered efficiently, but at a rate that  ensures that there are enough skilled doctors to take care of them, not more, not less.  Policymakers need to recognize that from the patient’s point of view, the service being paid for isn’t an office visit, or procedures, or CPT code or RVU per se, it is high quality, patient-centered, compassionate care delivered by a highly skilled physician of their choice.  And policymakers need to recognize that a payment system that devalues a physician’s training, knowledge and skills, that forces them into delivering assembly-line care, and that drives the best out of medicine serves no one’s interest, but especially not patients’.

Today’s question: What do you think about my explanation of the different perspectives that physicians, payers and patients bring to the debate over fee-for-service?

Thursday, September 6, 2012

Republicans and Democrats alike want to kill fee-for-service. But it might not be dead (yet).

Republicans and Democrats don’t agree on much about Medicare, except for getting rid of the fee-for-service system for paying doctors.

“If reducing the growth of Medicare spending to sustainable rates and moving away from fee-for-service are ‘ending Medicare as we know it,’ then both parties have embraced that goal, writes former OMB Budget Director Alice Rivlin in a Daily Beast commentary.   “Paying providers on a fee-for-service basis offers incentives to perform more services than necessary” she observes, “Health reformers in both parties favor adjusting payments to reward results, improve care coordination, and discourage waste. They also see the massive, largely fee-for-service Medicare program as a potential leader driving the whole health system toward greater efficiency.”  Both also agree on a same target rate of growth for Medicare.

Where they differ is how to move away from fee-for-service, she continues.  To reach the common objective, “Democrats favor regulation and Republicans tout market competition.”  Democrats rely on having the government promote “innovation, demonstrations, and research to develop more effective care delivery and an Independent Payments Advisory Board (IPAB) to design ways of keeping Medicare spending from rising much faster than the economy” while Republicans “prefer giving seniors a choice of comprehensive health plans offering benefits equivalent to Medicare, with the plans receiving a risk-adjusted payment from Medicare (premium support). They hope competing plans will ensure improvements in quality and lower cost, but they would also cap Medicare spending growth at the same rate the president proposes.”

So physicians contemplating the choices in this election might ask themselves. Do you want the government to limit total Medicare spending and have it decide how and how much you will be paid to keep spending under that limit?  Or do you want the government to cap its total financial contribution, turn the money and decision-making over to private insurers, and let them decide how and how much you will be paid to keep spending within the cap?

But despite a seeming bipartisan consensus that fee-for-service payment is the source of all evil, it might yet survive, with major changes.   Paul Ginsburg from the Center for Studying Health System Change takes this contrarian view in a new Health Affairs article. “To many policy analysts, the term provider payment reform means abandoning the fee-for-service approach, which pays clinicians for each service rendered, in favor of broader units of payment—such as global payment or episode bundles—which either cover the whole person regardless of the number of services provided to that person, or cover the whole episode of care for a specific condition” he writes.  “Even if these approaches succeed and are widely adopted, the core method of payment to many physicians for the services they provide is likely to remain fee-for-service.”  

He continues  “To be sure, physicians’ payments will be calculated not only according to volume, but also according to measures of physicians’ quality and efficiency. Both measurement and distribution of payment will be done by the organizations, or systems, such as the accountable care organization within which the provider delivers care.  As a result, for many physicians, these broad payment reforms, such as accountable care organizations, are more accurately seen as enhancements to fee-for-service, rather than as replacements.”

Ginsburg then argues that if fee-for-service is going to continue to be the “core method” for paying doctors, fee-for-service itself must change.  He advocates a range of reforms: better aligning payment for physicians’ practice expenses with relative costs,  reducing the influence of the Relative Value Update Committee (RUC), using more robust data than the surveys done by specialty societies to determine relative values, capturing  quickly any reductions in physician work and practice expense that occur as new technology evolve;  and paying primary care doctors (but not subspecialists) more for their evaluation and management services.  He also advocates for broad payment reforms, including Patient-Centered Medical Home and ACOs; although these models would include a fee-for-service component, total physician payments within these systems also would be linked to measures of quality and efficiency.

So like the famous “I’m not yet dead” Monty Python character in the Search for the Holy Grail, fee-for-service might yet survive, if the politicians don’t decide to put a quick end to it.   But fee-for-service won’t look much like the current system—many surgical and medical specialists likely would see their procedural fees go down, primary care doctors might see an increase in payments for their evaluation and management services, organized medicine would have less influence, and just about all doctors  will see that their “payments will be calculated not only according to volume, but also according to measures of physicians’ quality and efficiency.”  

I am not sure that this is what physicians who want to preserve fee-for-service have in mind—must just want to be let alone to set their own fees—but that isn’t what (most) Republicans or Democrats, or policy analysts from across the political spectrum, have in mind for them.  They might still be paid a fee for each service, but the fee will be determined by the government within a total budget, or a health plan within a total budget, or a health system operating within an at-risk budget, with their payments adjusted upward or downward based on measures of efficiency and quality. Some physicians (especially primary care) may do better under such approaches, some worse, but it will be very different than the fee-for-service system that most doctors are used to, and seem to prefer.

Today’s questions: Do you agree with Rivlin’s view that both political parties have embraced moving away from fee-for-service, and that this would be a good thing?  Or Ginsburg’s view that fee-for-service will likely continue to be a core component of broader reforms, but fee-for-service itself will  have to be radically changed to survive?

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About the Author

Bob Doherty is Senior Vice President, American College of Physicians Government Affairs and Public Policy; Author of the ACP Advocate Blog

Email Bob Doherty: TheACPAdvocateblog@acponline.org.

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