When Compromise Is Key

Reformation of the American healthcare system is not a new concept for Robert Berenson, who has been publishing work on physician payment and healthcare cost containment since 2003. He tells EHM about the need for compromise between private and public payers.

“There are opportunities for cutting costs but nobody has figured how to come up with proposals that are politically saleable”
-Robert Berenson

As a member of the think tank Urban Institute, Robert Berenson’s independent views on policy implementation have been developed during 20 years medical experience and a number of jobs in previous administrations. He worked on the White House Domestic Policy Staff during the Carter administration, as well as being a political appointee at CMS for three years in the Clinton administration. It’s his work within Medicare payment policy that has shaped his belief that Medicare should be collaborating with other payers to create a better system.

Payer reform
“Methods for setting fees for physicians in Medicare has been broadly adopted by private payers and they’re using it in their own fee schedules – Medicaid agencies use the Medicare fee schedule as the basis for setting their own fees.

“If private insurers use the Medicare fee schedule, then it follows that they should be much more active in what goes into the Medicare fee schedule rather than the current system which defers much too much to the AMA’s specialty societies. It’s a process that private payers could be actively involved with,” says Berenson, also citing the patient-centered medical home as another example of the common interest that public and private payers share.

“It seems pretty clear that to really make the healthcare system work, to promote real reorganization and new culture in how primary care physicians interact with their patients, you’ve got to get all payers at the table together. First, we’ll see if there’s an agreement on what the concept really is and then, second, to address various approaches to promoting it. So far, Medicare will have its own demonstration and private payers in many states are doing their demonstrations, but if you don’t include Medicare patients, it’s not likely to get the real attention of practices. Medicare patients are such a dominant influence and if the medical home involves trying to improve care for those with chronic illnesses, then that has to include the Medicare patients.

“There’s a separate discussion going on as to whether a Medicare-like public program should be an option in the health reform to provide coverage. No one is seriously talking about Medicare itself being the basis for that public plan, although there are all these discussions about whether people approaching the Medicare age should be allowed to buy into Medicare at a fair rate, but that seems to have died down during this year. Medicare’s major role is in delivery system reform and new payment models.”

Micro-care
The issue of the rise in multi-chronic diseases and the rising age in baby boomers remains to be at the very forefront of healthcare concern. Berenson notes an approach currently being tested in North Carolina, with early signs of success, in the state Medicaid program. It has now also begun to be implemented throughout the State of Vermont as they continue in unveiling their health reform plans. The strategy is to have a team of non-physician professionals – nurses, pharmacists, social workers, nutritionists – located in the community, either at the hospital or at the health department. The community physicians then have a place to refer their patients to and to interact with on a much more personal level than the disease management approach of having nurses in call centers.

“This new model would actually place those professionals in the community. They can go to the patient’s house, be on the phone with them, go with patients to the doctor’s office if necessary, and so it’s essentially an approach to setting up virtual teams of professionals working together. So it’s a very interesting model that’s being tested which would apply to a large part of the country where you still have lots of small, one person doctor’s offices,” he explains.

Promoting larger organizations, such as multi-specialty group practices like Geisinger still remains a popular notion, and with many young doctors opting to work in larger practices, in a salaried pay with scheduled on call and off call hours it is possible that the long held promise of larger organizations with greater in-office capabilities will finally be realized.

“The possibility of more multi-specialty group practices, which would have the ability because of their scale to have the nurses, nutritionists and social workers as employees that would work with patients with multiple chronic conditions is moving forward,” he says. “Medicare can take the lead on figuring out a payment model to encourage that kind of organization.” . Berenson favors a move away from fee for service to population-based payment. Here,  payment is based on the numbers of people cared for rather than the number of services provided. Currently, the focus seems to be on trying new approaches to what has been called capitation, and moving away from those that failed during the eighties and nineties.

Berenson also argues that something needs to be done, and soon about health professional workforce – the primary care physician workforce infrastructure is in dire need of change, and without an immediate boost it is likely to collapse. The medical students are not going into the primary care, internal medicine, family practice or pediatrics, and almost nobody is going into geriatrics despite the fact that we have an aging population,” he explains.

Clearly, one of the key factors of this is that in reimbursement schedules, primary care physicians are at the bottom of the rung. Berenson expounds on his recent research which confirms that for private insurance and for Medicare the hourly return for some specialist is approaching two and a half times what the hourly return would be for a primary care physicians; it’s argued that it’s actually more stressful and more demanding to be in primary care than in some of those specialties where the schedule involves fairly routine and repeated procedures.

“We’re sending a signal to medical students that this is an unglamorous specialty and it pays lousy, so anybody with a choice is going into something else,” he says. “The doctors who used to go into primary care now are becoming hospitalists and doing their work in the hospital. A lot of the residents are coming from international medical graduates, and that raises the whole issue of us trying to fill in gaps in our health system by robbing other countries of their expertise. It’s not a good policy. I’ve been arguing for substantial increases in primary care incomes as a way of trying to move people into primary care, especially geriatrics. Of course, for extra income, we should expect a certain level of performance from these physicians – especially as regards responsiveness to patient needs 24/7.”

Administrative proposals
The new administration’s commitment to increase healthcare coverage to include all Americans via an affordable plan is likely to place even more strain on the current system. Berenson cites the downfalls of such a policy: “You’d need to spend a lot of money to get everybody covered because most of the uninsured are low-income people who need to be subsidized to be able to get insurance. They can’t afford it and so the current estimates are that the ten-year cost of covering everybody would be about $1.2 to $1.5 trillion.

“This isn’t the same situation as bailing out the banks. Apparently Congress has decided that this $1.5 trillion will have to be paid for and therefore you have to look around for sources of revenue. There’s the belief and some evidence that we are spending a lot of money for no particular return in our healthcare system. We’re more expensive than any other country on a per capita basis without getting commensurate improved access or quality, so that there are opportunities for cutting costs but nobody has figured how to come up with proposals that are politically saleable and have a broad consensus.

“So the barrier this year is to figure out how to finance the coverage expansion. It looks like we will legislate this year, but maybe we’re not going to be able to legislate the whole thing in one package at this point. They might set it up in stages and newer proposals or ideas about how to contain costs, as they become successful will then result in an ability to cover more people. Obama also suggested that we don’t fund all of the expansion just from the health system, but instead we could do some more progressive taxation. However, even in his budget he proposed that the mortgage deduction and charitable deductions be capped at 28 percent – that would raise a lot of money, but is not favored by Congress. So as of now it looks like the health system itself is going to have to produce the savings to finance the expansion, and there is no consensus as to how to do that right now.”

A competitive system between public and private results in private insurers starting with a significant disadvantage compared to a public payer such as Medicare. “It’s pretty well-documented that the cost of increasing ability of hospitals in particular, and increasingly physicians, to gain local market power such that private insurers pay an average 20 to 30 percent more than Medicare pays for the same services,” says Berenson.

“Private payers also have significantly higher administrative costs so they then have to do much better using medical management to influence the use of services, and there’s some evidence that they do better than Medicare does in that area. The public debate has been dominated with discussions of a ‘government takeover” of healthcare, but in many European countries like Germany, France or The Netherlands, hospitals and physicians remain as independent entities and professionals, not part of the government. There are private insurers. There is a lot of loose and misinformed rhetoric floating around about ‘socialized medicine.’

“So at least one compromise was to have a public plan competing with the private plan, and that’s where there’s a major fault line in the current debate. Republicans and the insurance industry are fighting aggressively to oppose a competing public plan, arguing that public plan has unfair advantages. And on the other side, Democrats and people who think Medicare functions pretty well think that a complementary public plan could be the only way of reducing cost and continue going forward. At this point, nobody is seriously talking about moving to a single payer program and putting out of business private insurers directly and, in fact, people on the left who are single payer or Medicare-for-all advocates are very critical now of being left out of the debate as Medicare for all is not on the table as an option.

Patient-centered medical home
A strategy focused on providing primary care, the PCMH facilitates the relationships between individual patients and their personal physician who will provide individual, continuous care. This physician is responsible for coordinating all of the patient’s needs, whether this involves acute care, chronic care, preventative services or end of life care.

Geisinger Health System
In February 2006, Geisinger unveiled a new strategy within healthcare, in a bid to change the way in which it is provided and paid for. The program named ProvenCare holds three components: a strict emphasis on evidence-based medicine, a financial mechanism to pay for major surgical procedures and patient engagement.

Robert Berenson is an Urban Institute Senior Fellow and has published widely on a range of topics, including physician payment, private plan contracting in Medicare, healthcare cost containment and malpractice reform. He served on the White House Domestic Policy Staff under the Carter administration.

 

Patient-centered medical home

The patient-centered medical home (PCMH) is an approach to providing comprehensive primary care for children, youth and adults. It is a healthcare setting that facilitates partnerships between individual patients and their personal physicians, and when appropriate, the patient’s family.

Principles
Personal physician – each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care.

Physician directed medical practice – the personal physician leads a team of individuals at the practice level who collectively take responsibility for the ongoing care of patients.

Whole person orientation – the personal physician is responsible for providing for all the patient’s healthcare needs or taking responsibility for appropriately arranging care with other qualified professionals. This includes care for all stages of life; acute care; chronic care; preventive services; and end of life care.

Care is coordinated and/or integrated across all elements of the complex healthcare system (subspecialty care, hospitals, home health agencies, nursing homes) and the patient’s community (family, public and private community-based services). Care is facilitated by registries, information technology, health information exchange and other means to assure that patients get the indicated care when and where they need and want it in a culturally and linguistically appropriate manner.

[Source: www.pcpcc.net]

Urban Institute

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