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Health & Wealth Blog
6:53 pm
Fri October 28, 2011

Paying for Quality, Not Quantity

In the United States, we pay a lot more for our health care than other wealthy countries, but we are no healthier.  Missourians actually pay even more per capita than the U.S. average, and are even less healthy. (Missouri is ranked 39th in the nation in overall health, and we are the 9th most obese state.) A big part of the problem is the way we pay for health care, according to Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform.

Miller was in Columbia today for a summit hosted by the Center for Health Policy based here at the University of Missouri. Miller says the way we currently pay for health care does not reward providers for trying to save money or improve care. Just the opposite -- providers are paid for quantity -- the number of office visits, or surgeries -- rather than for keeping people out of the hospital in the first place.

That payment system needs to be rebuilt from the ground up, he says, if we ever want to have truly affordable care. A different way to pay for health care is based on "episodes." If you have a heart attack, you don't just pay for a bypass, and then pay separately for each bit of follow-up care. You pay one "bundled" fee for the whole episode, so the hospital is incentivized to save. (Or skimp, depending on your point of view. Some worry such a payment system will make it harder to see pricey specialists.)

There is evidence to support a new payment system. One recent study estimates national spending on health care could be cut by 5.4 percent by bundling payments. Last time the nation was torn over health care reform, in the 1990s, a Medicare demonstration program that bundled payments for heart bypasses saved 10 percent of expected cost, some $42 million. Now, under the 2010 health care reform law Medicare and Medicaid to will be able to experiment further with this new type of payment. Starting this fall, Medicare is launching a wider, but still voluntary, initiative with bundled payments.

Said Medicare administrator Donald Berwick, "From a patient perspective, bundled payments make sense.  You want your doctors to collaborate more closely with your physical therapist, your pharmacist and your family caregivers.  But that sort of common sense practice is hard to achieve without a payment system that supports coordination over fragmentation and fosters the kinds of relationships we expect our health care providers to have."

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