Obamacare Needs to Change the Way Doctors are Paid to Achieve Real Reform

I have had the opportunity to examine health care through the lens of a patient, provider, health system, self-insured entity, and a commercial and government supported insurer.  In order for health care reform to make sense, we need to follow its incentives and disincentives, understand who is responsible for spending the health care dollar, and follow the flow of money.  Unfortunately, in this time of transition, these are all very complex.

Obamacare presents an opportunity to expand the number of individuals with health care coverage and to begin to decrease the cost shifting of caring for the uninsured.  However, fixing health care requires that we fix the way payments are allocated and spent.

If payment is made the traditional way with a separate fee for each service provided, providers have little incentive to be efficient.  But what is the alternative?  There are several, and they all have problems of their own.

- "Pay for performance" provides incentives for preventive care.  However, evidence suggests preventive care might have little effect on health outcomes and expenditures.

- A payment system in which savings are shared can rapidly reach a point of diminishing returns. We cannot keep decreasing costs without compromising quality and access.  And who gets the savings?  Theoretically, it should be the individual responsible for health care spending.  However, most often it is the health care system.  Why is it not the patient or provider?

- In a payment system based on shared financial risk, providers have an incentive to do less, whether it improves or decreases quality.  They should not be disincentivized from providing thorough and optimal care.

- Some proposals call for providers to share risk for an entire population of patients.  But in that case, who would ultimately decide how money for care should be spent?

- There have been some innovative models that combine at risk within a fee for service environment.  This only works if the emphasis is placed on maintaining costs while improving quality.  To accomplish this, we will need tight networks of providers who are integrated horizontally and vertically.  We will have to decrease the pool of specialists in the networks and restrict high cost, high-risk procedures to a few health systems that are expert in them and that have the best clinicians, infrastructure, and outcomes.  We will also need to tighten relationships between acute and post-acute care and to create sites where patients can get needed care after hours and on weekends that are less expensive than the emergency department.

Health care reform is critical.  However, currently the major emphasis has been mostly on increasing the number of insured individuals. Critical questions about how we actually pay for care must still be addressed before the full promise of reform can be realized.