78% - The Fee For Service Problem


Today’s Managing Health Care Cost indicator
is 
78%



I'm preparing for the fall semester at the Harvard School of Public Health, and I've been digging through references about the impact of  fee for service and capitation on utilization.   I researched this for a Harvard Business Review article a few months ago, and found data on rates of cataract surgery in a group that was transitioning from fee for service to capitation.  In that instance, the rate of cataract surgery dropped a jaw-dropping 51% in one year.

But there's some potential demagoguery in that number.   It's likely that the ophthalmologists knew that the "index" year was their last chance to get paid "extra" for doing more surgery, and they might have advanced surgery from the next year into that index year, leaving a gap in demand during the intervention year.  This would have also made the apparent baseline seem higher than it should have been.  To my knowledge, a followup has not been reported.

I happened upon an article from Health Economics last spring that uses the Community Tracking Survey data (which matches what consumers report in terms of the medical services that they used with actual data on insurance coverage) and showed that surgeons being paid fee for service was associated with an eye-popping 78% increase in rate of surgery compared to capitation.  The article is especially robust, because there was matching of actual insurance coverage and provider payment methods, and the analysis was restricted to patients who had no choice of insurance plan to avoid adverse selection in the fee for service group.  Here's a full-text link for Harvard users.  Whether primary care capitation lowered surgery rates depended on whether there was prior authorization in place.

My take - this is further evidence that moving away from fee for service provider payment is a necessary element to lowering the rate of health care inflation.

Health Care Reform Will Save Medicare Costs


Today’s Managing Health Care Cost Indicator is $575 billion        



The Washington Post reports that the health care reform bill will

  • -       Save $8 billion in 2011
  • -       Add 12 years of solvency to the Medicare trust fund
  • -       Save $575 billion over the next 10 years

Where is this money coming from?  For starters, Medicare will continue to increase in cost – just not as fast as it would have without the passage of health care reform.   The biggest losers (Modern Healthcare, registration required) 


  • -       Hospitals and other providers  $205 billion
  • -       Medicare Advantage plans $145 billion

The estimate suggests that care improvement will result in savings of $13 billion over 10 years.

This won’t solve all the problems in health care finance (and savings in Medicare could result in cost shift to other payers).  But this demonstrates that health care reform does begin to address the cost problem.




End of Life Care


The Managing Health Care Costs Indicator is 25%


Atul Gawande has an essay in the August 2 New Yorker magazine about end of life care.  Gawande marvels that we physicians encourage patients to get obviously futile care – and that the care we give people at the end of their lives is part of the cause that health care has gotten so expensive. He gives examples from his own practice where he’s had a hard time telling patients there is no hope.  He goes out to a patient visit with a hospice nurse, and reports that she corrected him when he suggested that the purpose of hospice was to “let nature take its course.”  The hospice nurse defined the point as to helping patients “live the fullest life now.”    

People often note that a quarter of Medicare dollars are spent on the last six months of life. That's the source of today's indicator.   It turns out that while end of life care is a big cost driver for Medicare, it is a much smaller cost driver for employer-based health insurance plans. 


I’ve been doing a bunch of thinking about end of life care lately.   We all know anecdotally that we offer futile care – and we all know further that flogging people as they are dying leads to more pain and suffering for the person dying, and for all of their loved ones.   We also understand that there is ridiculous variation in the way care is delivered to those at the end of their lives. Here's data from Dartmouth researchers published in Health Affairs in 2004. 



Of course, the biggest cost of futile care is non-financial, and is borne by dying patients and their families, who bear unnecessary pain and suffering, and are robbed by medical technology of the chance to say goodbye.


On the other hand…

People at the end of their lives sometimes find every “found” minute precious.  Healthy people doubt how much suffering they would be willing to endure to live a few more days or weeks.   Sick people often, not always, would endure hell to breath a bit longer.  So who are we to say otherwise?

There was a haunting article in the New York Times in April about a palliative care specialist who was diagnosed with breast cancer at age 31, and who helped guide hundreds of her patients to a “better” death during her career. 

….As the doctors began to understand the extent of her underlying cancer, “they asked me if I wanted palliative care to come and see me.”
She angrily refused. She had been telling other people to let go. But faced with that thought herself, at the age of 40, she wanted to fight on.

My colleague Jaan Siderov, in the excellent Disease Care Management Blog points out that he saw patients who were at death’s door in the ICU – and who said “Surprised to see me, Doc?” when they came to his office for post-discharge followup.

There is certainly a lot of cost associated with end of life care.   People get Folotyn for their non-Hodgkin’s lymphoma, and the cost is $30,000 per month and there’s been no proof of even life extension.  On the other hand I was talking about this to a colleague whose wife has non-Hodgkin’s lymphoma.   It’s a different discussion entirely.

There is no easy answer here.   From a health policy point of view, I know that when we treat someone with an expensive drug who has no hope of benefit, there are fewer resources available in health care to immunize kids or counsel those at risk for sexually transmitted disease.  Further, I know that societally we’ll have fewer resources to fix the roads and provide good educations to our kids.  From a human point of view, though, I understand why people cling to the tiniest of hopes, even in the shadow of irrefutable evidence that these hopes are false.

What should we do?

Let’s learn from Oregon and Washington state.  They’ve each instituted the POLST (Physician Order for Life Sustaining Treatment) to allow patients to designate that they don’t want resuscitation if they stop breathing or their hearts stop.  Let’s learn from Lacrosse, Wisconsin, where few nursing home residents are transferred to the hospital – and a majority of elderly residents have advance directives.  85% of those who died had a living will.  85%!  In most communities, it is well under fifty percent.

Let’s talk to our loved ones about what kind of care they would want if they were unimaginably sick.   Let’s not wait until they have tubes in every orifice, and we can’t talk to them.  Let’s tell our loved ones what we want for ourselves, too.