Tuesday, August 18, 2009

Healthcare Reform: What's Missing

It is the middle of August, the Public Option is on life support, and it won't be getting End of Life Counseling. Comparative Effectiveness Research is alive but may have to operate with one hand tied behind its back. But the healthcare reform effort continues to move forward, bloody and only slightly bowed by a combination of special interests and irrational fears. And there are a good number of important and constructive changes that are likely to be enacted and which will contribute to better quality and control of costs: near universal coverage; more insurance sector competition (likely in the form of not for profit cooperatives); elimination of pre-existing condition exclusions; mandated minimum coverage requirements including preventive services; electronic health records; etc.

The politics of healthcare reform in 2009 have confirmed, not for the first time and certainly not for the last, something I used to stress to my political science students 30 years ago: the U.S. political system isn't designed to do major programmatic reform; we do incremental change, usually in small steps. That is often a good thing, keeping both conflict and risk dampened. It can be a problem in crises that can only be respolved by major and rapid directional change. Time will tell whether we are doing enough fast enough to correct the faults that are increasingly apparent in our healthcare delivery and financing systems.

I can, however, point to at least two possible reforms that are consistent with the expressed goals of the reform effort, that could make a substantial contribution to quality improvement and cost control, but that are not being considered: payment for clinical decision support systems; and capitation to implement pay-for-performance principles. In different ways, each of these measures would address flaws in the dominant fee-for-service healthcare payment system. In diferent ways, their challenge to the fee-for-service model makes them politically difficult. I'll address each separately.

Clinical decision support systems. Every day our store of data linking linking personal physical and/or genetic characteristics and diagnostic test results to the appropriateness and effectiveness of therapeutic options grows. In the near future, with widespread use of electronic health recorda and broadened funding for comparative effectiveness research, the rate of accretion of new dat will increase dramatically. There is more to know, more information to process and incorporate into clinical practice, than any one can relly keep up with. One solution to this information overload is the ongoing development and implementation of sophisticated clinical decision support systems - computerized models that provide practitioners with the data management and processing tools they need to find the right therapy for the right patient at the right time - the fundamental goal of the emerging personalized medicine movement, the necessary mantra for giving evey patient the best care we know how to provide. Well designed and maintained clinical decision support systems will assure that therapy prescription is not one size fits all, that comparative effectiveness findings will not be used to dictate the same treatment for everyone, and that every clinician has effective and efficient access to the most recent research and clinical practice findings that bear on the patient before them.

Broadly implemented, such systems would yield enormous quality improvement and cost reduction. But they will also be quite expensive to develop, distribute and maintain. The investment would yield a very high payback to society ... but the investment needs to be made, and the tragic fact is that our current healthcare financing system provides no obvious mechanism for a payback to a private investor (or group). There is currently no way to get paid for using a decision support system, and therefore no way for a physician or group or hospital to recoup the capital and maintenance costs associated with using it. In the context of a fee-for-service system, the upfront cost of installation for a non-revenue-producing tool would be prohibitive; and that means that the upfront cost of development would also be prohibitive. Maybe some extraordinarily wealthy foundation would step up to the development cost; still no implementation funding. The government could afford to fund development, and perhaps some implementation - but if end of life counseling raised fears of mandatory euthenasia, what would be the response to government-developed treatment protocols imbedded in a computerized decision (support) system? The political hurdle is daunting.

Here is an idea. Any physician, group or institutional provider acquiring, implementing and using a "certified" clinical decision support system would receive 105% (I don't know if that is the right number, but you get the idea) of the established fee-for-service payment amount for every service billed. The end user has a rationale for buying the system; the potential develop has a customer base willing to pay .... The system savings would be fa greater than the 5%, and quality would be greatly enhanced. Do it all in the private sector. It might just work.

Capitation. Sceptics say we tried capitation in the eighties and it failed; the people rejected the capitated HMO model. The unconvinced say that the capitation model was shanghaied by the HMOs' cost accountants, who found it easier to make money by squeezing resources out than by actually managing care. Now we talk about pay-for-performance, and implement it by imposing penalties for failure to achieve quantitative quality targets - a step in the right direction, but a mixed message at best.

Once again, Massachusetts may lead the way on an important healthcare reform dimension. It is unlikely to be by implementing a major systemic change, but Mass. has already developed one feasible model for implementing near-universal capitation without major disruption to the insurance coverage system. The work was done by the Special Commission on the Healthcare Payment System, a body created by the General Court in Section 44 of Chapter 305 of the Acts of 2008, and is described in the Commission's Recommendations issued July 16, 2009. The report was referenced in news articles when issued, and has receded from view as the national reform debate heated up. Whether it will surface again as a serious proposal remains to be seen.

The Special Commission's proposal, based primarily on work done by social policy research firm Mathematica, calls for insurers to make capitated payments, risk-adjusted in order to prevent selection bias, to Accountable Care Organizations (ACOs). ACOs, which could take any number of forms, would then be responsible for providing all of the necessary care enrollees require, either directly or through contracts with providers. The critical aspect of the plan is that there would be a strong incentive to provide preventive care and early intervention in order to avoid the high cost associated with unnecessary acute episodes of care, equally strong incentives to design and implement more cost-effective and less waseful or duplicative, models for the delivery of care. Patients would retain choice, but might have to pay a premium for "out of network" providers.

There are problems with the Special Commission's recommendations. For one thing, the system would need to encompass both public and private payers, and that would require a statewide Medicare waiver. For another, reconciling a major state model change with the substantial national reforms likely to be enacted will be an enormous challenge in cordination. But Massachusetts has at the very least generated a creative and plausible model for changing the perverse incentives of the fee-for-service health payment system without destroying the underlying structure of our health insurance system. It is a viable model for achieving many of the goals of healthcare reform that are well recognized but poorly addressed in the proposals under review by the Congress.

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