Dr. Miller is a national expert on value-based reimbursement and works closely with several national organizations to promote fair, valid, and innovative provider payment reform. As we move from fee-for-service to value-based reimbursement, it is helpful to understand the barriers and possible road maps to moving through the current difficult transition. Dr. Miller makes a strong and cogent argument for having physicians lead this effort. The AGA has taken this responsibility seriously in designing various practice tools as part of the Roadmap to the Future of GI Practice.
-John I. Allen, M.D., M.B.A., AGAF, Special Section Editor
Despite widespread agreement about the urgent need to control health care costs, successful solutions have been elusive. A major reason is that policy makers and health plans generally focus on only two options for reducing spending. One option is to cut patient benefits, such as refusing to cover certain services or increasing patient cost sharing. The other option is to cut payment rates to physicians and other providers. The draconian cuts in physician payment threatened by the Sustainable Growth Rate formula have been the most visible, but low payment updates and periodic “revaluations” of payment also have had significant negative impacts on physicians and patients.
Harold D. Miller
It is not surprising that there has been so little progress on cost containment with such undesirable options. Fortunately, there is a third and far better option: redesigning patient care to eliminate unnecessary and harmful services and improve patient health. Tens of billions of dollars in spending could be saved every year by avoiding unnecessary tests, procedures, emergency department visits, and hospitalizations; by reducing infections, complications, and errors in the tests and procedures that are performed; and by preventing serious conditions and providing treatment at earlier and lower-cost stages of disease.
The reason the third option has received so little attention is that better patient care cannot be legislated by Congress or mandated by federal agencies or health plans. Patient care can only be redesigned by physicians. However, physicians cannot redesign care to improve quality and reduce costs unless there are major changes in the current health care payment systems.
The fee-for-service system is a major barrier to higher-value health care
The fee-for-service payment system (FFS) creates large and often insurmountable barriers to significant redesign of patient care. Under FFS the following occur:
• Physicians are financially penalized for reducing unnecessary services and improving quality. Under FFS, physicians lose revenue if they perform fewer procedures or lower-cost procedures, even if their patients are better off. The Choosing Wisely campaign, which the American Gastroenterological Association supported from the beginning, will help patients and payers by reducing spending on avoidable tests and procedures, but implementation may also make it more difficult for many physicians to sustain their practices. Most fundamentally, under FFS, physicians do not get paid at all when their patients stay well.
• Some high-value services are not paid for adequately or at all. Medicare and most health plans do not pay physicians to respond to a patient phone call about a symptom or problem, even though those phone calls can avoid far more expensive visits to the emergency department. Medicare and most health plans will not pay primary care physicians and specialists to coordinate care by telephone or e-mail, yet they will pay for duplicate tests and the problems caused by conflicting medications. A physician practice that does outreach to high-risk patients or hires staff to provide patient education and self-management support typically cannot be reimbursed for those costs, even if they help avoid expensive hospitalizations or allow diseases to be identified and treated at earlier stages.
These barriers exist even for employed physicians, because most compensation systems are based at least in part on the number of FFS visits or procedures physicians perform.
Pay for performance, value-based purchasing, and shared savings will not solve the problem
Unfortunately, the typical “payment reforms” being pursued today do not fix these problems with FFS. Most health plans have tried to give physicians “incentives” to improve quality or control costs through pay-for-performance or value-based purchasing programs. However, these programs have had very little impact for a simple reason; the barriers described earlier are not solved by adding a small bonus or penalty on top of the existing FFS system. Tying payment to a large number of quality measures will have little impact if physicians are forced to lose money to implement better care.
The shared savings system being used by Medicare and many health plans has been promoted as an innovative solution, but in reality, it is just a new form of pay-for-performance built on top of the same broken FFS system. Shared savings systems provide no up-front resources or flexibility to enable physicians to redesign care, and if physicians reduce the number of services they deliver, they still lose revenues. A shared savings payment can reduce the size of the loss, but a smaller loss is still a loss. Moreover, shared savings payments are temporary, and unless physicians can keep finding new ways to reduce spending, they will be left in the same FFS system with lower total revenues than before.
