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   Paying for results, not treatments   
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   LOS ANGELES TIMES   
      
   Medicare pays most participating doctors and hospitals on a fee-for-   
   service basis.   
   December 31, 2012   
   One of the fundamental problems in the U.S. healthcare system is that   
   the most common and straightforward payment method — paying a fee for   
   each service rendered — encourages doctors and hospitals to provide   
   more care, not better care. In fact, it discourages efficiencies that   
   lead to healthier patients at lower cost because they translate into   
   lower incomes for those providing the service.   
      
   Nowhere are these weaknesses more acute than in Medicare, which pays   
   most participating doctors and hospitals on a fee-for-service basis.   
   Shifting Medicare to new payment methods that encourage quality and   
   efficiency is crucial to sustaining the program, which is the biggest   
   driver in the federal government's long-term fiscal problems. As the   
   baby boom generation enters its dotage, the ranks of Medicare   
   beneficiaries are expected to swell from the current 50 million to 80   
   million in 2030. Unless the government can motivate the industry to   
   treat these patients more effectively at lower cost, the pressure will   
   only grow to shrink Medicare benefits or cover fewer of the elderly   
   and disabled.   
      
   The ideal payment system would give providers a stake in the savings   
   generated by more efficient care, as well as in the financial risk of   
   ineffective treatments. Prodded by the 2010 healthcare law, Medicare   
   is moving in that direction, as are private insurers. Part of   
   Medicare's focus is on improving the quality of care delivered on a   
   fee-for-service basis, on the theory that it will reduce the demand   
   for treatment. To that end, it launched a value-based purchasing   
   program that ties a portion of a hospital's payments to how well it   
   meets specific quality targets, and it has begun reducing payments to   
   hospitals that quickly readmit too many of the patients they treat.   
      
   Those are sensible moves, but they don't dramatically change the   
   improper incentive in fee-for-service Medicare to perform as many   
   billable treatments as possible. Doing so will require shifting fee-   
   for-service doctors and hospitals into models that reward them for   
   helping their patients stay healthy, or for achieving the same   
   improvements in health while cutting treatment costs. A good example   
   is Blue Cross Blue Shield of Massachusetts' "alternative quality   
   contract," which gives provider groups an annual budget for meeting   
   all the healthcare needs of their patients while still hitting quality   
   targets. A recent study showed that this approach improved the quality   
   of care while cutting costs as much as 10% below their fee-for-service   
   level.   
      
   Medicare is experimenting with a number of variations on this theme.   
   It has encouraged providers to join forces in "accountable care   
   organizations" to combat the fragmentation of care and poor   
   information-sharing that lead to unnecessary treatments and medical   
   errors. It is experimenting with bundled payments that compensate   
   providers in one lump sum for all the care related to a trip to a   
   hospital's acute-care wing. Beyond that, there are dozens of trials   
   and demonstration projects that explore different ways to pay for   
   care.   
      
   The new models promise significant savings, but there are big issues   
   still to work through. One is how to prevent the sort of consolidation   
   among providers that would impair competition and spur even higher   
   prices. Another is the risk that providers will cut costs just by   
   skimping on necessary exams and treatments. When health maintenance   
   organizations appeared to adopt that course in the 1980s and 1990s,   
   consumers rebelled. To avoid a repeat of that experience, Medicare is   
   developing ways to measure and report how well doctors and hospitals   
   are delivering care. These could provide a safeguard, but they're   
   still a work in progress.   
      
   The question for policymakers is how hard to push the system to change   
   the way it compensates for care. One of the most controversial   
   provisions of the 2010 law — an independent board with the power to   
   limit Medicare spending per beneficiary — could also be the most   
   effective in pushing Medicare away from fee-for-service.   
   Alternatively, Rep. Allyson Schwartz (D-Pa.), who wants to repeal the   
   board, has introduced a bill to cut fee-for-service payments gradually   
   for doctors who don't move to alternative payment models. One way or   
   another, Medicare has to find a way to stop paying for treatments and   
   start paying for results.   
      
      
      
   http://touch.latimes.com/#section/-1/article/p2p-73843308/   
      
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