health care realities - Health Reform Incentives, Positive and Negative

The mind is more cheered and refreshed by profiting in small things than standing at stay in great.

Francis Bacon, 1561-1626

May 11 - Today’s newspapers, television channels, and Internet websites are full of news about President Obama’s health care meeting with executives of the Advanced Medical Technology Association – a lobbying group representing the medical device industry, the American Hospital Association, the American Medical Association, American Health Insurance Plans, the Pharmaceutical Research and Manufacturers of American, and the Service Employees International Union.

Purpose of Meeting

The purpose of the meeting is to announce that this group and the Obama administration will partner in a voluntary effort to reduce the growth of health care spending (6.2% last year), supposedly saving $2 trillion over the next ten years.

This will be done by joint efforts to,

• prevent obesity

• manage chronic disease

• coordinate care

• standardize claim forms

• increase information technologies

Congressional Efforts Below- the- Radar

So much for the above-the-radar, high-profile events to show everybody is on the same bandwagon to provide affordable health care for Americans. What isn’t being said is that Congress is already addressing ways to provide incentives to employers and hospitals to reduce costs.

• Congress is planning tax credits or other subsidies to employers who offer wellness programs. The goals of such programs are to help people control blood pressure, fight obesity, stop smoking, lose weight , eat better diets, exercise intelligently, and manage diabetes and other conditions.

• Congress is considering rewarding hospitals who reduce the number of people being readmitted after discharge. As things now stand, hospitals profit from these readmissions and have little incentives to reduce them. Reducing readmissions cost money, and hospitals feel they should receive financial incentives for readmission reductions.

• The recently enacted stimulus bill- the American Recovery and Reinvestment Act – contains $19 billion to give doctors hospitals and doctors financial incentives starting in 2011 to adopt electronic health records amounting to a one-time bonus of $ 2 million for hospitals plus on add-on for use for every Medicare admission for 4 years and $44, 000 spread over 5 years for doctors who use EMRs.

• Medicare pay for performance projects are underway to offer positive incentives in the form of bonuses or subsidies for medical students who commit to careers in primary care, for primary care doctors who establish medical homes, or doctors in general who meet or exceed quality standards.

More Care, More Money

As admirable as these efforts are, much of them are cosmetic. Let’s face it, the present health system is still rewarded for doing more rather than less. Hospitals profit from more admissions, health plans margins grow with more members, doctors make more money by doing more procedures and tests, device and drug manufacturers gain from more device and drug sales. And frankly, most government efforts focus on the Medicare and Medicaid populations, which represent about 1/3 of the total market and which are not necessarily representative of the whole.

Cost-Reduction Roles of Market Forces

To a large extent, market forces must also play cost-suppressive roles. This is already taking place in the form of worksite clinics, retail clinics, $4 Wal-Mart prescriptions for generic drugs, care outside of 3rd parties where discounted, basic care is being offered. But more could be done – doctor offices could have lists of comparative prices for brand versus generic drugs.

Negative Incentives May Be Counterproductive

Finally, Congress could let up a little on its talk about harsh penalties, i.e. negative incentives, on not paying for common complications, or not using EMRs, on not complying with unrealistic, expensive, and often unenforceable federal standards. Congress should keep in mind that expanded access is not going to possible without more doctors, that this is still a free country, and doctors remain free to accept or reject Medicare or Medicaid patients.