Category Archives: Payment reform
Arthur Kellermann, MD, MPH, FACEP, holds the Paul O’Neill-Alcoa Chair in Policy Analysis at the nonprofit, nonpartisan RAND Corporation. He is an alumnus of the Robert Wood Johnson Foundation (RWJF) Clinical Scholars program and the RWJF Health Policy Fellows program. This post is part of the "Health Care in 2013" series.
For the first month of my medicine internship at the University of Washington, I was assigned to Seattle’s VA Hospital. I was stunned to learn that my attending physician would be Paul Beeson, widely regarded at the time as one of the giants of American medicine. [i] At an age when most doctors are enjoying their retirement, Dr. Beeson was still doing what he loved best—caring for patients and teaching.
I have forgotten most of the clinical pearls Dr. Beeson taught that month. But one that still stands out is the way he questioned the need for every lab test, x-ray and treatment my team ordered. “Why do you want that?” he’d ask. “What will you do with the result?” Throughout the month, he urged us to forego interventions that offered little benefit to our patients, but exposed them to potential side effects or complications. His message was clear. Do only what’s needed, not more.
Today, we need Dr. Beeson’s message more than ever before. In the three decades since I trained under him, America’s health care system has grown so large, it claims a bigger share of the gross domestic product than American manufacturing or wholesale and retail trade. [ii] As a result, the federal government spends more on health care than national defense and international security assistance. In several states, health care is crowding out spending for education. In the past decade, health care cost growth has wiped out the hard-won earnings of middle-class families. [iii]
New Year’s resolutions are about fresh starts and new beginnings, and for many Americans that includes the decision to finally give up heavy drug and alcohol use. Unfortunately, when it comes to encouraging individuals to enter treatment, providing counseling, and supporting long-term recovery, our health care system is showing up late to the party.
There are 21 million adults and adolescents with a diagnosable substance abuse problem in the United States, but fewer than one in five receive treatment in a given year. The reasons why people do not get treated are complicated. Many are not ready to give up using substances or don’t recognize they have a problem, but many others are discouraged from seeking treatment because of the cost or the perceived lack of treatment options. Opportunities to raise awareness about treatment are often missed, as primary care doctors infrequently screen for substance abuse during routine visits, and are often unaware of where to refer patients for specialized addiction treatment.
Miriam J. Laugesen, Ph.D., is an assistant professor of Health Policy and Management at the Mailman School of Public Health at Columbia University. She is a 2009 recipient of a Robert Wood Johnson Foundation Investigator Award in Health Policy Research.
In a Health Affairs paper published in its September issue, Sherry Glied, Ph.D., and I find that Medicare fees paid for office visits are 27 percent higher than public fees in other countries, and fees for office visits paid by private insurers are 70 percent higher, on average, in the United States than in other countries. Fees for hip replacements paid by U.S. Medicare are 70 percent higher in the US and private insurers pay 120 percent more.
We show how higher physician fees, particularly among orthopedic specialists—rather than physicians providing more services or having higher training costs—explain higher incomes of U.S. physicians compared to physicians in other countries.
For some time, there’s been some awareness that prices are higher, on average, in U.S. health care. For example, people say that we pay more for pharmaceuticals than people in other countries. However, understanding the details of the cross-national differences is difficult, especially in the area of physician services. The category of physician services spending varies substantially, even within countries. To try to make this comparison cleaner we focus on just two areas of medicine and two specific physician services: basic office visits provided by primary care physicians, and hip replacements provided by orthopedic surgeons in Australia, Canada, France, Germany, the United Kingdom (England), and the United States.
One important difference between this study and others is that we take into account differences in utilization, practice expense costs, education costs, and lost earnings. That’s important, because the usual explanations for that difference might be related to those differences. The paper shows these differences don't account for higher earnings, and that is a new interpretation. Another difference is that we tease out the public-private differences in payment rates that are typically not compared.
A study published in the August 2011 issue of Health Affairs finds that physician practices in the United States spend significantly more time and money interacting with payers than their counterparts in Canada. For nurses and medical assistants, the disparity is huge.
The new study finds “substantial” costs in time and labor to work with multiple insurance plans, especially for small practices with just one or two physicians. Nursing staff and medical assistants in the United States spend nearly ten times more time than their counterparts in Ontario interacting with health plans. Nurses and medical assistants here spend 20.6 hours per physician per week interacting with health plans, compared to 2.5 hours per physician per week spent by Ontario nursing staff.
The study, based on surveys in both countries, estimates that overall, U.S. physician practices spend nearly four times more per physician per year in administrative costs interacting with health plans and payers than physician practices in Ontario. Canada has a single-payer health care system.
“If US physicians had administrative costs similar to those of Ontario physicians, the total savings would be approximately $27.6 billion per year,” the authors write.