2020 Vision Health in the 21st Century (1996) / Chapter Skim
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Risk and Responsibility: The Evolution of Health Care Payment
Risk and Responsibility: The Evolution of Health Care Payment
Pages 49-64
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From page 49... ...
I believe that my professional activities are more dangerous than my recreational activities. This topic, the issue of how health care financing is going to change, is fraught with particular danger because so much of the beta, the variability in our financing system, is accounted for by political and normative forces that are notoriously difficult to predict.
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From page 50... ...
These individuals come from the two highest-risk subgroups in our population: the multifunctionally impaired, chronically ill elderly population, for whom Medicare is currently responsible, and the poorest of the poor people enrolled in Medicaid programs who bring all of the societally driven risks associated with their socioeconomic status into the risk pool.
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From page 51... ...
So we have gone from a situation in which managed care was able to acquire a Tot of additional revenue while caring for relatively healthy people, to an environment in which the per capita amount of dollars going to the plans is shrinking in real terms. The fact that indemnity health insurance based on after-the-fact payment is disappearing creates a tremendous challenge for managed care plans to invent a new rationale for their existence besides "we are simply cheaper than conventional health insurance." The third change in health care financing, which I believe is the most s~gn~cant, is that we are moving from an event-driven to a risk-driven health care payment system.
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From page 52... ...
Managed care plans in my home town are running at 0.S bed per thousand, inclucling the elderly, and falling, 70 percent of the Medicare population have enrolled in managed care plans voluntarily. The other thing that is happening to managed care in communities where it has been long established, which should not surprise anyone who thinks about the nature of price competition, is that price is becoming a less and less useful guide to selecting a health plan.
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From page 53... ...
Robert Brooks of the RAND Corporation have been working on, is how to reduce the huge variation in resource consumption by practitioners for treating the same kinds of problems. There is obviously a tremendous amount of gold to be mined here as managed care plans seek, with the assistance of professional societies and their colleagues in academic medicine, to rationalize clinical decision-making to create what has been called, in Don Detmer's presentation, an evidence-based framework that defines what constitutes best clinical practice for a patient presenting with a particular constellation of health risks.
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From page 54... ...
Familiar tools of public health, such as epidemiological modeling and forecasting, as well as the somewhat more invasive relationship between public health systems and the people they serve, will provide a guide for private health plans and participating physicians as they move into the next century. What this represents is movement from an event-driven to a risk-ciriven framework for health care payment.
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From page 55... ...
Physicians find it necessary to have phone conversations with a far-clistant nurse about what they can or cannot do to patients they have known all of their lives for any clinical decision that involves more than a few hundred dollars. As health plans shift risk to physician organizations, responsibility for effective clinical decision making is going to devolve from a bank of nurses talking over 800 numbers to the communities of physicians who are at-risk.
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From page 56... ...
There is a very real limit to how much people will be willing to tolerate managed care plan involvement in the hospice movement or in the right to die a dignified death. If these issues are resolved by the narrow economic interests of the health plan, there may be tremendous tension between individual wishes and the economic interests of the plan.
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From page 57... ...
I think we are going to see coliaboration among competing health plans, and between private health plans and the public health sector. I think we are going to see bridges built between the health establishment and other institutions in our communities that are implicated in the economic risk associated with illness.
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From page 58... ...
" I came into medicine at a time when the most popular books about health care were written by Ivan Illich, Thomas McKuen, and Rick Carlson, who said that health care providers did not make any difference. We might as well close up shop because we were having no impact on health.
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From page 59... ...
Yet, it is of concern at a time when we do not have good measures of risk stratification, when we know that measures of severity of disease have lagged behind what the market demancis, that we are being told those of us in academic medicine, the Agency for Health Care Policy and Research, NTH, and the entire health enterprise that we have really failed to provide the public with the information it needs to decide what kind of health care it wants. This gets back, of course, to the question that has been a recurring theme throughout our discussion: Where is the information that we can apply in accepting this responsibility for the risk and variation in health care costs and outcomes?
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From page 60... ...
If we reject Thomas McKuen and Ivan Illich and assume that we can make a difference, we still are left with the fact that the people who come to us are in very disparate risk categories. There is the jeopardy that we will reject as our patients people who are BRCA positive or people who have positive family histories of disease without even knowing what genes are involved, figuring that some gene is lurking that increases the risk of our patients' incurring costs.
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From page 61... ...
When the hot money leaves, the executives of those firms are going to have to ask themselves if they can create a noneconomic rationale for their subscribers and for the physicians that work with them to continue participating in their system. So perhaps a bloodless University of Chicago person sees slightly more market discipline than someone who is looking narrowly at this allegedly inexorable trend of the gobbling up of not-for-profit medicine.
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From page 62... ...
Many private practice physicians have found what might be termed "virtual relationships" to one another that enable them to bear and manage risk without becoming part of a large medical bureaucracy. A Tot of people looking at the medical care marketplace right now are saying that the Mayo Clinics, the large regional group practices, are going to dominate.
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From page 63... ...
We have built up this huge body of cost that varies threefold from community to community, and we now give health plans a license to "mine" that variation instead of, as Miller suggested, putting the contracts out to bid and letting health plans competitively bid for and accept the risk for the Medicare population. On the issue of the Toss ratio, one of the reasons HMOs are really nervous right now is because that loss ratio is an enormously tempting regulatory target.
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From page 64... ...
I do not see the private sector leaping forward to take responsibility for these folks, and if public costs continue rising at the present double-digit rate, we won't get an affordable federal or state response to the problem of the uninsured. Yet I do think there are opportunities to pool the purchasing power of individual and small group health insurers and give them the same kind of per capita cost advantage that large employers enjoy.
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