I’ve read several posts today on so called “Value-based payment” strategies and I couldn’t resist adding my 2-cents.
VBP can’t fix these fundamental problems because it is still based on a price-opaque shell game I like to call Fee-for-Coding, which results in:
1) Price insensitivity on the utilizer’s part.
2) Misaligned incentives on the provider’s part.
3) Lack of important price signals between buyers and sellers due to lack of advance pricing capabilities.
VBP utilizes the same fundamentally flawed economic system as our current billing model.
Moving to value-based care will require…
1) A system where prices are known in advance of care (not trauma or emergency care where extent of injuries or illness are unknown at onset – but even still a lot of those can be estimated ahead of time based on scenarios).
2) …that physicians be paid to be available to solve our problems, where payment is not tied to documenting work in a chart.
3) …that we move to a system that is based on defined contributions as opposed to defined benefits. As John C. Goodman is fond of saying, “money should follow people”, not programs and insurance policies.
Value will be elusive until we let the discipline of the market work in healthcare.
“The court correctly rejected the government’s argument that Dr. Singh needed to apply for a CON before bringing this case,” said IJ Attorney Renée Flaherty, who argued the motion. “No one should have to go through an unconstitutional process in order to challenge it. We look forward to showing that North Carolina’s CON law unconstitutionally favors existing businesses at the expense of Dr. Singh and other medical providers.”
In July 2018, IJ and Dr. Singh, a Winston-Salem surgeon, and his business, Forsyth Imaging Center, sued the Department of Health and Human Services, alleging that North Carolina’s CON law is unconstitutional because it bans medical providers from offering services patients need solely to protect existing providers from competition. In order to receive a CON, providers must persuade state officials that new services are “needed” through a cumbersome process that resembles full-blown litigation and allows existing businesses, like established hospitals, to oppose their applications. Even after a CON is granted, existing providers can appeal the decision. Dr. Singh should not have to go through such a burdensome process just to provide affordable services that patients need.
“Hynden was shocked when he got the second CT scan in January, and the listed price was $8,897 — 33 times what he paid for the first test.
Gulf Coast Medical Center is part of his Cigna insurance plan’s approved network of providers. But even with Cigna’s negotiated discount, Hynden was on the hook for $3,394.49 for the scan. The additional ER costs added $261.76 more to that bill.
The higher price from Gulf Coast and its parent company could be a result of their enormous pricing power in Fort Myers, says Gerard Anderson, a professor of health policy and management at Johns Hopkins University.
Lee Health owns the four major hospitals in the Fort Myers area, as well as a children’s hospital and a rehabilitation hospital, according to its website. It also owns several physician practices in the area. When you drive around Fort Myers, the blue-green Lee Health logo appears on buildings everywhere.
“Anybody who’s in Fort Myers is going to want to get care at these hospitals. So by having a dominant position, they have great bargaining power,” Anderson says. “So they can raise their rates, and they still do OK.”
Anderson says his research shows hospital consolidation has been driving prices higher and higher in recent years. And because more and more people, like Hynden, have high-deductible insurance plans, they’re more likely to be on the hook for huge bills.
So Lee Health and other dominant hospital systems mark up most of their services on their master price lists — the list that prices a CT scan at Lee Health at $8,897. Anderson calls those lists “fairy-tale prices” because almost no one actually pays them.
“Everybody who’s taken a look at it agrees — including the CFO of the organization — that it’s a fairy-tale thing, but it does have relevance,” Anderson says.
The relevance is that insurance companies usually negotiate what they’ll pay at discounted rates from list prices.
So from the master price of $8,897, Cigna negotiated Hynden’s bill down to $5,516.14 — a discount of almost 40 percent. Then Cigna paid $2,864.08, leaving Hynden to pay the rest.”
The Healthcare industry, or medical-industrial complex, wears the armor of Government-sponsored protectionism; chinked together by pieces of the tax code, The McCarren-Ferguson Act, Certificate of Need laws, Medicare billing regulations, HIPAA, HITECH, and the ACA.
You would be hard pressed to find a more entrenched, impenetrable cartel.
Professor Otteson discusses the fatal flaws of redistributive planned economies, not the least of which is a decline in cooperative innovation.
“Americans should not be subsidizing the richest family in America and Walmart workers should not be living in poverty,” Sanders tweeted last month, castigating the big box retailer for not paying all workers $15 per hour. “Walmart’s greed has got to end,” he added.
As we continue to examine the outcomes of socioeconomic initiatives throughout our history, it becomes apparent that society’s benefits are not necessarily derived from good policies as much as from the absence of bad ones.
– Robert Nelson
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