More market fiddling, that’s the answer!

August 30, 2021

Summary: In a JAMA opinion piece, two physicians with homes in the business world propose payment innovations for our multi-payer health care system. Are these proven strategies? Of course not. Do they betray a blind faith in the magic of the marketplace? Sure do.

Setting the Stage for the Next 10 Years of Health Care Payment Innovation
JAMA
August 16, 2021
By Bob Kocher and Rahul Rajkumar

This Viewpoint describes 4 health policy strategies.

Broaden Participation in Alternative Payment Models, Particularly Among Specialists

Alternative APMs [e.g., Accountable Care Organizations] include higher levels of risk and therefore reward clinicians with more money for more cost savings and ensure that the Medicare program saves money by transferring risk to physicians.
…
A better approach would be to broaden the value-based payment portfolio by creating APMs for specialists …

Ensure That Payment Systems Reward Multiyear Investments in Health

A major shortcoming of the current system is that investments in health have very short payback periods. These time frames make it challenging to invest in interventions that have longer-term benefits, even when these investments may produce substantial improvements in health.
…
A new funding mechanism for breakthrough preventive care, such as health-related bonds, which are held by investors, and which increase in value along with a person’s long-term health, could create a strong incentive to address social determinants of health and healthier lifestyle interventions.

Align Payment Models Across Payers

One model could be moving to a capitated payment model for hospital services so hospitals receive monthly payments for the availability of their services rather than be paid on a fee-for-service basis.

Reduce the Administrative Burden of Risk Adjustment and Quality Measure Reporting

Commercial, Medicare Advantage, and Medicaid payers should adopt the same patient attribution, quality metrics, and risk adjustment (when appropriate) methods as Medicare.

Comment by: Don McCanne & Jim Kahn

This Viewpoint proposes a set of innovations based on shoddy, non-existent, or discouraging data. One example is shared savings programs. like accountable care organizations. As we recently wrote, Medicare’s experiment with ACOs failed. Why continue it? And why shift to hospital capitation when the primary problem is prices, not utilization? And, if you’re looking for the big pot of gold, why not eliminate $800 billion in annual excess billing-related administrative costs that derives from the morass of insurance products and rules?

The language used by the authors highlights the business orientation. Besides investors gambling on health-related bonds, they also mention bundling for specialists who agree to provide “parsimonious” care, making APMs more “attractive economically” for specialists, and, of course, the great overlooked potential of producing financial savings merely by “reversing” diabetes. Rather than basing the system on the opportunity to improve patient and population health, we should be developing systems catering to physician greed, they seem to suggest.

One innovation they don’t advocate: proven unified health insurance systems that lower costs and lengthen lives. Like single payer. Why not? Because, as the authors’ affiliations indicate, their interest is in making money.

Ah, marketplace innovations, they’ve worked so well for healthcare up to now, as we can all see. Clearly the best medicine is more of the same!