Payment Reform: What Physicians Need

This post originally appeared on WBUR's guest blog "Commonhealth" on July 29, 2009.

The state payment reform commission has a vision of a new payment system for Massachusetts – a global payments system. The commission’s report is an important contribution to the debate over health care reform for Massachusetts, and for the country, as we strive to provide affordable care with reliably high quality. However, our state’s movement to such a model should be careful, deliberate and mindful of the errors of the past.

This new payment model would mean a dramatic change in how practices and hospitals organize themselves around patient care. Any business leader who has attempted a change of a similar scope will tell you that the process is slower, more difficult and more costly than initially expected. When you consider that we would be attempting payment reform at the same time that people are still becoming sick or injured, this task becomes even more daunting. It’s like trying to fix an airplane while it’s flying. You have to do this carefully – very carefully.

If physicians sound cautious about proceeding with this transition, it’s with good reason. Like everyone else, we have long memories. We remember past failed experiments, like capitation in the 1990s, which was rushed into implementation without proper safeguards, checks and balances. Under capitation, patients accused doctors of withholding necessary care, while physicians felt they were being saddled with untenable financial risk.

I’m pleased that the commission took these and other concerns quite seriously. This was largely due to the terrific work of the physician and hospital members who sat on the commission, including Dr. Alice Coombs, an officer of my own medical society. I also want to acknowledge the wise comments of the dozens of physicians who attended the commission’s outreach meetings this past winter and spring.

It’s been noted that 20 percent of Massachusetts physicians are already compensated under a kind of global payment system. This is often taken as evidence that the global payment goal is achievable. By the same token, 80 percent of physicians are paid under the current fee-for-service model, and their readiness to move to a new model varies greatly from practice to practice. Their needs cannot be taken lightly.

If payment reform is to succeed, physicians will need lots of time and support to get there. Without such support, we risk failure, and inflicting even more harm to our health care system. Some have called this need for support a complementary strategy, but I believe it is essential to success.

The commission outlined a transition period of about five years. From my standpoint, this is possible, but optimistic. There must be flexibility to make adjustments if reality doesn’t meet expectations. What kind of support to doctors need? Some examples:

Financial: Very few practices have access to the capital required to build the technical and logistical structures required by a global payment model. The federal government is promising substantial subsidies for implementing electronic health records, but that’s at least three years away, and only after the systems are installed and meet “meaningful use” criteria that are still undefined. So, even assuming the federal money is still available in five years, practices need help getting to that point.

Technical: As anyone in an IT department will tell you, any big project will take longer and be costlier and more difficult than expected. This is doubly true when installing an electronic health record system, a young, evolving technology that is the underpinning of a global payment system.

Legal: Our laws and regulations need lots of changes before a global payment model can achieve its promise. Anti-trust laws must be revised. Administrative processes need to be reinvented; most paperwork today is costly and adds little or no value. Malpractice laws must be reformed, in order to discourage the costly, maximalist care that the malpractice system implicitly requires.

Finally, this cannot be accomplished without a similar careful transition for patients. If they fear their care will be compromised by this new system, it will fail in the blink of an eye. Doctors do not want to be gatekeepers again. This was one of the most distasteful outcomes of the capitation era, and we don’t want to return to that scenario. How we get to the point where patients trust this model is a very big challenge.

Time and again, during the commission’s final meeting, its members acknowledged there is a lot of work remaining. They’re right. It’s up to everyone – government, insurers, businesses, providers and patients – to do their part to make this vision become a reality.

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