Does Payment Reform Save Money? Comments on the Attorney General’s Report

By Lynda Young, MD, MMS President

Attorney General Coakley’s new study this week on health care costs and payment reform has been generating a lot of discussion. Here are some thoughts from our corner.

We think it’s too early to declare payment reform a failure from a cost-cutting perspective. You can’t measure its effectiveness after just one year. Five years is a far more reasonable time frame to declare victory or defeat.

Further, the implied threat of more top-down rate regulation greatly concerns us. It hasn’t worked in the long run, because players always find a way around the rules and the unintended consequences are too great.

But we don’t want to be entirely negative. We applaud the attorney general’s observation that a variety of organization models can be effective, and that both physician-based and hospital-based groups can get the job done.

But perhaps the most important part of the report discusses risk management and risk adjustment.

As the attorney general noted, most physician groups are ill-equipped to handle significant financial risk today. To do so in the future, we will need much better data than we currently have. We will need a clear picture of who is in our practice group, their utilization patterns, and what they do when they seek care outside our group. Without this, it will be impossible to monitor our own efficiency or quality.

We also need good electronic health record systems that can communicate with physicians outside our practice. By and large, this is not possible today. Imagine how limited your cell phone would be if you couldn’t call someone who’s using a different cell phone provider. That’s pretty much what most EHR users face today.

We also need to ensure that physicians can stay in small practices if they want to, while enjoying the benefits of aligning with larger networks. To remain viable, most physicians will need to share IT costs, reinsurance costs, contracting expertise, and clinical information, while maintaining some measure of independence. Many patients would prefer that too.

The payment reform initiative has a laudable but challenging goal – to make care more affordable while fostering quality and innovation. We haven’t been able to do it yet, but if anyone can do it, it’s this health care community in Massachusetts.

Let’s keep trying.

Dr. Young is a pediatrician based in Worcester, Mass.

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