Capping Medical Payments

I’ve been thinking a lot recently about how to keep healthcare costs down. There are a number of options, and the one that Massachusetts is set to implement will create accountable care organizations (ACOs) with “global payments.” In this system, there’s a big pool of money shared by all of the health care providers. It’s a bold act, but it’s necessary, since the Commonwealth’s universal coverage mandate requires that prices come down so that we don’t go completely bankrupt.

Today’s WBUR CommonHealth blog contains this fascinating nugget in an interview with Dr. Marc Bard about ACOs and global payments.

Now, what is being proposed in Massachusetts creates somewhat of a zero-sum game, doctor against doctor and doctors against hospitals; and that’s a less comfortable battle. And, it’s potentially going to be even less comfortable because with the ACO, there’s going to have to be more support for primary care, and if you’re operating with a fixed global payment budget, that means that the high-end providers, the high-end physicians and hospitals, are going to take the greatest haircut. That’s reality.

And by the way, I’m a strong advocate of capitation. Of all the payment strategies that have been used over the past decades, the one that truly fostered innovation was capitation, because it required the invention of new ways to deliver care on a fixed budget. So I like responsible capitation, it’s just that I’m realistic enough to appreciate that introducing it in Massachusetts is going to be very difficult.

Think of a bell-shaped curve. There are people at one end who absolutely need the high-end procedure and no one would dispute that. At the other end, I don’t need a total hip replacement. But there are a lot of people in the middle of the bell-shaped curve. The real question is: Do they need the procedure and do they need it now? And those kinds of borderline cases are going to come under much greater scrutiny. Who really needs a stent? Who really needs a bypass? What’s the data to support bypass vs. stent? The best example is Prostate Specific Antigen testing for men. There are going to be long-term studies that ask the question, who really needs surgery or radiation and if so, when?

That last paragraph scratches the surface of the shades of gray that are at the heart of the choices we might have to make if we can’t bring costs down any other way.

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