Paying for What Works

Paying for Treatments That "Work"  

From time to time I have heard a politician or a healthcare executive say that the best path to reform of the healthcare system is to pay physicians and hospitals to keep us healthy. I assume this means that payments for illness would be somehow reduced and our focus would be shifted from “illness care” to “wellness”. Of course, this sounds great; pay the providers to keep me healthy and my illnesses will be few and minor. Healthcare costs will drop dramatically and we’ll all live in a utopia of health and have plenty of money left over to fund the National Institutes of Health so that researchers can get more grants to study things that keep us healthy, right? Clearly, this is silly. Many factors, some of which interact with one another in still mysterious ways cause “good health” and “poor health”. The distillation of this complex collection of influences into a set of rules or treatment guidelines would result in a document that could make the tax code look like the phone book of Tulia, Texas (population 4,714 and location of an infamous drug scandal) by comparison. No, there is currently no practical way to reimburse providers based upon true health outcomes. The best we can do so far is to use surrogate indicators. Did a physician’s diabetic patients have a hemoglobin A1C measured as recommended? Did the emergency physicians administer aspirin to patients with chest pain? But that doesn’t mean things shouldn’t or can’t change.

As discussed in my March post, physicians and hospitals are currently paid based upon the volume and complexity of the services they provide. While it might seem reasonable to pay providers based upon the amount and difficulty of the work, one critical element is missing; did the work need to be done in the first place or, put another way, could the services rendered be reasonably expected to have a positive impact upon the patient’s health status? My friend, Dr. Guy Clifton, makes this point well in his new book Flatlined. In the book, Dr. Clifton describes several examples of medical procedures that reimburse both physicians and hospitals well but which have never been shown to be superior to less costly alternatives for the majority of patients. As long as we have a payment system that is structured exclusively around what we do with no regard to the outcome, costs will continue to escalate and, worse, patients will be subjected to medical care that, when examined objectively, offers them little or no true benefit.

One could reasonably ask how we can know what will be beneficial and what will not? Well, first, the history of healthcare is ripe with examples of procedures and treatments that seemed logical when they were first tried and yet, over time, were found to be ineffective or worse, harmful. So we know much about what does and does not work for many common conditions. Additionally, rigorously designed studies have compared treatment options for many diseases. So, while not every human affliction has been thoroughly studied, for many diseases we do know a lot about which treatments are very effective, which are marginally beneficial, which have no effect, and which are harmful. It follows then, that one way to reign in out of control spending is for payers to provide incentives for physicians and hospitals to use treatments that have been proven effective and to erect barriers to the use of ineffective and marginally beneficial treatments. This would almost certainly have to start with the largest single payer, the federal government, but large private insurers like the Blue Cross – Blue Shield network would almost certainly follow suit.

So then, how will we determine “effectiveness”?

The simplest way would be to allow independent expert panels to review the available evidence and make a determination. Upon review, the panel could reach one of two conclusions. Either there is clear and compelling evidence favoring one course of treatment over another, in which case payments to providers should be structured so as to favor that treatment; or evidence is conflicting or lacking. In the latter case, payers would continue to pay for all therapies until enough evidence accumulated to allow one to be deemed superior.

Three arguments are often leveled at the imposition of limits based upon effectiveness. The first is that innovation will be stifled. Without an incentive for physicians to try new things, so goes the contravening viewpoint, we will never be able to achieve the stunning advances that we have experienced since the end of World War II. The second argument against the model I propose is that people are different from one another so, while a therapy might be less effective than another across a population of patients, some individuals within that population may benefit from an “ineffective” or “marginally effective” intervention. Finally, some argue that the imposition of such a system  would rankle the American public because it places the insurer or some other entity between the doctor and the patient and denies the patient the opportunity to paraphrase a famous fast food commercial of yore; “have it their way.”

Each of these issues is relatively easily addressed. First, most physicians and hospitals making substantial sums of money doing marginally effective or ineffective treatments aren’t cutting edge innovators. They perform the same treatment again and again aiming for efficiency rather than effectiveness. True innovation, generally comes from observations and hunches that are then translated into research studies which are designed well enough to produce meaningful results. If we, as a nation, truly want improvements in healthcare, then we need to be prepared to make substantial investments in high-quality research programs.

It is certainly true that each patient is an individual and we are still far from a thorough understanding of what makes one treatment work well for patient A and poorly for patient B. But, if research has shown that a particular treatment is the best option available, then that one should become the standard of care and should be provided to most patients. If a provider has a compelling reason for doing something different then there should be an appeal process that allows him/her to explain his/her rationale before an impartial panel of colleagues. I suspect that such appeals would prove to be relatively rare occurrences.

Lastly, payment based upon proven therapies might indeed mean that a patient’s third party insurer or Medicare might refuse to pay for a procedure that he/she desires. To my way of thinking, that is OK. People who want to buy Toyotas, buy Toyotas; those who want a Lexus, buy a Lexus. Just as cosmetic procedures can be paid for out of pocket or using a health savings account, so could an unproven but wanted treatment.

Certainly, eliminating ineffective treatments alone will not save American medicine; as Guy says, it is only one arrow in a quiver, but it is an important arrow because, if nothing else, the public should always be able to trust that we are acting in their best interest by doing what we know to be best and safest.