I read with great interest the front page article by Thomas R. Collins (“Medicare Payment Data Release Concerns Some Otolaryngologists”) published in the August 2014 issue of ENTtoday, as well as the article by Win Whitcomb, MD, MHM, (“Physician Pay Shifts from Volume to Value”) published in the same issue. Both discussed physician compensation.
It appears that two initiatives are going to happen: pay for performance and the application of clinical guidelines. In most walks of life, people are evaluated for their performance and, oftentimes, compensation is linked to such evaluation. In most industries, there are standardized, acceptable ways, or a range of ways, to perform a job well. Clinical guidelines are being developed at a steady rate by academic institutions and organized medicine. If we do not craft these guidelines, nonmedical entities will impose their guidelines upon us. Much as we prefer not to have cookbook medicine, we can embrace well-crafted guidelines that allow for legitimate deviation. Current software is available to track the data.
It is the consensus that a “fee for service” or “pay for volume” model is not sustainable in the U.S. Capitation, ACO, and similar formulas being proposed do not solve the problem; in fact, they can create new problems.
The closest model is the so-called hybrid payment system (HPS). HPS takes into account human nature. It incentivizes the providers to be accessible on one hand and good stewards of the healthcare dollar on the other hand. As consumers, we all want quality, customer service, and “bang for our buck.” The HPS comes the closest to fulfilling the consumer’s wish. Besides, we are patients, or, someday, we will be patients, consumers of healthcare. The HPS incorporates the use of good clinical guidelines. As a collateral benefit, we can slowly affect tort reform. If the provider follows the guideline and an untoward event happens, the filing of a suit should not be permitted, or it should at least be a powerful aid in the defense.
The HPS keeps the fee-for-service payment system; however, instead of paying 100% of the claims, X% of the claims, which can range from 70% to 99%, is paid within one week from the date of claim, with no denial and no hassles. This will decrease unnecessary administrative costs on the payers’ side and on the providers’ side. Every quarter, the payer and the provider will review online the electronic medical records of a small but statistically significant number of the provider’s patients to measure the provider’s performance based on how he/she follows the practice guidelines. It is not cookbook medicine. Current technology allows physicians to deviate from the guidelines, documenting good reasons for the deviation to avoid a bad score. Depending on the results of this evaluation, the provider will get Y% of the claims or part of Y%.
Once we decide what X% is, we can decide what Y% of the claims will be. If X% is 70%, Y% can range from 40% to 0%. X% + Y% can be equal to 110% or less.
A quality, cost-effective doctor who does not underutilize or overutilize will get paid 110% of the maximum allowable fee. He/she will not only get the full value of the claims, but a 10% bonus can be added. Those who score lower will get paid between 70% and 100% of the claims.
HPS also borrows but modifies the principle of “HMOs withholding” of a prior era. In the eighties, the return of the “withhold” depended on the total performance of all the providers in the network and the financial health of the HMO. In this new HPS, each provider is measured according to his/her own performance. Hence, we are holding each provider accountable for his/her actions according to the criteria set by pay for performance. His or her compensation is thus not dependent on other physician performances.
The old “capitation model” or putting providers on salary without incentive will lead to less “access” for the patients, encouraging underutilization as well as making the provider want to pass the patient on to another provider (or refer to another specialty) to take care of and incurring unnecessary extra medical visits.
This HPS methodology will decrease cost without compromising quality and access. Once rational payment systems are adopted, providers will have no conflict with their conscience to overutilize and upcode, or underutilize or limit patient access. HPS is not going to be perfect at the beginning, but once we work with it, we can amend and improve it.
K.J. Lee, MD
Associate Clinical Professor
Yale Medical School
New Haven, Conn.