Fee for Service Medicine is going to disappear

Posted by Stephen Weinberg, MD FACC FACP

Fee for service medicine may be a thing of the past, relatively soon.

The President and Congress have stated on multiple occasions that they believe fee for service medicine is the principle cause of the high cost of medical care. The theory is that physicians often order tests that are sometimes unnecessary in order to increase their income. Unfortunately, it is difficult if not impossible to be certain that these tests are, in fact, inappropriate. Studies that have tried to determine the usefulness tests ordered by physicians look at tests that were performed relative to the final diagnosis. However, the tests were performed in order to make the diagnosis. It is not surprising that some of the tests were not directly related to the final diagnosis, since the final diagnosis was unknown at the outset. Admittedly, a small percentage of physicians probably churn testing to enhance their incomes. On the other hand, the vast majority of physicians practice appropriate medicine and order tests they believe are necessary and follow appropriate guidelines.

So what does Washington propose to take the place of the current system? The programs being put in place are related to the Accountable Care Act (Obamacare). Physicians will be placed into Accountable Care Organizations (ACO's) which will pay them salaries based upon the financial performance of the organization. Simply put, if the ACO makes money, physician income will increase; and if the ACO loses money, physicians will earn less. My fundamental concern with this system is that there is a perverse incentive to do less for patients because of the very real financial "vice" physicians will be put into. I believe it is important that the patient has confidence in the physician doing what is best for the patient and not the physician. This new system will damage the physician-patient relationship and create uncertainty about whose interest the physician is truly serving.

Additionally, there is no good data to suggest that this type of system will be effective. Medicare has done several demonstration projects over the past 20 years in a effort to show that costs will decrease and quality will be enhanced in a non fee for service system where physicians and hospitals are at risk. These studies have not shown any significant benefit as reported by the Congressional Budget Office. Despite this failure, Medicare has now licensed more than 200 ACO's and more will be coming to a region near you. As pointed out in a prior post, the ACO is supposed to provide a letter to each patient indicating that they and their physician are in the ACO, but the letters do not point out the financial implications. It is one thing to be in the ACO with full disclosure and quite another to not know all the intricacies.

What is interesting is that none of the major medical centers that have had this staff model for years (Mayo, Cleveland, Geisinger, and others) has joined the ACO programs. One could argue that some of the motivation of groups to form these ACO's is that the handwriting is on the wall as to the direction of the government programs, there is perhaps money to be made, and the organizers can control large regional resources of physicians, hospitals and money, so why not do it. This does not seem to be an appropriate motivation.

So what is an alternative?
The easiest way to promote appropriate use is to have the physician office computers ramped up with some artificial intelligence to point out what is the best testing for the patient's symptoms and problems. This would not be very difficult with overlay software packages that can provide appropriate use criteria in real time. There would always be the ability to override the recommendations with good reasons. The problem is that by not planning ahead when practice computers were mandated by the government, there are so many platforms now that it would be a more difficult task, but not impossible. This is just another example of poor planning by Washington. They jump from one issue to another without long term thought as to the best approach. Instead of trying things out in a regional laboratory, they move ahead with draconian programs that can destroy the healthcare system. And when they try programs that do not work, as above, they embark on them anyway.

The current programs of healthcare delivery set forth in the Accountable Care Act are like throwing the baby out with the bath water. We will develop a system that few will like or trust with uncertain results.

The easiest way to control costs is to set a fixed annual budget for healthcare nationally and regionally and then you will have certainty as to cost. I do not think any consumer of healthcare wants this alternative; but, believe it or not, this proposition is also part of the ACA with ACO's taking the lead. By doing this you will have Canadian and European healthcare with all the problems associated with it. More about this in a later post.  

It is important that we all have knowledge about what is coming down the road with the ACA and speak out against policies that will be detrimental to our collective health.