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Witness: Provider Pay Distorts Health Market

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The strategies public and private U.S. health plans use to pay health care providers drive up costs and promote fragmented care.

Dr. Robert Berenson, a senior fellow at the Urban Institute, Washington, delivered that assessment this week during a U.S. Senate Finance Committee hearing on health care incentives.

Berenson, who has been a doctor, a medical director at a preferred provider organization, and an official in the federal Centers for Medicare and Medicaid Services, says one problem is that current payment systems encourage doctors in the same specialty to team up to bargain for higher rates, rather than encourage doctors to form multispecialty groups that could improve the quality of care for people who suffer from several different chronic illnesses at the same time.

Another problem is that plans tend to have separate types of payment systems for different types of providers.

One effect of using different payment systems “is to reinforce the culture differences that already exist across the spectrum of providers which need to work together in patients’ best interests,” Berenson told members of the Senate Finance Committee, according to a written version of his remarks posted on the committee’s Web site.

Medical schools themselves encourage students to learn to work independently, rather than working in teams, and to adhere to standards of care that may not actually produce the desired results, Berenson said.

Meanwhile, even though large, integrated practices often can come up with statistics showing that they provide better care than small physician practices, patients often prefer to work with small practices, Berenson said.

The solution is to use electronic health records and electronic networks to hook small offices up the resources that large practices can offer, Berenson said.

Berenson suggested that public and private “payers” also ought to find ways to change payment systems that reward hospitals for readmitting patients.

Berenson noted that Medicare has been spending about $12 billion per year on hospital readmissions, and that many of these readmissions appear to be preventable.

“About half of Medicare patients who experience a readmission within 30 days have not had a visit with a physician or other provider in the interim between discharge and readmission,” Berenson said. “Patients who are sick enough to have needed a hospitalization or have undergone a major procedure requiring an inpatient stay are then ‘lost in transition,’ with, apparently, no one taking responsibility for their care in the crucial, initial post-hospital days.”

One strategy for tackling that problem would be require the doctors who manage patients’ care in the hospital to send the patients’ personal doctors discharge summaries when the patients leave the hospital, Berenson said.

“Simply, hospitals should not receive a full … payment in Medicare for readmissions that occur within short periods of time for large numbers of diagnoses that are amendable to better transition activities that would result in reduced rates of readmission,” Berenson said.


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