HR3200 has a pilot program for Accountable Care Organizations (ACO). These ACOs earn incentive dollars when their costs fall below some baseline. There is an opportunity here for expansion of these programs into the small physician practice area. The Mayo Clinic, Kaiser and The Cleveland Clinic have all dispensed with fee for service from the physician end long ago and are patient focussed and outcome focussed. Medicare Advantage is an existing ACO and has had moderate success from what I have seen.

The problem as I see it in the current reform is that no one’s ox is getting gored. The AMA was bought off with higher payments under the public option and the timid steps toward reform contained in HR3200 doesn’t harm anyone outright except the taxpayer, curious. If the AMA was screaming and hospital administrator’s were predicting their own demise then we would know that true reform was underway. Instead we have a Congress who seeks to offend only the taxpayer. Obama is suffering from overreach.

You rightly emphasized in earlier posts the need for cost-containment incentives, although I think more from the patient side (i.e., the patient bearing more of the cost as opposed to your Jiffy Lube hypothetical analogy to our current system http://keithhennessey.com/2009/04/21/slowing-health-cost-growth-requires-information-and-incentives/ ) than from the provider side (correct me if I’ve missed your addressing the latter, particularly if you’ve offered solutions, direct or indirect). Perhaps, similarly, the incentive portion of your healthcare plan above is the health savings accounts. But I think there is still a gaping hole in the incentives portion of your plan; what about provider incentives?

For whatever it’s worth, although there is still much I’ve been meaning to find time to read on healthcare reform options, and so I don’t feel highly-informed even for a layperson, my gut tells me that, sooner or later, we are headed toward widespread use of the gatekeeper capitation model of health insurance in both private and public sectors, quite possibly with “withhold” incentives (all explained below).

Way back over two decades ago I worked for a large IPO-style HMO (“IPO” meaning independent physicians treating in their own offices, as opposed to the “staff” model of Kaiser that had their own facilities with salaried medical staff). Members could only see a specialist after seeing the primary physician first and only if the primary physician gave a referral (i.e., approval), and did so to an in-network specialist, sometimes only of his choosing. This primary physician was compensated on a “capitated” basis: a fixed dollar amount per month per member signed up with that primary physician, whether that member was seen as a patient several times that month or not at all. Additionally, a portion of that monthly payment was “withheld”, and how much of it was eventually paid to that primary physician would depend on his level of referrals to specialists (who are generally more expensive). Thus, the primary physician would earn more money to the extent that he/she abstained from — or refuse to, when the patient so requested — referring patients to specialists, whether that meant the primary treating the ailment himself/herself or doing nothing.

I believe the above can provide strong cost containment. And I think it may eventually be necessary, in order to align provider incentives with a balance of healthcare objectives and cost-containment. But we should recognize that it would adversely impact healthcare in many cases. I recall personally having to argue somewhat heatedly with my primary physician before he would refer me to a specialist for a serious, chronic knee problem I had at the time. Someone less assertive would have been stuck with this primary doc’s best-guess “solution” of a few exercises he suggested, which may have worked for some, but not others.

Frankly, I’m sick of seeing over and over and over again the same tired phrases regarding the need to “move away from fee for service” and “change incentives” and “reward quality instead of quantity”, etc., etc., with very little or no discussion at all of what that would entail (although it’s even worse when the matter of incentives is not even addressed). The above is what I think it will end up meaning, at least in part. If you or anyone else has thoughts on this topic I’d like to hear them, along with any sense you have of the likely/potential adverse impact on healthcare.