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Navigating Payment Reform

Survey Snapshot: Deep Frustration with the Current Payment System

Insights Report · November 30, 2017

Kristine Olson, MD, MS, Assistant Professor of Clinical Medicine at Yale School of Medicine in New Haven, Connecticut, didn’t anticipate being in favor of a single-payer health care system, but she says a sea change in the industry has swayed her.

“I haven’t given up on a free market system with patient choice, but currently I have less confidence that legislators understand health care well enough to be able to implement anything else in a timely fashion,” says Olson, who also is an internal medicine/pediatric hospitalist.

Olson is among 49% of respondents to the recent NEJM Catalyst Insights Council survey, What’s Next for Payment Reform?”, who rank single-payer health care as the No. 1 best outcome for future payment reform. “Maybe we need to go to single-payer to simplify the system just to make it work, and then build on that,” she says.

Single-Payer Health Care Is the Favored Outcome of Future Payment Reform

From the New Marketplace Insights Report: What’s Next for Payment Reform? Click To Enlarge.

Doing so would address the battle between commercial and government markets engaged in risk-dumping and cost-shifting, according to Olson. Combined with a lack of transparency, this battle has distorted prices two to three times more than the same goods and services in other industrialized countries, generating “complexity too onerous for providers,” she says. Even with a free market, she believes government involvement would be necessary to maintain “a transparent and nimble market.”

The survey on payment reform, which evoked hundreds of verbatim answers from the 712 Insights Council respondents, exposes the frustration many executives, clinical leaders, and clinicians have with the pace of value-based payments, which is an important element of the move away from fee-for-service models. Respondents predict that the industry will shift toward value-based payment at a moderate pace (say 40%) or slow/very slow (37%) in the coming years. Insights Council members are more sanguine about their own organizations, predicting they will shift at a moderate (36%) or fast/very fast (27%) pace.

Shift Toward Value-Based Payments in the Industry and at Organizations Is Accelerating

From the New Marketplace Insights Report: What’s Next for Payment Reform? Click To Enlarge.

Olson considers Yale School of Medicine out front in the shift to value-based payments. Despite a perceived lack of clarity for a path forward from the Trump administration, she expects the shift to continue at a rapid clip. “The [value-based payments] train has left the station. The industry is working with narrow margins, so organizations are motivated not to leave a dollar on the table,” she says.

She acknowledges the pressures that go along with the change to value-based payments —  mostly for frontline workers who have “the hassle factor” of charting and metrics. And while the quality gains, in her estimation, are well worth the effort, organizations should be careful not to sacrifice patient-centered goals and physician well-being.

At Dover, New Hampshire–based Wentworth-Douglass Hospital, which earlier this year became part of Massachusetts General Hospital and the Partners HealthCare integrated health care system, Jeffrey Johnson, MD, Chairman of the Department of Obstetrics and Gynecology, says the hospital’s payment is still predominately fee-for-service.

“We’re not getting a whole lot of reimbursement that’s value-based yet,” he says. And with around 58% of the hospital’s patient population qualifying for Medicaid, he doesn’t think it ever would “make much of a difference.” He’s not a fan of the value model, arguing, “nothing has convinced me that if I do a really good job with value-based payment, I’ll improve outcomes. I just haven’t seen that metric.”

He does expect Wentworth-Douglass to mature its value-based payment systems over the course of this year and next, however, under the tutelage of Mass General.

In the near term, he’s more concerned about the future of Medicaid programs. Medicaid and Medicaid expansion are critically important to the hospital’s revenue stream, Johnson says. “We don’t have a lot in terms of social safety nets provided by the state of New Hampshire. If people don’t have coverage, they are going to get free care and we are going to get bad debt.”

Like Olson, he expects single-payer health care to gain traction. “We have to completely rethink things to get costs under control,” he says, adding that health care has become too big a part of the economy to be run by private industry. “[Insurance companies] are skimping out on what they will cover and issuing denials of payment.”

The existing payment model has had a negative impact on patient care, he says. “You spend so much time trying to justify treatment that costs a minimal amount extra that you don’t have time to care for patients,” he says. “Visits have become so superficial, and no one studies that in terms of outcomes.”

Single-payer, he believes, will change that. But he doesn’t expect single-payer to become reality in his career, calling the insurance lobby “just too strong.”

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