Unbiased Analysis of Today's Healthcare Issues

Fragmented Medical Care III: Policy Options

Written By: Jason Shafrin - Sep• 10•08

Continuing with yesterdays theme of fixing America’s fragmented health care system, I will review some of the Commonwealth Fund’s policy suggestions to improve health care quality.

  • Expansion of P4P.  While I support P4P in theory, in practice, it will be very difficult to apply.  P4P rewards only measurable components of health care quality.  Since much of health care quality is not measurable, leaning heavily on P4P will likely cause physicians to increase their effort on disease where they are eligible for P4P payments and decrease their effort towards treating patients whose conditions fall outside of P4P.
  • Global Case payment.  This sounds like a good idea as well. Pay a flat rate for medical services.  Under this type of payment structure, providers can pocket efficiency savings and thus have an incentive to use care more efficiently.  This model, however, is likely best suited for hospitalizations.  It would be very difficult to determine the correct global case payment for a patient with 6 chronic illnesses who visited a PCP.
  • Full population prepayment for organized delivery systems.  Similar to above, this gives providers an incentive to cut costs.  It also gives providers an incentive to consolidate so that the risk of a few high-risk patients with very high medical costs can be spread across physicians.  Further, insurance companies or providers will have an incentive to provide low quality care to the sickest patients if the population prepayment were not risk adjusted.
  • Bonuses for coordinated care.  This could involve bonuses for participating in a regional EMR project, bonus payments for serving as the the patient’s medical home.
  • Reduced patient premiums or copayments for choosing an integrated delivery system.  This seems totally unnecessary.  Integrated health care systems should be able to attract patients based on the quality of the care they provide.  From Fragmented Care I, we saw that while high quality integrated care is ideal, it is possible that integrated care can be of very low quality as well.  Thus, patients should be able to choose their provider on an even playing field.
  • Shift enterprise liability to the system.  I agree that physicians part of an integrated system be allowed to forgo physician malpractice insurance and instead be covered by the malpractice insurance of the health care system they are employed by.
  • Establish an accreditation program for organized delivery systems.  This seems like a good short term solution to help consumers evaluate quality.  However, if integration proceeds quickly and there are a few large players in the health care marketplace, it is unlikely that an accreditation agency will be able to remove accreditation status of one of these huge players.  Also, accreditation could stifle innovation.
  • Government funded infrastructure such as EMR.  Having the government design an EMR has the benefit of providing a standardized platform that all physicians can use.  Government designed products often fail to evolve over time.  There is a distinct tradeoff between the benefits of standardization when the government creates the EMR and the costs of a lack of innovation caused by the use of a single standard.

Shih et al. (2008) “Organizing the U.S. Health Care Delivery System for High Performance“, Commonwealth Fund Report  no. 1155.

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