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Should Doctors Lose Money If They Fail To Achieve Healthy Outcomes?

by | Sep 20, 2016 4:29am
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Posted to: Health Care, Insurance, Nonprofits, State Budget

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It’s not everyday that healthcare advocates and the Department of Social Services agree, but that’s what’s happening in a debate on how to save money and make sure residents, especially those on Medicaid, get the care they need.

On the other side of the debate there are a variety of interests — from hospitals to healthcare foundations — who want to explore changing where the risk lies for everyone who has health insurance, not just Medicaid patients.

Bailit Health, a consultant hired for around $360,000 by the Health Care Cabinet, told the group last week that according to “economic theory, individuals have a greater response to a risk of loss, than they do to the possibility of reward.” Applying that economic theory to health care, “it’s reasonable to expect that providers will be more responsive to improving care delivery if they are in a shared risk arrangement, rather than in a shared savings arrangement,” Bailit concluded.

Under a shared savings arrangement, which advocates have fought, doctors get paid a fee for service and they may get paid extra if they save money on patient care. Under the model Bailit wants to explore, also known as downside risk, doctors will lose money if they don’t save enough money on their patients.

Healthcare advocates said that means providers could be incentivized to reduce access to care.

“Loss aversion is a very strong incentive,” Ellen Andrews, executive director of the CT Health Policy Project, said. But “what happens when that doesn’t work?”

Andrews pointed out that doctors can leave Medicaid anytime they want, so if they’re likely to lose money there’s no reason for them to stay.

A lack of doctors willing to see Medicaid patients was a big problem for the state about eight years ago. There are currently about 759,000 Connecticut residents enrolled in Medicaid and the network of providers is much larger than it was during the shortage in 2008.

The proposal to adopt downside risk as an option is being discussed by the cabinet, which will make its recommendations on how to reform the health care payment system to the legislature later this year.

“It’s voluntary so why not put that aside and take that off the table,” Andrews argued at the Sept. 13 meeting.

Department of Developmental Services Commissioner Morna Murray said her agency does, in effect, include a shared or downside risk with private providers because of the way the contracting process works, and she doesn’t believe the concept should be removed from discussion about what it should recommend to lawmakers

Frances Padilla, president of the Universal Healthcare Foundation, agreed.

“I’m still wanting to keep it on the table for discussion,” Padilla said.

Kurt Barwis, president and CEO of Bristol Hospital, said it’s an important part of the discussion and should remain part of the discussion moving forward, along with some value-based incentives. He said the concept could help them lower the cost and improve access to specialists.

Megan Burns, a consultant for Bailit, said she would include more about downside risk in writing for next week’s Sept. 28 meeting.

Lt. Gov. Nancy Wyman, who chairs the cabinet, said that’s a great idea.

But Andrews and others in the legal services community who represent consumers don’t want it to be part of the discussion moving forward. She said they should focus on value and supporting providers, not punishing them.

Sheldon Toubman, an attorney with New Haven Legal Assistance, said Bailit’s analysis “oversimplifies the financial risk it proposes to place on providers.”

“Downside risk assumes that saving money equals paying for quality, when it could instead significantly reduce access to care or the quality of care,” Toubman said in his correspondence to the cabinet.

It also goes back on a promise that the state would never experiment in this way with the Medicaid population, according to both Andrews and Kate McEvoy, the director for Medicaid services at the Department of Social Services.

Daniela Giordano, public policy director for the National Alliance on Mental Illness (NAMI) Connecticut, said in written testimony to the cabinet that there was a promise made that the state wouldn’t experiment with this population.

“This commitment is crucially important to many advocates and other stakeholder groups as this risk-based model can have very harmful unintended consequences to the care delivered to individuals,” Giordano said. This is especially so for those with complex health conditions who require numerous interrelated interventions to achieve better health and quality of life.”

McEvoy pointed out that the state’s decision in 2011 to move to a Medicaid delivery system that reimburses doctors directly has been working.

The average cost per Medicaid patient is down 1.9 percent from $718 in 2012 to $670 last year and the number of doctors willing to treat Medicaid patients is up seven percent, according to state data. Another huge success is the focus on primary care and a drop in emergency room visits, McEvoy said.

Under the Patient Centered Medical Home model, primary care providers are paid extra for coordinating all the care of their patients and in addition get paid a bonus for doing well on quality measures.

McEvoy argued that doctors and many small practices throughout the state are not experienced enough to take on a downside risk proposal. She questioned whether it was viable given the financial landscape and the widespread complaints from specialists that Medicaid rates are not adequate.

She said the Medicaid population is vulnerable and she doesn’t recommend going forward with this type of experimental payment model.

Matthew Katz, executive vice president and CEO of Connecticut State Medical Society, which represents doctors, said downside risk is a “perverse incentive.”

He said it goes along with a trend that has doctors more focused on bureaucracy and less on direct patient care.

“Physicians weren’t trained to be actuaries or understand risk calculations that pertain to financing,” Katz said Monday in a phone interview. He said these are clinicians and not mathematicians.

In Connecticut, an estimated 60 percent of medical practices are run by solo practitioners or small practices, who don’t have the infrastructure to implement a downside risk proposal, according to Katz.

He said it might be different for large organizations such as the Mayo Clinic, which has the staffing and resources to understand the financial risk and try to make it work. However, one wrong year of guessing for a smaller practice and that’s it. They’re out of business, Katz said.

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