Last month, I admitted three patients to the hospital on the same day whose cases illustrated much of what is wrong with the nation’s health care system.
The first was a woman with many years of diabetes and high blood pressure that had led to chronic kidney disease. Her kidney disease was severe enough to require starting her on lifelong dialysis. The second was a woman with polysubstance use disorder, who was admitted with severe benzodiazepine withdrawal after voluntarily stopping them two days earlier. The third was a woman with a history of gastric bypass surgery who was admitted for gastrointestinal bleeding at her old surgical site after her pharmacy wouldn’t refill her antacid medication. It turns out that she had also been taking the medication incorrectly.
Why is the US health care system more than willing to pay for expensive hospitalizations and procedures but unable to prevent debilitating and expensive medical conditions in the first place — for example, by controlling a patient’s high blood pressure and diabetes before they lead to kidney failure? Why aren’t there enough primary care providers or providers who care for mental and substance use disorders? Why is the US health care system maddeningly complicated, even for something as simple as a prescription refill, and why can’t patients get the information and support they need to care for their own medical conditions?
One answer is how the nation’s health care system is paid. This is a different problem from how to pay for health care, e.g., Medicare for All, Medicaid expansion, and insurance reform. How it’s paid is rarely discussed among those outside the system, and yet it influences everything about how care is provided.
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So, how is the health care system paid? It’s complicated, but the majority of health care is paid via “fee for service” — this means a set price, often negotiated with insurance companies, for each office visit, each test, and each procedure.
The price of each service is fixed in relation to every other service through something known as the resource-based relative value scale and is updated each year by the Centers for Medicare & Medicaid Services, relying almost exclusively on input from the Relative Value Scale Update Committee, run by the American Medical Association. This committee has one representative from each specialty of medicine. The RBRVS system was originally designed to make sure that cognitive specialties, including primary care and psychiatry, where providers spend most of their time talking with you, thinking about you, and relying on their medical knowledge, were paid fairly compared with their procedural colleagues, like surgeons. But over the years, the gap between the price of procedures and the price of everything else, especially primary care, has only grown wider.
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What are the implications of this system? First, it means that society pays for “widgets” of health care, such as in this case, procedures, tests, or office visits. So, patients receive lots of widgets but not a lot of care. It means that the only thing your PCP gets paid for is an office visit. It means that primary care and cognitive specialists are relatively underpaid, and thus fewer trainees in medicine choose these careers, leading to workforce shortages in the most crucial areas of medicine. And it means that no one gets paid to coordinate a patient’s care (care coordinators, nurses, and pharmacists are “money-losers” to the health care system because they generally can’t bill for their services). Lastly, fee-for-service often makes it difficult for the health care system to improve itself; after all, why should a hospital invest in ways to prevent hospitalizations when, frankly, it gets paid for them?
There is a growing movement toward a different way to pay for health care, known as “value-based payment.” The essential idea is that the health care system is paid for an entire episode of care, like a patient’s knee surgery and recovery (episode-based payments). It’s given extra payments for improving outcomes and reducing costs (shared savings), or in the most extreme cases, is paid for a patient’s entire care over a fixed time period (global budgeting). The problem is that many health care systems are currently paid under both systems, fee-for-service and value-based-payment. The system is trying to maximize value (i.e., improve care and minimize costs) and at the same time trying to bill insurance companies for as many profitable procedures as possible.
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Imagine instead if the health care system were paid one risk-adjusted price to take care of patients for the year. Then, it should become obvious that resources need to be spent on primary care, prevention of chronic diseases, public health, treatment of mental and substance use disorders, advance care planning, and coordination of care. In short, anything to prevent patients from developing severe diseases that require hospitalization. It would also free up PCPs to care for patients in ways that make sense, without being yoked to the 15-minute office visit. And unlike the managed care of 30 years ago, there are many more tools to measure the quality of care that patients receive, to help prevent skimping on that care. The closest model to this in the United States is Maryland’s All-Payer Model.
Many segments of the health care system have seen the writing on the wall and have been consolidating and growing, expecting to be held accountable for total health care costs, and understanding that the only way to survive in that system is to control all the parts of that system, from primary care to hospitals to pharmacies. But no one has made them accountable — yet.
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Massachusetts can fix this by bringing together all the stakeholders, including patients and family caregivers, health care providers, health system leaders, insurance companies, health policy and quality improvement experts, public health agencies, and policymakers. There are many details to work out, such as how to prevent gaming of the system. And issues of quality of care can’t always be fixed by simply changing the payment system. Lastly, there are many entrenched interests with something to lose.
But the winners are clear: all of us as patients.
Dr. Jeffrey L. Schnipper is a hospitalist at Brigham and Women’s Hospital, where he is research director of the Division of General Internal Medicine and Primary Care and a professor of medicine at Harvard Medical School.
