Tuesday, May 15, 2012

Not Medical Fee Schedules Again...

I know I'm stepping into hot water with this topic, but okay, I've got the flak jacket on.

The topic is medical billing - and before all you physicians and medical industry lobbyists start putting finger to keypad and sending me all sorts of nasty emails, hear me out.

We all know we have a medical cost issue in the United States. It has been repeated so often, for so long, that it is getting not just old, but decrepit and a sign of ridiculousness that this nation, with all its ingenuity, genius and creativity, can not deal with it.

Just in one publication cycle this morning, WorkCompCentral News posts two top stories about medical costs: New Jersey is (finally) dealing with balance billing (physicians suing injured workers outside the comp system to collect the balance of any billing the carrier won't pay) and instituting a medical fee schedule, and Arizona is talking about tweaking its fee schedule drawing all sorts of objection from the medical community with dire prognostications of a mass exodus of providers from the state's system.

I'm not going to debate whether doctors will flee the system - I'll be inundated with statistics proffered to demonstrate that docs say they won't take work comp patients when reimbursement is set too low and other statistics demonstrating no impact on access to care. I've gone there before.

Nope - what I am going to say though is that the debate continues to be all about the wrong things.

The debate always centers on cost and procedure. Specifically, medical fee schedules are all about assigning a dollar figure to a procedure. Some procedures are reimbursed at higher rates than other procedures, presumably on the basis that those are either more difficult to perform and thus require greater expertise, or are inherently more expensive to deliver for some underlying reason.

The natural reaction to this type of service regulation is that the incentive is to push for the more highly reimbursed procedure, or set of procedures and not necessarily within the patient's best interests.

Regulating the cost of procedures ultimately fails because value is not rewarded.

In a prior post I mentioned the September, 2011 issue of Harvard Business Review (HBR) with the headline story, "How to Solve the Cost Crisis in Health Care," a scholarly, high-level, business oriented analysis of the health care management system by noted health care scholars Robert S. Kaplan and Michael E. Porter.

The bottom line of Kaplan and Porter's article is what is missing in the medical cost debate is a discussion about value.

Dr. David Deitz, Medical Director for Liberty Mutual, defines medical care delivery value in workers' compensation as quality divided by costs. Quality is defined as the health outcome following treatment of the injured worker.

Kaplan and Porter would enhance that value proposition by stating that medical providers need to be compensated based on the totality of services as a whole, based on diagnosis, rather than on a per procedure basis. This requires significant work analyzing data to determine statistically relevant expectations on outcomes.

Dietz would argue that this is possible in the workers' compensation system because of the huge quantity of data that is gathered on each case, but that the industry does a terrible job of marrying this data to real-world policy application.

The value debate does not have to be an entirely subjective determination. As Dietz notes, there is plenty of data that will allow definitions of value to almost any particular diagnosis and prescribed treatment regiment. We have to be willing to spend the time and money to analyze and study it.

My guess, though I could be wrong, is that the medical community at large would not be opposed to the value discussion. I think most medical providers want to do the right thing, and make great sacrifice to stay within the bounds of the system. But they also wanted to be adequately compensated.

However, like any other vendor to a highly regulated industry like workers' compensation, one tends to get beat down in the daily struggle for existence as the various forces at large tug and pull in different directions - thus there becomes an almost monocular vision towards the medical cost debate with no consideration for the delivery of value by either side.

I understand why the medical community responds to attempts to change medical fee schedules or reimbursement rates in the manner in which they do - because they are otherwise left out of the debate on value. And carriers are not the ones that should be driving the debate because they are just vendors too.

The debate should be driven by the stakeholders - workers and their employers - and moderated by regulators who have the information and data. Workers want to be fixed. Employers are willing to pay for that if they deem the costs to be reasonable. Somewhere in there is value.

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