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Saturday, January 19, 2008

Five Things you need to ask yourself about Health Care Reforms

Since 2008 is an election year, there will be much attention on domestic issues and the elephant in the room is health care reform. This healthpolicymaven blog reviews five fundamental questions and their importance in creating a more effective health care system for Americans.
Does everyone have access to some type of primary care?
Is the United States government optimizing its purchasing power for public programs?
Are provider reimbursements in line with health care goals?
Is there a mechanism for eliminating unnecessary and costly redundancies in a fragmented delivery system?
Is the financing of health care for the country adequate and equitable?

Access to Care
First of all, access to care is not the same as access to health insurance. Health insurance is one of the financing mechanisms for health care, it does not provide care. Secondly, access means adequacy of supply in relation to the demand for services, especially primary care services. Presently there are significant shortages of nurses, obstetricians, pediatricians, and mental health professionals for the juvenile population in the United States. Increasing the demand for health care services without provisions for stemming shortages in providers will only exacerbate the lack of access.
The United States could improve access for its residents by increasing funding to universities, enabling more professionals to be developed in areas of shortages. Since universities are publicly funded, it is incumbent on the state legislatures to have the political will to act. Do we have to wait until facilities close before we address the supply issue? Another critical element for access is alignment of reimbursements with social needs, such as pediatrics. Presently medical schools throughout the United States encourage doctors to pursue specialties because of the high cost of a medical education and the ability to earn more money. As a society this disparity can be addressed in two ways, by reducing tuition costs for professionals going into areas of need, and by increasing Medicare and Medicaid reimbursements for targeted services.

Optimizing Government Purchasing
The largest single provider for health care in the United States is the government, through its Medicare, Medicaid, Veterans Administration, and Community Health programs. As such, the federal government has the greatest influence on reimbursements for providers and ultimately, what the health care consumer pays for services. Changes in Medicare drive changes in private health care plans as well. One of the areas where the government failed to utilize its mass purchasing power was in the Medicare Prescription drug program, which was enacted in 2006. Medicare subscribers now have a limited prescription drug benefit, but at market prices. This is a failure of a monopoly to exert its purchasing power, which has cost the taxpayers millions. Is it unreasonable to expect the prescription drug industry to offer a group discount to its largest customer base? This practice is deployed in private industry all of the time. When I worked for a large hospital network, one of the performance improvement efforts was to optimize bulk purchasing for pharmaceuticals. The Bush Administration failed to negotiate effectively with the pharmacy industry. For consideration of a proposed deep discount for Medicare pharmaceuticals, the government could offer streamlined administration for the pharmacy industry as an enticement to lower prices.

Reimbursement Alignment with Desired Outcomes
One of the problems with health care access is the primary payer for health care, the government, does not reinforce primary care delivery with adequate financial reimbursements. Until this changes we will not see a major increase in supply of pediatricians, obstetricians, and other primary care providers. The entire Medicare reimbursement system is based on paying for transactions, like surgical procedures, and not for wellness driven processes. It is not fair to expect physicians and other providers to offer health services for free or at a financial loss. There is no other sector of the economy that is expected to offer services for free or in a nonviable manner. This problem drives family practitioners out of business. Ideas for improving the reimbursement methods include paying a stipend for continuity of care over a period of years, not just per visit. Also, recognize best practices and incorporate that into the rewarded financial allocations. Medicare is experimenting with recognizing diabetic care and other chronic disease management programs differently, and this is a step in the right direction.

Streamlining the Healthcare System
The United States has 50 different health care systems, because each state has its own insurance and Medicare practices. This creates unnecessary burdens on benefit administrators in the private and public sectors. One way to streamline health care is to establish common templates for claims processes, as has been done by the Health Care Forum in Washington State, a consortium of healthcare providers who work towards process improvements. Another method is to encourage adoption of electronic processes, which all major health care entities are already doing. The question is, how many different standards do we need? For private sector suppliers of electronic medical records and claims administration, differentiation in services is essential to their success, but this is not in the best interest of the consumer, as it adds to the ultimate cost for plan administration. It would be more effective to create regional purchasing pools for health care, where the electronic platform, claims process, and deployment will be standardized. Standardization saves time, reduces errors, and is a common element of effective business practices. An example of a regional purchasing pool would be the Pacific Northwest WAMI Region, which includes Washington, Alaska, Montana, and Idaho, but could also include Oregon.
All health purchasing cooperative gains would be cycled through to residents of each state participating in a health care purchasing cooperative. Financial success through regional purchasing pools would include the following elements:
Saving money in administration expenditures
Reduced volatility in health insurance premiums
Reductions in expenses from mass purchasing
Other criteria for success would include simplified claims processing, because we do not need 50 different claims adjudication systems. Private payers, like insurance companies and third party administrators could have an opportunity to administer these regional contracts, through a competitive bid process. Ultimately, reducing differentiation will optimize administrative simplification and administrative efficiency.
Due to brevity, this article does not address the need to review the unnecessary deployment of technology, for example, the excessive use of Magnetic Resonance Imaging and unnecessary procedures. These services respond to a complex system that recognizes procedures for higher reimbursements, avoidance of malpractice claims in our tortuous society, consumer demands, and a highly incentivized medical supply sector.

Financing Healthcare
Presently the United States has a fragmented method of financing health care services to its residents, including; government programs, private insurance plans ($12,106 is the average premium for a family according to the nonprofit Kaiser Family Foundation), individual contributions, and unpaid services. Services that are paid with payroll taxes include Medicare and state workers compensation taxes. Other government programs, like Medicaid are funded through state general funds, federal allowances, and sin taxes from alcohol and cigarette consumption. Ways to finance a national health care mandate to cover all residents include: increasing the FICA/FUTA payroll tax, creating a new tax, like a Canadian Value Added Tax, or using an income tax method.
According to the Kaiser Foundation 2007 Primer on Health Care Costs, premiums for private sector health care grew 87% between 2000 and 2006, which is four times the rate of wage growth. Every person covered on a private health insurance plan is paying for services that are not reimbursed to hospitals and other providers, due to gaps in Medicaid reimbursement and the uninsured. The current method of paying for health care in America is not sustainable. The question that should be asked isn’t how much more will a national health care mandate cost, but how will we deploy our resources? We are already spending the money, just not effectively or fairly. How much longer are Americans willing to spend 25% more for health care than any other country, with 12% of the national population lacking basic access to health care, and millions of people without primary care? The present health care delivery system uses resources from both the private and public sector disproportionately to the benefits for most participants. It is time for a change in health care delivery, but lets look at making sound systemic changes, not just add-ons to a poorly designed system.

This article was written by Roberta E. Winter, MHA, MPA

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