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Tuesday, February 2, 2010
Why Payment Reform and What Are We Doing About It?
By Heather Staples, NH Citizens Health Initiative Staff
Part 1: Why Payment Reform
This is the first piece in a two part series about health care payment reform. The second part will be posted Thursday, February 4, 2010 at NH Health Care Town Hall, where you can sign up to receive announcements about our new blog pieces. Also, we invite you to follow the Citizens Health Initiative on Twitter and become a fan on Facebook.
The NH Citizens Health Initiative Payment Reform Pillar has many active stakeholders who represent provider, hospital, insurance carrier, and policy groups. There is strong consensus among these stakeholders that payment reform is the appropriate, overarching vehicle for rehabilitating health care. Before I explain why payment reform needs to be aggressively pursued, both locally and nationally, let me provide a few facts about the state of our health care system:
• The United States spends more than twice as much as any other industrialized nation on health care (OECD Health Data 2008, June 2008 version).
• The quality of health care is 19th out of 19 industrialized nations when you consider death that could have been avoided with appropriate health care treatment (Commonwealth Fund National Scorecard on U.S. Health System Performance, 2008).
• Health spending in NH amounts to more than 18% of GDP and is expected to reach 22% by 2017. (NH Center for Public Policy Studies, 2008)
• NH’s average family health insurance premium, at $12,686 in 2006, is one of the highest average family premiums in the United States, far exceeding the 2006 national average of $11,381 (AHRQ, 2006 Medical Expenditure Panel Survey (MEPS)-Insurance Component)
• Personal per capita spending on health care in New Hampshire was $6,456 in 2007 and is projected to reach $11,043 by 2017 (NH Center for Public Policy Studies, 2008)
If New Hampshire’s health care costs were equivalent to the average of the top 5 “low cost, high quality” states:
• Our Total Health Care Expenditures as a Percent of Gross State Product (GSP) would be 14.6%, rather than 18.1% of GSP (2008). This would mean that NH healthcare expenditures, (currently about $10 billion per year), would shrink by $2 billion.
• Our Total Health Care Expenditures per Person would shrink from $8,235 to $6,909 (2008), a savings of about $1,000 per person.
• Our average premium for health insurance for family coverage would decline from $12,686 to $10,954 (2006), resulting in savings of about $1,500 per family. (NH Center for Public Policy Studies, 2009)
These facts remind us that no matter the outcome of national health reform, NH needs to continue to drive payment reform initiatives to rehabilitate our own system. Why? Because the manner in which we currently pay for health care is exclusively focused on volume (more services), and not on outcomes (whether the service helped, and in fact improved, the patient’s health). Further:
• It fails to appropriately value the complexity of health care that is delivered in the primary care setting;
• It over-values specialty services, emergency room and urgent care use and specialized testing such as CT-scans and MRIs;
• It pays for services whether they are needed or not, yet fails to pay for important conversations between physicians and patients on end of life care, or effectiveness of alternatives to expensive or risky treatments;
• It fails to pay for coordination of care across physicians, hospitals, testing sites and outpatient procedures, resulting in medication errors, duplicate and unnecessary tests and patient confusion and inconvenience.
Changing what we pay for, and how we pay for health care, has the potential to free up providers to:
• Focus more on outcomes and providing the right care at the right time;
• Take the time to collaborate with colleagues and other treating providers on treatment plans and alternatives;
• Plan for care in a formalized, long-term manner, particularly for those patients with multiple diseases, special conditions or needs and several medications;
• Communicate with patients using methods that make sense for the situation and for the needs of the patient;
• Focus on being more efficient in delivering services, to bring down waste, speed up communication, and remove unnecessary steps from processes, in ways that have been successfully accomplished in nearly every other industry.
In his 2010 State of the State Address, Governor Lynch outlined two important NH health reform initiatives. One is the Primary Care Medical Home Project occurring in 9 sites across the state. More information is available on the Citizens Health Initiative Website and in my previous blog on the topic of Medical Homes . The second initiative is a set of Payment Reform/Accountable Care Organization (ACO) pilots that will be launched early this year in collaboration with the major insurance carriers. For more information about ACOs, look for part two of this series, which will post Thursday, February 4, 2010.
Tags: Citizens Health Initiative, Health care, medical home, NH Citizens Health Initiative, Payment Reform, Payment Reform Pillar, rehabilitating Health care, stakeholders