“If our beds are filled, it means we’ve failed”. I heard this quote from Mount Sinai Hospital during testimony on health care payment reform and thought how in a few words, it spoke volumes.
Imagine providing a service and instead of being paid to serve people, you were paid for not seeing them. Sounds odd, but this in part is the cornerstone of how Vermont, and other states some more than others, are building a future system to help achieve affordable health care.
At the risk of over simplifying, assume on average today you are paid $5,000 for every inpatient admission, and on average you admit 15 patients a day. Payment reform for tomorrow might say we will pay you for your historic average, 15 patients, and if you admit only 12 patients you will still be paid as though you had admitted 15. But, if on average you see 20 patients, the risk is on you, you will only be paid for 15. All of a sudden your top priority is to keep people healthy and out of the hospital. Sounds easy, but of course nothing in health care is. Risk corridors, risk adjustment and reinsurance may be technical terms but they are very real for providers looking for protections.
The organizations that are attempting to manage this payment transformation are called Accountable Care Organizations, otherwise known as ACOs. Some, cynical over past efforts to reform health care, who wanted a single payor system are reminded of Health Maintenance Organizations, HMOs, and see ACOs as more of the same; bloated bureaucratic entities focused more on providers and profits than on people. To guard against poor outcomes, the health care payors, Medicare, Medicaid and commercial insurance companies, are designing quality report cards to measure the performance of ACOs and tying their payments to outcomes. All of this is an experiment that the federal government has encouraged as a way to rein in costs.
The stakes are high. If we do not succeed in controlling health care spending, we continue to drain Vermonters by choking them with uncontrollable premiums, co-pays and deductibles. If these efforts are not designed and implemented properly we could destroy our hospitals. We will have to support them if they cannot manage care and they start to go under.
Hospitals and physicians will likely complain that they should not suffer financially for the poor behaviors of many of the citizens they serve. A person, stuck on the couch with a remote control in one hand a beer in the other, feeding on a diet of Twinkies with cigarettes for dessert is a liability not only to themselves, but under these payment changes, to the health care system too. This is not meant to be insensitive. Instead of criticizing many for behaviors we might find offensive, our system now has an economic incentive to help address the underlying addictions and stresses driving these behaviors. None of this means to absolve any of us from personal responsibility, but slogans like, “move more and eat less” may not get at the underlying reasons for dangerous behaviors. But I digress.
As the movie title said, “It’s complicated”.
You might be wondering why I would elaborate on this issue as the legislature is winding down for this year. We are trying to focus on next year. This area of our economy, much the same as the property tax, is perhaps the biggest challenge to living affordably in Vermont. The issue is wrought with politics and policy, not uncommon when money, a lot of it, is involved. There is no way in a 600 or so word column I can cover all of the aspects of this topic. But I do want to say that as a citizen legislature we have to play a role in these policy changes. Consumers need protection, and providers need to be treated fairly. I do not think it would be acting responsively to leave all this solely to the experts. The public needs a voice at the table.