A goal of health care reform is cutting costs by reducing unnecessary or ineffective medical treatment. This week JAMA, the AMA’s premier journal, published a cogent commentary on the problems in achieving this important objective.
Victor R. Fuchs of the National Bureau of Economic Research makes several salient points about how difficult it is for physicians and patients to decide among treatments based on rational assessments of effectiveness and cost. Here’s one of his examples:
Consider, for example, a patient who has experienced frequent, intermittent headaches for several weeks. Her physician thinks it is unlikely that the headaches are caused by a brain tumor or lesion (less than 1 chance in 10). A magnetic resonance imaging scan would provide more definite information. If the physician orders the scan, is that waste? What if the chances were 1 in 100 or 1 in 1000? What if the patient is so anxious about the headaches that she has difficulty with daily functions?
Another difficulty is deciding among different medications for the same disease. For example, a 2007 analysis by the Agency for Healthcare Research and Quality compared a dozen second-generation antidepressant drugs. The comparison didn’t include another dozen or so first-generation drugs, many of which are still in use.
The agency looked at 187 clinical trials involving thousands of patients, but it found little evidence that favored any one drug over any of the others.
How could physicians make rational decision among these drugs, based on evidence? Yet the research and marketing work for each of the dozens of these duplicative antidepressant drugs requires billions of dollars. Surely that is great waste, which Americans pay for in the costs of medicines. But how to eliminate it?
Waste in medical treatment is a problem with no easy solution. But Fuchs succinctly summarized the requirements for making cost-effect treatment decisions:
First, physicians need information about effectiveness and costs; the range of possible diagnostic and therapeutic interventions available in all but the simplest cases is staggering. The provision of such information in a timely and easily accessible form is a public good that can only be provided by a large, publicly funded but quasi-independent organization. Second, physicians require access to an infrastructure that provides specialized technology and personnel appropriate for cost-effective care, for example, a multidisciplinary, team approach to the care of patients with diabetes. Third, information and infrastructure will often be wasted unless physicians are provided with incentives that reward cost-effective decisions.
What this boils down to, in my view, is ending the fee-for-service health care reimbursement system. If we stop paying health care providers for treating their patients’ diseases and start paying them for making their patients well—by bundling payments for services to achieve good outcomes—the steps to reduce waste will follow.
Taking Fuch’s points one by one:
- If providers get paid for good outcomes, they will seek out the comparative effectiveness and cost information they need. Even more: They will do the research to discover it.
- If providers get paid for good outcomes, they will be willing to invest in the organizational structures to achieve those results.
- If providers get paid for good outcomes, they will have the motivation to choose the most cost-effective treatment options.
Sorry to say, there is little in the current health care proposals in Congress that tackle the cost problem head on. The legislation likely to pass continues the fee-for-service reimbursement system by continuing the payment system now in place for almost all Americans—private insurance, Medicare and Medicaid.
The one hope for radical changes comes from the Senate proposal to expand Medicare. As I noted in my post Wednesday, that step could put up to 50% of all health care into government hands. Faced with escalating medical costs and the precarious financial future of the entitlement program, the government would be forced to change the payment system rapidly and substantially.
