All Sticks and No Carrots

Payers are seemingly enthusiastic in the design and implementation of strategies to contain cost and promote quality of care, especially cancer care. Many methods are on the table; some are partially implemented. The most common ones include following national guidelines, specific institutional guidelines, and “Medical Homes.” I will not dwell on the guidelines, since they are predominantly designed to mold what doctors do 80% of the time and the requirement is compliance 80% of the time. That must be easy, but they only enforce doing what we have been doing for decades with little impact on cost. Many would argue that the process of establishing those guidelines is infested with the influence of the pharmaceutical industry.

The Medical Home model is seemingly more appealing, since it requires access to the physician 24 hours a day. Isn’t that what physicians must do (and even required to do)? In addition, the medical homes are geared to minimize emergency room visits and hospitalization, which is the essence of quality, cost-conscious, health care delivery – an ideal system.

A proposed Medical Home model by the Centers for Medicare and Medicaid (CMS), endorsed by many other third-party payers, would financially reward well-performing practices. That sounds good and fair, but fairness comes into question when details are mined. A practice would be rewarded a portion of the savings which is also fair, but the savings would be calculated based on the difference compared to the cost incurred by the practice for caring for the patients the year before, not based on their cost compared to national or regional average cost.

Hence, a practice that is already cost-effective would have a small margin to deal with in order to qualify for a small reward, since the reward is proportional to the delta saved. An oncology practice that is historically less cost-effective (and typically providing inferior quality) has a lot to gain even by achieving mediocre savings. This is very much akin to an “F” student gaining a gold metal when he or she scores a “D” on a test while the “A+” student would gain nothing by achieving his "usual" and expected score.

Maybe the insurance companies should take a lesson from the grade school teachers. A student who has achieved an “A” average throughout the year gets a bye from the final exam, since he is expected to ace his class anyway.

For example, there is the process of pre-authorization done for any test or procedure ordered for patients. The payers implementing this policy in the last decade or so are spending a lot of money, time, and effort. The problem is that all providers are treated "equal" in this process. The “good” providers, who are almost always the most cost effective, are treated the same way in the pre-authorization process as the less effective, lesser-quality providers. This process is not any different from the Transportation Security Administration (TSA) that do body searches on 80- year-old women at a frequency similar to 20-year-old men with classic Middle Eastern complexions. Somehow, our society has degenerated through aversion to profiling – viewing it as a sin that should be added as the eleventh commandment.

The bottom line is: The employers are paying the cost, yet they don’t seem to have a say in how their premium money is spent; but, Ronald Reagan reminded us of this adverse phenomenon when he said, "People are the best custodians of their own affairs."