Health Care ReformHealth Care Reform

April 28 & 29, 2010April 28 & 29, 2010

Jack A. Lenhart, M.D.Medical Director, Valley Preferred

Jack A. Lenhart, M.D.Medical Director, Valley Preferred

Health Care ReformHealth Care ReformWhy we needed health care reform?■ Problems of cost, quality, safety and the

uninsured■ The United States spends substantially more per

person on health care than any other country■ In 2005, the last year for which comparison

statistics are available, the United States spent $6,401 per person

■ The next highest spending was in Norway - $4,364 and Switzerland - $4,177

Why we needed health care reform?■ Problems of cost, quality, safety and the

uninsured■ The United States spends substantially more per

person on health care than any other country■ In 2005, the last year for which comparison

statistics are available, the United States spent $6,401 per person

■ The next highest spending was in Norway - $4,364 and Switzerland - $4,177

Health Care Reform(continued)

Health Care Reform(continued)

■ Overall, United States health care expenditures are 2.4 times the average of all developed countries

■ Yet, health outcomes for United States patients whether measured by life expectancy, disease specific mortality rates or other variables are unimpressive

■ Mediocre outcomes + high cost = poor value

■ Overall, United States health care expenditures are 2.4 times the average of all developed countries

■ Yet, health outcomes for United States patients whether measured by life expectancy, disease specific mortality rates or other variables are unimpressive

■ Mediocre outcomes + high cost = poor value

1942 Stabilization Act1942 Stabilization Act■ Congress limited the wage increases that could be

offered by firms, but permitted the adoption of employee insurance plans

■ Health benefit packages become a major means of securing workers

■ 1949 – National Labor Relations Board rules that the term “wages” included insurance benefits

■ 1954 – Internal Revenue code made employer contributions to employee health plans exempt from employee taxable income

■ Congress limited the wage increases that could be offered by firms, but permitted the adoption of employee insurance plans

■ Health benefit packages become a major means of securing workers

■ 1949 – National Labor Relations Board rules that the term “wages” included insurance benefits

■ 1954 – Internal Revenue code made employer contributions to employee health plans exempt from employee taxable income

Medical Cost InflationMedical Cost InflationThe forces of third-party payment, and usual andcustomary reimbursement, Cost plus HospitalPayments

■ Hospitals paid costs plus – no incentive to deliver efficient care

■ Physician earned more by charging more for procedures, surgeries and hospital care

■ Patients were insulated from the costs, paid by employer insurance / tax free benefit

The forces of third-party payment, and usual andcustomary reimbursement, Cost plus HospitalPayments

■ Hospitals paid costs plus – no incentive to deliver efficient care

■ Physician earned more by charging more for procedures, surgeries and hospital care

■ Patients were insulated from the costs, paid by employer insurance / tax free benefit

Not office visits

U.S.

3.8 per capita

OECD average

6.8 per capita

Not over hospitalization 121/1000 163/1000

High tech 3x as many MRI scanners as OECD average

Procedures: Coronary re-vascularization (per 100,000)

579 245

Drugs: Pharmaceutical spending per capita

$752 $383

End Result of those Forces Leads to Over Utilization

End Result of those Forces Leads to Over Utilization

Not office visits

U.S.

3.8 per capita

OECD average

6.8 per capita

Not over hospitalization 121/1000 163/1000

High tech 3x as many MRI scanners as OECD average

Procedures: Coronary re-vascularization (per 100,000)

579 245

Drugs: Pharmaceutical spending per capita

$752 $383

End Result of those Forces Leads to Over Utilization

End Result of those Forces Leads to Over Utilization

Physician Factors – Intervention BiasPhysician Factors – Intervention Bias

■ Culture – thoroughness not prudence is rewarded – imperative to do everything for patient regardless of cost or effect or others

■ Fee-for-service payments misalign incentives

■ Explosion of physician ability to intervene

■ Medical malpractice and defensive medicine

■ Culture – thoroughness not prudence is rewarded – imperative to do everything for patient regardless of cost or effect or others

■ Fee-for-service payments misalign incentives

■ Explosion of physician ability to intervene

■ Medical malpractice and defensive medicine

Patient FactorsPatient Factors

Patient FactorsPatient Factors■ United States culture embraces technologic fixes

for problem ● Doing more tests and receiving more

treatments; intervention provides better care■ Direct-to-consumer marketing very successful in

driving patient requests for new and more costly medicines

■ Third-party payment has largely shielded patient and family decisions from the true cost of health care

■ United States culture embraces technologic fixes for problem

● Doing more tests and receiving more treatments; intervention provides better care

■ Direct-to-consumer marketing very successful in driving patient requests for new and more costly medicines

■ Third-party payment has largely shielded patient and family decisions from the true cost of health care

Health Care Reform Is there any way out of this mess?

Health Care Reform Is there any way out of this mess?

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

Employer-Based Culture of WellnessEmployer-Based Culture of Wellness

■ Keep the well healthy■ Keep those with chronic illness (Diabetes,

Vascular diseases, Hypertension, Hyperlipidemia) from getting worse

■ Encourage employees to evaluate their own health risks

■ A culture that encourages employee to take responsibility for their own health

■ Keep the well healthy■ Keep those with chronic illness (Diabetes,

Vascular diseases, Hypertension, Hyperlipidemia) from getting worse

■ Encourage employees to evaluate their own health risks

■ A culture that encourages employee to take responsibility for their own health

Health Care Reform Is there any way out of this mess?

Health Care Reform Is there any way out of this mess?

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician reimbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician reimbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

Health Care Reform Is there any way out of this mess?

Health Care Reform Is there any way out of this mess?

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying

for volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient-Centered Medical Home

■ Take malpractice out of the courts – compensation system for physician and hospital error

Patient-Centered Medical HomePatient-Centered Medical Home

■ Team concept■ Wellness focus■ Improved access (virtual visits, e-mail, etc.)■ Care coordination■ Goals of care

■ Team concept■ Wellness focus■ Improved access (virtual visits, e-mail, etc.)■ Care coordination■ Goals of care

Health Care Reform Is there any way out of this mess?

Health Care Reform Is there any way out of this mess?

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying for

volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient Centered Medical Home

■ Take malpractice out of the courts– compensation system for physician and hospital error

■ Find a way for basic insurance for all with emphasis on wellness and prevention

■ Allow cost to effect patient and family decision-making; at least in high tech expensive care with marginal benefit (value based insurance design)

■ Develop Employer Cultures of Wellness■ Change hospital and physician re-imbursement from paying for

volume to paying for value – Pay For Performance Accountable Care Organizations

■ Alter physician compensation to encourage primary care – Patient Centered Medical Home

■ Take malpractice out of the courts– compensation system for physician and hospital error