Should Specialists Be Paid Fee-For-Service?

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

How did the fee-for-service model originate?

Once upon a time, legends say, if you could not afford to pay your doctor cash, you could pay him with commodities like grain, chickens, Brussels sprouts, or milk. Whatever goods or currency were exchanged, we called this model “fee for service.” For decades it has been the dominant model in American medicine, and it defines the patient-doctor interaction as fundamentally transactional: the doctor gets something in return for the advice/diagnostics/prescription/procedure she provides you. So historically the way to increase your income as a doctor was to simply increase volume: the more patients you saw, the more money you made.

Quality was generally measured, if at all, by the likelihood of a patient returning to see the doctor. In cases of possible patient harm, doctors tried to hold one another accountable by reviewing peers’ cases and participating in meetings such as “Morbidity and Mortality” (M & M) conferences to catch obvious errors. Working within a model that so rewarded quantity of care over quality of care, it comes as no surprise that doctors may miss half of indicated care, and that somewhere between a fifth and a third of the care that doctors provide may not be indicated at all.

A move towards quality over quantity

We are gradually moving away from “fee for service.” With the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), a rare bipartisan bill, doctors can earn significant bonuses or incur significant penalties from Medicare by meeting or failing to meet certain benchmarks of quality of care.

We’ve long experimented with capitated Medicare Advantage plans that seek to incentivize private insurers to find cost savings and quality opportunities. And around half of payments from private insurers are now thought to be tied to some degree of value-based payment, or “pay for performance.” The goal of this change is to incentivize not just quantity of care, but quality as well.

We’ve even seen a modest rise in doctors operating outside the insurance system in so-called “Direct Primary Care” practices. These doctors ask for a modest recurring fee—usually $50-$100 per month—in exchange for unlimited access, with the underlying assumption that by limiting their patient panels (in part by eliminating administrative overhead), quality will inherently rise.

Should specialists be paid fee-for-service?

It was in this line of thinking that investigators recently undertook an examination of costs associated with specialty care in Canada. Canadian specialist physicians seeing patients with diabetes and chronic kidney disease can be paid under an American-style fee for service system, or they can be salaried with potential benefits tied to the quality of care they provide. *Disclosure: Justin Moore, MD, is a diabetes specialist by training*

Researchers compared the costs and quality of care associated with each one, and the results were surprising: diabetic patients were 12% more likely to have a hospital admission or an emergency department visit for a diabetes-related condition if they were seen by a salaried physician rather than a fee-for-service physician, although the difference was not quite statistically significant (1.63 admissions or visits per 1000 patient-days in salaried docs vs 1.47 in fee-for-service docs).

A lazy interpretation of this might lead you to believe that the salaried physicians, having their paycheck guaranteed, simply didn’t see the patients in clinic frequently enough. But the researchers actually found the opposite: patients seen by salaried docs had 13% higher rates of follow-up visits and procedures (and their associated costs) than the fee-for-service docs, although again, the numbers didn’t quite reach statistical significance (1.74 visits per 1000 patient-days in the salaried docs vs 1.54 visits in the fee-for-service docs).

From this data–admittedly in a Canadian system that differs in many important ways from our own–editorialists concluded that “It would appear that salary-based payment does not have the same association with reduced quantity of care provided for specialist physicians who treat chronic diseases as it does in some primary care settings.”

The lesson to be taken from this study seems to be, as it so often is, that we should proceed with caution. While primary care may be in some ways best delivered in a salaried model, for now a fee-for-service payment model may remain preferable in specialty care. When designing your benefits, or when thinking of innovative ways to contain costs in your high-utilizing employees, this might be worth keeping in mind.

Your Doctor Is Your Real Financial Planner

As the Medical Director of the Kansas Business Group on Health I’m sometimes asked to weigh in on hot topics that might affect employers or employees. This is a reprint of a blog post from KBGH:

The last time you spoke to your financial planner, I suspect the first question she asked you was some version of “Where would you like to be in ten years?” Or twenty, or thirty. Maybe you told her that you wanted to have your house paid off, or to be out of debt, or to be retired, or to have enough savings to send your kids to college.

The last time you went to the doctor, though, I’m willing to bet your conversation was more…retrospective. Medical students are taught to use open-ended questions to initiate a visit, so he probably asked something like “What brings you in today?” And if you’re like most people your answer wasn’t “I want to make sure I’m happier and healthier ten years from now than I am today.” Instead you probably led with whatever complaint was bothering you that day: a rash, a sore joint, shortness of breath. This doesn’t mean you were doing it wrong. Doctors exist to relieve suffering, after all. The Hippocratic Oath states in part that “I will apply, for the benefit of the sick, all measures which are required.”

``Where would you like to be in ten years?`` isn't just a question that should come from your financial planner. It should come from your doctor, too.

But if you’ll allow the slight stretching of a metaphor, what if your interactions with your health care professional sounded more like your conversations with your financial professional? Because the person that is most in charge of your financial future may not be your financial advisor. It’s more likely your doctor. Here are some hard truths at the intersection of medicine and finance:

So “Where would you like to be in ten years?” isn’t just a question that should come from your financial planner. It should come from your doctor, too.

What if we applied a financial planning rubric to health and wellness? Once the shock wore off from your doctor asking you where you wanted to be in ten years, what would you say? If you were diabetic, you might first answer that you wanted to avoid the complications of diabetes: you wanted to keep your vision, you wanted to keep all your toes, and you wanted to avoid having to go on dialysis for kidney failure. These are all perfectly good answers, but they suffer from low expectations. They’re a little like telling your financial advisor that you want to avoid bankruptcy and avoid having the bank repossess your house.

What if you were more ambitious? What if you said that, in addition to all those, you wanted to run a 5k with your granddaughter, or dance at your son’s wedding without being out of breath? What if you said you wanted to be able to carry your infant grandson up and down stairs without fearing a fall? Fortunately, just as the best financial strategies tend to be simple, the best health strategies are simple, too. Just as the financial advisor would hopefully come up with a plan to start putting money away, your doctor would work with you to make a shared decision on how to get to the last dance at that wedding a few years from now. The financial advisor might tell you to maximize deposits into tax-deferred annuities, while the doc might work with you to start scheduling “deposits” of physical activity. Just as your financial advisor might tell you to knock off the daily trips to Starbucks, your doc might tell you to knock off the bright screens in your eyes for an hour or two before bed (and, hopefully, would tell you to take it easy on the #PSL).

The next time you have a meeting with employees about their health benefits, ask them what they think of this philosophy. After all, the Hippocratic Oath also says, “I will prevent disease whenever I can, for prevention is preferable to cure.” And more powerfully, “I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person’s family and economic stability.”  Also remember that as an employer, you have the opportunity to help your employees stay healthy by offering real food at work instead of processed foods, providing a wellness program in a box, or by helping to shape the environment in which your employees live.