"One Cannot Measure What One Does Not Manage": Invidious Cost-comparisons (Part XIII-e)

April 15, 2009

Karen Davis, President of the Commonwealth Fund, has been advocating that Medicare change its payment policy and move from volume-driven to value-driven healthcare.

Karen Davis, President of the Commonwealth Fund, has been advocating that Medicare change its payment policy and move from volume-driven to value-driven healthcare. She advocates using a single price or “'case rate' for all of the services needed by a patient for their condition, regardless of which providers are involved, instead of multiple fees for each of the specific services provided." Medical practitioners would receive "one bundled payment to treat people for the duration of an illness, with an emphasis on incentivizing high-quality care rather than a high volume of care, which rewards providers who do not improve patients' health but perform a lot of medical services. The idea is that providers would have incentives to treat people effectively and efficiently."

See "From Concept to Reality: Implementing Fundamental Reforms in Health Care Payment Systems to Support Value-Driven Health Care" [pdf].

In "Experts Spar Over Best Models for Health Care," Rebecca Adams (CQ Staff writing for the Commonwealth Fund), however states that "cost comparisons between Medicare and private insurers are unfair because some of Medicare's costs are not explicitly delineated as administrative program costs [and] Medicare's "true costs" for administrative expenses are higher than is widely assumed.

I ask you if this failure to properly account for the costs of care is also true for the comparisons made between:

1. Fee for service and managed care?

2. Drug A and Drug B?

3. Urban and rural practice?

4. Specialists doing primary care, ie, in down time?

5. Primary care docs doing minor specialist care, eg, splints, nasal cautery, biopsies, specialized testing, etc.?

If so, it's time for the provide community to wake up and demand fair and transparent payment methods that "encourage coordinated care for all individuals," especially those with "significant chronic illness."

As we make comparisons and judge health care, the proper translation of data into information about its cost-effectiveness, quality and accessibility is tricky business, but it can be done—See page 11 of "A Consumer-Driven Health Care Cost Control Agenda for Massachusetts: 17 Legislative Proposals" [pdf] by Norbert Goldfield, Marcia Hams, John McDonough, Michael Miller, and Brian Rosman— (March, 2007).