Paying docs to save costs

Medicare program in NJ attempts to root out waste in health care

President Obama and his supporters are banking on the assumption that Medicare wastes millions, perhaps billions, of dollars on inefficiency and fraud. They hope, by eliminating those flaws, they can help finance a health system overhaul. Several hospitals in New Jersey aren’t waiting for the overhaul — they’re testing a program to save money now: by rewarding doctors for efficient care.
(Photo: http://www.flickr.com/photos/dborman2/ / CC BY 2.0)

Listen: [audio:090922kgmedicare.mp3]

Virginia Whittington is a trim, 78-year-old who lives in Paoli. In the window of her townhome is a smiling picture of President Obama. Several years ago she spent a few hours exercising at the Y, and came home exhausted and with a terrible chill.

Whittington: Three layers of clothes and five layers of blankets and I’m still just shivering and cold and nauseated and afraid I’m going to pass out. So I did call 911.

Whittington went to the hospital with hypothermia.

Whittington: And I think they were overly careful. They did an MRI and a CAT scan…When the cardiologist came to see me she was quite disgusted. That was overkill I think.

Whittington recovered quickly and went home the next day. Overkill happens. Inefficient care happens. Part of the problem is the way that Medicare pays hospitals and doctors. Here’s the basic set-up: hospitals are paid by the diagnosis. Doesn’t matter if the patient stays 3 days or 5 days — it’s the same fee. But doctors…

Bateman: …are paid on a fee for service basis.

That’s Mark Bateman, the CEO of Our Lady of Lourdes Medical Center in Camden.

Bateman: So for everyday the patient stays in the hospital or every procedure that is performed on the patient, the doctors are paid a fee for service…There definitely is some inherent conflict in that scenario.

So Bateman volunteered his hospital for a pilot program through Medicare that’s taking place in New Jersey. Hospitals will pay doctors a bonus — up to $300 per patient — if they can give patients proper care while keeping costs under a certain limit. The arrangement is called gainsharing. Alan Pope is one of the doctors in the program. He says doctors rarely think of cost when they’re treating patients.

Pope: This gainsharing program is an opportunity for them to think twice.

That means, say, ordering the cheaper hip replacement, if the options are equal in quality. Or not doing a test just because a patient’s family asks for it.

Pope: This is the type of thing where the physician needs to spend the time discussing with the patient and the family why the testing was appropriate and not just go on and order another study because the family seems to be demanding it.

Reimer: Why should they need an incentive to do what they should be doing?

Diana Reimer, an organizer for the conservative Tea Party Patriots and a Medicare consumer, is a little surprised to hear about the program, although she agrees there’s waste in health care. But she’s concerned that a doctor could get too occupied with cost.

Reimer: I wouldn’t feel comfortable if they were on a program, and you knew that they were going to get paid for cutting costs. I would not feel comfortable.

Richard Stefanacci is the executive director of geriatric studies at the University of the Sciences in Philadelphia. He says Reimer’s fear would be valid — if the program didn’t have certain checks within it, such as measuring quality, and keeping incentives small.

Stefanacci: With the current level of bonuses, that they’re so minimal, patients should not have any fear at all.

Stefannci says his only concern is if the program increases incentives to boot patients out of the hospital too soon.

Stefanacci: So if you have a patient that really could use that extra day, now you have two parties trying to get that patient out sooner than they might necessarily be ready.

The pilot will run for three years at twelve New Jersey hospitals. Medicare says that if it’s successful, the incentives could turn into a national program.

 

AARP’s take on the pilot

AARP is the country’s largest organization advocating for people over 50. Hear what John Rother, AARP’s vice president for policy, has to say about New Jersey’s pilot program to save money on hospitalizations. He spoke with senior health and science reporter Kerry Grens.

 

Listen: [audio:090922kgrother.mp3]