Medicare\'s Chronic FFS Condition
By Alain Enthoven and Alan Glaseroff, M.D.
The Medicare program reflects the popular understanding of medical care 50 years ago: primarily treatment by doctors of acute episodes such as pneumonia.
Medicare’s design was based on the historical demands of the medical profession for “fee-for-service” payment: “free choice of treatment” without accountability for quality and outcomes; Medicare to pay the doctor’s “usual and customary” fees; solo practice and physician autonomy (without coordination or teamwork).
Fee-for-service means more money to the doctor for doing more and more costly services. The doctor who prevents the patient’s costly medical problem or solves it quickly and inexpensively does not prosper in this model.
Primary care, the building block for most cost-effective systems, is also undervalued in comparison to procedures and specialist services, resulting in visits that are too short to meet the needs of patients with complex problems. “Continuous healing relationships,” which include telephone and other contacts between visits, are not covered at all.
Additionally, Medicare is “open ended,” which means no provider or patient feels any imperative to shepherd a limited resource wisely. Medicare spending is on track to double in the next 10 years. It is fiscally unsustainable. One way or another, it will be curtailed.
Medicare’s focus on acute episodes of care, which leads it to pay for doctor office visits rather than continuous healing relationships, is now out of date.
Seniors’ main medical problems now, from a cost and health point of view, are chronic conditions. In 2002, 93% of Medicare spending was associated with beneficiaries suffering from three or more chronic conditions, including, diabetes, congestive heart failure and coronary artery disease. These problems persist over years, and their acute exacerbations can lead to very costly acute episodes which largely could be prevented by proper team-based management.
The management of these conditions usually requires ongoing support, disease monitoring, adjustment of medications, and lifestyle modification, most of which can be done without an office visit.
For example, diabetes management requires regular checking of blood sugar and medications and checking eyes, kidneys, and limbs for early signs of damage that can be arrested before disaster strikes; and advice on lifestyle modification and self-management.
Heart failure requires regular monitoring of weight and adjustment of medications to prevent the gradual fluid buildup in the lungs. It is preventable if the patient is tracked by a nurse who monitors daily weight.
Medicare does not pay for most of this (unless people pretend the doctor saw the patient.) Likewise, phone calls and emails, often preferable to frail seniors challenged by traveling to frequent doctor appointments, are not covered. As a result, patients often are told to schedule appointments just to get their lab results or have simple questions answered.
What these patients (and the taxpayers) need is mostly not office visits to solo doctors; it is care through physician-led teams that are organized to provide the necessary support to prevent acute exacerbations, supported by a periodic per capita payment that covers all necessary care regardless of who provides it. Such team care is primarily delivered through integrated delivery systems that organize and deliver continuous services to the chronically ill.
These systems typically cost some 20% less (premium and out of pocket) than traditional FFS.
The leading exemplar systems include Kaiser Permanente and the Group Health Cooperatives, Intermountain, Geisinger Health and others.
There could be many more such systems, and these systems could cover many more people, if the insurance market were configured so they could market their superior performance and economy.
Alain C. Enthoven is the Marriner S. Eccles Professor of Public and Private Management, Emeritus, Stanford University. Alan Glaseroff, M.D. is a clinical professor of medicine at Stanford.
