The path between the rock and the hard place

Arnold Milstein writes about the unnecessarily hard choice impeding health reform.  The views he expresses here do not represent those of any organizations with which he is affiliated.

Some Congressional observers are gloomy about the prospects for health reform legislation that could get most people covered. Bedeviling the current political debate is a belief that a “pay-go” Congress committed to debt control must make a choice between extending expanded health insurance coverage and avoiding unpopular tax increases or indiscriminate Medicare fee cuts.

The perception of an inescapable trade-off is flawed: there is a technically achievable and politically viable path between the rock and the hard place.  That path is incentivizing greater efficiency in how we deliver care without sacrificing quality improvement or biomedical innovation.

Why isn’t Congress walking this path? It’s because of CBO’s skepticism about the feasibility of clinical efficiency improvement.  The Congressional Budget Office appropriately imposes a high standard of certainty that methods for capturing clinical efficiency will be effectively implemented in government-sponsored health benefits programs such as Medicare or a new federally-subsidized program for the uninsured. 

We shouldn’t blame CBO for its stingy scoring.  CBO’s vision is severely impaired by society’s gross under-investment in clinical evaluation science.  If we had invested more money in comparing the cost-effectiveness of treatment options for the same condition and of clinical pathways for delivering each treatment option, then CBO would have more to go on. 

Congress’ recent commitment to fund more research on comparative effectiveness is a step in the right direction, but its dividends are too far in the future to help with CBO scoring in 2009.  In addition, CBO is properly skeptical of whether any government-sponsored health benefits programs governed by Congress will reduce health spending, since Congress has a history of great caution in holding physicians and hospitals financially accountable for clinical efficiency improvement.

Evidence that American clinicians can produce more health with fewer dollars is plentiful: multiple communities and organizations described their journey to better and less costly care at a recent forum, called “How’d they do that?” Using a smaller unit of analysis, I described several such examples of large and small physician practice sites on the Health Affairs blog here as “medical home runs.”  Health Affairs will publish a longer article describing these physician practice sites in September. These success stories are characterized by effective clinical leadership and the practical application of systematic performance management tools.  The results are impressive: satisfied patients and clinicians, with substantially lower levels of per capita annual total health spending and no evidence of poor overall quality. 

How can Congress find its way to the middle path?  Four ingredients seem key in legislative drafting: 

• Use shared payer savings and/or performance-based insurance network co-insurance tiers to strongly motivate the delivery system component with the highest leverage on total per capita health spending and quality to improve on both parameters, starting with care for patients with serious chronic illness.  Primary care physicians (PCPs) occupy this leverage point.  They have trusted relationships with chronically ill patients and are best positioned to help them to avoid health crises that require costly referral and hospital services.  They are also a highly effective vehicle for connecting patients with specialists and hospitals offering the best quality at the lowest total annual cost of care.  To solve the statistical challenge of accumulating enough patients to measure savings and quality of care, these incentives can be offered to existing or self-forming groups of 5 or more PCPs and to larger organized health care systems that include PCPs.   
• Pay today’s most efficient health care providers of all types to help their peers to adopt proven methods of producing more health with less money.  The U.S. health industry’s performance management capability is much less developed than of most other U.S. industry sectors.  Help is needed from efficient peers.
• Incentivize non-federally-sponsored health benefits plans to harmonize their provider payment methods and provider incentives with federally-sponsored health benefits programs.  This needn’t be a one-way dictation from the government.  However, once all-payer agreements are reached, non-federally-sponsored health plans must be strongly incentivized to implement them, so that consistent signals are conveyed to clinicians and hospitals.   
• Delegate Congressional provider payment and consumer cost-sharing policy to an entity composed of well-informed consumers and purchasers.  Ultimately, it is for their benefit that the health industry exists and it is by their taxes, payroll deductions, foregone wages and/or out-of-pocket spending that the health industry is paid.  The scope of delegation could be tied to national per capita health spending growth and quality improvement targets, so that if Congress is effective in meeting national targets, it need not cede much authority. 

While this short list of relatively simple rules may seem ill-matched to the magnitude of the problems of an underperforming U.S. health care industry, the science of complex adaptive systems indicates that such systems can only be changed with a short list of well-chosen simple rules.  I invite fellow bloggers to improve upon my list.