Wanted: A Real Reform Plan That Will Control Costs

(MoneyWatch)  As the healthcare reform discussions in Washington finally start to grapple with cost control, some providers are becoming alarmed. Specialist physicians are up in arms over a proposal by Sens. Baucus and Grassley to have Medicare pay primary-care physicians 5 percent more while reducing specialists' incomes by a like amount. CMS has made similar redistributions in the past that have had little effect on specialist revenues in the long term, and also have done little to increase the number of primary-care doctors. But under health-care reform, physicians are apparently afraid that the redistribution might eventually go much further. In fact, the Medicare Payment Advisory Commission has already recommended a 10 percent shift.

At the same time, the Baucus/Grassley team has proposed that hospital and post-acute payments be bundled together to promote coordination of care and reduce readmissions. Trade groups representing nursing homes, home health care agencies, and hospices have expressed reservations about this approach. They fear that hospitals would dominate the relationship and manipulate the process to their own financial benefit.

Both the President and Congress have made it clear that they'd like to see the reimbursement system for health care providers amended so that doctors and hospitals are rewarded for quality rather than quantity. Under the Baucus/Grassley proposals, there would be bonuses for providers who exceed quality benchmarks and penalties for those who don't. (Of course, the devil is in the details of what is defined as "quality" care.)

Meanwhile, government officials are considering what can be done to buttress the shrinking primary care base, which they view as essential to reform. Aside from paying primary-care doctors more, they're also talking about raising enrollment in medical schools and residency programs. And they're looking at how they could increase the numbers of nurse practitioners and physician assistants.

Of these approaches, only growth in the number of midlevel practitioners would have an immediate impact on the primary-care supply. Given sufficient incentives and training programs, for example, nurses could quickly be turned into NPs. But it would take much longer to turn out a significant number of new primary-care physicians, even if the field became more attractive to medical students. And the government is still not dealing with the huge debts that young physicians run up during training. Perhaps medical education should be free, as it is in some European countries.

If the government wants to bolster primary care in a cost-effective way, it should encourage the medical-home movement. CMS is going to test the concept, but it will be years before we even see a report on the results. Meanwhile, private payers like Blue Cross Blue Shield of Michigan are moving ahead with vigorous efforts to reward primary-care physicians for better care coordination. Baucus and Grassley are talking about paying doctors extra for hiring nurses to coordinate post-discharge care, but that isn't enough. What's needed is a national plan to transform the healthcare delivery system so that specialists and hospitals support primary-care doctors' efforts to turn themselves into medical homes. Only when providers realize that the old ways of doing business are dead can we start to implement reforms that will really control costs.