maybe I am misunderstanding... wrote:
Educated guy wrote:I've studied the health care industry from an economics perspective for both school and leisure.
How anyone can defend a system that is EITHER fee-for-service OR employs a third party payment system (just one of the two) is beyond me.
But how anyone can defend a system that is BOTH fee-for-service AND employs a third party payment system... wow... I mean, that blows my mind. And it doesn't matter how many people pay into the system; the basic foundation of how the system operates needs to be efficient. You can't have a bunch of people skimming off the top, with unlimited funds (because "everyone's paying in") and expect to keep costs in check.
The solution isn't based on any Left/Right politics either; it's rooted in basic economics and incentive structure. Anyone including politics/political references in their responses are not to be taken seriously when discussing health care reform.
LOL!!! Maybe I am misunderstanding what you're saying but are you simultaneously arguing against fee for service AND saying that the solution is the sacred "free market reform"? Isn't charging a fee for goods and services the cornerstone of a free market?
The health insurance issue isn't going to get solved on this forum. The best system has been debated for years, and will continue to be because no one plan will make everyone happy. Currently, on the Medicare inpatient side of things, everything is DRG (diagnosis related group) based, the hospital gets a lump sum payment from Medicare based on the patient diagnosis and any identified complications. If the hospital does a good job of treating the patient and keeps costs (mostly labor, supplies, equipment and administrative) and length of stay low (LOS), they can make money. If not, they lose money hand over fist. And it gets worse if there is an unintended complication. Say a hospital acquired pressure ulcer. A recent analysis I did using MEDPAR (Medicare database) on a sampling of inpatients with ICD-10 codes indicating the presence of chronic wounds indicate that the average hospital loses in excess of 500K annually...........cost to provide treatment vs amount reimbursed. And this is just in the wound care realm. Many managed care payors also use this type of reimbursement model, very few if any use a "fee for service" model for inpatient. For outpatient, its largely fee for service, however most insurance companies negotiate a rate for each procedure they contract with the hospital or other outpatient clinic to provide. The hospital can bill what it wants, but the insurance company pays the negotiated rate. Very few these days pay on a % of charges basis. Physicians are in the same boat, a typical office visit (Medicare) to your primary care MD is only paid (depending on geography) and average of about $57.00 and change, and goes up or down depending on the level of the office visit, IE Low, medium, high complexity. There are 10 Different CPT coding levels depending on the services within the evaluation delivered to the patient. Most managed care companies also have a negotiated fee structure with the MD for each procedure (CPT) thats billed. The advent of the ACO (Accountable Care Organization) model has been designed to ratchet down cost further, by bundling providers into one group, with the hospital as the gatekeeper with a lump sum payment that is distributed to the providers in the continuum based on the patient diagnosis and acuity. There are a few in the area that I live and work, each has its own "quirks", and I've not seen data on effectiveness and efficiency, or savings/covered life. I've also not been particularly impressed with any of them. Over deliver services and your costs rapidly exceed your reimbursement. Hospital and MD reimbursement is becoming more like the model thats been present in the skilled nursing and therapy industry (SNF) since 1999, IE PPS or prospective payment. The average SNF these days runs on about a 1 to 3% profit margin, and its only by aggressive management of their their labor, facility and supply costs. I could go on, and on, and on ad infinitum. But suffice it to say that there is not a "one size fits all" solution to this mess. Someone has to pay for all this and as technology gets better and more expensive, and as the population gets older, fatter and unhealthier, costs are gonna rise. A focus on primary prevention beginning early in life is critical and really the key, but people are lazy, they don't wanna do the work required and would rather have their leg amputated then have to manage their diabetes through diet and exercise. Just my $.02.