Only the Healthy need Apply

“Making providers routinely pay attention to cost and quality is widely viewed as crucial if the country is going to rein in its health-care spending, which amounts to more than $2.5 trillion a year. It’s also key to keeping Medicare solvent.”

That's from a Washington Post article, “Medicare moves to tie doctors’ pay to quality and cost of care.” The mantra since the passing and signing into law of the Affordable Healthcare Act has been that doctors need to be paid on their quality of care. The prevailing theory is that better quality will result in lower healthcare costs. This theory only works, though, if you don’t get one of those expensive diseases or costly injuries. Now, however, Medicare has made the doctor responsible for the cost of care. A doctor is no more responsible for the cost of care than an oil driller is for the cost of gasoline.

A doctor provides a service. The doctor prices the value of that service on the same factors that drives all pricing in a free market society. Cost of overhead and competition. Cost of overhead is what it costs the doctor to deliver the service and competition is what the doctor down the street is charging for the same procedure. Now this is where the free market stops and reality of medicine today takes over. If a provider has a contract with a third party payer, Medicare or private, then the provider is paid based on the set fee schedule of the third party payer, meaning that the doctor can charge whatever he wants for the procedure, he will only be paid what the third party payer has deemed he will be paid. Thus, it is the third party payers, including Medicare, that are controlling the cost of healthcare, not the physician and certainly not the patients.

The article continues with this gem in response to quality care:

“…properly assessing how a doctor affects costs must include not just the specific services she directly provides, but also care other providers may give, either because the patient was referred to them or because the original doctor didn’t take the right preventive steps to avoid more expensive treatments later on. And without properly adjusting for patients’ health problems, paying bonuses to physicians who use fewer Medicare resources might encourage doctors to stint on care or shun patients with expensive-to-treat ailments.”

The writer puts it together that if a doctor will be rewarded for healthy patients and penalized for unhealthy patients, then the doctor will not see unhealthy patients. These patients will be dismissed from the practice so that the doctor’s numbers will be healthy. According to the article, this will happen sooner than people had expected, “although the program is still being devised, it will become reality for many doctors starting in January, because CMS plans to base the 2015 bonuses or penalties on what happens to a doctor’s patients during 2013."

Physicians are being squeezed financially with rising overhead and stagnant reimbursements from third party payers. Now physicians are facing the unpleasant prospect of denying care to a patient because that care will cause the physician to lose money, a prospect that no business can take on and survive. It is for this very reason that a policy has been in place for decades that a doctor cannot take into account the cost of a procedure, treatment or medication as that will unduly influence the doctor’s decision. Malpractice is based on the concept that the doctor will inform the patient of the best course of treatment, regardless of cost, because what is important is the life of the patient, not the cost. Now, that underlying concept has been deemed inappropriate and instead it is the cost of the care that will matter.