Beginning last year, the state of Maryland embarked on an extraordinary new experiment — one that could be a model for the nation. In partnership with the Centers for Medicare and Medicaid Services (CMS), Governor Martin O’Malley’s statewide hospital commission announced in January 2014 that it would address escalating health care costs by tackling the arms race of medical care. The Commission unveiled the framework for a new plan that will pay hospitals for quality over quantity, enabling them to profit from providing more appropriate—rather than simply more—care.
The proposed change of incentives has the potential to positively alter hospital workplace culture by halting the current revenue-based push to do more — an effort that invariably trickles down to doctors. The government pays more for more medical care, CEOs in turn tell their department leaders to increase volumes, and department leaders tell their doctors to do more. The push sometimes gets magnified along the way, and it is met with frustration among doctors because it values how much a physician does over how well they do it.
Maryland’s framework has the potential to break these vicious cycles and replace them with virtuous ones leading to greater quality and health. However, the plan is still in its early stages and its impacts are still developing; it also contains the seeds of potential conflict between hospitals and physicians, and there are other issues that must be addressed if the plan is to achieve its potential. These concerns and some potential solutions are discussed below.
The context for the Maryland health care (new) system in which a record 40 percent of physicians report feeling burnt out. Many physicians cite increased pressure to see more patients and do more procedures with limited resources; doctors are often evaluated by monthly volume quotas that do not measure appropriateness or outcomes. Some doctors regularly receive coaxing emails from their higher-ups reminding them how “critical” it is to meet their monthly relative value units (RVU) targets, clinic targets, or target number of operations in a month, if they are projected to have a slow month, in the same way a car dealer is evaluated by monthly car sales. Physician burnout has negative implications for patient safety, quality, and access, imposing costs that can ironically offset the added revenue from increased volume.
Increasingly aggressive compensation structures promoting the arms race of doing more are now being recognized as a driver of the massive waste in American medicine. While doctors will generally do the right thing most of the time, there are myriad examples where decisions were driven by profit over quality care, fueled by the fee-for-service system. The problem has reached endemic proportions. Calling out the trend, the Institute of Medicine now reports that up to one-third of health care dollars in the U.S. are spent on care that does not make us any healthier. One great strength of Maryland’s new health reform is its long-term plan to address this dangerous and costly trend.
Read the full report here.
Contact Steven G. Cosby, MHSA, Group Health Insurance Broker and Agent with Cosby Insurance Group, with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.
