Chapter 31

Chapter 31: Payments to Health Care Providers

Health Care Payments That Do Not Incentivize High-Value Care

• Alternative payment models proposed to reduce rising health care costs include those that incentivize high-value care.

• Ethical concerns related to these payment models are crucial for clinicians to understand.

Fee-for-Service Payments

• Currently the most prevalent payment model in the U.S.

• Incentivizes the increase of all services, not just those that are effective; can lead to patient harm.

• Example 1: Oncologists adjusted practices to increase revenue due to perceived unfair Medicare reimbursements:

  • Higher reimbursement for intravenous chemotherapy compared to the cost of drugs.

  • Oncologists switched to high-margin drugs despite no clear clinical advantages.

• Example 2: In renal dialysis, reimbursement of erythropoietin-stimulating agents increased despite lack of evidence for their efficacy:

  • MedPAC addressed this by bundling payments, leading to reduced usage of these drugs.

• Fee-for-service models cause a focus on procedures over patient discussions regarding care options.

  • Example: Cardiologists are reimbursed four times more for procedures like inserting temporary pacemakers than for a family meeting discussing care goals.

Physician Ownership of Health Care Facilities

• Physicians may have ownership in facilities like imaging centers, raising ethical concerns about conflicts of interest and service overuse.

  • Studies show self-referring physicians order more unnecessary imaging and procedures.

• Investigation into justifications for self-referral:

  • Claims of patient convenience and increased access to technology often lack supporting evidence.

Ethical and Legal Issues

• Conflicts of interest when physicians refer services for financial gain are significant:

  • Self-referral could undermine patient trust and professionalism.

  • Disclosure of ownership does not adequately mitigate these concerns.

• Prohibition exists for physicians to refer Medicare/Medicaid patients to facilities in which they have financial interests, with several exceptions.

Nonfinancial Incentives to Provide More Services

• Psychological and social factors reinforce financial incentives:

  • High-technology procedures are viewed as examples of excellent care, leading to unnecessary interventions.

  • Defensive medicine practices may also contribute to over-utilization.

Ethical Issues with Fee-for-Service Payments

• Incentivizes unnecessary services which may not benefit patients.

• Raises questions about physician motivations versus patient interests;

  • Patients lack ability to judge the value of recommended services.

Value-Based Payments

• Proposals to enhance care value include:

  • Bundled payments: Fixed amount for episodes of care to promote collaboration.

  • Global payments: Encourage preventive care and coordination among providers.

  • Changes to these payments aim to align physician incentives with patient care.

Cost Sharing by Patients

• Rising deductibles and copayments raise concerns:

  • Leads to underinsurance; associated with reduced use of high-value services.

  • Inappropriate services decrease, yet essential ones may also decline.

Choosing Health Plans

• Employers shift more costs of premiums to employees.

• Various plans (HMOs, PPOs) create different incentives regarding care.

• Employees face choices between cost control and desire for full medical interventions.

Incentives for Health Promotion

• Health plans offer incentives for healthier lifestyles, yet ethical considerations arise:

  • Unequal ability for different populations to achieve these incentives.

  • Concerns over fairness, privacy, and potential discrimination in employment-based programs.

Ethical Considerations in Health Payment Models

• Withholding beneficial care in cost-control practices can be detrimental to patients.

• Need for education for both patients and physicians on the value of interventions.

  • Guidance on out-of-pocket costs is essential for informed patient choices.

Addressing Health Disparities

• Value-based payments can inadvertently penalize care for complex populations due to unadjusted risk factors.

• Proposals may be needed to ensure equitable care acts are preserved in financial settings.

Summary and Considerations

• All payment systems generate incentives that could lead to inappropriate service levels.

• Continual assessment of outcomes from payment system reforms is essential to ensure ethical and beneficial clinical practices.