How Much Longer Can Fee For Service Last?

I recently read a post by a representative of the American College of Cardiology which discussed the origin of the fee for service model and its pernicious effects on the delivery of health care in the United States.  Fee for service means that the health care provider bills for each service separately and is paid on the basis of the number of services provided.  Fee for service rewards quantity over quality.

Fee for Service Dentistry - A Complete Consumer Guide

The author of the post quite properly pointed out that the United States has the most advanced treatment options for cardiovascular disease in the world.  Cardiologists have been able to reduce mortality due to cardiovascular disease but this progress is threatened by the fee for service model.  We have the highest cost per capita for care in the world and the cost of care here is accelerating faster than anywhere else in the world.  Although we spend more per person on health care than anyone else, our measures of success overall are well behind many other industrialized nations.  Compared to the rest of the industrialized world, we are not getting our money’s worth.  This is unsustainable.

The fee for service model creates a conflict of interest for the health care provider.  It is in the best financial interest of the provider to decide you need a procedure or service..  It may not be in your best interest to receive the procedure or service.  The system should not be set up to give the provider a financial incentive to provide care you don’t need.

As it stands now, the more things a doctor does to or for you, the more money she or he makes.  It doesn’t really matter if you benefit from what the doctor does.  Some of the tests the doctor orders may not really be necessary, but the doctor gets paid for ordering them, interpreting them and reporting to you about what they mean, so you get the tests.  You may not need to have two surgeons in the room for your procedure, but since whoever is paying the bill will pay for two, you get two.  You may not need to have that mole removed, but since the dermatologist gets paid more if it comes off, the chances are increased that your mole will be removed.

What we need is a system that rewards good care and improved patient health.  The alternative to fee for service is a value based health care delivery system in which providers are paid on the basis of patient outcomes.  Providers are given incentives to help patients improve their health, reduce the incidence and effects of chronic disease, and live healthier lives.  We are moving, albeit slowly, to a value based model.  Under the Affordable Care Act, Medicare and Medicaid are rewarding hospitals on the basis of the care delivered to patients.  It is not yet clear whether these programs for hospitals are having their intended effects or not.

There are many different ways to reward providers for value rather than just for quantity.  Capitation is one such method.  Under the capitation model, a primary care physician is given a certain amount of money for each patient for a specific period of time.  If the patient can be kept healthy, the provider gets to keep whatever money was not spent providing care for the patient.  The physician has an incentive to make sure the patient, for example, takes her medicines, stops smoking, gets regular blood pressure checks and generally complies with the doctor’s orders.  The patient is healthier, hospitalizations are reduced, and the amount we as a society spend on health care is reduced.  A win-win.

Of course, doctors are human and zealous about guarding their rights and privileges.  Any changes that reduce physician income will be opposed by some doctors.  They won’t say they oppose the changes because they reduce their income.  They will argue that they oppose them because they will lead to “socialized medicine” or will in some way damage patient freedom of choice.

Changes to our bloated, inefficient health care delivery system will always be contentious.  We have to accept that fact and commit to pushing forward to improve the system regardless of the fact that some doctors oppose the changes.  We can and should be able to do at least as well in caring for our citizens as the other industrialized nations of the world.


Posted in Defensive Medicine, Doctors, Fee for Service, health, Health Care Costs, Health Insurers, healthy living, Hospitals, Medical Costs, medical ethics, Medicare, Rationing |