Skip to content
  • About
  • Contact
  • Contribute
  • Book
  • Careers
  • Podcast
  • Recommended
  • Speaking
  • All
  • Physician
  • Practice
  • Policy
  • Finance
  • Conditions
  • .edu
  • Patient
  • Meds
  • Tech
  • Social
  • Video
    • All
    • Physician
    • Practice
    • Policy
    • Finance
    • Conditions
    • .edu
    • Patient
    • Meds
    • Tech
    • Social
    • Video
    • About
    • Contact
    • Contribute
    • Book
    • Careers
    • Podcast
    • Recommended
    • Speaking

Will fee for service ever go away?

Brian Klepper, PhD
Policy
December 14, 2013
Share
Tweet
Share

The catchy title of a recent Harvard Business Review Blog post, The Big Barrier To High Value Health Care: Destructive Self-Interest, suggested that the Institute for Healthcare Improvement (IHI) is forging arrangements that can overcome fee-for-service reimbursement’s propensity to drive excess. As the honest broker, IHI could advocate for arrangements of mutual self-interest based on the right care, better outcomes and less money. Employers and unions would get lower costs, with improved health and productivity. Health systems and health plans would win more market share (at their competitors’ expense), realizing longer term relationships that could facilitate sustainability as market forces intensify.

The substance of IHI’s description was less satisfying, though. Their principles — common goals, trust, new business models, and defining roles for competition and cooperation — are obvious ingredients in any workable business arrangement. But the authors never talked about the money. That left plenty of room for skepticism by those of us who have heard more than one CFO ask, “Why should we take less money until we have to?” What, exactly, is the incentive for health care organizations to moderate their care and cost patterns?

The harsh truth is that, so long as fee-for-service (FFS) reimbursement remains in place, we won’t make headway against the immense excesses that have plagued US health care. FFS pays for piecework, so it encourages more services while failing to appreciate results and value. All services are considered appropriate, so all are reimbursed without differentiating what results in better outcomes. All health care professionals and organizations, except for primary care, benefit from this structure, so it has become nearly impossible to dislodge.

Reform has held out the promise of moving payment from volume to value. But it is still mostly an aspiration and, no doubt, the rank and file of the health care lobby is working hard to assure that it stays around as long as possible, independent of external pressures. Most accountable care organizations, for example, are still paid under FFS, which is why so little real progress has been made in changing the ways care is delivered.

A recent Medscape article asked whether FFS might really disappear. It pointed out that while recent reports from four prominent health care policy groups — The Robert Wood Johnson Foundation, The Bipartisan Policy Center, The National Commission of Physician Payment Reform and The Brookings Institution — had all strongly advocated for a transition away from FFS and toward some form of value-based reimbursement, CMS’ progress toward this goal has been glacial. Paul Ginsburg, the highly respected Director of the Center for Studying Health System Change, notes that Medicare hasn’t announced that it will drop fee-for-service or reduce reimbursements for physicians who continue with it.

That, of course, is welcome news to most doctors. Many physicians are adamant that FFS should remain, and that their clinical judgment is not influenced by money. But the truth is murkier. There is a mountain of literature on unwarranted practice variation and overtreatment, and their relationship to income.

Most physicians also have nagging doubts about money’s role. In a 2012 survey by the Physicians’ Foundation, 86% of almost 14,000 responding doctors admitted that “money trumps medical care” was either very important or somewhat important in medicine’s decline.

In the worksite clinic sector, which caters to employers who have become value-sensitive, many vendors, including my firm, have stepped away from FFS reimbursement. Instead, they pass through operational costs with no markup, and then charge a per employee (or per enrollee) management fee. This means that they have no financial stake in delivering unnecessary care (or denying necessary care). Their clients evaluate their performance through measurable changes in health outcomes and cost. It is in the vendor’s interests to implement mechanisms that drive appropriateness inside the clinics and, to the degree possible, downstream, throughout the continuum.

The differences between this and conventional, FFS medicine are profound. FFS reimbursement has transformed much of health care into a merchant enterprise in which the central incentive is to order more products and services, for the margin associated with each one. In the clinic model, the goal is to manage the process as effectively and efficiently as possible. It is a payment model that is more aligned with the interests of the patient and the purchaser.

There are a range of alternative payment models that make a great deal more sense than what Americans are saddled with today, with more rational incentive structures for care. The health care industry will continue to fight hard to protect the excesses it has come to take for granted. As with the rest of meaningful reform, it will fall to business, the most important health care purchasers other than government, to come together to drive approaches that can bring health care back into balance. The industry is counting on business to remain unfocused and ineffective. The question is whether businesses, as health care purchasers, will remain impotent or learn to leverage their collective heft.

Brian Klepper is chief development officer, WeCare TLC, and blogs at Care and Cost.

Prev

Cholesterol management with patients requires shared decisions

December 14, 2013 Kevin 2
…
Next

Medical trainees have access to far too many resources

December 14, 2013 Kevin 5
…

Tagged as: Primary Care, Public Health & Policy

Post navigation

< Previous Post
Cholesterol management with patients requires shared decisions
Next Post >
Medical trainees have access to far too many resources

ADVERTISEMENT

More by Brian Klepper, PhD

  • a desk with keyboard and ipad with the kevinmd logo

    The FDA’s epic regulatory failure

    Brian Klepper, PhD
  • a desk with keyboard and ipad with the kevinmd logo

    Why reform needs to start at cancer care

    Brian Klepper, PhD
  • a desk with keyboard and ipad with the kevinmd logo

    Stop pursuing self-pay patients as a windfall opportunity

    Brian Klepper, PhD

More in Policy

  • Who gets to be well in America: Immigrant health is on the line

    Joshua Vasquez, MD
  • Online eye exams spark legal battle over health care access

    Joshua Windham, JD and Daryl James
  • The One Big Beautiful Bill and the fragile heart of rural health care

    Holland Haynie, MD
  • Why health care leaders fail at execution—and how to fix it

    Dave Cummings, RN
  • Healing the doctor-patient relationship by attacking administrative inefficiencies

    Allen Fredrickson
  • The hidden health risks in the One Big Beautiful Bill Act

    Trevor Lyford, MPH
  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • Why timing, not surgery, determines patient survival

      Michael Karch, MD | Conditions
    • How early meetings and after-hours events penalize physician-mothers

      Samira Jeimy, MD, PhD and Menaka Pai, MD | Physician
    • FDA delays could end vital treatment for rare disease patients

      GJ van Londen, MD | Meds
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
  • Recent Posts

    • Addressing menstrual health inequities in adolescents

      Callia Georgoulis | Conditions
    • How to advance workforce development through research mentorship and evidence-based management

      Olumuyiwa Bamgbade, MD | Physician
    • The truth about perfection and identity in health care

      Ryan Nadelson, MD | Physician
    • Civil discourse as a leadership competency: the case for curiosity in medicine

      All Levels Leadership | Physician
    • Healing beyond the surface: Why proper chronic wound care matters

      Alvin May, MD | Conditions
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions

Subscribe to KevinMD and never miss a story!

Get free updates delivered free to your inbox.


Find jobs at
Careers by KevinMD.com

Search thousands of physician, PA, NP, and CRNA jobs now.

Learn more

View 8 Comments >

Founded in 2004 by Kevin Pho, MD, KevinMD.com is the web’s leading platform where physicians, advanced practitioners, nurses, medical students, and patients share their insight and tell their stories.

Social

  • Like on Facebook
  • Follow on Twitter
  • Connect on Linkedin
  • Subscribe on Youtube
  • Instagram

ADVERTISEMENT

  • Most Popular

  • Past Week

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • America’s ER crisis: Why the system is collapsing from within

      Kristen Cline, BSN, RN | Conditions
    • Why timing, not surgery, determines patient survival

      Michael Karch, MD | Conditions
    • How early meetings and after-hours events penalize physician-mothers

      Samira Jeimy, MD, PhD and Menaka Pai, MD | Physician
    • FDA delays could end vital treatment for rare disease patients

      GJ van Londen, MD | Meds
  • Past 6 Months

    • Forced voicemail and diagnosis codes are endangering patient access to medications

      Arthur Lazarus, MD, MBA | Meds
    • How President Biden’s cognitive health shapes political and legal trust

      Muhamad Aly Rifai, MD | Conditions
    • Why are medical students turning away from primary care? [PODCAST]

      The Podcast by KevinMD | Podcast
    • The One Big Beautiful Bill and the fragile heart of rural health care

      Holland Haynie, MD | Policy
    • Why “do no harm” might be harming modern medicine

      Sabooh S. Mubbashar, MD | Physician
    • Here’s what providers really need in a modern EHR

      Laura Kohlhagen, MD, MBA | Tech
  • Recent Posts

    • Addressing menstrual health inequities in adolescents

      Callia Georgoulis | Conditions
    • How to advance workforce development through research mentorship and evidence-based management

      Olumuyiwa Bamgbade, MD | Physician
    • The truth about perfection and identity in health care

      Ryan Nadelson, MD | Physician
    • Civil discourse as a leadership competency: the case for curiosity in medicine

      All Levels Leadership | Physician
    • Healing beyond the surface: Why proper chronic wound care matters

      Alvin May, MD | Conditions
    • Why specialist pain clinics and addiction treatment services require strong primary care

      Olumuyiwa Bamgbade, MD | Conditions

MedPage Today Professional

An Everyday Health Property Medpage Today
  • Terms of Use | Disclaimer
  • Privacy Policy
  • DMCA Policy
All Content © KevinMD, LLC
Site by Outthink Group

Will fee for service ever go away?
8 comments

Comments are moderated before they are published. Please read the comment policy.

Loading Comments...