Newtown, CT – May 8, 2015
There's a reason why many physicians and other health care providers feared the light in McAllen, Texas – After Atul Gawande's New Yorker exposé of the unjustifiable variation in the use of health care services in McAllen, the light shined in from all sides. In his new piece, Atul circles back to the Texas border town and observes how dramatically things have changed. Some of it came from a series of fraud investigations that led to significant penalties paid by the crooks. Some of it came from the institution of new feedback loops – reports on cost and quality – that helped physicians understand the very high cost of certain services that were of dubious benefit to patients, including home health care. As a result, some home health care providers went out of business. Of course, they should never have been in business to begin with. And some of it came from primary care physicians organizing themselves into effective practices with new payment models that don't punish them for taking care of patients. The upshot of all of these changes is that the total per beneficiary costs of Medicare in McAllen has gone down. Much of the waste, fraud, and inefficiency has been driven out by that shining light.
What this means to you – A recent paper in the Journal of the American College of Radiology shows the significant variation in prices for a routine and common imaging test. Of particular note is that geographic areas with lower patient density have a tendency for higher prices than areas with higher density. The lack of competition for patient volume drives up prices…duh. And despite the uncontestable evidence that consolidation of providers creates a lack of competition that increases prices for commercial plan members, Medicare is merrily ignoring that evidence and pushing for ever more consolidation. While the recent Medicare Payment Scorecard by CPR illustrates how long the road to real payment reform will be, movement by many providers anticipates the changes that will inevitably come. That's true in McAllen and it's true in many other places, but given that the volume of Medicare and commercial payer dollars that create real financial risk for providers is stuck at less than 20%, the other elements of the shining light have to be deployed more rapidly. That includes full and unfettered disclosure of price and quality differences, and highlighting the continued overuse of unnecessary services through clinical data and claims-based feedback loops to clinicians and facilities. McAllen has taught us that payment reform is not the only driver of behavioral change, and that transparency is certainly as important. Ignoring the importance of the combination of these factors might be fine for Medicare, but it's not fine for employers and employees who have been footing the bill that stems from market opacity.