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Department of Cardiovascular Surgery, Children’s Hospital Boston, Boston, Massachusetts
* Address correspondence to Dr Mayer, Department of Cardiovascular Surgery, Children’s Hospital Boston, 300 Longwood Ave, Boston, MA 02115 (Email: john.mayer{at}cardio.chboston.org).
In the current issue of The Annals, two opposing viewpoints [1] are presented on the optimal organizational structure for health care insurance in the United States. Himmelstein and Woolhandler argue that a single-payer national health care insurance system would solve many of the current problems in financing, access, and delivery of health care; whereas Goodman suggests that reform should remove the current private and public health insurance third-party payer structures from the equation to promote competition among providers on price and quality and restore the doctor-patient relationship. I agree with both Himmelstein and Goodman that reimbursement may be at the root of many of the problems that the American health care system is facing. However, neither of these authors’ proposals would engage the medical profession in providing solutions, even though physicians’ pens and keyboards are still ultimately responsible for much of what American society spends on health care.
Historically, members of a profession have had a number of important prerogatives and societal responsibilities, which include adhering to a code of ethics that includes the moral imperative to serve others, advancing a body of knowledge and transmitting it to the next generation, setting and enforcing its own standards and values, and cherishing performance above personal rewards [2], self-regulation [3], and fairly distributing finite medical resources [4]. Gruen and colleagues [4] recently noted that physicians have a "responsibility to address the rising costs of health care, which are a key threat to access." A conceptual model of the relationships among the professions, market forces, and society has been proposed by Krause [5]. He describes the privileges and prerogatives of the professions as inherently in conflict with the forces of the free market, but notes that these "anti-market" privileges are granted to a profession by the state, representing society, only as long as society believes and trusts that the profession is acting in the societal interest and not in its own. Others have reached similar conclusions [6]. At the same time, competition is proposed as a health care system solution [1], and physicians are then pulled in opposite directions by their responsibilities to society as members of a profession and by this societal imperative to "compete." Added to this mixture is the centrally controlled administered pricing system used by Medicare, which has placed all physicians, but particularly cardiothoracic surgeons, under significant economic pressures by reductions in reimbursements for the services that they provide. The problem is exacerbated by the use of the Medicare Fee Schedule (MFS) by a large number of third-party private payers.
The question arises whether the medicine can survive as a profession in this environment. Although the MFS has important conceptual flaws, which are responsible for the declines in physician reimbursements, changes to this system could actually address some of the inherent conflicts that the medical profession and the American health care system are facing. The current MFS system is based on the resource-based relative value scale, which assigns relative value units (RVUs) to each physician service. By law, each year Medicare sets a single "conversion factor" (in $/RVU), based on the sustainable growth rate (SGR) formula, and this conversion factor is multiplied by the RVUs for each service to yield the Medicare allowed charge [7]. By controlling the conversion factor, the federal government has a simple mechanism to control aggregate Medicare physician payments, but since the total physician payment expenditures are capped by the SGR, a "zero sum game" results [8]. When aggregate expenditures increase faster than called for by the SGR formula, then physician payments in subsequent years must be reduced by decreasing the conversion factor to "pay back" the "overspending" on physician services that occurred in prior years. The SGR mechanism required reductions in the 2007 Medicare conversion factor [9] that were offset by last-minute legislation, but a 9.9% reduction in fees for each service is projected for 2008 without repeat Congressional action [10]. The SGR formula that prescribes the annual Medicare physician payment update is "widely recognized as being fatally flawed and, if not greatly reformed, may result in reduced access to beneficiaries" [11]. However, SGR revisions require billions of dollars in additional federal funding over the next 10 years, a difficult hurdle with projected federal budget deficits for the foreseeable future. From the physician perspective, the fundamental conceptual flaw in the SGR mechanism is the economist’s assumption that individual physicians’ patterns of practice will be influenced by their recognition that current "overutilization" will cause future reductions in the conversion factor. In a zero sum game [8] each participant attempts to maximize his or her own benefit, despite the negative effect that the aggregate behavior of all participants has on the subsequent year’s conversion factor. Each physician currently has no information or mechanisms to influence the concurrent behavior of other physicians, and there is no mechanism by which physicians can cooperate to husband society’s health care dollar. Thus, there is little ability to fulfill the profession’s self-regulatory responsibility to society. Situations in which there is a conflict between individual gain and the common good and in which the participants are unable to communicate are characteristic of the "prisoner’s dilemma" [12] in game theory and the related case known as the "tragedy of the commons" [13]. The "commons" has been described as a "paradigm for situations in which people so impinge on each other in pursuing their own interests that collectively they might be better off if they could be restrained, but no one gains individually by self-restraint" [13]. The recurring "crises" in Medicare physician reimbursement, which are directly related to the growth in the volume and complexity of physician services, would seem to indicate that the current Medicare reimbursement mechanism is providing the necessary elements for a tragedy of the commons to continue.
However, modifications to this Medicare reimbursement mechanism could serve as an initial step to more effectively engage the medical profession in fulfilling its responsibilities to society and in addressing the societal problem of unsustainable increases in health care expenditures. The key concepts involve an ability to assess the effectiveness of the care that is provided and the ability to self-regulate. Ultimately, all physicians should wish to provide the most effective care for their patients, and ideally, the reimbursement system should promote effective care.
I propose two changes to the current health care system to further these goals. First, each medical specialty or subspecialty should have a separate Medicare conversion factor. This change would create a significant incentive to self-regulate and exert some control on the growth in the number and complexity of medical services, and it would place the level of self-regulation at a level where such self-regulation could actually be effected. Second, federal financial and administrative support for the establishment of clinical registries and databases should be provided so that a robust, credible assessment of individual physician performance and of the effectiveness of the diagnostic and treatment modalities being utilized would be possible. Free access to Medicare claims data would be essential to provide cost information. The Society of Thoracic Surgeons has taken an important leadership role in this area through its clinical database efforts [14] and the development of performance metrics [15]. By taking these these two steps, each medical specialty would have the incentives and the mechanisms by which to self-regulate, the major missing factor in the current "tragedy of the commons" situation in the American health care system.
One result of these changes would be an annual allocation of Medicare physician payment resources to each individual medical specialty rather than the current aggregate allocation for all physician services. It would be more effective to place these allocations at the individual specialty or subspecialty level for several reasons. First, each specialty would have an incentive to develop and implement the most effective practices, since all members of that specialty and their patients would benefit from more effective use of physician resources. Ineffective and excessive uses of physician resources would penalize the members of that specialty, rather than physicians of all other specialties, as occurs under the current system. Second, this restructuring of the reimbursement system would also provide both the incentive and the resources for specialties to develop and maintain outcomes-focused registries and clinical databases, which can provide feedback of risk-adjusted outcomes to individual practices and institutions with peer comparison data, and which can lead to improved patient care and clinical outcomes [16–18]. Such a mechanism would provide needed data by which to judge effectiveness and would be essential to assessing resource utilization. It would also allow each specialty to monitor and attempt to improve the performance of all physicians in the specialty, to identify and disseminate best practices, and to develop mechanisms to identify and assist institutions, practices, or individual physicians that have less favorable outcomes. In so doing, there would likely be a reduction in the variation in practices and outcomes that have been found to exist [19] and which have been the basis of many criticisms of medical practice in the United States [20].
An important change that could also result from this proposal is that Medicare allocation decisions for physician services could be made overtly rather than by the almost random allocations resulting from the collective action of individual physicians each acting in their own or their patients’ interests. Such allocation decisions must be made based on where an investment of societal resources is judged to be needed and, equally important, on what the results of previous investments of resources have been. A data-driven body responsible for making these Medicare allocation decisions would have to be created with significant representation from both the public and the profession. However, even if one simply started with the current allocation levels and only allowed each specialty’s conversion factor to change annually in response to utilization, the proposed system would ameliorate the "commons" problem among specialties and would strongly encourage professional self-regulation by making specialty members accountable to their closest colleagues.
Critics may question the placement of the resource allocation at the medical specialty level, but it is at the specialty level where organizational structure and the most natural alignment of physicians’ interests already exist. At this level, there is the greatest likelihood that collaboration and sharing of information on best practices, monitoring of clinical activity, and feedback of risk-adjusted outcomes data could be accomplished. Alternatives such as resource allocation by disease management category or by expansion of global payments (pooling Medicare Part A and Part B) for complex hospital services could allow allocation decisions to be made at the local insititutional level for tertiarty services, but there is currently little organizational structure at either the national or local level to allow self-regulatory activity to occur; and it does little to address the office-based imaging and evaluation and management services, which are the fastest growing and largest volume physician services for which Medicare pays [21]. Furthermore, professional peers from the same specialty are arguably in the best position to develop clinically appropriate outcome measures and risk-adjustment algorithms, and physicians are reliably motivated by comparative national peer data. This proposal would also not preclude collaboration among specialties to pool resources in dealing with complex patients, such as those with heart failure, in a coordinated and collaborative fashion.
A second potential criticism is that although this proposal might be applicable for a smaller specialty, those with large numbers of practitioners may still have the conditions for the "tragedy of the commons" to occur. For these specialties, organizations exist at the state or regional level where the peer pressures and data collection could be effectively managed.
Two other significant issues should be addressed. First, some specialties will argue that they have no control over their volume of services, including emergency room physicians, radiologists, anesthesiologists, and pathologists. These specialists have less control over how frequently patients present to them, but they would have an incentive to manage their services to provide the most effective use of physician resources. If resource allocation updates were made annually, then an increase in patient volume in the previous year that is outside the control of the specialty, for example, an influenza epidemic, could be considered in making the subsequent year’s allocation. An equally important question is how physician services associated with new technologies and therapies could be funded to allow continued development of more effective therapies. The process of annual resource allocation decisions would have to include new funds for clinical research and development activities by physicians, but clinically based outcomes registries could facilitate the acquisition of information about the effectiveness of such new treatments and services. Notably, Medicare currently links payment for expanded indications for cardioverter-defibrillator implants to a required submission of clinical information to a registry [22]. Current government and private health care funding mechanisms invest heavily in bench research, but far less federal funding exists for the assessment of the effectiveness of therapies that are in the "gap" between the bench and accepted clinical practice. Expanded funding should support the acquisition of clinical effectiveness data on both established and new treatments through expansion of professional society–based outcomes registries.
The most fundamental change resulting from this proposal is an expanded role for individual professional societies not only in developing guidelines and best practices, but also in monitoring and actively improving the clinical performance of their members. The movement by medical specialty boards toward "maintenance of certification" is already under way. Incentives for each specialty to engage in monitoring members’ clinical performance and the effectiveness of treatments could enhance these maintenance of certification efforts. Pellegrino and Relman [6] argue that "medicine is, in essence, a moral enterprise and its professional associations should therefore be built on ethically sound foundations," but also noted that "the history of professional medical associations reflects a constant tension between self-interest and ethical ideals that has never been resolved." If physician payment allocations were placed at the level of the individual medical specialty or subspecialty, the role of professional societies would expand to include the responsibility to husband the health care resources of American society. In so doing, medicine will have taken an important step toward resolving the tension between self-interest and ethical ideals and toward better aligning our interests with the interests of the American society that we serve. In so doing, medicine could fulfill an important professional responsibility to society and simultaneously regain something of what it means to be a profession.
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