UnitedHealth Knows How to Save $500 billion In the Medicare Program--So Why Do They Need the Extra Private Medicare Payments?
This from Erica Werner's AP story today:
A major health insurer [United Health Group] says the government can save more than $500 billion in Medicare spending by sending patients to less expensive, more efficient doctors, reducing hospital visits by the elderly and cutting down on unnecessary care.So UnitedHealth knows how to save $500 billion in Medicare spending.
Aside from the fact that all of this is voluntary and has no consequences in it for failing to deliver it---and therefore not "scoreable" under Congressional budget rules--I have a question.
If United Health knows how to save $500 billion in Medicare costs why has it been lobbying for years to maintain the hundreds of billions of dollars in extra payments private Medicare plans--of which United is the biggest player--get from the government?
It would seem to me that if they know how to save all of this money in Medicare they wouldn't need the extra 14% the government pays United and all the other private Medicare plans above what it pays itself under the traditional Medicare plan.
The Obama administration says these extra payments to private Medicare HMOs are worth $175 billion over ten years and the private plans have about 40% of the Medicare market. Forty percent of the $500 billion these savings United says are there would therefore be in the private market--or $200 billion. So all of these great ideas United put on the table today should more than make-up for the industry giving up the extra $175 billion payments.
Am I missing something here?
Gee, next thing you know AHP will be going to the White House volunteering the $175 billion for President Obama's health care plan.
They're just coming up with extra cash all over the place!
3 comments:
Bob: I'm doing everything I can to promote your blog as the "go to" analysis, because of items like this: you ask the right follow-up questions.
So much of what is being said by all sides in this current back-and-forth remains unexamined and unchallenged; each side merely delivers their own finely spun statements, and the press gets lost because it can't be explained in 20 seconds or less.
Even if UnitedHealth were to go ahead and send patients to less costly doctors, the doctors would expect to "share the savings," wouldn't they? Unfortunately, large employers, insurers and policy makers nationally were sucked into this model as a way to get providers to the bargaining table. As a result, this concept is now a mainstream (if unexamined) part of the reform discussions. We are stuck with providers expecting that if they quit wasting our money, we'll let them keep part of the formerly wasted money. How is this different from paying someone to quit breaking your window? What if a contractor said to you: "Look, I could use shoddy workmanship on this new bathroom, and you'd end up having to replace the plumbing and re-do the sheetrock. But instead, I'll do a good job the first time. In return, you will reward me by paying me part of the money you would have wasted if I had done a lousy job."
Would not this contractor be laughed out of the room? How do hospitals and physicians get away with this?
Atul Gawande's piece in this week's New Yorker about the flim-flam physicians in McAllen, TX is a case in point: why should we let them keep any of the money they are now wasting on unnecessary and ineffective treatments? But even Gawande talks about "shared savings" reform models.
We raised this when Elliot Fisher brought his accountable care organization model to our legislature. (Vermont will be applying to run one of the upcoming "pilots" for ACO.) Fisher doesn't see any other way of getting docs and hospitals to the table, if they are to be cut back to the revenue stream that the most efficient ACOs can deliver. In other words, we have to bribe the inefficient ones by allowing them to keep part of their waste, to "soften the blow" that payment reforms will bring. Are there any payment reform pilots testing how to bring a seriously inefficient or wasteful providers into the fold, without bribing them? I'd love to hear about one.
I used to say "I'm sorry if this offends you, Doctor," but I don't say that any more. I'm offended by the idea that I should pay them to quit wasting our money.
UHC has tried steering its members to efficient providers with only a few of its product lines--the Edge plans for samll groups and some plan designs for larger groups. The insured receive a greater benefit by going to the designated providers--chosen by outcomes and overall cost of care.
The problem with the wide application of this concept is that the effcient providers would be swamped and not be able to accomodate the patient load. Over time maybe the inefficient providers would change in order to receive the efficient designation.
>"In return, you will reward me by paying me part of the money you would have wasted if I had done a lousy job."
Perhaps if a true market price were paid, the discussion would be different.
But as long as third party payers act as monopsony buyers and offer contracts of adhesion, docs will be uniformly uninterested in any notion of efficiency...merely standing there with their hands in their pockets and shrugging their shoulders.
This is like the old Soviet adage...as long as they pretend to pay us, we will pretend to work.
>Atul Gawande's piece in this week's New Yorker about the flim-flam physicians in McAllen, TX is a case in point
But they are only following business precepts to maximize revenue. Wouldn't that be a sign of good business practice if they were lawyers or accountants or plumbers?
In fact, aren't they just responding to the incentives such as they are?
If you want to fix the system, we must do away with fixed prices. After all, McDonalds and Ruth's Chris both sell dinner, but the prices are not the same.
In medicine, we pay for McDonalds (unit prices) and expect Ruth's Chris. If you got paid the same for dinner, which would you serve?
I would serve 10 McD's instead of 1 Ruth's Chris, make revenue x10, and sleep well.
>Are there any payment reform pilots testing how to bring a seriously inefficient or wasteful providers into the fold, without bribing them? I'd love to hear about one.
Sure. Letting consumers pay a significant portion of the bill. Discerning shoppers spending their OWN MONEY will spend more prudently...or at least the McAllen boys would have to do a better sales job.
Remember, it is a lot easier to spend someone else's money than your own.
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