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For a better health system, we need to move beyond fee-for-service payments

Croakey has lost count of the number of contributors who have written here of the need to reform the fee-for-service model that underpins so much healthcare (for a recent sampling, see this by Professor Peter Brooks, and the comment here from Professor Stephen Leeder).

Fee-for-service, it is widely agreed, is not an efficient mechanism for encouraging quality care and addressing health inequalities. Indeed, you might argue there is no better system for entrenching Dr Julian Tudor Hart’s famous Inverse Care Law.

Not surprisingly, the topic was also up for discussion at the recent Medicare Roundtable meeting in Canberra, reports Walter Kmet, CEO of WentWest and a councillor of the AHHA.

He writes below that Australia should learn from moves in the US away from fee-for-service to more equitable funding mechanisms.

***

On the fee-for-service debate, it’s time for some action

Walter Kmet writes:

The fee-for-service system may have been good policy in the past, when the demands on Australian’s health care system were largely episodic and far less complex than they are now.

We could learn from the example of the US, which as a result of reforms is moving away from a fee-for-service model out of recognition of the risks it presents to equity, financial sustainability, value and quality.

According to the American Academy of Family Physicians, the reforms in the US would:

  • Provide funding to shift emphasis toward new payment models that focus on quality of care rather than fee-for-service;
  • Provide $125 million to help small physician practices transform to payment models based on the quality of care;
  • Consolidate existing quality improvement programs into a single Value-Based Performance Payment program that would reward high performing practices;
  • Create a Medicare payment for complex chronic care services, which also will compensate physicians for services provided remotely; and
  • Create a process to identify misvalued services and redistribute savings on those services within the physician fee schedule.

One thing is clear, if US can have a debate about fee-for-service, and move towards a more equitable model, so should Australia.

The evidence shows that to get the best return from our investment in health, it is vital to support continuity of care and reinforce the role of primary care.

But the one-size-fits-all funding model that we currently have does not support continuity of care and primary care. Quite the contrary.

The ability of primary care and general practice to play its role at the centre of our health care system will continued to be undermined when volume and price drive practice, which is inevitable when we rely on fee-for-service completely and in particular when fee-for-service is disconnected in payment silos as it is in Australia.

I am not arguing that we should ditch fee-for-service and copy the largely salary-based NHS system.

Rather, Australia has the opportunity to modify Medicare and the role of Medicare Locals to ensure fee-for-service is the starting point – not the end point. That was an argument I put at the Medicare Roundtable.

The RACGP, in its recent submission to the 2014-15 Budget, made a clear case for reducing the dependence on fee-for-service by providing a framework for support payments across practice, practitioner and population metrics. We should also ensure that those in most need are not left behind by barriers such a specialist co-payments attached to our current fee-for-service system.

Again looking at US, it is worthwhile to look at the most recent outcomes being achieved from the Patient Centred Medical Home (PCMH) initiative. The nexus between fee-for-service payment reform and the PCHM are at an interesting juncture, and also surely worthy of further debate.

The Patient Centred Primary Care Collaborative in the US in their January 2014 Annual Update showcases impressive outcomes from the PCMH structure, one that is becoming more influential in service delivery in that country. This should not be ignored in the Australian context.

Interestingly, the Collaborative’s report notes:

“Paying for a health care system that invests in primary care and the Patient Centred Medical Home (PCMH) is imperative.”

 And goes on to say that:

“If passed into law, these reforms will result in a major step toward moving the US health care system away from a fee for service model, to one that rewards quality, efficiency and innovation.”

At a time when the government considers the financial sustainability of Medicare, it is both opportune and necessary to consider payment reform that improves the effectiveness and equity in our health system.

• Walter Kmet, CEO WentWest

Comments 1

  1. Trevor Kerr says:

    Fees for what services?
    The mechanic issues a carefully itemised account of the work he is supposed to have done on a vehicle. Yes, in the private health sector there will be carefully itemised accounts of services rendered to customers. That’s not to say they are disclosed to end-users.
    On Feb 3 Inner North West Melbourne Medicare Local hosted a session on PCEHR compered by Norman Swan (https://www.facebook.com/INWMML) The format was a panel representing professions. Norman had a dramatist to act out several parts that he worked off to query panel members on various aspects of PCEHR. It was all designed to encourage greater interest and participation in the project.
    There was one obvious, unasked question, though. “Since the Govt expects citizens to sign up for an electronic record, could the panel and audience tell us how they have been keeping their records up to now?” I think we know what the response would be.
    The Minister could work off a similar base. He could describe how he and Ms Dutton have been keeping a book, or computer file, of records of all the health transactions they have paid for, including their children and the aged parents in their care. He could make a stab at how much, in their time, that has been costing them. He could then extrapolate out to all taxpayers and make a reasonable estimate of what reasonable people would pay to have that burden of record-keeping lifted onto an automated expert system.
    That seems, to me, to be the essential parts that would ease the politics of adding to the budgetary outlays. But, there are huge gaps and these should be enough to let the Minister slam the door on further outlays, into something the community of voters does not value.
    If he was trying to be mean, he could invoke the “Individual responsibility” clause.
    But, there’s more to this business of record-keeping. I don’t bother with it, either. If I had a chronic condition that needed precise numbers to be managed, I’d be making some notes. Largely, though, we can’t be bothered. Why? Is there a psychological reason, beyond that of not caring too much for what we receive as entitled expectations and paid for by someone else? I have a feeling that the co-pay would entrench the “entitled expectation” attitude, with added resentment and even less interest in personal awareness of health needs.
    Fee-for-service is, certainly, a powerful actor that thrives in a setting of ignorance. It could be torn out of providers’ hands against enormous resistance. (Think Charlton Heston and his rifle.) A government would have to have super-powerful forces to do it, though, because the community is rendered helpless to assist through being blind to actual costs. Fix that first.

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social policy
Summer reading 2020-2021
Tasmanian election 2021
Testing Croakey News category 1
The Croakey Archives
#cripcroakey
#HealthEquity16
#HealthMatters
#IHMayDay (all years)
#IHMayDay 2014
#IHMayDay15
#IHMayday16
#IHMayDay17
#IHMayDay18
#LoveRural 2014
Croakey Conference News Service 2013 – 2019
2013 conferences
Australian Centre for Health Services Innovation Forum 2013
Australian Health Promotion Association Conference 2013
Closing the Credibility Gap 2013
CRANAplus Conference 2013
FASD Conference 2013
Health Workforce Australia 2013
International Health Literacy Network Conference 2013
NACCHO Summit 2013
National Rural Health Conference 2013
Oceania EcoHealth Symposium 2013
PHAA conference 2013
2014 conferences
#IPCHIV14
AIDA Conference 2014
Congress Lowitja 2014
CRANAplus conference 2014
Cultural Solutions - Healing Foundation forum 2014
Lowitja Institute Continuous Quality Improvement conference 2014
National Suicide Prevention Conference 2014
Racism and children/youth health symposium 2014
Rural & Remote Health Scientific Symposium 2014
2015 conferences
#CPHCEforum
#CRANAplus15
#HSR15
#NRHC15
#OTCC15
Population Health Congress 2015
2016 conferences
#AHHAsim16
#AHMRC16
#ANROWS2016
#ATSISPEP
#AusCanIndigenousWellness
#cphce2016
#CPHCEforum16
#CRANAplus2016
#IAMRA2016
#LowitjaConf2016
#PreventObesity16
#TowardsRecovery
#VMIAC16
#WearablesCEH
#WICC2016
2017 conferences
#17APCC
#ACEM17
#AIDAconf2017
#BTH20
#CATSINaM17
#ClimateHealthStrategy
#IAHAConf17
#IDS17
#LBQWHC17
#LivingOurWay
#OKtoAskAu
#OTCC2017
#ResearchTranslation17
#TheMHS2017
#VMIACConf17
#WCPH2017
Australian Palliative Care Conference
2018 conferences
#6rrhss
#ACEM18
#AHPA2018
#ATSISPC18