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Is an annual fee the answer to paying for healthcare?

The way we fund and pay for healthcare can have a significant impact on both the equity and the efficiency of our health system.

A single, unified funder for all health care is often held up as the ‘holy grail’ of health funding systems but this goal may be unachievable in the context of our existing federated nation and siloed health system.

In this piece, originally published in Australian Doctor, Professor Stephen Leeder steers a pragmatic path between the health funding system we have and the one we might like by proposing a re-thinking of our ‘fee-for-service’ system to encompass annual fees for all the care provided to people with chronic illnesses.

This system would reduce the current uncertainty over health care costs faced by many people with chronic conditions, increase the clinical freedom of GPs and primary health care providers and support a greater focus on prevention.

Professor Leeder writes:

The uproar over the proposed $7 co-payment for bulk-billed general practice visits and pathology services raises questions about how we pay for healthcare more generally.  But serious discussion is urgently needed in regard to the billions that comprise the cake, rather than the thin icing of the new impost.  While I do it frequently, in my heart I know that there is little point in lamenting that Australia does not have a unified health financing system. It simply doesn’t.

With the UK’s NHS and managed care systems in the US such as Kaiser Permanente, the entire health budget is managed by a single health authority that can move money to where it is most effectively employed: hospital or community, prevention or care, private or public.

Instead, we in Australia have these compartments that each have their own lives to live, more or less independently. While that’s not quite true, it is close enough.  Given the improbability of Australia shifting within the foreseeable future to a unified system of healthcare financing, we need to find small, doable things that achieve efficiencies (which, when defined properly mean effectiveness gains as well) where we can act.

A decade ago, I heard senior health service manager Dr Katherine McGrath, now consultant at KM Health Consulting Services, suggest that, given the rising tide of chronic illnesses that require continuing community-based care, it would be wise to consider a better way of funding services for these patients in general practice.  She suggested that an annual fee could be struck that would cover all the services provided by a GP.

Average fees are exactly that — patients may require more or less service than the fee would cover but the end result should be even.  Of course, payment on this basis could be gamed, at least in theory, but there is hardly anything unique about that.

More positively, an annual fee might help those GPs who wish to develop and implement a preventive plan with their patients experiencing serious and continuing problems to do so.  Such a system could give more clinical freedom for the GP.

Dr McGrath made a second point: episodic, acute care is demonstrably well-managed within a fee-for-service system.  Occasional use of general practice would not need a system of payment based on repeated visits. Immunisation, common infections, even minor psychological upsets do not need continuing care.  “An annual fee might help those GPs who wish to develop and implement a preventive plan with their patients experiencing serious and continuing problems to do so.”   The fee-for-service element of Medicare would remain unchanged.

This hybrid arrangement may be politically workable. A change to annual fee-for-service for chronically ill patients would need careful scrutiny to ensure that unforeseen side effects don’t mean that it is more trouble than it is worth.  Such a proposal was advanced three years ago for the management of patients with diabetes in Australia and the results of pilot testing have not yet appeared.

The development of this method of payment would need careful handling and would be unlikely to succeed if imposed from above.  But it might enable the development of different ways of caring for these people, based more on their needs than now, with flexible arrangements about how they could be seen and when.

For example, a special channel for patients with chronic problems might be opened in a general practice where they simply turn up if they need help or reassurance.  It is possible that practice nurses and others could play an expanded role in their care. Recent US studies on the medical home — a form of patient-centred general practice — have been encouraging.

The debate about how much a patient pays at the time of receiving care vs how much they pay through their taxes when they are well will not solve our current set of healthcare financing challenges.  The current administration of Medicare is already dauntingly complex and the co-payment will add to that complexity.

We need to test new ways of paying for care in the community for patients with serious and continuing illness.  These forms of payment will serve patients and the profession best if they stimulate improved ways of providing care in continuity, new ways that come from imaginative thinking by the doctors who provide this care.  Their leadership is essential.

• Professor Leeder is a member of the Menzies Centre for Health Policy at the University of Sydney, chair of the Western Sydney Local Health District Board and editor-in-chief of the Medical Journal of Australia.

This piece was originally published Australian Doctor, 23 July 2014 and is reproduced here with permission.

 

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Australian Palliative Care Conference
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