Description:

Now we're going to talk about paying providers, primarily physicians. So a little bit different at the top. Still have a unit of service. Still have purpose. Now the financial risk is different. The financial risk is if a patient gets more care than projected, who stands to lose money from this. Unintended consequences still the downside, but we call it unintended consequences.

So fee for service, RBRVS. This is actually Resource-Based Relative Value Scale. This is how Medicare pays for outpatient care. And what they do is they say, OK. We're paying by the visit. So the fee for that visit depends on the intensity of the visit, the diagnosis. But it's a flat fee for a visit. Purpose is you pay for what's provided. But the risk is with the payer, because a person could keep on going back and having more and more visits, or they could be getting a lot of care at these visits, and they could be expensive. So there's pretty much no control on utilization.

So the unintended consequence would be, really from the patient's perspective in many ways, that they are getting unnecessary services. They're getting over-treatment. They're getting overly expensive services. So that can be bad for the patient because care you don't need is not good care. Also bad for the payer that you're spending a lot of money.

Now let's move to capitation. Capitation's kind of like the meal plan, person over time, often per member per month. The incentive is so that the provider wants to keep a person healthy. So say a primary care provider was capitated. Maybe he or she would then say, OK. I don't want my patients in the emergency room or the hospital because that costs a lot of money. So instead, I'm going to give them very good primary care. I'm going to see them myself when they're sick. And I'm going to try to keep them healthy so that they don't get expensive.

And why is that? Because the provider gets a set fee for you as a person. If you end up being more expensive, the provider doesn't get any more money. So if a person in a capitated plan has large expenses, it's on the provider, because the provider just has what they have.

The flip side of that is the provider got a certain amount for taking care of a person for a month. If they don't give the person very much care, the provider keeps the change. So because of that, the concern with capitation is that services will be restricted or rationed, and that a patient won't get as much of what they need.

So now we're moving on to salary. Salary's a little different because it's basically an employer pays a salary to an employee. The employer could be a health plan, or the employer could be a physician group. But the whole purpose is to take away the incentives we talked about above, so to make it so that people don't make or lose money by giving extra care or by skipping care.

So the financial risk of it depends. It depends if the provider's capitated. It depends on a bunch of things. But the unintended consequence to keep in mind is if somebody's just paid for showing up at work, maybe they're not motivated to give high-quality care or to be efficient. So maybe they work slowly, figuring, hey. Working harder doesn't get me any money, any more money. Or maybe they give kind of not fabulous care, thinking, I don't make more for good care than bad care. So I really just have to kind of show up and go through the motions. I'm not saying this is what I think providers under salary do, but this is the flip side.

Last piece is bonus and penalty. In health care, we call it pay-for-performance, Or P for P. Unit of service depends, but the goal is to have higher quality, more efficient care. So maybe you say to doctors, if 80% of your patients in this age range get a flu shot, we'll give you extra money. Or maybe you say to them, OK. If you're able to keep your cost per patient below a certain level, we'll give you a bonus.

So the unintended consequence of that, though, is that the standard-- so the people will be paying so much attention to flu shots and getting flu shots so that they can get the bonus, that maybe they're not thinking about colonoscopy. Or what if the thing you're measuring isn't actually the most important thing to a patient? You might be missing more of a holistic view because basically you just have little measures, like got your cholesterol checked, blood pressure under control. So that's pay-for-performance.

Here is a link to the media file cryan_payment_w03_p02.mp4