When the Currency Changes — Do You Know What You’re Worth?
My wife is from a very small village in the South of France. Her parents, brothers and sisters live a modest, and by some measures, idyllic rural life in one of the most ruggedly beautiful spots on Earth. Strip away the cell phones, televisions, and internet, and you would see a very traditional life that in many ways resembles the life of a few hundred years ago. But on January 1, 1999 their world was, as they say, rocked. On that day, the event that most said could never happen, did. Eleven European countries, most of whom who had been at war with each other at least twice in the past century, economically united and issued a new single currency – the Euro. Literally, overnight my in-laws went to the village boulangerie to buy their daily baguettes with francs and were handed back change in bills of a new color bearing famous faces that they didn’t recognize.
It doesn’t take much imagination to realize that this economic heart transplant, performed without switching to bypass, could have gone very badly. But surprisingly, they pulled it off without anything close to economic collapse. During the transition, however, at the grass roots, phone-calls-to-Mamou-and-Papou level, it got pretty dicey there for a while – for the devil prospered in the details of the exchange rate. The conversion allowed a once-in-a-millenium opportunity for the merchants of Europe to “round-up”. As they did the math to convert their prices from francs, marks, and lire to Euro, and had all those extra numbers after the decimal, they simply rounded the number up to have a nice even new number. In reality, the more well-healed citizens took little notice of their immediately diminished buying power, but in the close to the Earth economic class that my in-laws dwell, 1999 was a long year – each visit to the market being another kick in the groin by the grand new EU experiment.
Last Saturday night the House passed its version of the Healthcare Reform Bill, and American medicine took one step closer to our January 1, 1999. Love it or hate it – it does indeed appear that change is really coming. And buried somewhere in the sedimentary layers of the 1900 pages of the bill that showed up on the Senate doorstep yesterday is wholesale payment reform for physicians. This part of the bill is a very sharp stake aimed at the heart of the fee-for-service model. Now most of us physicians can adopt a mental posture of objectivity and offer many critiques of this long running system, but up until now all of these arguments have been doctor’s lounge rhetorical exercises. The reality is that fee-for-surface is and has been our ecosystem for all of our professional lifetimes, and we have simply learned to survive and evolve in response to all of its byzantine selective pressures. But what has all of us (or at least those of us not smoking on the denial pipe) in a bit of a frenzy is that the equivalent of the dinosaur-vaporizing asteroid is officially about to hit – and the name of that projectile launched from the galaxy of Washington is “Bundling”.
It’s a recycling of an old big idea with a new benign-sounding name – bundle – evoking a “bundle of joy” or “I made a bundle in the market”. Here’s how it works – the payor (which is about to be even more synonymous with “the government”) pays one “bundled” fee for the provision of care for a given disease state. The old, more sinister and bureaucratic sounding name for this concept which was unleashed on hospitals in 1983 was Diagnosis Related Groups or DRG’s. In this prototypical iteration of the plan, the assumption was that if you want to reign in health care costs, then you pay hospitals a fixed fee for a patient’s admission and care of a given disease state. The hospital can then live or die based upon its ability to develop efficiencies and generate a margin from the flat fees paid. Of course, the desired outcome hasn’t been achieved, because Peter (the private insurance carriers) has patiently allowed his seemingly endlessly deep pockets to be robbed to make up for losses from Paul’s (Medicare and Medicaid) flat fee. Well my colleagues, it looks like Paul is about to become the pontiff of this church, and he has become a whole lot stingier.
As I understand them (and I will unashamedly assert that, like most physicians, my understanding of what the governing class has come up for us this time may be very shallow at best), most of the new iterations of the “bundling” idea propose a single payment for the entire “care experience” for a given disease state. If that care involves a hospitalization, the payment will include pre-admission care, physician fees, hospital charges, and post-discharge therapies. For outpatient care, the plan seems even more fuzzy, and appears to be something like sending the bundle of money to a so-called “medical home” – another cleverly contrived, Norman Rockwellian-sounding term, evocative of all of us in the healthcare team gathered around the golden-brown, well-stuffed healthcare turkey waiting with rosy-cheeked smiles for Uncle Sam to carve us a slice. Sadly, I am afraid this deal is going to have the doctors at the kid’s table fighting for the giblets and neck bones served on paper plates with a Dixie cup of tap water, while listening to the joyful background noise of frenzied feeding and vintage claret-quaffing rising up from the hospitals and “medical home owners” gathered around the polished antique Chippendale adult’s table. Now we primary care pathologists have a slight advantage over the rest of our medical colleagues, in that we have been sitting at this kid’s table for about 20 years, and are thus familiar with the adult’s MO. And any of you primary care pathologists who have had the distinct pleasure of negotiating with hospital administrators for payment for laboratory medical director services for the hospital’s clinical lab knows exactly what I mean.
I have been very happy, and a little flattered, to discover through lots of e-mail feedback (again thank you very much) that many resident physicians and fellows are indulging me by reading this blog. So in the interest of their continued education, let me make a brief digression to explain this perennial negotiation to our young. Under the payment for DRG system that has been around for a generation, Medicare and Medicaid pay a hospital a lump (that’s right – bundled) sum for the care of a patient with a condition defined by a “diagnosis-related group” aka – DRG. This payment only covers the hospital portion of the charges – not physician fees, well – except for us. Let me pose an example to help explain. If a patient covered under Medicare is admitted to a hospital with a diagnosis of cholecystitis, undergoes a cholecystectomy, and is discharged hopefully in better health than when admitted, then the the hospital receives a fixed amount, lets just say for argument’s sake $10,000, to cover the hospital charges. That’s all – regardless of length of stay, complications, whatever – 10K is all they get. Now in that actuarially-baked pie there are supposed to be many slices of payment to account for all aspects of the patient’s hospital care while admitted, nursing, OR time, supplies, food service, etc. One, ever so small sliver is clearly designated for laboratory medical director services – no not just laboratory testing, that’s a separate sliver – but also a additional payment for the pathologists (yes that’s us) who use their extensive post-graduate medical training in laboratory medicine to insure that the laboratory testing is accurate, controlled, and correctly interpreted; that the choice of instrumentation is optimized; that the technical staff performing the assay are competent; and that we are on call 24/7 to perform these tasks or fix any problems. The problem is that the actuaries weren’t very specific about how big that slice is supposed to be. And so we pathologists have endured the annual ritual of negotiating, often as supplicants, for our payment crumbs under the hospital banquet table. To their great credit, the CAP and the American Pathology Foundation, have, over the years, developed a number of resources and algorithms to aid us in this negotiation. And fortunately the Office of the Inspector General, US Dept. of Health and Human Services has issued rulings which give us some legal leverage against the more sinister hospitals who come up with the bright idea to keep the payment for these services and give us the finger. But the 20 year experience of pathologists who practice laboratory medicine should stand as a harbinger of this new reality. Bundled payments made to “entities”, be they hospitals or medical homes, will force the providers within those entities to become aggressive hunter-gatherers fighting for their piece of the daily kill on the king’s hunting grounds rather than the independent self-sustaining farmers we have heretofore been.
Healthcare reform is promised to the American public by the end of the year – and delivery on that promise is now solely dependent on Senate deliberations. Let us all say a silent prayer that the Senate does indeed live up to its charge to be “the deliberate arm of government”. But it does seem near to certain that our January 1, 1999 is upon us, and our medical currency is about to change. As difficult as the past twenty years has been for pathologists who have wrestled with hospitals to be paid for what we do, I ask you to envision, frightening as it may be, what it will be like when all physicians and care providers are supplicants negotiating with “the entity” for their share of the bundled payment. Imagine the workhouse scene when Oliver Twist and all the other orphans ask Bumble the Bead for more gruel from the single “bundled” copper pot. The pound sterling of surgery, the krone of cardiology, the guilder of gastroenterology, and the franc of family practice are about to be converted into one newly minted currency. I would suggest that we primary care pathologists begin thinking very hard and very quickly about how to insure that when it comes time to exchange the peso of pathology, that our decimal places are rounded up, and not down – or even out.
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