Taking Doctors' Profits Out Of Medical Care Decisions In the current health care system, doctors profit from each procedure they order. Some lawmakers want any health care overhaul to add incentives for doctors to value quality over volume. Others say incentives for cutting costs should target the patients instead.

Taking Doctors' Profits Out Of Medical Care Decisions

Taking Doctors' Profits Out Of Medical Care Decisions

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This is the first of a two-part report about the search for a more cost-effective health care delivery system.

In the national debate over health care, a key factor driving up costs seldom gets discussed: the payment system for doctors.

At present, the more procedures doctors perform, the more they get paid. The health industry calls this practice "fee for service." Many consider it a perverse system — one that lacks incentives to hold down costs. Yet the legislation pending before Congress may not do enough to change it.

Prioritizing Quality Over Profit

At a recent White House news conference, President Obama gave a succinct diagnosis of the nation's health care ills: "We spend much more on health care than any other nation, but aren't any healthier for it."

The remedy the president prescribed, though, was not health care reform — it was health insurance reform, a term he and fellow Democrats have lately begun using to describe Congress' effort to overhaul health care regulations.

But one Democrat warns that the problem goes well beyond health insurance. U.S. Rep. Jim Cooper of Tennessee says the real issue is a system bent on telling consumers that more is better.

Transforming The Model

Read the second in this two-part report on the search for a more cost-effective health care delivery system:

"The message of our medical system has been to 'sell, sell, sell, buy, buy, buy,' " Cooper says. "And the real message should be, 'What's really going to help me live longer and healthier?' "

With the fee-for-service model for health care, Cooper says, doctors have little reason to discourage the demand for more and more health procedures.

"I liken fee-for-service medicine to the situation if we paid lawyers by the word, or by the paragraph," he says. "We would have the longest legal documents in the world, and essentially, that's what we do with our doctors, but most of us don't realize it."

Republican Sen. Olympia Snowe of Maine agrees with Cooper. Snowe is one of three Republicans working with three Democrats on the Senate Finance Committee to forge a bipartisan health care bill. She wants legislation holding doctors and hospitals accountable for both the cost and the quality of their treatment.

"The fact is, right now, we encourage volume over value," Snowe says. "We've got to really analyze what is the net outcome, you know, in the procedures and the testing and the care that is provided [to] individual patients, and by whom."

Other lawmakers say incentives for cutting health care costs should be directed more toward the patients themselves.

Wyoming Republican Sen. John Barrasso, who is also an orthopedic surgeon, says there is nothing in the legislation now before Congress to motivate people to live healthier lifestyles — "nothing that's aimed at helping people individually and gives an incentive to that person to eat less, exercise more and quit smoking."

Changing An Unsustainable System

Even outside experts say that while the health care payment system encourages waste, it's not clear what the fix is.

"I think the truth of the matter is, we don't know exactly what would be the best way to reform payments," says Karen Davis, a health care expert who is president of the nonpartisan Commonwealth Fund.

Health Care Legislation

Davis says the legislation pending before Congress does offer some incentives for more cost-effective health care: Medicare would crack down on excessive hospital re-admissions, and there would be bonus payments for Medicare providers to improve the quality of their health care. Pilot projects would also be funded.

"There are pilots for medical homes for primary care; there are pilots for accountable-care organizations, which certainly cover the continuum of care. But there are also pilots for bundling hospital payments," Davis says. "I think all of those are very important for laying the groundwork for fundamental payment reform."

Rep. Vic Snyder (D-AR), who is also a physician, says the fee-for-service model is unsustainable. But, he says he has hopes for the health care legislation before Congress, which he calls a work in progress.

"Whatever the final version is," Snyder says, "we'll have this discussion maybe after the president's ink is drying on the document. Then we'll say, 'Well, was it a little nudge? A big nudge?' But it will be a nudge in the direction of more efficient delivery of health care services in a way that rewards quality [and] fairly reimburses providers."