Who Or What Is Forestalling The Death Of Fee For Service Medicine?

With decreasing Medicare payments, rapidly shifting market pressures, and ongoing discussions regarding value and cost in healthcare, by now it should be clear to everyone that fee-for-service is a dying way of delivering care.

That is not to say that fee-for-service will not survive in certain circumstances. Particularly in emergency care, it is difficult to integrate into a simple, population-based formula. Emergency care by its nature is episodic and in many times unexpected. On the other hand, we know that some care received in the emergency department is due to lack of access as well as preventable conditions, many of which can and should be handled in a different, lower cost care setting. 

But the historic fee-for-service model that incentivizes procedural skills over outcomes is well entrenched in our healthcare system. The question is how do we move from a fee-for-service model to a value-based model and manage our practices and businesses until we get to the other side?

Once choice is to continue to innovate and gather data on outcomes, and link those outcomes to gain sharing arrangements via shared savings plans across multiple specialties. There are obvious ways to do this, including recognizing that a surgeon who does not operate may be just as important as a surgeon who provides the lowest cost operation.

It makes sense to expand shared savings past primary care, patient-centered medical homes to larger multispecialty groups that can have a greater impact on a broader range of diseases and overall health. These are hard conversations to have with caregivers and patients alike. It requires investments of time and technology on the provider’s part as well as an assumption of more responsibility on the patient’s part.

Beyond the difficult conversations though, there is real pushback (call it resistance, reluctance, or something else) by the payers to this sort of arrangement. MEP has proposed both gainsharing arrangements and shared savings programs as a way to move away from a fee-for-service model. The response we have received from the insurers is that it’s a great idea but they do not know how to structure such an arrangement in the current environment. It is frustrating for those who want to transition to value-based reimbursement when major payers continue to negotiate on a Medicare fee-for-service basis.

It is also time for medical specialties in shared geographic areas to begin to band together and partner with hospitals to deliver the value that the healthcare system both needs and requires. If physician groups fail to take advantage of this opportunity, they will be the odd man out as payment mechanisms change, and as hospital systems become the driving force in delivering care to their collective patients.

In a country which has historically both depended on and benefited from the entrepreneurial spirit of its citizens, the idea of meeting those needs through innovation in healthcare is obvious. As we leap into this unknown, those who continue to focus on better outcomes and lowering costs while leading our patients and ourselves to the other side will be to the benefit of all.