Volume 60, Issue 1 , Pages 6-10, February 2009
The US Health Care (Non)System: The Personal Assessment of an American Radiologist
Article Outline
- Employer-Based and Federally Funded Health Insurance and the Current Reimbursement System
- Proposals for Change
- Summary
- References
- Copyright
It would be convenient to say that the US health care system is a reflection of the character of the American people—diverse, creative, entrepreneurial, “can do.” It is not that simple. In point of fact, there is no US health care system. Rather, the organization, financing, and delivery of our medical care are a patchwork that has grown over time and in response to temporal demands. In not having a clearly defined, integrated health care system, the United States is unusual among developed countries. That this is the case has implications for the American populace, which I will address in this article. My goal is to provide insight to Canadian radiologists, which may help them to evaluate their own system of care in the context of another.
At the second annual American College of Radiology Forum, an event drawing together multidisciplinary experts on a selected topic, then National Quality Forum President, Dr Kenneth Kiser, described what he called “the US health care paradox”[1]. The United States has an abundance of highly trained practitioners, state-of-the-art technologies, and unequaled health care spending. Despite this, care is difficult to access, fragmented, unevenly distributed, and much of the care provided is of uncertain value. As a result, he noted, there is a “quality gap,” characterized by overuse, underuse, misuse, and waste [1]. The Institute of Medicine has concluded that simply tinkering with the current nonsystem is insufficient to cure our problems and that sweeping change is needed [2].
Dr Kiser's indictments to the contrary, the majority of Americans receive high-quality medical care. Nonetheless, there is a growing consensus, to which I subscribe, that how we deliver health care in the United States is flawed, such that our society pays too much for its health care. The continuing rate of increase in expenditures as a share of our economy (16.3% of the gross domestic product in 2007) is unsustainable; and Americans receive too little value when considering both cost and benefit. There are various sources of evidence that sustain these assertions. The following are only a few of the many examples I might have chosen. Despite spending double per capita of most developed societies, the World Health Organization ranks the United States in the midlevel of developed societies for such quality indicators as life expectancy, infant mortality rate, and overall care [3]. A 2007 Commonwealth Fund comparison of US health care with the United Kingdom, New Zealand, Australia, and Germany rated the United States as worst overall and found the United States lagging in information system infrastructure, ineffective in its expenditures, worst in providing multidisciplinary care, and having by far the highest administrative costs [4]. A research study evaluating the performance of U.S. News and World Reports “Top 10 Hospitals” found up to 2-fold differences in expenditures depending on the health system from which elderly patients sought care for the last 2 years of their lives. Upon seeing this result, one health economist, Uwe Reinhardt, exclaimed, “How can the best medical care in the world cost twice as much as the best medical care in the world?” [5]. Indeed, the same group of Dartmouth University researchers who conducted that study has shown repeatedly that there are large differences in the volume of services provided across different geographic locales, explainable principally by the available capacity of services. The greatest variation is for services for which there is the lowest evidence basis for their use (imaging among them). In the patois of economists, as regards American health care, supply (and not necessarily patient need) induces demand. There is nothing in the Dartmouth group's research to suggest that the regions with higher utilisation and cost of services enjoy better health.
Why Americans are susceptible to such high and variable health care expenditures almost certainly is multifactorial. Despite a century of scientific medicine, most US physicians eschew evidence-based guidelines in favor of habit, anecdote, and the advice of questionable sources (pharmaceutical vendors are especially influential). In fact, the evidence basis for much of medical practice is quite ambiguous, so a great deal of marginal and inappropriate care still can be rationalized. More than most countries, the United States has great availability of advanced technology, some would say to the point of excess capacity in some locales (ie, supply-induced demand). Few states regulate the dissemination of new technology to any significant degree. State laws also rule in the venue of medical malpractice, and these laws vary a great deal, introducing variability in physicians' susceptibility to practicing defensively. It is hard to estimate the true cost contribution of the defensive use of diagnostic tests and treatments, but fear of legal liability probably does drive substantial wasted care. Perhaps most significantly, the moral hazard of employer-based insurance (the dominant source of private US insurance) and the incentives of a fee-for-service system that align patients' desires to receive more care with physicians being paid more the more services they provide converge to motivate the greater provision of care even in circumstances in which more care may not be beneficial or may even produce harmful effects.
What makes change difficult is that, even allowing for these flaws and occasional polls showing mixed levels of satisfaction with care, many fear the uncertainty over how real change would affect the substantial number of Americans who now easily and promptly access medical care. Those are the individuals who have good employer-based or government-provided insurance. Other powerful elements of the US system also have an aversion to change. Physicians are well compensated compared with the salaries earned by physicians elsewhere. After a period of decline, hospitals once again are making money. Insurance companies enjoy a powerful and profitable position. However, the patchwork nature of American health care financing leaves a substantial number (currently estimated at 47 million) of US citizens and residents uninsured and with no traditional access to care. This is not to say they receive no care. Rather they must stand in line at the doors of local hospital emergency rooms and clinics. Many more have minimal insurance coverage incapable of protecting them from the disaster of medical bankruptcy. As a result, perhaps as much as a third of the US populace may receive less than optimal care later in the course of disease than might be ideal. Institutions are strained by the demands of providing so much uncompensated care.
Employer-Based and Federally Funded Health Insurance and the Current Reimbursement System
To sum up the previous section, I believe we in the United States receive too little value for our health care expenditures. To say it another way, we spend more than we should, given the service and benefit we receive, relative to other developed societies. To me, the fundamental problem is the skewed financial incentives proffered by our employment-based insurance system of funding medical care and the governmental insurance programs for the poor and elderly (Medicaid and Medicare, respectively). It is worth taking a moment to examine how these financing systems developed.
Although private health insurance could be obtained in the United States as early as the 1930s, this was not the general practice. Health care mostly was delivered on the basis of cash or even barter transactions, often according to individual negotiations between the physician and the patient. After World War II, at a time when many countries were developing centralized health care systems, the United States was going in another direction. The American Medical Association (AMA) used the power it had earned through the mutual involvement of doctors and their patients to stall any national health insurance program, arguing that it represented the onset of much-feared “socialism” [6]. At the same time, however, employers increasingly began to offer health insurance as a benefit to attract scarce labor in a booming economy. The incentives promoting health insurance as a benefit of employment were profound. Employees received an assurance of care, and Internal Revenue Service regulations did not require workers to pay taxes on the benefit as they would if the same dollars were paid to them as wages. Employers could deduct their contributions from revenues as a business expense and thereby decrease their tax liability as well. Employer-based health insurance disseminated rapidly, such that by 1965, greater than 70% of workers were covered [6]. That left mainly the people who needed health care the most, the old and the poor, without insurance.
In 1961, John Kennedy entered the White House promoting a national plan to finance health care for the elderly and indigent. In a famous battle of nationally televised speeches that drew the attention of much of the TV-owning American populace on successive nights, Kennedy debated the AMA's President, Dr. Edward Annis, who again called on Americans to defeat what his organization considered the march towards socialized medicine. In a close Senate vote several months later, Kennedy lost. Still, the die had been cast. President Lyndon Johnson, buoyed by an overwhelming electoral mandate, won passage of Medicare in 1965. The political wrangling required to pass the legislation extracted a high cost. Hospital payments (Medicare Part A) would be on a cost-plus basis; this meant the more a hospital spent to provide care, the more it would be paid. Coverage for physician services (Medicare Part B and Medicaid) would be on the basis of historical usual, customary, and reasonable (UCR) fees. This meant that new physicians entering a community could set their own (usually higher) fees, initiating an inflationary spiral. Established physicians advanced their fees to keep pace with the new community standard. Both the hospital and physician payment methodologies were fundamentally inflationary. Inevitably, US expenditures for health care increased rapidly.
Although both cost-plus and UCR fees have long gone the way of the dodo bird, inflationary incentives still rule American health care reimbursement. For both public and private insurance programs, the dominant approach to physician payment is fee-for-service. Unlike almost any other purchase of goods or services that an individual might contemplate, insured US citizens are largely protected from the financial consequences of seeking medical care by their insurance plans. Historically, patients have contributed little out of pocket in the forms of copayments and deductibles, although these recently have begun to increase as employers seek to transfer some of their rapidly increasing health care costs to patients. Moreover, we Americans have been conditioned by mass exposure to the media to believe that more care is better than less, high-technology care is better than low-technology care. Physicians are fiscally incentivized to provide more services because the greater the number of services they provide, the higher their income. The convergence of physician and patient incentives is quite powerful.
The pricing of specific physician services is fixed by a system developed in the early 1990s to replace UCR: the Resource-Based Relative Value System, which places all physician services in the context of one another, valuing both the professional component (for diagnostic radiology, the interpretation) and the technical component (the use of the equipment, technologists, consumables, and so forth) on the basis of the resources required to provide the service. The relative value of a service (stated in relative value units) is multiplied by a dollar factor and the result is modified for local economic conditions to arrive at a payment. New services are incorporated into reimbursed practice through a Byzantine system that establishes their relative value [7]. Newer and technologically more complex services tend to be paid for at higher levels, a practice that has led to admitted skews in the reimbursement system. These faults in the Resource-Based Relative Value System have induced some physicians to relinquish some of their long-established practices and adopt newer, better-paying ones [8]. One example of this that is pertinent to radiologists is the self-referral of high-technology medical imaging procedures. Nonradiologist physicians increasingly are acquiring computed tomography, magnetic resonance, and positron emission tomography scanners and self-referring their patients. This practice indisputably leads to higher rates of referral than if the physicians were referring their patients to radiologists [9], [10], leading to the suspicion that many referrals generate marginal or inappropriate scans. The financial incentive is to bill the lucrative technical component. Most often, self-referring physicians arbitrage the less well-paying interpretation of the studies (professional component) to radiologists.
Hospital inpatient services are reimbursed by using a less inflationary approach—the so-called Diagnostic-Related Groups, wherein the payer provides a lump sum for an episode of illness and consideration of the patient's comorbidities (ie, how sick the patient is). Hospitals make money when they provide care for less than they receive and lose money when they do not. Thus, in the inpatient setting, imaging represents a cost against the lump sum payment, as opposed to revenue in the outpatient setting.
As of 2003 (very little has changed), roughly 50% of the (then) $1.7 billion US health care bill was paid by taxpayers through various federal programs: Medicare, 17%; Medicaid and other programs for the poor, 16% (split between the federal and state governments); taxpayer contributions to federal employee health insurance programs, 6%; and other federal programs (eg, Veteran's Administration), 12%. The federal share of insurance spending is expected to increase over the next 20 to 40 years as the large baby boomer generation reaches the age at which they are entitled to receive Medicare benefits. Another 30% of US expenditures was paid by private insurance. Patients paid for 14% out of their own resources. Charitable donations accounted for 5%. Roughly 55% of all of these expenditures go to hospitals and physicians, with pharmaceuticals accounting for another 11% (drugs may, in fact, have increased their share since 2003, since Medicare added a pharmaceutical benefit in 2005—Medicare Part D) [6].
One peculiarity of US health care expenditures bears particular mention: administrative cost. Although small in relative terms (2.2% of outlays for Medicare, 4.4% for private plans [3]), American administrative costs are 2 to 3 times higher than for other national health care systems and clearly do not contribute directly to patients' care or outcomes. The pluralistic financing of our care is at the root of the problem. Each insurer has its own mechanisms, forms, and rules for reimbursement. The upshot is that seeking payment for services is time consuming and expensive for providers. Payment often is delayed or denied on the basis of an insurer's extensive code of operations, adding to providers' frustrations.
Government health care financing programs and our American attachment to employer-based insurance are politically inflammatory entitlements. Any effort to tamper with them requires great courage on the part of our corporations and legislators. This is why so little really important change has occurred in a financing system now more than a half century old. Nonetheless, there exists on the private side of the equation a general concern among employers for how health care's ever-escalating costs are harming our national economic competitiveness. Similarly, severe concerns exist for the fiscal soundness of governmental plans, particularly Medicare (the elderly are our most reliable voting block). The expectation is that the Medicare program will be bankrupt in the latter years of the next decade [11]. Our problems financing current levels of care make it all the more difficult to address the issue of our uninsured. Progress on implementing national health insurance for all Americans will require a strong political will and the strength to face the majority of insured Americans who might view covering the uninsured as a potential “take away” from them.
Proposals for Change
As might be expected from the foregoing, the winds of change are blowing. The avowed goal is to improve quality, but in many cases this is transparently code for reducing cost. Ideally, one would hope that the United States would focus on value (the balance of cost and quality) to ensure high-quality, efficient, integrated, and more equitably accessible care.
One idea that has gained popular currency, particularly among employers, is a so-called market-based approach that is focused on narrowing the information gap between patients and providers that many economists believe prevents health care from acting like other markets (needless to say this is not the only feature of US medicine that is unmarket-like). Referred to as consumerism, the idea is to provide patients with greater information about both cost and quality and let them decide which providers to trust with their custom and at what price-point (ie, trading off considerations of cost and benefit as they would any other product). The patient's incentive to do so would be for employers to provide only a defined dollar benefit, beyond which the patient would be responsible for the cost of seeking care, at least until the cost reached a high (catastrophic) level. Indeed, most employer-based plans already are increasing the share of costs their workers bear and are beginning to develop programs intended to disseminate information about quality.
Clearly, the hard part of operationalizing consumerism is to come up with and gather reliable data on meaningful measures of quality. The Medicare program, in collaboration with the AMA and various health care quality organizations, has developed the Physician Quality Reporting Initiative (PQRI). The purpose of the PQRI program is to develop quality metrics for specific disease conditions and elements of care pertinent to those conditions, and then to test the performance of physicians for those circumstances. An example of a PQRI metric pertinent to radiology is the following.
At this time, participation in the PQRI is voluntary. Participating physicians submit data and are paid an additional 1.5% bonus on all relevant procedures according to whether they met the quality metric for an acceptable number of cases over the course of the preceding year (referred to generically as pay for performance, or P4P, in health-speak parlance). There is some consideration of making PQRI data submission a mandatory aspect of participation in the Medicare program in the future. Similar programs for hospitals have been in existence for some time [13].
A second, much-discussed approach is the medical home, which specifically addresses the fragmentation of US care among organizationally unrelated specialists and the associated high use of services and cost. As reflected in the recent Commonwealth Fund study cited previously, because of the point-of-service nature of most US medical practice, there is poor integration of care. A patient may or may not have a primary physician. Physicians refer patients to other physicians, frequently with poor follow-up evaluation of the result. Most insurance plans allow patients to seek the care of specialists directly. The result is, at best, inefficient care. Worse, such lack of communication might harm patients. The medical-home concept would assign patients to clinics or physician groups that would take responsibility for better organizing care. Groups would accept a lump sum payment for providing usual care (as with our failed experiment in so-called managed care of the 1990s), but might be eligible for additional payments if there were a need for unusual care or catastrophic events. Proponents of the medical-home concept believe that coordinating care will improve quality and that reintroducing capitated payments will alter physician incentives to provide too much care (although perhaps substituting an incentive to supply too little).
Ultimately, many policy makers believe that the only effective way to address the high rate of provision of marginal and inappropriate services is to redirect physician incentives away from high-technology, procedural medicine towards paying more for disease management and preventative health activities. This is clearly what the Institute of Medicine had in mind in its 2006 report when they wrote, “New payment incentives must be created to encourage the redesign of structures and processes of care to promote higher values” [14]. General Electric's (GE) benefits guru, Bob Galvin, said much the same thing, but more dramatically, “Pay for performance is like putting lipstick on a pig…The biggest win in 2006 was Centers for Medicare and Medicaid Services (CMS) increasing payments for evaluation and management services (personal communication, October 2006).” The notion of restructuring incentives is potentially threatening to radiologists because there are some in our Centers for Medicare and Medicaid Services (those who bring us Medicare and Medicaid) who believe that many imaging services currently are overvalued, particularly with regards to the technical component. They believe that further lowering the technical fees paid for imaging examinations—as occurred devastatingly as part of the 2005 deficit reduction—will dramatically reduce the rate of increase they are experiencing with imaging use and cost, which currently outstrips general medical inflation by 3-fold to 8-fold, depending on the imaging modality [15].
Summary
US health care providers have prospered under a virtual calico cat of financing, organizational, and delivery approaches that provide social and financial incentives to deliver too much care at too great a cost. Although the majority of the US populace has good access to high-quality health care, the citizenry, their employers, and governments pay too much for the benefit received. A significant number of people have poor access to providers and receive less-than-timely care because they have no health care insurance or because their level of insurance requires that they share the cost of care beyond what they can afford (ie, are underinsured). Given the increase in expected lifespan, the chronic ailments that accompany advancing age, and the demands of baby boomers that their anticipated entitlements provide them with enhanced quality of life, there should be a greater sense of urgency among both private and public policy makers to address the inefficiencies and inadequacies of our current nonsystem of medical care.
References
- . Radiology 2012: radiology and radiologists a decade hence—a strategic analysis for radiology from the second annual American College of Radiology forum. Radiology. 2003;227:9–14
- . Crossing the quality chasm: a new health system for the 21st century. Washington (DC): National Academies Press; 2001;
- World Health Organization. The World Health Report 2006. Geneva (Switzerland): WHO; 2006. Available from: http://www.who.int/whr/2006/annex/06_annex1_en.pdf.
- Reuters. U.S. healthcare expensive, inefficient: report. May 15, 2007. Available from: http://www.reuters.com/article/domesticNews/idUSN1430711120070515?feedType=RSS.
- Fisher ES. American College of Radiology 2007 Robert and Alma Moreton lecture: pay for performance: more than rearranging the deck chairs? May 21, 2007.
- . Money-driven medicine. New York (NY): Harper Collins; 2003;
- . CPT: an open system that describes all that you do. J Am Coll Radiol. 2008;5:555–560
- Financial pressures spur entrepreneurism. Health Aff (Millwood). 2004;23:70–81
- The frequency and costs of diagnostic imaging in office practice: a comparison of self‑-referring and radiologist‑-referring physicians. N Engl J Med. 1990;323:1604–1608
- Recent trends in utilization rates for abdominal imaging: the relative roles of radiologists and non-radiologist physicians. J Am Coll Radiol. 2008;5:744–747
- . Medicare update for radiologists: predictions for 2008 and beyond. AJR Am J Roentgenol. 2007;189:3–4
- US Department of Health and Human Services. 2008 Physician Quality Reporting Initiative (PQRI): Eligible Professional Quality Measures. Baltimore (MD): Centers for Medicare & Medicaid Services. Available from: http://www.cms.hhs.gov/PQRI/Downloads/2008PQRIMeasuresList.pdf?agree=yes&next=Accept.
- . Pay for performance: the MEDPAC perspective. Health Aff (Millwood). 2006;25:413–419
- . Performance measurement: accelerating improvement. Board on health care services. Washington (DC): The National Academies Press; 2006;
- Medicare Payment Advisory Committee. Report to Congress: Medicare payment policy. Washington (DC): 2005.
PII: S0846-5371(09)00004-7
doi:10.1016/j.carj.2009.02.002
© 2009 Canadian Association of Radiologists. Published by Elsevier Inc. All rights reserved.
Volume 60, Issue 1 , Pages 6-10, February 2009
