Sarah Kliff of the Washington Post reports:
There are two big parts of the health reform law going into effect today. One penalizes hospitals if patients are re-admitted to the hospital within one month of a visit for a condition that should have been dealt with on the first trip. The other seeks to redistribute higher Medicare payments to the hospitals that are delivering better care.
Both are part of an effort to fundamentally transform the health-care system in the United States by moving it from a system that pays for value rather than volume. If efforts like these succeed, hospitals will become more concerned with delivering higher quality health care. If they don’t, health providers will continue to earn a living the way they have for decades: By earning a fee for every service they deliver.
When most of us talk about the health care reform law, we tend to focus on the insurance changes -- the exchanges, the individual mandate, the essential health benefits, and so on. Arguably, however, the more important changes are reforms like the ones described here.
The health care economists that I read uniformly cite America's traditional fee-for-service model as one reason for runaway health care costs. The equation is simple: The health care provider performs a test or procedure, and someone pays him for it. It doesn't take a great deal of thought to realize that performing more procedures and tests produces more payments to the provider.
I am not so cynical as to think that doctors perform unnecessary tests and procedures just to boost their incomes. They order these things because they believe there are sound medical reasons for doing so. However, the medical-only perspective may not necessarily contemplate a cost-benefit analysis of a test or an operation.
The goal behind these reforms is to get hospitals and doctors to ask, at least more often: How much good will this (test/procedure/treatment) do? How much will it cost? Given the cost and the odds of failure, does it make sense to go forward with it? What will the outcome be for the patient of going forward vs. not going forward?
Whether these changes will result in slowing down the growth of costs while improving patient outcomes is anyone's guess. If it works, look for a lot of similar changes to come over the next 10 years. It should be interesting to see.