Payment for Physicians and Outpatient Care
The NHI would include three payment options for physicians and other practitioners: fee-for-service; salaried positions in institutions receiving global budgets; and salaried positions within group practices or HMOs receiving capitation payments. Investor-owned HMOs and group practices would be converted to not-for-profit status. Only institutions that actually deliver care could receive NHI payments, excluding most current HMOs and some practice management firms that contract for services but don’t own or operate any clinical facilities.
1- Fee-for-service: The NHI and representatives of the fee-for-service practitioners (perhaps state medical societies) would negotiate a simplified, binding fee schedule. Physicians would submit bills to the NHI on a simple form, or via computer, and would receive extra payment for any bill not paid within 30 days. Physician payment would cover only the work of physicians and their support staff, and would exclude reimbursement for costly office-based capital expenditures for such items as MRI scanners. Physicians accepting payment from the NHI could bill patients directly only for uncovered services (e.g. for cosmetic surgery).
2- Salaries within institutions receiving global budgets: Institutions such as hospitals, health centers, group practices, migrant clinics, and home care agencies could elect to be paid a global budget for the delivery of care as well as for education and prevention programs. The negotiation process and regulations regarding capital payment and profits would be similar to those for inpatient hospital services. Physicians employed in such institutions would be salaried.
3- Salaries within capitated groups: HMOs, group practices, and other institutions could elect to be paid capitation premiums to cover all outpatient, physician, and medical home care. Regulation of payment for capital and profits would be similar to that for hospitals. The capitation premium would not cover inpatient services (except physician care) which would be included in hospital global budgets. Selective enrollment policies would be prohibited and patients would be permitted to disenroll with appropriate notice. HMOs would pay physicians a salary, and financial incentives based on the utilization or expense of care would be prohibited.
The proposed pluralistic approach to delivery would avoid unnecessary disruption of current practice arrangements. All three proposed options would uncouple capital purchases and institutional profits from physician payment and other operating costs, a feature essential for minimizing entrepreneurial incentives, containing costs and facilitating health planning.
The fee-for-service option would greatly reduce physicians’ office overhead by simplifying billing. Canada, and several European nations have developed successful mechanisms for reconciling the inflationary potential of fee-for-service practice with cost containment. These include: limiting the supply of physicians; monitoring for extreme practice patterns; setting overall limits on regional spending for physicians’ services (thus relying on the profession to “police” itself); and even capping individual physicians’ reimbursement. These regulatory options are not difficult (and have not required extensive bureaucracy) when all payment comes from a single source. Similar measures might be needed in the U.S. There might also be a concomitant cap on spending for the regulatory apparatus - eg. expenditures for program administration and reimbursement bureaucracy might be restricted to three percent of total costs.
Global budgets for institutional providers would eliminate billing, while providing a predictable and stable financial support. Such funding could also stimulate the development of community prevention (eg. school-based smoking prevention programs) whose costs are difficult to attribute (and bill) to individual patients.
Continuity of care would no longer be disrupted as patients’ insurance coverage changes due to retirement or job change. Incentives for capitated providers to skimp on care would be minimized since unused operating funds could not be diverted to profits or capital investments.
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Long Term Care
The NHI would cover disabled Americans of all ages for all necessary home and nursing home care. Anyone unable to perform activities of daily living (ADLs or IADLs*) would be eligible for services. A local public agency in each community would determine eligibility and coordinate care. Each agency would receive a single budgetary allotment to cover the full array of long term care services in its district. The agency would contract with long term care providers for the full range of needed services, eliminating the perverse incentives in the current system that often pays for expensive institutional care but not the home-based services that most patients would prefer.
NHI would pay long term care facilities and home care agencies a global (lump sum) budget to cover all operating expenses. For-profit nursing homes and home care agencies would be transformed to not-for-profit status. Doctors, nurses, therapists, and other individual long term care providers would be paid on either a fee-for-service or salaried basis.
Since most disabled and elderly people would prefer to remain in their homes, the program would encourage home and community based services. The 7 million unpaid care-givers such as family and friends who currently provide 70% of all long term care would be assisted through training, respite services, and in some cases financial support. Nurses and social workers, as well as an expanded cadre of trained geriatric physicians, would assume leadership of the system.
[*Activities of daily living (ADLs) include: bathing, dressing, going to the toilet, getting outside, walking, transferring from bed to chair, or eating. Instrumental activities of daily living (IADLs) include: cooking, cleaning, shopping, taking medications, doing laundry, making phone calls, and managing money.]
Only a handful of Americans have private coverage for long term care. For the rest, only virtual bankruptcy brings entitlement to public coverage under Medicaid. Universal coverage must be combined with local flexibility to match services to needs, overall budgetary limits, and simplified regulations that minimize bureaucracy and assure that payments benefit patients, not executives or investors.
Our proposal borrows features from successful programs in some Canadian provinces and in Germany. The German program, in particular, demonstrates the fiscal and human advantages of encouraging rather than displacing family caregivers - offering them recompense, training and other supports.
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