Patients' Views On Reforming The Physician Fee-For-Service Payment System


Reprinted from Health Affairs Blog (February 28th, 2014).

Virtually all serious proposals for health care cost containment include reforming the fee-for-service payment system. Last fall’s bipartisan proposal to fix Medicare’s sustainable growth rate included provisions to reward physicians for providing high-value rather than high-volume care. Ostensibly, realigning physicians’ financial incentives would lead to higher quality, better coordinated, and more appropriate care.

But would patients necessarily be aware that their physicians are being paid differently? And would they even care? A new research report from Public Agenda and the Kettering Foundation suggests that consumers could play a role in advancing payment reform. But in order to work through the trade-offs of changing the system, employers and payers must help members of the public understand that most reimbursement is currently fee-for-service.

Public Agenda asked a total of 44 insured and uninsured Americans, 40 to 64 years old, to deliberate together in focus groups over the pros and cons of several approaches to cost containment. Participants had some recent contact with the health care system as patients but none were seriously ill. They considered payment reform, price transparency, increased consumer cost-sharing, government price-setting, and expanded access to Medicare, among other approaches.

We held the deliberative focus groups in February and March 2013 in Secaucus, New Jersey; Montgomery, Alabama; and Cincinnati, Ohio, as well as a pilot in Stamford, Connecticut. After the groups, we followed up with participants for in-depth interviews. These focus groups do not provide information about how other types of consumers, particularly young people, view different approaches to addressing health care costs.

As we prepared for this research, we spoke with several health system executives, physicians, foundation leaders, and policy researchers who predicted that insured people would be uninterested in cost-containment because their insurance shields them from the true costs of their care. But contrary to their expectations – and consistent with recent findings from the Commonwealth Fund – we found that both insured and uninsured focus group participants were upset about high out-of-pocket costs and angry about administrative complexity. Moreover, participants routinely described physicians as greedy pushers of too many tests and procedures. A New Jersey woman joked that she would “have no blood left” if she submitted to every procedure her physician recommended.

But focus group participants did not know that the current reimbursement system is largely fee-for-service. When we explained this defining feature of the American health care system to them in basic terms, participants said that this helped them understand why they had so often been subject to care that they described as overly aggressive. They also were eager to grapple with how payment reform and other approaches to cost-containment would affect their own care.

Focus group participants saw pros and cons to paying physicians fixed amounts per patient or per episode of care. They thought it would help them better predict their own out-of-pocket expenses and help doctors focus more on patients than on paperwork. They also figured that it would prevent some of the excessive, inappropriate care that so many of them reported experiencing.

But participants also expressed some reservations about payment reform. Many were concerned that physicians would retaliate by skimping on care. As a man in New Jersey said, “I bet you the doctors won’t like it.” An Ohio woman asked, “Are you really giving me the full scope of everything you would if you were charging for every little thing?” Several participants assumed that if reimbursement were based on health outcomes, physicians would discharge people from hospitals prematurely or refuse to treat sicker patients.

Payment reform is not a magic bullet. But in the midst of economists‘ and policymakers‘ debates over projected health care spending growth, the success of payment reform could play a significant role in determining whether or not the current slowdown in growth proves durable. Given the difficulty of dispelling the myth of government death panels, it is reasonable to ask whether it is advisable to engage Americans on cost-containment measures such as payment reform. But in our experience, lack of meaningful citizen engagement on tough policy choices can lead to pushback. As Paul Ginsburg wrote recently, “failing to engage beneficiaries…exposes payment reforms to the risk of political backlash.”

In summary, qualitative focus group research does not provide generalizable data, but this research does provide a detailed picture of how this group of consumers thinks through different options for controlling costs, including payment reform. Our focus group participants were eager to discuss payment reform. They did so with an impressive degree of interest, thoughtfulness and, despite some differences of opinion, civility. Their suspicion that some physicians are motivated by profits indicates that some consumers may be eager to choose providers and insurance plans that embrace value over volume. Helping consumers understand that most physician reimbursement is fee-for-service and making use of their concerns about out-of-pocket spending may help to move payment reform forward.

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