Three Steps to Achieve Health Care Reform Goals

Author:  Kathy Spiliotopoulos                                                            October 12, 2009

The goals to empower consumers to choose wisely, and pressure insurers, providers and health care suppliers to deliver high quality economical services can be achieved.

 The first step is to establish a basic set of health care benefits for everyone, perhaps using the Federal Employee Program as a model. Benefits can be set up in categories by age ranges, to reflect the care needed at each stage of life.  Implementation requires the cooperation of governors to give up control over benefit mandates, and instead, to empower their staff to conduct quality control, fraud and abuse prevention, and health delivery improvement activities. 

Currently, each state is responsible for determining what benefits must be included in health insurance policies issued to their residents.  The benefit mandates vary widely. Of course there are ways around them for big business.  Large employers self insure by spreading their risk over a large employee base, with a customized set of benefits that exclude expensive, undesirable mandates.

 Establishing a uniform benefit package creates a level playing field with the cost of the universal mandate spread across everyone:  individuals, small businesses, large corporations, and the government.  Establishing a uniform benefit package supports the worthy goals of health care reform: 

·     ▪    Protect consumer choice by reducing complexity so that consumers know what they are buying and can compare “apples to apples”

·     ▪      Improve quality and coverage by shifting states’ focus from mandating benefit mandates to assuring quality and accessibility of care.

·      ▪     Lower costs and thus insurance premiums by reducing the complexity from 50 sets of benefit mandates to a single set. The proposed “health insurance exchange” would cost less to implement, supporting comparison of health insurance options nationwide, instead of state by state.

 The second step is to establish uniform provider reimbursement methodologies that are auditable to reduce fraud and waste, and that provide incentives for outstanding performance centering around quality of care. There is no other industry to my knowledge that has a more complicated way of determining how to bill for their services than do health care providers.  Each third party payer, including insurance companies, the federal government and state governments set payment methods and rates they are willing to pay providers.  Arrangements can be based on a fee schedule, a per day allowance,  a set fee by diagnosis, or capitation whereby a fee is paid for each covered patient for a basic set of services or for the entire care of the patient. Establishing uniform reimbursement methodologies will dramatically cut administrative costs, especially for providers.

 Quality performance expectations and guidelines for providers should be established as benchmarks.  Credentialing of health care providers should be included. Providers who do not meet quality benchmarks can be retrained and/or culled from the system, which sets the stage for torte reform.  Tracking performance and providing nationwide comparisons against standards in an understandable format enhances consumer choice.

 Other components of the health care system contribute significant costs, and add complexity.  These include drug producers, pharmacies, laboratories, durable medical equipment and medical supplies producers and distributors.  They also need to be included in the universal benefits package, have accountable reimbursement methodologies, and quality standards.

 Primary responsibility for quality control should be at the state level.  The federal government could provide grants for demonstration projects that increase quality, reduce fraud and abuse and support sharing of best practices. This will support the goals of reducing costs and improving quality.

 The third step is to reduce the number of federal health care programs. For example, why not merge Medicare and Champus into the Federal Employee Program?  Health care benefits, claims and service could be differentiated if necessary for each group of covered members so that federal employees, the elderly and those servicing in Uniformed Services received appropriate coverage and service.  Three large bureaucracies could be reduced to one, saving an enormous amount of money, and shrinking the government a little.

 Achieving health care reform goals requires a unified, realistic effort among all of the participants in the health care system.  Politicians at the state and federal level must work together to simplify our overly complicated system. If this miracle occurs, we will have great hope that “care” will actually become the focus of our health care system.

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About the Author:

Kathy Spiliotopoulos has spent more than three decades consulting to the health care industry, both to institutional providers and health insurance companies.  Her efforts have resulted in administrative cost reductions and improved service, saving her clients collectively hundreds of millions of dollars. Ms. Spiliotopoulos consults independently through her company Nestor Advisory Services, and earlier in her career was a consultant with Booz Allen and with Touche Ross, now Deloitte-Touche.