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Why Your Insurance Company Will Pay You to Take Your Medicine

Feb 6 2014, 8:15am CST | by

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Why Your Insurance Company Will Pay You to Take Your Medicine

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Why Your Insurance Company Will Pay You to Take Your Medicine

Imagine your insurance company paying you for healthier behavior, such as taking your vitamins or medications as directed, going for daily walks, or not eating that second dessert.  That day may not be very far away.

The healthcare industry is moving from a “fee for service” model (clinicians getting paid for each service they provide) to a “fee for outcome” model (clinicians getting paid for successful healthcare outcomes, regardless of the number of services provided).  With the emphasis shifting to preventive care, your insurance company will want to encourage you to do things that keep you healthy and out of hospitals, because it will save them money in the long run.

This involves a shift from “mega” payments to “micro” payments, in which good behaviors of both patients and clinicians are financially rewarded in an effort to lower overall healthcare costs.  Dr. Marco Huesch, assistant professor at the University of Southern California Price School of Public Policy and the Duke University Fuqua School of Business, talked me through the new approach.  The main insights from my interview with Dr. Huesch follow:

Too much of healthcare delivery is about going for the big fees.  You see this in medical education: what are the “best” specialties?  You see it in healthcare delivery: what are the most “rewarding” procedures to invest in and market?  Knee orthopedics, spinal surgery, interventional cardiology, cardiothoracic surgery, transplants, and complex oncology cases all draw large payments.

Big payments encourage overuse and inappropriate use of interventions, and not enough cheaper alternatives.  A perfect storm for the overuse of health services exists when (a) patients believe more care is better than less care, (b) patients believe that any intervention is better than waiting and seeing what happens, and (c) when physicians and hospitals get large fees from such interventions.  This helps to explain why patients in this country incur more costs on average than anywhere else in the world, and yet have outcomes that are among the worst.

Altering this trend will involve major changes in perspective.  We need to change how we view health and wellness, as well as how we reward stakeholders in the healthcare system.  One especially important fact is that clinical care contributes only about 20% to a country’s overall health, while proactive, healthy behaviors make up 30%, and social and economic factors kick in as much as 40% (genes and biology make up the remaining 10%).

Healthcare is not just about clinical interventions.  There will always be an important place for trauma surgeons in emergency departments, radiologists in cancer centers, etc.   However, that’s for “sick care.”  How do we care for the healthy or the “not too sick” so they don’t get sicker?  What if we realized that the most effective medical “practice” is a slow, humdrum, difficult slog through counseling patients, ensuring prescription medications are taken as directed, and working with patients on strategies to stop smoking, lose weight, and exercise regularly?

Micro payments for consumers:  Pay individuals each day they take their medications.  Unfortunately, many patients don’t take medications as directed.  For every 100 written prescriptions, 20-30 never even get filled.  About half of the remaining 70-80 are not continued as prescribed.

Consider the fact that for patients who’ve had at least one cardiovascular event, taking statins as prescribed significantly improves health outcomes and reduces annual costs by an average of $300-800 per patient.  That’s enough money to justify paying a patient $1+ per day as a “kickback” for following their doctor’s instructions through automated monitoring technologies.  Similar incentive-based approaches can be developed for other healthy behaviors, such as eating appropriately and exercising regularly.

Micro payments for clinicians:  Pay physicians to skip unneeded tests and referrals.  Consider the case of lower back pain without clinical evidence of cancer, infection, or compression fracture.  Tests and treatments are costly, and there’s little to no evidence of better outcomes resulting from them.

Consider the example of 100 patients with low-risk lower back pain, 20 are referred for unnecessary advanced imaging (e.g., an MRI costing $1,000) within the first 4-6 weeks.  Of these, some are then referred for, and one subsequently receives, unnecessary spinal surgery (e.g., a $30,000 laminectomy).  If the initial general physician can say “no,” large cost savings appear downstream, and some of those savings can be redirected back to the physician as an incentive.  In this case, the average imaging and surgical expenditure comes to approx. $500.  If every doctor and patient agreed to conservative, supportive management, an insurance company could “kick back” $50-100 to the physician for avoiding this kind of defensive medicine.  This also results in better outcomes for the patient.

“The trend from mega to micro payments makes sense at so many levels,” Huesch explains.  “In such a model, responsible behaviors for both patients and clinicians are encouraged and financially rewarded in an effort to lower overall healthcare costs.”

Robert J. Szczerba is the CEO of X Tech Ventures and author of the Forbes column “Rocket Science Meets Brain Surgery.”  Follow him via TwitterFacebook, or LinkedIn.

Source: Forbes


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