Consumer-driven healthcare is a buzzword often used to describe the goal of introducing consumer competition into U.S. healthcare. For decades, low deductible, comprehensive healthcare insurance meant that price was not a top priority for patients. Recently though, the advent of high deductible health plans (HDHP), augmented by health savings accounts, has reintroduced or opened the door for patient consumerism and cost to enter into the equation. But the healthcare consumer market is also a complex behavioral paradox.
Most consumers shy away from lower cost healthcare alternatives because they equate cost with quality of care. How often have you heard the phrase that someone would pay any amount of money to be healthy? In fact, it is generally perceived that the higher the price, the better the quality of care — as long as your insurer pays for it.
For many healthcare consumers, the fear of sickness or even dying far exceeds the reward of saving a few hundred or couple thousand dollars when choosing a healthcare test or treatment. Even higher out of network pricing and deductibles have not significantly stemmed the consistently rising tide of healthcare costs because the consumer will often seek out the “best” provider available, regardless of cost.
However, the prevailing “cure at any cost” healthcare motivation rarely holds true for preventative or wellness maintenance programs that require the consumer to pay directly out of pocket. Consumer-driven healthcare models, especially after HDHPs provided the opening, have caused the government, healthcare providers and insurance companies to explore other ways to handle costs.
One method taking hold is to include and incentivize primary care physicians (PCP) in consumers’ healthcare choices. Most consumers have already entrusted their PCP with their life and well-being, and the relationship is generally regarded as the tightest bond in the healthcare continuum. If a physician identifies for their patient a lower cost but equally effective option, only then does pricing becomes a factor. The need for this guidance can be seen in the rise of the concierge medical industry, although restrictions on enhanced payment for quicker or dedicated services in payer contracts have challenged that industry.
The cost containment option now in play is to financially incentivize physicians to lower their patients’ healthcare costs. This option seeks to augment and eventually replace the current fee for service financial incentive model. Relying on the physician-patient relationship, the belief is that physicians are in the best position to assist, direct or guide their patients to:
1) identify and choose healthier options;
2) selectively and efficiently use preventive testing; and
3) when treatment becomes necessary, seek out lower cost, high quality healthcare alternatives.
In exchange, physicians are compensated for lowering the overall cost of their patient population.
To further push consumer-driven healthcare, the government has begun to identify and scrutinize market barriers that are perceived to inhibit healthcare delivery competition. The U.S. Departments of Health and Human Services, Treasury and Labor recently released a report, Reforming America’s Healthcare System Through Choice and Competition, that identified targeted actions to facilitate the development and operation of a healthcare system that promotes choice and competition such as mandating transparency and availability of pricing in the marketplace. This report, some 120 pages in length, made a number of recommendations to eliminate anticompetitive measures. Some of them include:
1. Eliminating or restricting the use of certificates of need, now widely viewed as an anticompetitive barrier to entry tool that artificially restricts competitors’ ability to enter the marketplace (p. 50-57 of the report).
2. Establishing or mandating site-neutral payment policies for testing and treatment modalities, including facility fees rather than paying certain healthcare providers a higher rate to cover costs in other less profitable areas. If the payment amount is equalized, those who offer the service and can make the reimbursement economically feasible will survive and flourish (p. 88 of the report).
3. Repealing the recent Affordable Care Act's restrictions on physician-owned hospitals (p. 73 of the report).
4. Allowing the free market and patients to define value in healthcare rather than a one size fits all definition from Washington (p. 111 of the report).
5. Eliminating providers’ ability to limit or block free access to patient health records (p. 104 of the report). Ideally, all electronic health records would be interoperable, so patients with physician guidance and price transparency can truly shop for healthcare services without concerns that selecting another provider will mean incomplete or independent sets of medical records.
Common sense suggests that preventive medicine is the key to lowering overall healthcare costs. The Affordable Care Act mandated a number of preventive services that require no copayment or meeting of a deductible (p. 16 of the report).
Adding the physician cost-conscious direction as a part of incentive-based population management to an expanded list of no cost preventive services, especially for behavioral health and diabetes prevention, may finally be enough to add significant consumerism and competition to the healthcare marketplace. It will be interesting to see if consumer-driven healthcare has finally arrived.
Mark E. Wilson, JD, is a member partner at Dickinson Wright where he chairs the Health Care Practice Group. He has facilitated the creation and ongoing operations of Medical "Supergroups" in which multiple practices come together to form a single large-scale group practice. He also facilitated the formation and operation of a number of multispecialty group practices, including medical practices operating in multiple states. He works closely with the practices on their internal operations including all aspects of compliance, management and governance.