Perverse Health Payment Dividing US

Numerous examples exist of perverse payment designs that pay less or that are more likely to penalize hospitals and practices in counties where lower to lowest concentrations of clinicians are found.
  1. The same service by an outpatient hospital compared to physicians
  2. Rural and smaller hospitals
  3. Pay for performance/Readmission penalties
  4. Primary care and basic services paid less than procedural

These are not small matters. The level of 1% less paid to small and rural hospitals from Medicaid may cut profits in half and 2% is enough to result in losses or an acceleration of losses. Rural hospitals are closing at 1 per month and one of the major reasons is less reimbursement for the same service. Outpatient departments of hospitals are paid over 15% more for the same service delivered as compared to physician clinics. This is also enough to change positive to negative balance sheets – or drive independent practices away.

Fewer MD, DO, NP, and PA graduates remain in primary care – another indicator of perverse payment designs that shape lesser support, lesser salary, and lesser health spending in primary care.

Payment designs work to marginalize health care where most Americans need care. Marginalized payment also reduces local health spending, local jobs, social organization, available leadership, and local economic impact - factors that continue to divide our nation into a few advantaged and more disadvantaged.

Top Concentrations By Design

In 1000 Super Center zip codes with 1% of the land area, the sites of care receive all lines of revenue with the top reimbursement in each line and 45% of physicians are stacked into sites with 12% of the population. Over 50% of health spending for 1% of the land area leaves little for the rest – as with distributions of income, education, wealth, property values, and other concentrations.

In 40,000 zip codes with 68% of Americans, workforce is much more likely to be provided by primary care clinicians, those who deliver basic services as well as smaller and rural hospitals and practices. Exclusive revenue lines such as graduate medical education and National Institutes of Health research dollars go to locations that already have top clinician concentrations.

Designs for health spending and GME help to shape physician workforce toward just 6 states with top concentrations, away from primary care, and away from care where needed. GME is concentrated in sites with top clinician concentrations. Expansions of GME are all about subsubspecialty fellowships increasing at 11% per year and subspecialty fellowships increasing at 4% a year (Jolly, Academic Medicine). Core specialties are gobbled up, the specialties most needed outside of physician concentrations. When residents fail to remain in general surgery or general ob-gyn or other core specialties, they fail for distribution. 

Teaching hospitals fund the GME that works for them, 
but the highly specialized physician result is not capable of distribution 
where care is needed by most Americans.

Even shortage areas are poorly targeted with shortage locations receiving such funding despite higher or even highest local concentrations of clinicians. Urban and more highly organized sites win out over less urban and less organized sites.

Obvious Solutions

The solutions are easy to see, once the design impacts are understood.

The solutions are difficult to actualize because those doing well are highly organized and shape most of the health information and health care designs.

It is easy to see that health spending must be redirected away from top concentration locations and toward locations with most Americans. It is easy to see that this must involve payment increases for primary care and basic services and small or rural hospitals. An entire body of literature is being developed with regard to basic, small, and rural being lesser quality with the implication of less deserving to receive funding – essentially marginalization or termination by design.

Most Americans in need of care are increasing at faster population growth rates and also are increasing more rapidly in demand for primary care and basic services. Restoration of primary care workforce and workforce to deliver basic services is essential for such locations, but requires payment and training design changes.

Higher complexity, more barriers to care, and social determinant limitations also are found where care is needed. This is why Pay for Performance and Readmission Penalty discrimination is more likely for those providing care where needed (Hong, others).

No Help from Innovation or Reorganization

Payment designs and innovations are most often about cost cutting. Cost cutting payment designs were re-established in the 1980s – in reaction to the rapid increases in Medicare and Medicaid spending from 1965 to 1980. Cost cutting still dominants policy. Innovation plans, programs, and government sites almost always include “and cost reduction.” A common mechanism to allow innovation to be funded is to take away 2% of spending from physicians or hospitals to be able to fund the innovation – and then penalties of a few percent are saddled on sites with “lesser outcomes” often because of high complexity, social determinants, and situations inherent to populations in need of clinicians.

Cut Cut Cut starts the design, then cuts are seen where care is needed, 
and then additional cuts are seen such as sequestration 
or cuts from losses of disproportionate share or other funding. 

Innovation focused upon care delivery, only care delivery, would seem to be useful. One problem with this is that little innovation is needed where basic specialties, basic services, and basic payments are most appropriate. 

Innovation often distracts from the basic workforce, basic services, and basic payment foci that are required for recovery of health access for most Americans. Disruptive innovation has been disruptive for needed health access improvement.

America must return health policy to a focus upon care delivery
and delivery of care where needed,

rather than continued policies intent upon cost cutting or innovation or more paid for fewer Americans in few locations. Sadly the desperation to "do something" has facilitated innovative primary care clinicians and payments and practice designs - but not more primary care delivery per primary care graduate, more payment for more services, and more clinicians and team members to deliver more primary care.

Specific to Health Access - Right State, Right Specialty Position, Right Location
Measurable in Primary Care Delivery - Standard Primary Care Years per graduate

Recent Works

How To Resolve Health Access for 40 States Behind By Design

Health Care Delivery Is No Laughing Matter

Overcoming Barriers to Health Access Including ACA

Will Teaching CHC Sites Deliver on the Promise of Health Access

How Bad Medicine is Sweeping The Country.

Preventing Rural Workforce By Design

Best of Basic Health Access

Blogs indicate that primary care can be recovered and should be recovered.

Dr. Bowman is the North American Co-Editor of Rural and Remote Health. He was the founding chair of the Rural Medical Educators Group of the National Rural Health Association and the long term chair of the STFM Group on Rural Health.


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