Dyscoordinated: Healthcare’s Line Item Problem

Many people in healthcare got their first look at Scott Shreeve through his work with
Medsphere, the open source software company based on VistA, the information system developed by a team of programmers and doctors at the VA in the early 1970s. After a series of early successes that drew national attention, the project ran into problems when the founders clashed with management over how best to apply the open source model to the company’s business. With that experience now safely in the rear view window behind him, Scott is back in the limelight with Crossover Healthcare, a new venture with a Health 2.0 focus.

In addition to doing a little Health 2.0 Experiment in my last post, I have to followup with the actual delivery and payment of the service as well. I am really focused now on these two areas, particularly as they relate to the creation of Health Plan 2.0. The simple outpatient procedure that
my son had done, performed at a well respected surgery center, was
instructive of how far we have to go and how much opportunity exists to
redefine how health care is actually consumed.

First, I showed up at 6AM to sign in as a patient. Fortunately, my wife had called ahead of time (should have been able to do this online) to help provide some basic insurance information (should be able to do with a swipe of my personal identification).
After signing in, we took a seat and were called up a minute later to
review the billing information. The office manager happened to be
checking in patients that day and she dove immediately into her shpeal
about signing your obligation to pay, informing me that I was going to
get multiple separate statements from multiple separate providers, and
essentially wishing me the very best in trying to figure it all out.

Figure 1. Actual form I signed regarding payment for services.

At this
point, I stopped her and informed her that I wanted to actually read
the materials. I asked her why, for such a simple and well defined
procedure (less than 10 minutes in OR), the surgery center didn’t
provide me with a single bill? She tried some blow off answer about
physician tax ID’s being different. I called her out on it and said
that tax-ID’s are bundled all the time for other types of health care
services and that I know of several organizations that provide a single
episode of care charge for care they deliver. She tried twice more with
weak answers, which I patiently and politely challenged.

Finally, she picked up that I wasn’t going to be satiated with the usual fare. I
next asked her if she knew of any health insurance companies that
provide this simple but highly valuable bill aggregation service or
that paid by episode of care. She stated she was unaware of any plans
doing this (remember, this is a lady with 30+ years billing experience)
but that as an administrator it would make her life dramatically
easier. I went onto explain to her that a new health plan is going to
be introduced (the Health Plan 2.0 concept I am working on) that would be responsible for creating a new type of health care market. She asked where she could sign up.

believe that the next iteration of health plans will have to work much
harder to earn my business, not only by the simple value added services
they provide, but that they are driving important health care
marketplace reforms such as the ability to purchase health care at the
medical condition level and in discrete episodes, or units, of care.
Line item billing (defined in this context as discoordinated care delivery and billing by providers) will only be a bad memory in the next iteration.

cultural and financial impact of line item billing in healthcare, where
individual providers create individual bills disconnected from each
other, continues to be a primary driver of the ongoing spiral (up or down depending on your perspective) of our health care “system“.
The way healthcare is financed does NOT promote a system, but rather a
discoordinated group of individual actors doing their individual thing
with total disregard for the patient and zero accountability for
outcomes. How did this sorry state of affairs happen? Follow the money:
9,000+ billing codes for doing “things” – ZERO codes for achieving an
outcome! Coordinated, efficient, and evidence based care is not
financially healthy way to practice medicine.

But it can, and will, and has to get better.

start by simply demanding that we create a health care marketplace
wherein we buy episodes of care at the medical condition level. A hip
surgery. Complete evaluation for headache. A comprehensive genetic
screening with consultation. 12 months of diabetes care, asthma, or CHF
care. Discrete medical conditions with a definable set of care which
would encompass all the different providers, care coordination, CPT /
ICD-9 compilation, and aggregated single bill for the overall “care
package”. This concept of paying for health care services by discrete
episodes of care at the medical condition level, or purchasing so called “care packages“, could yield some pretty interesting results:

1. Standardized Care Packages.
First, medical science and evidence based guidelines could serve as the
standard in creating the specifications of what is included in a
standardized care package for a specific condition. Purchasing an
asthma care package would entail a know set of clinical activities that
would provide optimal care for that medical condition. The care package
specification process is important baseline as it allows the creation
of side by side comparisons between different groups of providers who
self aggregate to provide the service.

2. Provider Self-Organization.
This second point is interesting, no longer do payers have to be the
ones to aggregate to provide the set of services. Providers would self
organize, much like they structurally do in a vertically integrated care delivery system (Kaiser, Mayo, VA, etc), but now this could/would happen in a virtually integrated care system (more on this in another post).
Different providers could choose their own care team to provide the
specific set of care package components. All this negotiation and magic
would happen on the back end and be as transparent to the consumer as
all the negotiation, manufacturing, and magic that happens in producing
any other finished consumer product (do you care how Vizio assembles
all its parts from all its providers or do you just care that you got a
totally flossy 50” big screen for a great price?

3. Market Comparison.
The standardized care packages, and the providers who deliver them,
would also be able to be compared in a virtual marketplace. This
marketplace would not only feature price as a comparison point, but
multiple other features that are relevant to consumers. Like patient
outcomes, five year survival rates, quality of life improvements,
patient satisfaction, and other relevant consumer metrics. This would
be a much different experience than what I had recently when trying to piece together this
information on my own. The internet infrastructure to do this exists,
but the capability for this level of data fluidity does not.

The key point with all this is that the dysfunctionated (discoordinated
+ dysfunctional) care delivery processes can be modified, often
dramatically, but appropriately aligning financial incentives.
Healthcare providers currently bill line item by line item because that
is how they get paid. Do more, get paid more. Who cares if the patient
gets 30 bills as long as mine gets paid. There is no incentive to add
value to me as a patient by simply aggregating my bill or even
aggregating my care by episode. However, if providers were getting paid
to deliver outcomes that required coordinated care among a team of
providers, I believe strongly they would respond with more efficient,
more effective, and higher quality care. Furthermore, as consumers get
experience purchasing care in this way in a true health care
marketplace, I can’t imaging they will ever consider purchasing it in
any other way.

The concept of care packages as a reform instrument is being kicked off in Minneapolis, MN by a Lemhi backed startup called Carol.
It is a vanguard concept that requires significant heavy lifting by
first creating care package specifications, convincing providers to
self organize and deliver care in this way, and careful conversations
with payers to modify their current process to finance this new
delivery mechanism. Of interest, the response by patients, providers,
and payors has been overwhelming. Official launch date is January 22 –
stay tuned.

I, for one, will certainly be cheering from the sidelines: “Go team, hold that line (item)!”

Scott Shreeve

One Response to Dyscoordinated: Healthcare’s Line Item Problem

  1. MG says:

    This idea about standardized care packages for medical conditions is a great idea in theory but unlikely anytime in the near future. It is like a lot of idea in Porter's last book on health care - great idea in theory but problematic in execution for several reasons and likely a long ways down the road.
    If you want a nice summary of what is going on with potential payment reform in the U.S., read this article. http://www.managedcaremag.com/archives/0707/0707….
    Basically states that the federal gov't is dabbling with this concept while the private sector is uniting behind the Prometheus Payment project.

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