Thank you very much for this interesting thread. Coming from outside the US, I
still try to understand how that system works and would like to address a few
questions to the experts. I especially wonder what the *discounted/bargained*
fee for service payment is about, as opposed to the ‘regular’ ffs. What is
reflected by these discounts: is it the performance of providers as I
(somewhat frighteningly) read in a textbook recently? So would you (your
insurer) get a little discount from your doctor if he/she makes a sloppy job? 
Or is it rather about ‘countervailing power’ as I extract from Ted’s remarks?
So insurers with sufficient bargaining leverage get price reductions? This
seems to be true considering the debate about government’s (not existing) role
in bargaining drug prices in Medicare Part D and the fact that the uninsured
receive the highest hospital bills. If market clout is rewarded by the system:
how many insurance companies does the private market really need? The five
largest insurers already cover about 60 percent of the private insurance
market. To put it more provocatively: why not 100 percent (and saving some
administrative cost)? What do economists say about the necessity to have
competition and diversity in the insurance market? (This by no means
offensive… I am an economist too.).

Thank you very much,

Mirella.

(Germany, Bremen University, currently Harkness Fellow of the Commonwealth Fund.)


---------- Forwarded Message -----------
From: Alan Maynard <[log in to unmask]>
To: [log in to unmask]
Sent: Wed, 18 Feb 2009 14:30:09 +0000
Subject: Re: FFS

Tim Jamie Robinson remarked insightfully in a Milbank paper some years ago 
that: " There are three ways of paying physicians: capitation, fee for 
service and salary. The worst systems of payment are capitation, fee for 
service and salary" Thus blended systems seem apppropriate but they must be 
carefully targeted at interventions that bring health to patients cost 
efectively. Paying for performance is what it is about, and this requires 
definition of process and outcome performance targets. paying folk to 
provide procedures of little value is traditional and a nice source of 
waste Alan On Feb 18 2009, Jost, Timothy wrote:

> It seems to me that an additional problem with ffs is the incentives that 
> it creates for fraud and for complex structuring of relationships that 
> serve no function other than to reallocate resources from providers to 
> professionals in the hope of generating business. One of the most obvious 
> examples of this is the billions of dollars that drug and device 
> companies spend on giving trinkets, CME, travel, and compensation to 
> doctors who are in a position to prescribe or use their products. If you 
> read through the Stark self-referral regulations and guidances or the 
> various Medicare prospective payment regulations, however, you become 
> aware of all sorts of arcane arrangements that are used to move money 
> from hospitals, clinical and imaging labs, and outpatient facilities to 
> physicians in the hope of generating business. I asked my doctor a couple 
> of days ago what a particular minor surgery that he was recommending 
> would cost. His initial response was, of course, it would cost me very 
> little, because insurance will cover it. When I pressed him, however, he 
> said he didn't know, but that he assumed that he would charge $200 to 
> $400, the hospital bill would be $10,000 to $12,000 (for day surgery). 
> With this kind of disparity in payment, it would be surprising if 
> hospitals weren't trying to find ways to pay doctors for business.
>
> I realize that no payment system is perfect, but fee for service seems to 
> be one of the most inefficient. tim
>
> -----Original Message----- From: Anglo-American Health Policy Network 
> [mailto:[log in to unmask]] On Behalf Of Adam Oliver Sent: Wednesday, 
> February 18, 2009 7:53 AM To: [log in to unmask] Subject: FFS
>
>
> So, it seems as though FFS still dominates in the US, and some (including 
> me) might see FFS as particularly inflationary. But other systems also 
> heavily use FFS and, though health care expenditure growth may be 
> problematic, it has not been as problematic as it has been in the US.
>
> The key might therefore be the keep the FFS system within a reasonable 
> overall budget constraint. It seems to me that a special feature of the 
> US is that the payers (employers, government) are more willing to pay the 
> increasing fees charged by providers without too much questioning, so to 
> control total US health care expenditure growth, there needs to be reform 
> not necessarily of the way physicians are paid, but of the control that 
> the payers exert over total budget. I guess this was tried with managed 
> care, and then the backlash (which was really a backlash against HMOs 
> rather than managed care wasn't it? - the number of PPOs exploded between 
> the-mid 1990s and now - but let's not wind Ted up any further about 
> definitions of managed care).
>
> Another reason why this type of reform (i.e. strenghening the role of the 
> payer) may be particularly difficult in the US is that there are so many 
> different sectors within the one country (this point came to me from 
> speaking to Larry Brown and Howard Berliner, so if my ideas here are 
> useless, we can blame them...). So if you take the Oregon experiment, a 
> main reason why it seemed to fail is because Medicaid patients and their 
> advocates thought that it was unfair that their care was being further 
> constrained whilst that of those covered in the private sector wasn't. In 
> many other countries, these cross sector comparisons within a country may 
> not be quite so much of a problem (this might feed into Michael and 
> Anna's debate about whether different baskets of services across states 
> would be a problem in a Medicaid for all programme).
>
> Anyway, I should do some work, and should refrain from writing what 
> everyone already knows. But greater payer control seems to be the key 
> (?), but that might call for a more unified system than previous reforms 
> and plans to build upon the existing system (Medicare/Medicaid, and last 
> year's Obama proposals). But that may be politically impossible. So 
> perhaps we should study education instead.
>
>Best,
>Adam
>
>
>
> Please access the attached hyperlink for an important electronic 
> communications disclaimer: 
> http://www.lse.ac.uk/collections/secretariat/legal/disclaimer.htm
>
>!SIG:499c05fc80291961211920!
>
>
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