The New HMO Fiasco

There is no more perverse, more derailed concept in today’s health care environment than fee-for-service. Even Wikipedia knows true evil when it encounters it. Let’s read their definition:

Fee-for-service (FFS) is a payment model where services are unbundled and paid for separately. In health care, it gives an incentive for physicians to provide more treatments because payment is dependent on the quantity of care, rather than quality of care. Similarly, when patients are shielded from paying (cost-sharing) by health insurance coverage, they are incentivized to welcome any medical service that might do some good. FFS is the dominant physician payment method in the United States,[1] it raises costs, discourages the efficiencies of integrated care, and a variety of reform efforts have been attempted, recommended, or initiated to reduce its influence (such as moving towards bundled payments and capitation). In capitation, physicians are discouraged from performing procedures, including necessary ones, because they are not paid anything extra for performing them.

And yet, year after year, American health care has managed to stay afloat with this supposedly deranged scheme. In fact, provider payments have continued to spiral lower even as the overall cost of caring for our nation has increased dramatically. By most estimates, physician services only account for 10%-15% of annual spending.

Read the rest of my post at The Medical Bag.