Chaos and Organization in Health Care

8. What Can Payers, Employers, and Patients Do?

8 What Can Payers, Employers, and Patients Do? Although physicians and other health care providers may be best trained and best positioned to bring order to the chaos of modern medicine, most of them are not sufficiently organized to take on this task with optimal effectiveness. Even providers in tightly structured organizations such as those described in chapter 6 frequently fall short of their goals. When providers cannot make care safe, efficient, and reliable, how can the gaps in performance get filled? In this chapter, we examine the contributions that can be made by payers, employers, and patients themselves. These contributions are aimed in many cases at improving interactions between providers and patients—for example, offering incentives to physicians for helping their diabetic patients control blood sugar and cholesterol levels. The interventions may be aimed at building in safeguards to catch and correct errors, such as disease management programs that detect when diabetic patients have not seen an eye doctor, or to steering patients toward physicians with track records suggesting better performance. In other cases, the interventions do not involve health care providers at all, and try to go around the traditional health care system and improve patients’ health directly. The interventions that involve providers work most effectively when the providers are in well-organized groups. Yet these interventions have been created in part because of the need to improve the care delivered by the fragmented system that dominates U.S. medicine. The U.S. delivery system and the interventions themselves are in active evolution. This final chapter of the first two sections of this book will set the stage for the final section, in which we will examine the issues that will shape that evolution. 144 Chapter 8 Payers Nature abhors a vacuum—and in the absence of any alternative in U.S. health care, health plans have been the major organizing force since World War II, when employer-sponsored health insurance became a mainstream workplace benefit. Originally, health insurance plans had limited ambitions. They provided protection to members should catastrophic illnesses befall them. To do so, they amassed the funds to pay for physician visits and hospitalizations when patients were acutely ill—and little more. As costs rose and knowledge of how to prevent illness increased, health plans began to struggle with the more complex goals of improving the health of their members and trying to improve efficiency. Both of these tasks are formidable, but U.S. health plans have had both the means and motivation to bring some organization of care. The first of these means are data. Health plans do not know everything that is happening to a patient, but they know about everything that they pay for. The data that the health plans collect as these bills get paid are far from perfect, but they paint a more complete picture of the needs of a population of patients than is available to any other party (see the section on performance reporting below). The second of these means are the financial resources. Health plans are paid a substantial administrative fee to ensure that their members have access to good health care. These fees tend to range from 8 to 25 percent of the entire health care dollar. With these resources, the health plans decide which doctors and hospitals should be available to the patient, negotiate contracts with those providers, and monitor the quality and efficiency of care. The health plans also use these funds for programs to search for errors (e.g., a diabetic patient who did not get all the recommended interventions). Finally, health plans have the motivation to organize and improve care. They achieve financial success if they maintain and increase their membership. Growth allows them to spread their fixed costs across a larger population, thereby making the health plans’ operations more profitable. How do plans grow? The first strategy is to attract new members by lowering costs—usually by negotiating lower rates with providers, but also by improving the efficiency of care. A more difficult strategy is to improve the quality of care, either by rewarding providers for improved performance or through the use of disease management programs. What Can Payers, Employers, and Patients Do? 145 In the following sections, we will discuss the three major strategies employed by health plans as they use their control over data and the flow of money...