Can we still earn a living caring for sick people?

TO LOWER COSTS, MEDICARE AND MEDICAID ARE encouraging their beneficiaries to enroll in health maintenance organizations (HMOs). These people--the elderly, disabled, and poor--are the most likely of all Americans to be sick.[1] HMOs originated as a way for employers to budget for health care benefits and to lower costs. Experience so far indicates that for fundamentally healthy working people, they can do the job. Many feel HMOs discriminate against the sick, against the doctors who take care of them, and the hospitals where they are cared for.[2] What will happen when the elderly and chronically ill enroll in health plans?

Medical specialists and large hospitals, whose stock in trade is taking care of these complex cases, expect trouble. In managed care parlance the term is "adverse selection." In theory, when the enrolled population gets large enough, the sick and vulnerable get diluted by the healthy and independent. With Medicare and Medicaid, that won't happen.

What are doctors and hospital managers to do? Taking good care of the very sick consumes large amounts of resources. The costs can no longer be shifted elsewhere. The employers already have the work force in health plans. Physicians and hospital staff can do more work for less pay, which is what most are doing. This is driving some institutions out of business and some doctors into retirement; but our free market economy considers these no more than tolerable casualties of efficiency.

Insurance companies and health plans squeeze ever harder to shorten hospital stays and reduce use of expensive drugs and procedures. Their weapons are actuarial data collected under the rubric. "utilization management." Most cogently, they set standards for optimum results.

And this is what gives physicians and hospital managers cold sweats. Human beings are complex, illness is unpredictable, and inefficiency is inherent in providing custom-tailored service. Doctors feel much of what happens to sick people is beyond their control, despite quips that the MD's pen generates most of the health care costs.

Who is likely to prevail in a contest between payers (employers and the federal government, assisted by insurers and health plans) against providers (organized medicine and the hospital associations)? Even if the providers of care were allied, which they definitely are not, the smart money would bet on the payers.

A coherent system of medical care, however, needs to balance three interrelated factors (Figure 1). 1. How sick are the patients? 2. What resources do they require for care? 3. What kind of results can be obtained?

Physician leaders and hospital managers are struggling, but are learning to assess their true operating costs. Huge efforts are going to outcomes research. Clinical pathways and care tracks have become ubiquitous. Severity of illness has so far been the most difficult component to assess. Acuity scales and methodologies to calculate severity. such as APACHE, have as their goal formulating prognoses or setting standards for care.

How is severity of illness tied to reimbursement' The federal government, through the Health Care Financing Administration, (HCFA) has chosen to use the diagnosis-related group (DRG) system. Its underpinning is the ICD-9 coding, which originated as an epidemiologic tool, but has been adapted by HCFA. This leaves a lot to be desired, because it is cumbersome to clinicians. The logic and semantics do not follow how caregivers approach patients. But it is the most comprehensive system available and for better or worse, is what Medicare has chosen to use. Medicare relies on physician documentation of severity to decide how it will pay hospitals--and soon, doctors.

With this fact as a given, the best strategy for doctors and hospitals is to document that costs are proportionate to the severity of illness being treated. This means substantiating the basis for all they do. This is easier said than done. Physicians don't warranty their treatments. Often what they do, is done empirically. They accept the responsibility of making diagnoses on their patients, but don't feel documenting complexity, especially to outsiders. is germane to their role of helping patients. Even doctor-managers in groups contracting with HMOs do not adjust for case severity when profiling doctors costs.[3]

To affirm the value of what they do, doctors need to pay very close attention to attesting and documenting the details of their diagnoses and comorbidities. If an adult onset diabetic develops pneumonia, which throws the blood sugar out of control. that patient will need more care than a patient who is in good health, except for the pneumonia. Recognizing this, Medicare pays an additional 50 percent for such a patient. (DRG 79, respiratory infection with co-morbidity; relative weight 1.6955. DRG 89, simple pneumonia, relative weight, 1.1317). How often do physicians bother to distinguish that the non-insulin-dependent diabetes is out of control due to the pneumonia? It seems self evident to the caregivers; but it's not to those paying the claims.

Similarly, Medicare reimburses nearly double for a vascular bypass done on a patient with COPD, versus a patient with no underlying medical disease. (DRG 110, major cardiovascular procedure with co-morbidity; relative weight 4.0796. DRG 111, major cardiovascular procedure without co-morbidity, relative weight 2.3024.) Surgeons tend not to document the coexisting chronic lung disease, though COPD is nearly ubiquitous in patients with severe vascular disease (smoking being the copathogen).

Of the 495 DRGs recognized by the HCFA, 110 have companion headings that upgrade reimbursement for co-morbidities and complications. Physicians must do more than be aware of them. If they hope to be recognized for what they do, they must take advantage of them.

Health plans are collecting data to "profile" the physicians with whom they contract.[4] So far, most have not paid much attention to utilization of resources.[5] Some are starting to use relative value systems, to reflect use of resources, and case mix indices, to get at complexity.[6] When physicians fail to adjust for case mix in their practices, they risk being miscategorized as overutilizers[7] This further indicates how essential it is for physicians and hospitals to understand and apply case mix indices, diagnosis-related groups and resource-based relative value systems.

For the foreseeable future, it looks like the government and the private health plans are going to use either a DRG or DRG-like system to set capitation rates and other payment mechanisms. This rankles physicians, but it boils down to being able to say 'this is why we did what we did."

Eventually, severity of illness, use of resources, costs, and outcomes have to come together for the U.S. to have a coherent quality health care system It is likely that such a system will code diagnoses severity, and complications based on ICD-9, as flawed as it may be. Providers need to learn how to work with the DRG system and its derivatives. That's how to take care of sick people and remain in business.

[Figure 1 ILLUSTRATION OMITTED]

References

[1.] Vladeck, B., Medicare at 30. Preparing for the Future JAMA 1995,274:259-262

[2.] Quinn, J., HMOs Loom Large in Future of Medicare. San Diego Union Tribune, p. 1-1, August 6, 1995

[3.] Kerr, E. A., Mittman, B. S., Hays, R. D., Siu, A. L., Leake, 13, Brook. R.13. Managed Care and Capitation in California: How l)o Physicians at Financial Risk Control their own Utilization? Annals of Internal Medicine 1995. 123:500 504.

[4.] Physician Payment Review Commission, Annual Report to Congress. Washington, DC: Physician Payment Review Commission; 1994: 446.

[5.] Gold, M. R., Hurley, R., Lake, T., Ensor, T., Berenson, R.A National Survey of the Arrangements Managed-Care Plans Make with Physicians. New England Journal of Medicine 1995 333:1678 83

[6.] Stark, P., The Politics of Medicare. JAMA 1995:274: 2745.

[7.] Salem-Schatz. S., Moore, G., Rucker, M., Pearson, S. The Case for Case-Mix Adjustment in Practice Profiling. JAMA 1994; 272:871-874.

Kevin P. Glynn, MD, is Chief of Adult Medicine at Mercy Hospital, a division of Scripps, in San Diego, California. He is President and Medical Director of In Health Medical Group, an IPA associated with Scripps. He can be reached at 619/299-0414.

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