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M e d i c a l R e c o R d F e at u R e

Paying for Value?
by Heath Mackley, MD, FACRO


ur politicians, fond of catchphrases, have endorsed the
latest Medicare reform agenda as a move from "volume to
value." But what is value? A health economist will tell us
that value can be quantified as outcomes received per dollar spent.
The rest of us non-economists out there might say that value is
the usefulness, or worth, of something. So what value do we as
physicians bring, exactly? Most of us in medicine don't think about
value on a daily basis. We tend to focus on doing the best we can,
on each patient encounter, every day. And as much as we might be
tempted to keep focusing on our job and hope these new reforms
don't disrupt our ability to care for patients too much, I think we
need to understand how this affects us. Furthermore, I think a
rational focus on value can be a positive force for change, beyond
patient care and reimbursement, by giving us a paradigm to evaluate
where we need to be as a society, both on the county and state
(PAMED) level.
As stated previously, value is defined as outcomes divided by
cost. So all we have to do is figure out what the outcomes and costs
are, and we've got it figured out, right? One would think that cost
should be the simple part. If only that were true! One can't use the
prices hospitals and physicians charge, as they aren't similar to what
those entities are paid. One could use what Medicare pays, but
Medicare pays different prices for the same procedure based on a
number of factors, and the approved diagnoses for each procedure
differ significantly by region. Furthermore, the process by which
Medicare decides what it will pay for each procedure is a highly
politicized process akin to a large group of sharks fighting each
other as they devour an injured whale. In a rational world, the




cost to Medicare would be based on the actual costs of delivering
the procedure, with a predetermined profit margin that is uniform
across specialties and doesn't favor one group over another. But it is
difficult to see a way to achieve that goal with the system as it now
Defining the other half of our equation, outcomes, is an even
more precarious process because the goal of creating a fair system
seems even more remote. From quantitative subjective outcomes,
such as patient satisfaction scores, to objective outcomes that rely
on patient adherence, like hemoglobin A1c levels, hospitals and
physicians are forced to focus on the processes that they control,
and then hope for the best. Undoubtedly, there will be ways to
game the new system, just as the current system has ways to game it.
Some physicians will embrace this, but most will not, as physicians
tend to focus on trying to do the right thing by the patient. In a
rational world, outcomes would not be used to reward or penalize
individual physicians, but would be used to value procedures. For
example, if one procedure has a global satisfaction rate of 25% and
another has a global satisfaction rate of 90%, then giving a higher
relative value to the appreciated procedure will reflect the collective
will of the patients. If one drug extends survival by one month,
but another drug extends survival by six months in the real world,
providing differing reimbursement would be logical. Again, it is
difficult to see a way to achieve a fair, transparent system.
This essay is not going to solve the problems of health care
reform. We must all remain engaged to help influence the system
as it evolves. Irregardless, we live in this new world, and there are
measures that demonstrate our quality and outcomes, as defined


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