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Milton Friedman
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Price Restraint by Competitors. Milton Friedman once devoted his Nobel Laureate speech to creating new price competition for doctors by removing their licensing requirement; naturally, many physicians were outraged. It seemed to them we saw plenty of competition between individual practitioners. Competition between Homeopaths and Allopathic physicians had a history of unspeakable viciousness in the Nineteenth century; it could not have been of benefit to the public. Competition between Optometrists and Ophthalmologists has created unanswerable quandaries about specialization without a preceding general medical background, about the limitations inherent in a superspecialized lifetime, and the conflict of interest between giving advice and profiting from products which implement the advice. On the whole, it takes one to know one, and the Hippocratic tradition of peer pressure may have been as far as surveillance can usefully go. Lately, however, the herding of solo practitioners into group practices (by insurance) may require some reconsideration of heightened issues of organized fee splitting, cross-subsidy, and the loss of personal responsibility. Universal government involvement in reimbursement will surely unbalance these old issues, and it would probably be wise for the government to hold back until we can see if its heightened interest in cost control improves matters, or worsens them.
Turning matters over to the trial bar, however, commercializes the motives of the investigator and provokes defensive medical behavior which is just as expensive as any negligence left in a practitioner after a decade of education. Healthcare institutions with business departments moreover have the uncomfortable incentive to use the price of hospital malpractice insurance as a major metric, thus exaggerating the role of plaintiff lawyers in escalating unwarranted defensive behavior within the institution. For a century we have observed more expensive institutions destroying less expensive ones, always using other descriptions of the process. Horizontal integration could be forgiven when more expensive hospitals shouldered heavy burdens of indigent care, but the 20th Century transfer of indigent care to the government also transferred much of the credit for it. Research is also mainly a governmental transfer of funds rather than a payment, with administrative costs a local bonus to be enjoyed rather than deplored. These disloyal viewpoints justify the proposal that more competition for healthcare institutions would be beneficial, at the fortuitous time that escalated construction costs discourage government funding of it, while private borrowing costs are essentially zero.
Teaching hospitals are unchallengeable the best place for delivering tertiary care, and must not be injured by mere reformist ideas. However, this function is probably underfunded at present, subsidized by inflated costs for so-called bread and butter medical care, transferred by cost shifting. Considerable cost savings are possible if this system is brought more in line with its true costs, but it must be done carefully. Having said that, it is surely true that much of the care delivered in tertiary institutions could be capably performed in less expensive institutions.
The Central Locus of Healthcare. When I started medicine, which was fifteen years before there was a Medicare, the doctors of Philadelphia tended to have their offices on Spruce Street. It was like, and it looked like, Harley Street in London. In time, doctors moved their offices to the campus of a nearby hospital, where they now can be found, using the parking lot and the laboratories, and seeing each other at lunch in the hospital cafeteria. I now propose that this hospital locus no longer serves, and should be moved.
Thirty major diseases have disappeared since this was entirely appropriate, and patients are a great deal older. The hospitals charge inordinately for sharing a bed in a room with a stranger; the last time I was a patient, no one gave me a bath or a back rub. All the nurses wore signs because you couldn't tell them from dieticians. The hospital is now threatened with fines if a patient is judged to have stayed in bed too long. On the other hand, if he goes home too soon and has to return, the hospital is also fined. The doctors tend to make rounds at 6 AM, because later than that the commuting traffic is horrendous. A profession of hospitalists has grown up because it isn't worth a doctor's time to come to town to see one or two patients. The whole medical complex is in the wrong place, driven there by third-party reimbursement.
I can't say what things are like in other cities, but in Philadelphia, there are at least fifty retirement villages scattered in the suburbs, filled with old folks. They all have infirmaries, most of them have drug stores and collection stations for blood tests. For the most part, what they don't have our doctors, x-ray machines and operating rooms. What they have in great abundance are sick old folks who need a lot of attention. I see no reason why the young folks with SUVs can't visit the doctors if doctors had their offices there, and x-ray machines will appear if there is a call for them by doctors practicing nearby. This complex probably needs a full-time ambulance or jitney to take people to the hospital for a one-day surgery, but after that, they can stay in the retirement village infirmary as long as they like. Imagine that; no one will find you for staying a month too long, in the judgment of a utilization clerk. Furthermore, it's all voluntary. Other places don't need to do it if they don't want to.
The Affordable Care Act, commonly called Obamacare, contains two clashing provisions. Although the public may believe the Act provides for Universal Mandatory Health Insurance for all Americans, it actually only sets standards for minimum coverage. Because of later Supreme Court decision, the applicable section was renamed Section 5000A of. In the same section, it delays applying these standards to employees of big business and exempts about thirty million others entirely. (Section c). In an independent section of the same law, Section 1251 clearly states that people satisfied with existing coverage may keep it. Even after millions of Americans nevertheless received cancellation notices, President Obama repeated on television that no satisfied person would be required to drop existing coverage. Even disregarding mere verbal assurances, the two written sections did follow the rules for enactment and were signed by the President. just how are they simultaneously possible, to say nothing of workable?
A quick answer would be that the first sentence of the first Article of the Constitution vests sole power to create legislation in a Legislative Branch composed of a Senate and House of Representatives; thereby requiring the agreement of both, for a law to be a product of the entire Legislative Branch. It did not take long before a Conference Committee system was established, where the two Legislative Houses could negotiate any differences. When one party has voting control of both Houses, however, it is occasionally able to create identical language, eliminating the need for reconciliation. According to a book by an intimate, the Clinton administration planned to take this process a little further in their own Health Plan of 1992, including undesired provisions when that was useful to obtain a wavering vote, or otherwise to obscure the true direction of the legislation for extra time. Having complete control of the process, the party in power would later be able to delete undesirable provisions. The true nature of the legislation might thus only emerge at the last possible moment when timing could be manipulated to make it difficult to object. It is not possible to know whether this strategy has been used in other legislation, but circumstances strongly suggest it was partially implemented in both Clintoncare and Obamacare, and by many of the same people.
In any event, Clintoncare was withdrawn by its sponsors, before a floor vote, and for undisclosed reasons. Obamacare was enacted by the Senate, but the death of Senator Kennedy and his replacement by a Republican Scott Brown made it impossible to survive a filibuster on its return for final Senate adoption. To avoid this outcome, the Senate bill was forced through the House of Representative's word for word, and the Senate bill then became the final law, even though it was known to include booby traps. Largely as a result of public outrage, a strong Republican majority was returned to office, and the possibility of the further amendment was ended. So that's why we are essentially where we are.
What happens next is much more uncertain, because more actors have an opportunity to initiate events. Setting aside international adventures and financial crises, Congress could lose control of events by failing to negotiate a solution. After that, it is probably up to the electorate of seven states with tight Senate races, if not the United States Supreme Court, which has its own private agenda. All of these potentials put pressure on Congress and the President to negotiate a compromise. I suggest a simple first step would be to see if the entire section 1251 could become an amendment by addition to section 5000A, That would have the effect of adding a fourth class of exemption (people who don't want to change) to Illegal immigrants, incarcerated persons, and those with religious objections. Alternatively, they could be added to employees of big business as "temporarily" delayed. A case could be made to the Democrats that a smaller initial transition group could be more readily implemented. And a case to the Republicans would essentially be that "nothing is so permanent as the temporary". In both cases, the November Senate races would suggest what the public will support.
The public tends to believe the central agitating issue is health care, but more likely the central issue is state versus national regulation of health insurance. Health care was universally regarded as a local or state issue for three hundred years, and the issues were all technical and peaceful until pre-paid insurance began to be the dominant method of paying for it. No one seems to be noticing that ERISA has peacefully solved almost all of the problems of interstate mobility, which is what agitates interstate health insurance. Essentially, my position is that healthcare regulation can safely return to state control, at least during the period when the techniques and insights of ERISA are copied and experimented with, for health insurance. The public actually has very little interest in the interstate regulation of health insurance, so fifty years of agitation have essentially been over nothing.
With regard to health insurance, I believe we are working with the wrong design. Young working people accumulate savings, and old retired people spend it. Lengthened longevity has created the potential for enormous savings from compound investment income generated by working people, but such savings have been frittered away by using a "pay as you go" payment system. If we created portable systems for saving and investing income during the working years (the Health Savings Account), we could almost dispense with health insurance of the present model until people reach fifty or sixty years of age. Lifetime health insurance would be one approach, but all that is really necessary is lifetime savings accounts. Dispensing money from a fund could be quite adequately managed with a debit card, leaving only the problem of disciplining the fees of investment managers. But the details of such saving, investing and disbursing are of only secondary interest to the public, probably best left to the industry itself, because the industry will be very interested, indeed. As for reducing the cost of health care, we have stumbled along, letting the scientists eliminate disease costs by eliminating disease itself. They still have worms in Africa, and Asia could use some sanitation, But we have reached the point where our fastest-growing age group is over 100, and out biggest unsolved health problem is not dying too soon; it is living beyond our savings.
In the usual funding and billing operation, the main concern is finding enough money to pay the balances. In this circular system, however, if a balance keeps going around and around for generations, it will eventually reach infinity. Anticipating this loophole, with the absolute certainty that someone will try to take advantage of it somehow, the laws of perpetuity provide that inheritances may only last a single lifetime, plus 21 years. The main concern, however, is to be sure there is enough money without pooling.
In this case, what individuals have available are sixty years duration(age 25-85), or 85 years if we start the clock at birth (0-85), and maybe 90 years if longevity inches up during the 90 years of a coming lifetime. Using the 7% in 10 years doubling rule, that's 9 doublings. Compounded quarterly, these age durations create a multiplier of the $400 we plan to donate, of 64x, 256x, and 512x, leading to contingency funds at death of $25,000, $102,000, or $205,000, respectively. Those are multipliers which surprise most people. Keeping the compound interest within present Medicare ranges just isn't enough, but $145,000 might scrape by, and $206,000 is quite comfortable for the purpose. The specified goal is to bequeath, donate or tax $18,000 to the designated grandchild, and $100,000 to Medicare as a last-year-of-life reinsurance transfer, all of which grew out of the original $400.
We compound 7% as an example because it's easy to double every ten years in your head, but 7% relates well to a century of large-cap common stock returns at 11% (re Ibbotson), less 3% inflation, less 1% more for overhead. And it correlates well with the mode for the last 50 years of the S&P, which comes to 6.6% (see my son George's calculations in the special index.) That's in the ballpark of what we seem to need. And remember, by doing this, the heaviest and most permanent expense of life (terminal care and death) has been transferred away from lifetime cost burdens, into Medicare. (Birth costs are not saving; they are merely transferred from the mother's account to the child's). For reasons we won't go into, reducing the volatility of buy-and-hold investments might lower their transaction cost somewhat.
Obviously, someone must be designated to watch this drama unfold, with latitude to make small mid-course corrections re-aiming it toward its goal. Eventually, Congress must reserve to itself the right to change the ground rules if serious miscalculations begin to appear. It may begin to fall short, which results in raising the initial donations. Or someone may figure out a way to game the system by overfunding it, turning it into a perpetual money machine.
For that rather vague goal, I advise adjusting the choke point at age 25. That's when childhood subsidy runs out and the adult funding for death begins; in a sense, it's the beginning of financial life. It fits the existing laws about perpetuity. Every dollar you change it, up or down, can have a leverage of roughly $300 at the time of the subscriber's death. Of course, there's such a thing as outright fraud, where you ultimately have to send someone to jail rather than allow him to topple the financial system.
Essentially what you would have done, is identify a safety buffer for first and last year of life insurance, with an approximate risk cost ($400), toward which we work as scientific advances slowly modify the rest. Any other surpluses go into the retirement fund for seniors, as healthcare surpluses appear. How long it will take to come into equilibrium is uncertain, but at least it's a plan. Leftovers from the first year of life gift from grandparent to grandchild will appear at birth, but shift over to the grandchild's own account at age 25. After that, he's on his own.
Data from CMS, 2013:
Medicare enrollees: 53 million (+3% per year)
Medicare expenditures:$585.7 billion($11,253 per enrollee x 20 years=$225,000 lifetime)
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APPROXIMATED
a. 1/4 of premiums on half(x 2 programs)=($112,500/4)=$28,000=or $1400 per year over 20 years, plus interest
b. 1/4 of withholding on half similarly =$14,000 total = or $700 per year over 40 years, plus interest
----------------------------------------- -------------------------------------------------------->
CONTRIBUTIONS................................................................Death................Perpetuity
Age....................................O...............25.............................65.....................84........................105
Childbirth...........................1800
First-Last Seeding................... 400
Payroll Withholding.........................................................28,000
Seniors Premiums......................................................................................28,000
Total...............................$58,200
------------------------------------------------------------------------------------------------------------------------EXPENDITURES..
ASSUMPTIONS
Childbirth Gift..................................18,000*
Childbirth Escrow............................... 250*
Contingency fund ................................100*
4 Last-years Re-insurance.(200,000)..666
Child Medical Expenses.....................17,000*
Interest on 17,000(age 0-25)................(85,000*)
--------------------------------------------------------------------------------------------------------------------------RUNNING BALANCE
ESCROWED INVESTMENT INCOME @ 7%
Individual Programs:
Child Gift...................250(0)*............$1,125(25)*..$1,625(65)*..$64,000(84)*..$375,000(104)*
Payroll Tax ................0.00(25)..........$28,000(65)...$1,120,000(85)...$35,840,000(104)
Medicare Premiums...0.00(65)..........$28,000(85)...$1,148,000(104)........
Notice: Affordable Care Act, Contingency fund, Retirement provisions -- omitted.
Running Totals=$250(0)..$1,125(25)..$18,000(65)..$90,000(84)..$420,000(104)
Running Balance=$250(0)..$1,125(25)..$28,500(65)..$912,000(84)...$35,840,000(104)
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Total
Stimulated mainly by the passage of PL-92-603 and the data requirements of the PSRO's established by that law, a lively debate has developed as to how health care data will be collected and processed. The three main topics around which the debate revolves are:
1.) Accuracy of the data
2.) Confidentiality and access
3.) Cost.
Recent passage of PL 93-641 has increased the urgency of this debate, as it would seem logical for the HSA's established by this law to work closely with the corresponding PSRO's and to use data provided by the latter. It is apparent that they will not be able to become effective until such data is available.
Therefore, it seems appropriate at this time to develop a general scheme for data management which would:
1) Meet the requirement of accuracy, confidentiality/access and cost effectiveness
2) Provide a minimum data set necessary for a uniform national system of peer review.
3) Be flexible enough to adapt to specific local needs and to unforeseen future needs.
PRESENT SITUATION
It is apparent that there is a considerable investment (both private and public) in data systems at present of the order of magnitude of billions in hardware and annual expenditures of approximately billions in EDP operations, related to healthcare. Among the larger data processors is the National Center for Health Statistics, the Bureau of Health Insurance, SRS, State Medicaid programs, Blue Cross / Blue Shield, and private health insurance companies. In addition, the considerable data-collection capability exists in private monitoring systems (such as the Commission on Professional and Hospital Activities) as well as within individual hospitals. Because of the substantial existing investment, legitimate concern has been expressed that PSRO's might simply add "another layer of data-gathering" and further increase cost and confusion. This concern must be addressed.
In spite of the significant capacity in existing systems, there are several glaring defects. One is compartmentation. Data collected by one organization is not available to other organizations that need it. The corollary to this is duplication, organizations have set up duplicating systems because of ignorances of data available elsewhere or inability to get it. Both of these problems tend to increase the total cost of data collection. Related to the problems of compartmentation and duplication is the significant problem of harassmentof the provider. Hospitals have increased administrative costs simply to provide the information required by federal state and local agencies of government as well as third-party payers, and physicians and clinics are likewise struggling under an increasing load of paperwork which threatens to impede their ability to deliver the medical services which are urgently needed.
In spite of the complexity and extent of existing data-gathering apparatus, there are areas in which gross inaccuracies occur. In Hospitals the crucial point of data-gathering is usually in the hospital record rooms, and the causes of inaccurate data fall into two main categories;
1) Insufficient, inaccurate or illegible recording of diagnoses and procedures by the attending physician.
2) Deliberate distortion of information to accommodate third-party payment mechanisms.
3) Inadequate or inaccurate identification data due to lack of uniformity of hospital discharge data sets and lack of uniformity of training and supervision of personnel abstracting the data.
The problem of confidentiality and access to data are magnified considerably by the present uncoordinated system not only are there flagrant breaches of confidentiality because of the multitude of people handling this data without overall supervision, but conversely, when a public party has legitimate need to know certain information, it is often nowhere readily available in an aggregated format.
These defects in the present system relate mainly to data concerning institutional care. When it becomes necessary to collect ambulatory care data, all these problems will be multiplied manyfold. Additionally, present data collection systems are seldom demographically oriented so that what actually happens within a given geographic area or within a defined population is difficult to determine.
PROPOSAL
A. Structure.
In an attempt to bring more order into the presently fragmented system and to address the three basic issues of accuracy, confidentially/ access, and cost, we would propose the following scheme diagrammed in Figures 1 and 2: (see diagrams following)
These figures are based o the concept of a "data brokerage" (Ref.), and a common pathway for all health care data, with management of the system at the PSRO/HSA level by a Data Sub-Committee of the PSRO, and at the State Support Center or State PSRC level by a similar data sub-committee of that body. Both sub-committee would, of course, be responsible to their Boards.
A key feature of the system is the data-processing contractor at both levels. This organization would be chosen after competitive bidding in response to an RFP put out by the data management sub-committee. Organizations which might bid for such contracts would be either existing data processing firms, specializing in health care data, such as EDS, like wood.
Optimum Systems, Health Application System, etc..., or they could be spin-offs of existing third-party payers, either the Blues or commercial health insurance companies. In the latter case, the EDP organization, handling data under the integrated PSRO system, would have to be managerially divorced from the parent corporation in order to avoid conflict of interest. Existing organizations such as BHI, the Blues, commercial carriers, etc., would continue to maintain data systems for their own internal needs, but common needs would be met by the PSRO network.
A second key feature of the system is that management information, quality assurance data, and claims payment data would all flow over a common pathway. The compelling reasons for this are
1) Economy of operation
2) Minimal harassment of providers
3) Effectiveness of managerial control.
Economy and minimal provider-harassment would be accomplished by the necessity for submission of only one abstract containing the necessary data elements for each service rendered, whether in hospital, nursing home, doctor's office, or patient's home. This could be submitted to a local PSRO data center, generally by direct terminals located in community hospitals. When ambulatory care review becomes required, doctors and clinics or medical office buildings may find it expedient to have entry terminals primary for ambulatory care data in their own facilities. Doctors in solo practice or in more rural communities could submit abstracts by mail to their OSRO data centers or to the entry \terminals in their community hospitals. Large hospitals having their own computer systems at present would only need to make arrangements for linkage from their computers to the PSRO data center for transmission of essential data elements.
B. Management
Managerial responsibility at the PSRO/HSA level would be invested in the PSRO Board and delegated to the Data Management Sub-Committee. Although the Board membership is restricted to M.D. or D.O. members of the local PSRO, the sub-committee could, and should, include non-M.D. members. Certainly a member of the corresponding HSA should sit on this committee, and if the PSRO is statewide, each of the main users of this system should be represented; namely, BC/BS, HIAA, State Hospital Association, Inc.
At the level of the state or regional support center (of which 12 exist at present), the Data Management Sub-Committee would be even more broadly representative, with representation from the appropriate state health agencies, medical schools, regional HEW offices, and responsible consumer organizations, etc.
Confidentiality/access issues would be settled by the Data Management Sub-Committees at the appropriate levels. A uniform policy would be established, and there would be no question as to where to fix responsibility for the release or retention of information.
Although not shown in the second diagram, there is a third, or nation, level of data-handling represented by such organizations as the National Center for Health Statistics, Bureau of Health Insurance, SRS and, When some national health insurance plan is voted by Congress, whatever federal agency will be given authority to manage this program. These organizations should be concerned mainly with aggregated data and only when necessary for eligibility determination or payment of claims with individually identified data.. Much of the argument on this subject at present seems pointless if it is recognized that disciplinary control of both patients and providers should be delegated to the PSRO level and at higher levels. Management should be concerned with managing the systems, not with the disciplining of individuals.
On this subject, it might be pertinent to observe that, as the data system becomes operational, the present tendency of BQA to try to control process in each PSRO should be drastically curtailed, and the role off BQA should be mainly to monitor the outcome of the efforts of each PSRO actually relying on the support centers to provide most of the data that will be necessary to do this.
C. Funding.
Funding of the PSRO Data System is a part of the general problem of funding PSRO operations, which is an issue at present. We will not go into this question in detail in this paper, other than to observe that we feel strongly that PSRO's should receive their income mainly from those institutions for which they provide services so that all purchasers of data from the PSRO would pay an appropriate amount for it. It should be remembered that in addition to providing data, the PSRO also providers certification of the necessity, quality, and the appropriateness of the service, upon which payment will be based. The cost of EDP and certification must be recognized as reimbursable costs, and provision made to pay for these functions through the same reimbursement mechanism which pays for the health care services themselves. At present the total cost of PSRO review of institutional care including administrative, EDP, and certification costs is between $10 and $35.00 per hospital admission (Ref.).
It would appear that, as PSRO's become more efficient, this cost will settle down to between $10-$15 for a total of $110-$165 million dollars for present 11 million Medicare and Medicaid admissions annually. Reimbursement for review of nursing home care and ambulatory care will require slightly different arrangements, but the principles should be the same.
Funding for the State-Support Centers and the data libraries, which would be used primarily for medical care evaluation studies and other retrospective research, might come directly from BQA and research grants from medical schools or schools of public health.
DISCUSSION
Questions which have been raised in regard to the feasibility of such a common data system are;
1) The possibility of requiring a significant investment in "new hardware" by duplicating existing capacity. We anticipate that the successful bidders for the data-processing contracts would use existing hardware to a large extent and only invest in new hardware as technologic advances in the industry require it. Certainly, new software systems would be required and the stimulus of competitive bidding on some 200 individual PSRO contracts, plus the stimulus of minimal data requirements, established, presumably by the Professional Standards Review Council would, we feel, be a healthy influence to continued improvements in the system.
2) A single, nationwide data system would be another example of "Big Brother is watching you", and a further breach of individuals privacy in a particularly sensitive area.
As we have mentioned above, there are numerous possible "leaks" in the present, uncoordinated system, and essentially no control of confidentiality by any responsible public party. The proposed system clearly fixes responsibility for release or retention of information with data management sub-committees of the PSRO at the local level and the corresponding committee of the support center at the state or regional level. All requests for access to data would be channeled through these committees, and such request would have to be supported by documented "need-to-know".
The converse problem of access to health care information by consumer groups and public parties with a legitimate interest in health care data would be much more readily solved in our proposed scheme than at present. With regard to individual data relating to a particular patient-doctor relationship, confidentiality is the predominant issue, and professional control should be maximal at this level, with only enough non-professional input to keep the professionals honest. At the state, regional and federal levels, access to aggregated data, in order to assess the elements of the healthcare delivery system becomes the dominant concern, and at this level non-professional control becomes important, with a small component of professional input, principally to safeguard privacy and to ensure accuracy. This relationship is shown in Figure 3, taken from a report of the Institute of Medicine, entitled, "Advancing the Quality of Health Care".
Confidentiality of "business" information is a legitimate concern to many providers. For instance, how many beneficiaries Mutual of Omaha or the Blues have in a given area, or the total benefit payments for a given group of beneficiaries, or the retention rate for administrative costs and reserves, are generally regarded as business information, which should not be released to competitors. We are satisfied that the technology exists to build into a "common pathway" system adequate safeguards to secure the privacy of this information.
It should be noted in our scheme that the repositories of "old" data (as opposed to "online" data needed for day-to-day operation) are the "data libraries" controlled by the state / regional support centers. Such data would be used for retrospective MCE studies comparing the performance of different PSRO's, hospitals, clinics, HMO's and other provider groups. Since, as a result of such comparison, someone is always going to come off second best, strict control of such studies and release of information only to those with a legitimate need for the information will be important. The conduct of such studies and the monitoring of the coordinated data system for accuracy and efficiency are two reasons why we feel the support centers should continue to exist and not be phased out (as is present HEW policy).
3) . A large amount of data which would have to pass over a common pathway would "jam the system" and slow the speed of transportation of information, particularly that required by third-party payers for payment of claims
We have reason to believe that, conversely, the transmission of such information would be accelerated rather than delayed, and the efficiency of claim payment would be increased. How to claim payment request comes from a variety of providers (hospital, doctor, pharmacy, VHA, etc.) . and to a variety of payers (Medicare, Medicaid, the Blues, commercial health insurance companies, and the patient himself). Attempts to coordinates the payments of benefits are still clumsy, resulting in duplicate payments, incorrect payments, retroactive denial of payments, and a tremendous volume of correspondence phone calls, etc., trying to rectify these errors.
The "common pathway" scheme would afford an opportunity to gather together the claims of all providers pertaining . to a given case, and to compute accurately the deductibles, co-insurance and coordinated payment of benefits by various payers. At the same time, the PSRO certification (required at present only for payment under federally-funded programs, but eventually in all probability for payment under all health insurance program) would be added to the claim. In approximately 85% of cases based upon present experience, the claim would pass through the screens built into the local and regional computer systems without delay, arriving essentially instantaneously at the office of the third-party payer. The third-party payer would then only check eligibility and conformance to the scope of benefits provided by his contract, and issue checks or payment credits to the appropriate providers.
For approximately 15% of cases requiring review at the PSRO level, the review process would be accelerated by the gathering of all information regarding a particular case in one locus, and the development of online accessible data systems for review of much of this data. We visualize a BSRO room in each community hospital where the paramedical and professional personnel would review questioned cases, using a CRT terminal to access the PSRO data bank (for details of such a system,). Experience to date indicates that of the approximately 15% of cases "kicked out" by computer screens, all but 2-5% can be certified after paramedical review and promptly returned to the payment mechanism. The 2-5% requiring professional review would be reviewed by doctors at their community hospitals (where they are usually available on a daily basis), and certification would have to wait for weekly or monthly meetings of peer review committees only in rare instances. The virtually total abolition of delayed, retroactive review of claims and denial of payment, which is a source of considerable irritation to all providers at present, should be achievable under our proposed scheme.
4). Such a scheme would be exorbitantly expensive.
We have previously mentioned that the system would not require significant capital investment in new equipment nor in the training and employment of large numbers of personnel as these already exist and need only to be organized in a different management structure. It is even possible that by eliminating some presently duplicative systems, there may be a net saving. There is reliable evidence that the review of institutional care can be done at present for approximately $10-15, per admission. With the costs per hospital admission of Medicare and Medicaid patients averaging $750-$1,000, this amounts to 1-2% of the total cost of care. Experience in the costs of ambulatory care review indicates that it can be done at present for approximately 3-5% of the cost of providing that care and as volume increases that figure can be reduced.
It might be pointed out that when such a scheme becomes operational for both ambulatory and in-patient care, we will have available for the first time reliable data on the costs of an entire spam of illness, from the first patient contact to eventual recovery or death. Such information will give us much more useful information with regard to the cost-effectiveness of different elements of the healthcare system that is available at present.
The question as to how much effect the PSRO review system will have on total costs of healthcare in the nation has been widely debated, and it does not seem wise to make any sweeping generalizations on this point. It seems apparent that initially some unnecessary services will be eliminated, and the length of stay in expensive institutions will be reduced, and there will be an opportunity for better control of provider charges.
On the other hand, insistence on a higher quality of care will, in some instances, increase costs and the inevitable pressure of inflation in the national economy and the continuing introduction of high-cost technology into the healthcare field may offset any potential savings resulting from the PSRO review system.
5). A "common pathway" system might multiply errors in data-gathering and information-handling.
On the contrary, we believe that the proposed scheme affords opportunities for control of the accuracy of data which do not exist in the present "patchwork" system. One important feature is the initial control of data input. We have mentioned that institutional data at present is subject to several causes for the error. In our scheme, all institutional data would be gathered initially by trained nurse-coordinators and transferred from their abstracts to the computer terminal by another specially trained individual. These individuals should preferably e on the payroll of and supervised by, the local PSRO, although in some cases they may be on the hospital payroll and supervised by the PSRO.
When ambulator review is added, we recommend the adoption of the minimum data set for ambulatory care review, which is similar to the UHDDS, which is becoming standardized for institutional care review. We also recommend the adoption of a simple encounter-reporting form for ambulatory care, adapted to individual practices, similar to that developed by H. Philip Hampton of Tampa, Fla. This will provide all information necessary for both claims payment and quality review, reducing the "harassment factor" to a minimum. Information from these encounter forms would be entered likewise by trained data entry personnel in either the local PSRO office or at computer terminals located in community hospitals, clinics, and doctors' office buildings.
One of the important functions of the Bureau of Quality Assurance, working cooperatively with state regional support centers, would be to monitor the accuracy of data system and to continue to develop and introduce into the system improved techniques to ensure accuracy. Such control is impossible at present.
SUMMARY
In this paper we have attempted to demonstrate the need for, and the feasibility of an integrated PSRO data system, addressing the three main issues of accuracy, confidential/access, and cost. A proposed scheme is described in general outline. Some frequently voiced questions regarding such an integrated data system are posed and answered.
Originally the "lower counties" of Pennsylvania, and thus one of three Quaker colonies founded by William Penn, Delaware has developed its own set of traditions and history.
Start in Philadelphia, take two days to tour around Delaware Bay. Down the New Jersey side to Cape May, ferry over to Lewes, tour up to Dover and New Castle, visit Winterthur, Longwood Gardens, Brandywine Battlefield and art museum, then back to Philadelphia. Try it!
Millions of eye patients have been asked to read the passage from Franklin's autobiography, "I walked up Market Street, etc." which is commonly printed on eye-test cards. Here's your chance to do it.
In 1751, the Pennsylvania Hospital at 8th and Spruce was 'way out in the country. Now it is in the center of a city, but the area still remains dominated by medical institutions.
Grievances provoking the American Revolutionary War left many Philadelphians unprovoked. Loyalists often fled to Canada, especially Kingston, Ontario. Decades later the flow of dissidents reversed, Canadian anti-royalists taking refuge south of the border.