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In Retooled Health-Care System, Who Will Say No?
Questions About Cost And Limits Linger

By Alec MacGillis
Washington Post Staff Writer
Wednesday, July 8, 2009

The question came from a Colorado neurologist. "Mr. President," he said at a recent forum, "what can you do to convince the American public that there actually are limits to what we can pay for with our American health-care system? And if there are going to be limits, who . . . is going to enforce the rules for a system like that?"

President Obama called it the "right question" -- then failed to answer it. This was not surprising: The query is emerging as the ultimate challenge in reining in health-care costs that now consume $2.5 trillion per year, or 16 percent of the economy. How will tough decisions be made about what to spend money on? In a country where "rationing" is a dirty word, who will say no?

The question permeates all levels of medicine: the use of tests that many argue are unnecessary (U.S. doctors order five times as many MRIs as doctors do in Germany); how early to intervene with common conditions such as heart disease and prostate cancer; how aggressively to treat patients nearing their life's end.

Although Obama and his advisers have held up providers' spending patterns as the crux of the crisis, proposals in Washington go only so far in addressing the thorniest questions about who gets what care. Instead, cost-saving measures are focused on introducing a public insurance option to compete with private insurers, or on general cuts in Medicare and Medicaid payments to hospitals.

The bills being written would put new emphasis on evaluating treatments according to their "comparative effectiveness," or weighing the risks and benefits of different types of treatment for the same illness, but the bills stop short of incorporating cost-benefit analyses into the findings or of requiring that providers abide by conclusions.

Lawmakers are also considering ways to reform Medicare payments to emphasize the overall quality of care over the quantity of treatments. But lawmakers are not going as far as Massachusetts did; it is considering shifting entirely from a fee-for-service model to one where salaried physicians would be paid an overall annual price for covering a given person or family.

Such a shift would probably be a shock to the system of many Americans, who have grown used to having any and all health-care options, regardless of cost, available to them.

"The questions of who gets what, these difficult choices . . . really are not posed in the current health reform legislation," said Drew E. Altman, president of the Kaiser Family Foundation. "The challenge," he said, "is us, the American people: We want the latest and the best, and we want it now."

The Democrats' caution has not kept Republicans from accusing them of embracing rationing. They raise the specter of the British agency, which goes by the acronym NICE, that decides whether that country's nationalized health-care system will pay for items such as costly cancer drugs that extend lives a few months on average.

"You're going to be saying to people, 'We're not going to care for you, because we've decided it's too expensive to care for you,' " said Robert E. Moffit of the right-leaning Heritage Foundation.

Others retort that the United States already has rationing: The uninsured and under-insured do not get the care they need. "We're already doing it," said Stanford University epidemiologist Randall Stafford. "We're just doing it in such way that it doesn't service societal interests."

But reformers are clearly spooked by the notion that they could be accused of denying, for example, hip surgery to an 80-year-old. In recent months, a federal panel has held hearings on how to spend $1.1 billion in economic stimulus money allocated for comparative effectiveness research. At each hearing, representatives of providers, industry and patient groups praised the research -- but then demanded that cost not factor into the eventual findings.

Scott Wallace, a Bush administration official who is now the Batten Fellow at University of Virginia's Darden School of Business, said factoring cost into treatment decisions would create the same backlash that HMOs encountered in the 1990s. "A mother of five with cancer wins against any rationing scheme ever created," he said.

Many physicians and health care-experts argue, though, that it is precisely by marshaling better research data, partly with the help of electronic health records, that a case can be built for limiting certain treatments. If doctors were to demonstrate to heart disease patients how few advantages coronary artery bypass graft surgery has over less expensive treatments, for example, many patients probably would not elect to undergo the surgery.

At Kaiser Permanente, the California-based health network that relies heavily on such research, Permanente Foundation Executive Director Jack Cochran said fears of treatment denials were exaggerated. Doctors, he said, need to be more realistic about not raising vain hopes about expensive, last-ditch treatments: "Comparative effectiveness is a hot-button issue because everyone sees their pieces of pie coming under scrutiny. But all of our pieces should be under scrutiny."

All signs in Washington suggest that cost considerations will be kept at arm's length as health-care legislation moves forward. Carolyn M. Clancy, director of the Agency for Healthcare Research and Quality, said the emphasis will be on clinical outcomes alone.

The draft legislation in the Senate Health and Education Committee, meanwhile, stresses that any research findings "shall not be construed as mandates for payments in coverage and treatment."

A senior administration official who requested anonymity to speak candidly acknowledged that while research might point to obviously wasteful practices, the reform would for the time being not get at the "harder question" of what to do "if new technology does work better and reduces risks but costs a lot more, and how to evaluate that."

The other half of the "saying no" challenge, reformers agree, is giving providers the right incentives and structures to deliver high-quality care as affordably as possible. The goal is to spread the "accountable care" models featured by the Mayo Clinic and others, where a network of providers works closely together to coordinate a patient's care, increasing the odds of keeping them healthy and decreasing unnecessary procedures.

Massachusetts, which has achieved near-universal health coverage but is struggling with high costs, is considering major changes in this direction. A legislative commission is about to release a report recommending that the state goad providers into joining networks that would receive payments for each enrollee, rather than for each procedure delivered.

Proponents say it would differ from the "capitation" approach -- fixed payments for each member -- used by the HMOs in the past because there would be more focus on performance and long-term value than on simply keeping costs down.

Skeptics say such a system would force the state's many solo practitioners or small groups of physicians into big networks and would renew complaints from the HMO era about limiting patients' choice. In Massachusetts, for instance, most parents with a sick child would demand access to Children's Hospital; and most cancer patients would want to go to the Dana-Farber Cancer Institute, no matter what network those were in.

The plans being considered in Washington do not go nearly as far in seeking to change providers' spending habits. They contemplate changing some Medicare payments from fee for service to a "bundling" system in which providers would be paid for an entire episode of care, giving them an incentive to reduce repeat hospital admissions. Another idea is to empower the Medicare advisory panel whose recommendations now tend to be ignored by Congress, or to create a separate, Federal Reserve-like entity to make tough decisions about federal health-care spending.

John C. Goodman, president of the conservative-leaning National Center for Policy Analysis, questions this approach, citing new research by his group that shows that areas with high Medicare spending do not correlate with high medical spending overall, suggesting that fixing excesses in Medicare will not necessarily translate to the broader system.

Henry J. Aaron of the Brookings Institution, who co-wrote a 2006 book called "Can We Say No?" said that real cost reform would mean giving all physicians incentives to leave behind the fee-for-service model for accountable care networks. The transition will take a long time, he said, and at first, people could still sign up for fee-for-service plans. But they would see their neighbors getting good care at a much lower price and hopefully switch over themselves.

"We're just not going to be able to all have everything . . . regardless of cost," Aaron said.

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