Bill Frist Wants to Ban FFS

Here we go again. Once an idea gets fixed in certain minds, it never goes away. Politico reports

The National Commission on Physician Payment Reform is calling for eliminating the fee-for-service model within seven years, starting with a five-year transition period to a blended payment system.

This commission is chaired by Bill Frist, MD, former Senate Majority Leader. He also wrote an op-ed with Steven Schroeder in which he says we can abolish FFS within five years. He writes –

Lawmakers, care providers and insurers must act now to change physician pay incentives to ultimately improve how care is delivered and ensure that the cost of that care is affordable for generations to come. That means moving away from fee-for-service now.

Dr. Frist thinks the SGR (Sustainable Growth Rate) cuts in Medicare payment to physicians should be replaced by cuts in “physician payments and reductions in inappropriate utilization of Medicare services.” I’m not sure how his substitute is any different, but the commission thinks the whole shebang could be replaced by Accountable Care Organizations (ACOs) ― something that wasn’t even a gleam in the eye of the Dartmouth Health Atlas five years ago.

There is absolutely no support for the notion that ACOs will do anything ― anything ― to reduce costs or improve quality (see this recent NCPA blog, “Question: Why Did Anyone Ever Believe in ACOs?”). It is nothing more than a wish dressed up with high-falutin’ language (sustainable, cost-effective, high-quality, interoperable, coordinated, etc.) In fact, virtually all of the evidence indicates just the opposite ― that the elements of ACOs (disease management, pay-for-performance and so on) are useless or worse.

We have written here ad nauseum that the problem in health care is not fee-for-service, but third-party payment. Almost everything we do during the course of a day is done on a fee-for-service basis and none of it results in high inflation or poor quality. Quite the opposite. The only difference in health care is that someone else is paying the bill, so there is no constraint on the consumer or the provider of services.

There is no clever trick for overcoming that problem. We have already tried capitation, price setting, rate regulation, RBRVS, DRGs, and a host of other gimmicks. None of it works. And the new magic formula, ACOs, will not work either.

More importantly, if I choose to pay my doctor a fee for providing me a service, who the hell is Bill Frist to tell me I cannot? Multiply me by a million, or ten million, or a hundred million, how is it any of Bill Frist’s business? If we millions decide to pool our money into an insurance mechanism that pays our doctor’s fees for providing services, what gives Bill Frist the right to forbid it?

Now Dr. Frist is free to refuse accepting fees for the services he provides. Since he feels so strongly about it, I encourage him to do just that. He can even encourage his friends and colleagues to do the same. Good for them.

Here’s a novel idea for Dr. Frist (and Michael Bloomberg, for that matter) — How’s ’bout we all mind our own business? I won’t tell them what to do and they can show me the same courtesy. I expect we would have a much happier country.

Comments (17)

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  1. Gabriel Odom says:

    Hear, hear!

    We should require a 10% deductible on ALL medical expenses whatsoever (5% for lower income). This way, the consumer is put back into the driver seat of their own healthcare. This percentage could be in addition to the other annual fees. However, once people have a vested interest in medical prices, market efficiency will force prices down.

  2. Patel says:

    This is an interesting post, I did not know this. Indeed, I am glad to learn about this.

  3. Amy Jones says:

    This is an outstanding piece, Mr. Scandlen. Unfortunately, politicians these days have that tendency to want to dictate what goes and what doesn’t, and how we all are supposed to live our lives. Who are they anyway to have an opinion on this matter regarding other people’s decisions? I look forward to reading more about this. Thanks!

  4. H. James Prince says:

    “We have already tried capitation, price setting, rate regulation, RBRVS, DRGs, and a host of other gimmicks. None of it works. And the new magic formula, ACOs, will not work either.”

    I suppose we haven’t tried good ol’ fashioned Capitalism yet, have we?

  5. Studebaker says:

    Bill Frist Wants to Ban FFS

    FSS isn’t the problem. The problem is the perverse incentives caused by excessive use of third-party payment.

  6. David Lenihan says:

    Why is it that we want to take our most valuable citizens…doctors (no…it is not politicians)and attempt to “regulate” them into giving away their valuable services at a discounted rate…regardless of what the nom du jour is?

  7. Frank Timmins says:

    You are so right Greg. The idea of third parties dictating benefits and costs is so ingrained in the political psyche that one trying to present a case for direct free market healthcare economics might as well be suggesting that the moon is made of green cheese. Of course we should not overlook the horde of rent seekers insulating the ignorance of otherwise honest legislators from the facts. And as you know there are plenty of special interests to fill that bill.

  8. Jay Power says:

    From what I can glean from ACO’s is that it’s a return to the old “brick and mortar” HMO’s which actually held costs down fairly well. Kaiser Permanante still is one of the most cost effective healthcare plans out there I just wish they tried to move East perhaps opening a facility at GCT, NYC. Think of the business they could do there. To the cost of healthcare in general, we seem to forget the presence of trial lawyers and the absence of tort reform which would significantly curb the cost of defensive medicine which plagues our current system. Won’t happen under a Democratic Administration. ObamaCare was designed to kill the private Insurance Industry and likely will.

  9. Karl Stecher says:

    What do you expect? Bill Frist went to Princeton.
    Seriously, Bill Frist is a very smart guy who as a heart surgeon at Vanderbilt has done many good things. But he doesn’t know how bad things are away from a university medical school/hospital.
    Americans work best with incentives. Gov Bradford found that out the first year in the Pilgrim’s Massachusetts.
    I wouldn’t trust some hospital administrators to hold the ball while I kicked it. Example…The Medical Center of Aurora, Colorado, HCA/Columbia, CEO Sylvia Young: I was blamed for the demise of my operative, then postoperative cerebellar vascular malformation patient in their ICU. The surgery had gone well. I had no idea what caused him to decline the day after surgery, and the hospital gave me a summary suspension later based on that case and two others (called by another neurosurgeon “those three bogus cases at Aurora”). Two years later a malpractice lawyer reviewed the chart, and found two sets of ICU nurses’ notes…the second substituted set was the only one I had seen. The first set revealed that the nurse had overdosed the patient with morphine so that he could not breathe on his own, (medications ordered by the hospital’s pulmonologist), taken him off the respirator. He had a pulmonary arrest, but I did not know that as the second set of nurses’ notes had been substituted. When discovered, the hospital was sued successfully for malpractice. I was not sued. Ms. Young and her hospital never apologized nor made right the damage they had done to my career, and my family. Further, I had a hearing in front of four of their own hand-picked doctors (on all 3 cases), who concluded that I should be immediately reinstated. The hospital failed to do that, not observing their own rules when they did not get the result they wanted. (I had criticized the poor nursing care in the ICU and floor and the lack of equipment in the OR and floor).
    Another example: Swedish Medical Center, HCA/Columbia transferred a little 22 month old girl of mine, who had three broken thoracic vertebrae and spinal cord swelling, to another hospital, defying COBRA/EMTALA rules and with lack of professionalism by their doctor. This resulted in an operation, contraindicated by all neurosurgeons at Swedish in peer review, which paralyzed her from the waist down forever. When I strongly complained, Swedish’s CEO (Margaret Sabin, whom I notice had a similar run-in later with a neurosurgeon in California), retaliated by breaking my trauma contract with the hospital.
    The fewer number of people who are allowed to get in between a doctor and his/her patient the better; we have third party payors now and their reviewers. Imagine letting the hospital (or large group) further control the pursestrings.
    My story (there are even more examples) as a whistleblower is the same as that of many other doctors across America…and usually with the same disastrous results for the doctor who fights the corporate-controlled hospital and their administrators.

  10. Brant Mittler MD JD says:

    Great post, Greg.
    The short answer is that Bill Frist gets to set health policy because he’s a rich guy from a rich family who was smart enough to figure out a way to game the laws and set the rules so that they could take their hospital holdings public, then private, then back to public making a lot of money in the process. He’s no different than the car dealers, home builders and Junior Leaguers who sit on hospital boards and have the ultimate say on how physicians like Karl Stecher get to practice. No nothings like Frist and the Junior League hospital board members need to get the credit for high hospital prices. That’s to feed the 7 figure exhorbitant salaries of the hospital CEO with their multiple tiers of administrators who do everything to silence opposition and whistleblowers thru their in house and outside counsel using the kangaroo court state and federal “peer review” statutes and case law. Hospital disruptive doctor “re-education committees” prosecute doctors in many instances for the real crime of potentially interfering with administrator pay or shareholder profits – but do so in the name of “quality.” Frist and his ilk ( add Schroeder of Robert Wood Johnson Foundation fame) won’t be happy until fee for service becomes fully changed to plea for service. Somehow they think it won’t affect their care. Frist and Schroeder and the editorial board of the NY Times know the best way to practice because they are rich enough to know best.

  11. Harley says:

    Princeton was home to some people a little more scandalous than Frist. Must be something in the water over there.

  12. Jack says:

    Putting consumers back in the driver’s seat is interesting. Extending the metaphor, from the standpoint of normative health economics, it would explain why there are so many bad drivers out there.

    Not to say that I’m against privatization — it’s just that information asymmetries make it difficult already.

  13. L. BRODY, M.D. says:

    Does the Frist Family still own a major position in Hospital Holdings HCA
    the largest for-profit hospital chain. In HCA as Hospital Corporation?

  14. Ralph Weber @ MediBid says:

    Everyone who provides a service for me from the guy who treats my goats, to the guy who cuts my trees, to the guy who builds my barn, fixes my RV, cleans my house, gives me a massage, does my taxes, carries my bags to my room, drives me to the airport….all of them I pay a fee for the service.
    WHY…prey tell WHY should medical care be any different?

  15. Ralph Weber @ MediBid says:

    PS. I live in Nashville, the epicenter of managed care. This is the WORST medical market in the country

  16. Brant Mittler MD JD says:

    Great comment. Why? Because the Frist family can make better and more assured profits by having expenses for care determined by bundling, shifting risk to doctors and their groups, having hired hand administrators keep doctors in line through turning contract disputes into peer review disputes where hospitals have all the statutory and case law power, fixing doctors’ income, and setting the conditions for doctors do the dirty work of letting old people and sick people (cost centers) die in the name of “less is more,” cost effective, evidence based practice. This is the reality of the “free market” in medicine as articulated by Bill Frist. It’s also a heartening Easter message about the New Golden Rule: the Frists have the gold and they make the rules. I’m waiting to see a picture of Bill Frist washing and kissing the feet of some HCA administrators later today.

  17. Ralph Weber @ MediBid says:

    Right…the HMO/ACO model is a perfect model to pay for fixed costs like a facility, but not so good for variable costs like services provided. In the latter, the economic incentive is to provide less, whereas with fixed costs like facility, there is always going to be room.
    Speaking of which, Governor Haslam said he would not expand Medicaid but he would use the federal dollars to buy everyone under 138% of FPL a policy on the exchange. A private policy would pay the hospital more than Medicaid. What he thinks we dont get is that anyone under 138% of FPL already has a policy which is 96% subsidized.