While scanning the news this morning, I laughed out loud at Pennsylvania’s newest proposal to cut Medicaid costs.
According to this Kaiser Health News report, Pennsylvania plans to pay Medicaid recipients up to $200 to visit “higher quality and lower cost hospitals and doctors.”
Gary D. Alexander, the Pennsylvania secretary of public welfare, compared the idea to a shared cost savings. “If the state saves $1,000 on a medical procedure we may give the beneficiary $100 or $200 as a reward.”
Does anyone see a problem with this approach?
Let me lay it out for Mr. Alexander, just in case someone who reads my column has his e-mail address.
In some of the inner-city emergency departments where I have worked, there used to be a policy that patients would be given subway tokens … or bus fare … or cab vouchers at the conclusion of their ED visit. The theory was that hospitals didn’t want patients loitering in the emergency department waiting rooms after their visits trying to find a ride home. The policy was also viewed as creating good public opinion since the hospitals were making sure that patients had a way home if they came by ambulance and had no other means of transport. Ambulance transport to the hospital is provided at no cost to the patients. Ambulance transport home must be paid with credit card.
Once the general public got wind of the cab voucher policy, guess what happened. Patient volumes increased. Ambulance transports increased. Wait times went up. People waited hours for free medical care so that they could then get their free subway token … or bus fare … or cab vouchers at the end of their visit. The policies were quickly discontinued.
If Pennsylvania begins paying people to go to “better” hospitals, the cab voucher fiasco will occur in Pennsylvania, only on a much grander scale. Once Pennsylvania Medicaid recipients learn that they will be paid to go to a certain hospital for medical care, those hospitals will be deluged with patients. To those receiving public medical assistance, the medical care is free, the medical testing is free, and the medical procedures are free. Now, with a monetary incentive to have a procedure done at a given facility, what do you expect will happen? Patients get $200 if they get a cardiac catheterization at one hospital versus another? Twelve year olds will go to those emergency departments complaining of crushing chest pain. Patients get $50 if they go to one emergency department that provides “higher quality”? There will be lines out the door.
Medicaid will end up footing the bill for an increase in medical care because it has incentivized the patient population to seek out that care.
Brilliant. Just brilliant.
Mr. Alexander even went to a meeting of “300 health insurance executives” in Washington and pitched his plan. I’m sure he got a little round of golf claps for his innovative approach to reducing health care costs.
This is what happens when people who make policies have no practical experience in the industry in which they are making the policies. Mr. Alexander was a political science major in college and has a law degree.
You want to decrease utilization? Pay Medicaid patients that same $200 at the end of a year only if their medical resource utilization (ED visits/prescriptions/whatever other variable you want to control) is below the average utilization for other Medicaid recipients for that year. Kids get $50 per year. Send out letters to those who didn’t get the money telling them why they didn’t get their “incentive payment”.
That policy will pay for itself within the first two years.
But what do I know? I’m just a dumb ER doc without a political science degree.