The Dilemma of Unintended Consequences of Public Policy on Health Care

Posted by: Larry Sobal on Thursday, September 15, 2016
The Dilemma of Unintended Consequences of Public Policy on Health Care

I’m writing this from Washington D.C., where I’m attending a meeting focused on health care legislation. With all the conversation around MACRA, bundled payments, and other future changes coming to the health care industry, I can’t help but think about what unintended consequences will result from these changes. If we reflect on the health care public policy decisions of the past, there are many unintended consequences that have occurred. No matter what, policy decisions lead to consequences that can’t be foreseen, and therefore are unintended.

What do I mean by unintended consequences? I focused on a significant one in a recent blog, where I highlighted the reality that CMS payment changes led to cardiologists closing up independent practices. Physicians migrated to large medical centers, where imaging reimbursement rates can be three times more than at independent cardiologists—a cost discrepancy that hit patient pocketbooks hard. As I speak to legislators and CMS representatives, they generally admit this was an unintended consequence. Here are a few other unintended consequences that come to mind.

There has undoubtedly been a revolution in the public reporting of quality data in the last decade or so. Whether you feel that this has been beneficial to health care or not, an unintended consequence is that the focus on reportable metrics has resulted in some patient care decisions being influenced by how the clinical outcome might impact the reportable measure. It’s predictable that some physicians who treat sicker or less compliant populations are likely to have lower scores on process and outcome measures, despite working hard to provide high-quality care. I’ve had many physicians admit, off the record of course, that they have declined to do a procedure (such as a cath or CABG) with at least some consideration of how it would play out in terms of the public metric. Personally, I don’t blame them. If I were a heart surgeon and knew my mortality data would be shared, I would think twice about operating on a 70-year-old smoker.

Likewise, reporting and rewarding a few (or even many) specific, easy-to-document quality processes will almost surely discourage unrewarded activities. Some of those may be more important to patient health, but are difficult to measure and become reportable metrics. This response to being graded on measureable performance is called “teaching to the test.” A non-health care example is when education critics worry that important dimensions of the educational experience are lost when school districts pay too much attention to student test scores. Similarly, since pay-for-metric-performance programs focus, by necessity, on the few clinical areas where there is good consensus on what constitutes high-quality care, there is a risk that other aspects of care will suffer.

I’m not sure anyone can foresee the consequences of a policy decision 16 years later, or even 16 weeks later, which makes me pause when I see so many different initiatives coming forth from CMS these days

Here’s another one. The Stark Law was enacted as part of the Omnibus Budget Reconciliation Act of 1990. In brief, the Stark Law prohibits a physician from referring Medicare patients for certain designated health services to an entity with which the physician (or an immediate family member of the physician) has a financial relationship, unless an exception applies. In addition, the law prohibits the entity from billing the Medicare program for services provided pursuant to a tainted referral.

Aside from an argument that the legislation was created for a bygone era in health care, the Stark Law’s requirement that any financial relationship between an entity and a physician fit within an exception can often have a current unintended consequence of being an impediment to the development of new delivery collaborations. Arrangements such as pay-for-performance, shared savings and bundled payments are frequently problematic under the Stark Law because they may not fit squarely within any existing exception.  

I’m not sure anyone can foresee the consequences of a policy decision 16 years later, or even 16 weeks later, which makes me pause when I see so many different initiatives coming forth from CMS these days. 

Let’s consider bundled payments. Will bundles result in higher quality and lower costs?  Possibly, although there is limited experience with bundles so far to know for sure. The easiest thing to bundle is a procedure, such as joint replacement, PCI or CABG. Does the bundle itself reward innovation on medical management and treatment therapies, or are there just different ways of paying for a procedure episode?  This is what I worry about in an industry that seems desperate to find the policy-oriented magic bullet to fix its inherent problems. 

Like any policy decision, whether bundled payments or other Alternative Payment Models, it’s safe to say there will be some unintended consequences. All we can hope for is that those consequences are positive. 

What unintended consequences do you think are most interesting or problematic?  Post a reply.


Larry SobalLarry Sobal is Executive Vice President of Business Development at MedAxiom. He has a 35-year background as a senior executive in medical group leadership, hospital leadership and insurance. As part of his current role, Larry consults, writes and presents on topics relevant to transforming physician practices and health systems.




Illustration: Lee Sauer


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