Medicare Has The Right Idea

As we’re fond of reminding you here, the costs of medical malpractice don’t amount to a hill of beans when it comes to our health care spending. The legal fees and payouts from medical malpractice amount to 0.5% of our health care spending.

It would be a great thing for the tens of thousands of Americans killed each year by medical malpractice if we succeeded in reducing the incidence of medical malpractice (which we can) but it would not help us bend the curve of health care spending.

To get control of health care spending, we need to get a handle on what most experts consider the biggest driver of health care costs: fee-for-service medicine. Under our fee-for-service model, doctors and hospitals get paid according to how many procedures, tests and other services they perform and not according to how healthy they keep their patients. This gives doctors and hospitals an incentive to run up the bill by ordering unnecessary therapies, instead of focusing on the long-term health of the patient.

So it is a good thing that, starting next year, Medicare will cut reimbursement rates to hospitals with high levels of patient readmission. Part of the impetus for this move is a recent study from Dartmouth school of medicine, showing that the rate of Medicare patients being readmitted to a hospital within thirty days has increased over the past decade.

Let’s hope this precipitates a broader move to a focus on patients’ long-term health.

Private insurance companies also bear part of the blame here. They will pay top dollar for a cutting-edge surgery but are misers when it comes for paying for recuperative stays after a surgery. But if paying for that extra day of recovery time reduces the risk of complications and, thereby, the rate of readmission, it’s worth paying for.