This month, Disruptive Women welcomes Brent Shafer, CEO, Philips Electronics, North America, as our June Man of the Month. Below, he shares his thoughts on the funding of healthcare reform.

After years of stops and starts when it comes to healthcare reform, it appears that we are now moving forward at lightning speed. Perhaps so fast that we are trying to change a complex system without the required due diligence needed to make sure that we preserve what works. It has always been the conventional wisdom of most policy makers that true reform needs to be done incrementally, not in one giant overhaul. The growing number of Americans without access to healthcare has increased the urgency to “do something.” Although many are frustrated with what has been perceived as “all talk and no action”, pushing for health reform at ANY cost is not necessarily the answer either. The projected price tag to overhaul the system—$1 to 1.6 trillion dollars—is staggering. And, frankly, the $1 trillion dollar question is no longer “what do we need to change to make it better” but “how are we going to pay for it?” So while we are busy talking about everything we want to add to the system, the strongest undercurrent on the Hill right now is what needs to be taken away in order to pay for everything.

Medical imaging, for example, is one of many “pay-fors” currently on the table. The Obama Administration has proposed that Health and Human Services (HHS) base reimbursements for advanced imaging services in non-hospital settings on the assumption that physicians operate imaging equipment 95% of the time that the office or freestanding imaging center is open . Because of the way the formula is calculated, this proposed change will drastically cut payments for services already significantly impacted by reductions in reimbursements from several regulatory and policy changes, including the Deficit Reduction Act of 2006. The Administration has focused its proposal on one data point in an extraordinarily complex formula and did not consider other factors such as the way CMS maintains the budget neutrality of the Physician Fee Schedule (PFS) and the way it calculates payments for overhead and indirect costs for PFS services. All of these factors, when viewed as a whole, actually undervalue imaging services, instead of overpaying as assumed by the Administration.

As pointed out by the Access to Medical Imaging Coalition, the President’s proposal is similar to past ones advanced by the Medicare Payment Advisory Commission (MedPAC) which were based on a survey that relied on data from only six urban medical imaging centers. Also, according to AMIC, the methodology used by MedPAC to make its utilization assumptions did not account for the health or age of the patient – both important factors accounting for patient preparation time – the single biggest determinant affecting the length of an imaging appointment, and ultimately utilization rates. Denying providers adequate payments for the services they provide may account for some short-term savings to Medicare, but it ultimately could result in access problems for Medicare beneficiaries, especially in rural areas.

There is no argument that there is waste in our current healthcare system. We need to change the way we deliver and pay for healthcare in this country. But cutting payments for valuable services is not the way to fund health reform. We must focus on innovation that increases value by improving care for patients and helps realize substantial savings by enabling healthcare professionals to deliver more efficient, coordinated care. By focusing on patients and care providers, we can work together to advance healthcare and drive for goals like better diagnosis, more appropriate treatment, faster patient recovery and more effective management of long-term health—all of which can help drive down the cost of providing care. Right now we are trying to chip away at an antiquated payment system by cutting payments and containing services, instead of really focusing on how to change that system to better reflect the way healthcare can be delivered today. We have a great opportunity right now to really improve our healthcare system – let’s slow down a bit to make sure we do it right.

This entry was posted on Friday, June 19th, 2009 at 2:34 pm and is filed under Man of the Month. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.