In an exclusive podcast interview, Richard Clarke, president and chief executive officer of the Healthcare Financial Management Association, tells Modern Healthcare reporter Melanie Evans about why his membership is pushing for a fundamental restructuring of the way healthcare is paid for in the U.S. The interview was conducted on June 18 at Modern Healthcares offices in Chicago.
Melanie Evans: This is Melanie Evans, a reporter with Modern Healthcare. I'm speaking with Dick Clarke, president and chief executive officer of the Healthcare Financial Management Association. The HFMA is expected to release on June 23rd its principles for healthcare payment reform. Before we get to your principles, please explain why you consider payment reform necessary. What's wrong with what we do now?
Richard Clarke: Melanie, the current system of payment for healthcare services is very fragmented; it pays individual components of care for the patient, it pays on, oftentimes, a variation of either a per case or a per procedure or a volume-based relationship. It does not pay for outcomes, it does not distinguish very well between the quality of care among various providers of care, and we think that what it does is it causes the healthcare delivery system to be dysfunctional, to not provide the best care for the patient, because of the fragmentation, because of the lack of coordination that happens among the various providers of care. The incentives oftentimes are misaligned with the national health goals that we have. Oftentimes, it pays for acute care services, but does not pay well for preventative care services. All of those issues, we think, are part of the current payment system and causes it, the nation, to spend more and to have poorer quality of care than it would be possible otherwise.
Melanie Evans: So what needs to change?
Richard Clarke: Well, we think that the first thing we need to do is first of all have the various stakeholders, and the stakeholders would be the providers of care, the insurance companies [unclear] of care, the various forms of government at the Federal level and the local, state level. The employers, who oftentimes pay for their employees' care, the community action groups, such as AARP, for senior citizens, and other groups like the Access Project, which looks at those who are somewhat disenfranchised, those who are uninsured. We think that we need to get all of the stakeholders together and to agree that first of all, the national health goals that have been established by HHS are reasonable health goals and the kinds of things that we should be moving toward.
And then we should identify, which we have done in our paper, the principles under which reform of the payment system should be guided, because one of the things that we would is that there is a lot of fragmentation in the method by which the current payment system works, but there's also a lot of fragmentation in the method by which they're making changes to improve the payment system. And there's no guiding framework, and so we think what's necessary to develop a guiding framework that would allow us to say, Here is where we're trying to take the payment system and here's how it supports the national health goals.
And then there is a series of elements within those payment principles that would change the method by which we currently pay providers of care. And so that framework is what we're releasing on our, in our paper on payment reform, because we think that it's important to define that framework, to get the stakeholders to agree to that framework, and to begin the hard work, and it will be very hard work, to design the way in which the payment system should be changed to achieve those principles.
Melanie Evans: So what are the key elements of the framework?
Richard Clarke: Key elements are, first of all, the definition of the national health goals and that there is not a lot of debate about that. There are a variety of groups that have identified and articulated where we think the healthcare system should go in the country, and we think that should be, there should be good alignment around those national health goals, among the various stakeholder groups.
The next is the identification why the current payment system inhibits our ability to achieve those national goals. So we want to articulate why, what was wrong with the current payment system, because oftentimes if you identify the barriers, you can then identify the solutions to those barriers.
We then went through one of the major components of the paper, relates to the principles of reform. And this is the framework that I'm talking about, the idea of deciding what are the overarching, guiding rules or principles that will provide the framework, as I said, to do the reform efforts that will achieve the national health goal and overcome many of those barriers.
The finding within the paper that we've identified, a series of potential options, and we're not supporting any one option at this point, because we think it's too early to do that. We think we need to get alignment on the principals. But once we have alignment on the principals, then, the paper identifies a variety of options that could be used to change the payment system, and we broke those into three components. One relates to specific, condition-specific payment, which relates to primary care and chronic care. And those payment methodologies would potentially look like a combined, either capitation or fee-based system that includes a variety of services and programs.
The second is an episode or episode of care-based payment, which is probably more related to accident and acute injury, that, or acute illness, that a patient would have.
And then the third level would be the payment for what we refer to as societal benefits, that the identification of medical education, the identification of public health education, the identification of medical research. If, in fact, the uncompensated care issue is still a major issue, the identification of how uncompensated care is taken care of, we believe that those elements ought to be specifically identified and paid for either through the payment system or through some other mechanism of payment.
Currently, it's buried within various components of the payment system, and the payers of care actually don't even see it, for the most part, because it's buried within the payment system.
And so those are the major elements of the paper.
Melanie Evans: Thank you very much. This is Melanie Evans, I'm a reporter with Modern Healthcare, and I've been speaking with Dick Clarke, president and chief executive officer of the Healthcare Financial Management Association.