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Does reform give health systems enough reason to lower costs?

by Loren Bonner, DOTmed News Online Editor | August 15, 2013
Brian Klepper
Brian Klepper is a health care analyst and commentator who has spoken widely about a secretive American Medical Association committee, the repercussions of health system consolidation, and what needs to happen for meaningful change to occur within the system. He spoke with DOTmed News about some of these topics and more.

DMN: After Steven Brill's blockbuster article in Time Magazine came out a few months ago, it feels like everyone is interested to know the real scoop on hospital pricing and what's driving up the cost of health care. I think you have some opinions on this. Can you share your thoughts?

BK: Egregious hospital unit pricing is certainly one driver, but the truth is that over the last several decades, every health care sector has devised ways to extract money from the rest of us that they're not legitimately entitled to. I've written extensively about the Specialty Society Relative Value Scale Update Committee (or RUC), the secretive AMA committee that has jiggered the relative value scheme that Medicare, Medicaid and most commercial payment systems are based on, driving up cost.

In my day job, I see health systems buying stakes in Pharmacy Benefit Management (PBM) firms, jacking up the generic pricing to their own members by 200% or more then telling their members that they're managing their cost. Physicians are doing unnecessary procedures on patients, which not only costs a great deal but puts those patients at risk of physical harm. Primary care reimbursement has been driven down by Medicare and the commercial plans, which decreases visit time and increases the rate of specialty referrals and in turn produces much more costly care unnecessarily. Health plans push "choice" in networks, but having the right to go to a lousy doctor or hospital does nobody any favors, except by driving the cost up for less effective and efficient care. I could provide many, many more examples.

If you get down in the health care weeds, as we do, you can see these behaviors clearly. Nothing will meaningfully change until the system moves away from fee-for-service reimbursement and onto some version of risk, and everyone is held accountable through transparent safety, quality and cost performance data. And the only way to make that happen is for purchasers to galvanize and mobilize to be a counterweight to the health industry's influence over policy.

DMN: You said before that health systems want market dominance. How is this driving excessive care and costing our health system?

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