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COST & REIMBURSEMENT ISSUES
IN HEALTH CARE REFORM:
How Does Quality Fit In?

By Jeanette Mefford, RN, MPH

There is widespread agreement that there is a need for health care reform in the United States. Millions lack financial access to care, health care costs continue to escalate, health promotion and prevention services receive little priority compared to high technology/high cost procedures, and while many are satisfied with their current health care, there is a fear that they will not be able to access care when they need it (Smith, Altman, Leitman, Maloney & Taylor, 1992). As a reflection of these concerns, health care reform became a campaign issue in 1992, and health care reform has remained center stage since then.

While there is some disagreement about the need for reform the primary disagreement revolves around how to reform the system. Recommended remedies vary from adjustments to the current fee for service system to the shift to a single payor system. Managed competition, recommended by President Clinton, is built on the premise that consumers, if educated and given incentives, will choose to purchase the most cost efficient, high quality care available (Enthoven, 1993; Frieden, 1991). The words cost efficient and high quality would appear to represent the dichotomy facing health care providers today. The reality is that we will never have true reform in health care unless there is accountability for outcomes. We must have a mechanism for the measurement of quality and cost effectiveness.

It has been said that we have the best medical system in the world, but what we have is the largest, most expensive, technologically superior system. We spend more on health care than any other country yet fall behind others in life expectancies and infant survival rates. Our health system represents many mini-systems, each limited by purpose and audience. The focus of reimbursement has been toward acute care, with minimal resources for preventive, maintenance or chronic care. The system forces the client to serious illness before there is reimbursement, thus encouraging dependence, intensity of services and institutional care.

Medicare is the primary reimbursement source for home care, representing 38% of the total dollars spent. Medicaid represents 25% of the home care reimbursement dollars, while private insurance covers only 5-6%. The remaining 30% represents private pay. With this reimbursement structure, those who receive home care either meet the skilled need criteria of Medicare, the financial qualifiers for Medicaid or have the personal resources to pay for care. These limitations of our current system and the cost of providing health care are key reasons some form of reform is inevitable. The proposed reform strategies include: employer based, single payer, market competition, and managed competition.

EMPLOYER BASED:

This plan would require employers to provide health insurance directly or pay into a public health insurance program through a payroll tax. Proponents of this system say it would address escalating premium costs, loss of insurance when changing jobs and lack of coverage for pre-existing, high risk and costly conditions. On the other hand this program could lead into a two tiered system with lower quality and a less adequate public plan. This program does not inherently improve quality or efficiency of services or control administrative costs.

SINGLE PAYER:

A health care trust fund similar to social security or Medicare would receive designated tax revenues, which would then be paid to providers by a single governmental entity. Types of single payer plans include expanding Medicare and/or Medicaid, federalizing Medicaid or replacing Medicaid with Medicare. Critics fear the cost containment mechanisms would lead to delays in accessing care and would reduce the quality of care. To provide universal coverage these programs would need to be expanded significantly.

MARKET COMPETITION:

This proposal would create an expanded role for private enterprise with less government involvement. Consumers would be given information and incentives to purchase the most cost effective, high quality service available. Our current system, built on this premise, has left millions uninsured and benefits vary greatly within the insurance plans. It is difficult to provide universal access and cost containment within a supply and demand market. Providers are incented to create a demand for their services using a self determined fee. This system would combine government regulation with probate enterprise to provide universal coverage and retain consumer choice. Consumers would choose among plans on the basis of cost and quality using outcome measures. Cost savings are anticipated from insurance reforms, universal eligibility and simplified claims procedures.

While no one can say what the reform package will look like or how it will be funded, the one criteria health care consumers and providers must demand is accountability. Consumers must shift their paradigm from complacency to active involvement and demand cost efficient high quality health care. There cannot and will not be quality in health care until there is accountability for outcomes. We must be able to compare products, delivery systems and payers not just on the basis of cost or reimbursement, but on outcomes. This level of consumer involvement and choice will provide the incentive for providers and payers to demonstrate less costly high quality alternatives.
If we are requiring real accountability for individual decision making and policy that drives the system, we must define and measure outcomes as the standard for identifying and promoting quality health care. This is the opportunity and the challenge for home health care providers. As this industry moves into the spotlight, nursing practice, the core home care service, needs to take the leadership in defining and quantifying data collection designed to provide clear measurements for the value of home health care services. There can be no reform without clarifying what quality, cost effective health care means. Education is the key to involving the consumer, but outcomes are the key to proving what home care can accomplish in the lives of clients, families and communities.

REFERENCES

Bradshaw Matz, L & Gary, G. (May 1993). Patient outcomes measure home health care accomplishments. Nursing Management, 96Y-96EE.

Enthoven, A.C. (1993). The history and principles of managed competition. Health Affairs, 12 (Suppl.), 24-48

Frieden, J. (1991). Many roads lead to health system reform. Business and Health, 9(1), 38-44, 46-55, 58.

Smith, M.D., Altman, D.E., Leitman, R., Maloney, T.W., & Taylor, H. (1992). Taking the public's pulse on health system reform. Health Affairs, 11(2), 125-133.

Citation: Mefford, J. (1994). COST & REIMBURSEMENT ISSUES IN HEALTH CARE REFORM: How Does Quality Fit In? The Quality Messenger, 1(2), 1, 4, 5.

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