A Warranty for Your Health?

When you buy a car, the manufacturer usually offers some kind of warranty on your purchase e.g. bumper-to-bumper coverage for 50,000 miles or 5 years, whichever comes first. Or coverage for 100,000 miles for the power train and 50,000 miles bumper-to-bumper. Some are now offering oil changes for life, free car washes, dry cleaning, or the salesman will pick up your kids from soccer practice if you make a purchase now.  Ok, maybe they won’t pick up your kids, but you will please! buy now?

Francois de Brantes, a nationally known advocate of health care quality, is hoping to bring warranties to healthcare. He and a few associates penned an article in Health Affairs describing the benefits of a new payment model for physicians which may inspire physicians to improve patient outcomes by putting their skin (and money) in the game.

The warranties which de Brantes proposes–Prometheus Payment as he’s called it–flip the current medical billing payment model on its ear. Prometheus Payment offers set fees to providers for recommended services, treatments and procedures. However, unlike the current system where all fees are covered by third-party payers, the provider now becomes a party in the payment process by assuming fiduciary responsibility for outcomes–should patients develop an avoidable outcome, providers become responsible for half the costs. The warranty is based on the costs of these avoidable outcomes and is risk adjusted for elderly or frail patients.

de Brantes and his co-authors explain that “the warranty concept has filtered into the self-pay portion of health care, such as corrective eye surgery, general cosmetic surgery, and dental care, which are often based on a global fee that includes any necessary rework by the provider. But it has taken much longer for warranties to appear in the third-party payer system.” They argue that with this global-fee model, overall costs in the healthcare can be reduced while improving outcomes for patients by making (and paying) the provider for any expenses before, during, and after the procedure.

The abstract to the Health Affairs article reads:

How health care providers get paid has implications for the delivery of care and cost control; the topic is especially important during an economic downturn with persistent growth in health spending. Adding “warranties” to care is an innovation that transfers risk to providers, because payment includes allowances for defects. How do such warranties affect patient care and bottom lines? We examine a proposed payment model to illustrate the role of warranties in health care and their potential impact on providers’ behavior and profitability. We conclude that warranties could motivate providers to improve quality and could increase their profit margins.

I find two points interesting.

  1. He named it Prometheus Payment. In Greek mythology Prometheus stole fire from Zeus and gave it to mortals–Zeus repaid him by tying him to a large rock and having an eagle eat his liver every day only to have it grow back and be eaten again the next day. Are the insurance companies Zeus? Are the payments the fire? Who is stealing from whom? Do physicians even want this kind of fire?
  2. This plan was developed with the support of the Commonwealth Fund and the Robert Wood Johnson Foundation and a similar plan is already in practice at the Geisinger Health System in Pennsylvania. These are not exactly small operations.

This whole idea adds a new wrinkle to medical billing. As your billing service, we’d not only be incentivized to help you collect more money but also provide you tools to provide better patient care. Great news for you, we have a CCHIT-certified EMR which provides just the tools you need. Find out more here.

We will keep you posted if this model crops up at any payers near you.

Read more about Prometheus Payment: