Is Payment Parity a Good Idea?

Some hospitals and medical groups are paid much more than others. But isn't that what the market's about?

There's a legislative proposal to equalize fees to doctors and hospitals. Those paid the lowest would get a raise, while those paid the highest would get a cut. It sounds like a simple, good idea.

Unfortunately, it may have a detrimental effect on providers for underserved areas. If you're the only doctor or hospital in town, you can demand a higher rate. That creates an incentive to be the only game in town, sending medical care to areas that lack it.

So, say you're the only medical group in an area of the Berkshires. There aren't that many people around, and because of your size your overhead is actually higher than larger groups that can pool resources. Thankfully, the higher reimbursement rate you can charge allows you to keep the practice open. Your doctors may not make more than their urban counterparts, but at least they make a comparable amount after expenses.

What happens when you're reimbursements are cut?

A few providers may stay in that office in the Berkshires and just take the pay cut. Others will head for a larger medical group in a city. Suddenly, that town in the Berkshires just lost most of their medical care. Oops.

The fee-equalization legislation is likely aimed at a certain large hospital group widely known to charge higher fees than comparable hospitals in their area, which shall remain nameless. Maybe they're not justified in charging those higher fees. But this legislation could have some unintended consequences.

The Cost of Success

If a program is successful, you should end it. Correct?

That's why the CDC may be gutting Massachusetts' HIV prevention programs. Infection rates are lower in the Northeast than they are in many other parts of the country, and the CDC wants to improve prevention services in places with higher infection rates. Sounds reasonable, but it could have an effect exactly the reverse of the intention.

So what does the CDC do when they find that they've caused the rate of infection in the Northeast to go up to match the rest of the country? That's what could happen, since each program has a measurable impact on the HIV infection rate.

Many prevention programs begin as a research program or a local pilot. Success means that the people who were part of the program had a lower HIV infection rate than a comparable population. Let's use a HIV prevention hotline as a possible pilot. Start by opening it to one region, then look at the infection rate both before and after the hotline opened in that region, and also compared to other regions. If the infection rate went down relative to other regions, that hotline is a success. It then gets rolled out to everyone.

Each program is based on being able to reduce the rate of HIV infection by some percentage. Commonly, the goal is 5%. It doesn't sound like a huge amount, but absolutely worth it when you consider how many people that 5% represents.

The important thing is that the rate of HIV infection is lower while the program is active. What happens when it's no longer active? What happens when five programs, each of which has shown to be able to reduce infections by 5%, are cancelled?

Addressing the higher rate of HIV infection in some areas of the country is an absolute priority. That's another topic to go into later. But here's a hint: once a successful program is gone, so are the people who can help new programs be modeled on it.

What's in a serving?

Kids should eat a variety of healthy foods. I don't think you'll be able to find anyone outside of a large processed food company's lab who will argue. So, of course, legislators are spending quite a bit of time an energy trying to make kids food healthier.

The government wants to limit the amount of sugar in products aimed at kids (using cartoon characters) to no more than 8 grams per serving. The food industry is suggesting that they voluntarily limit that amount to 10 grams per serving. What's missing is any talk about the serving size.

When you look at a food label, such as on the side of a cereal box, at the top you'll find the product's serving size. A cereal that I often enjoy lists the serving size as 1 cup. And therein lies the problem. It's not regulated.

I'll pour cereal into a bowl until it looks like the amount I want to eat, which is somewhere around 2 cups. Then I'll add milk. On the side of the cereal box I should have 1/2 cup milk per serving. That's pretty dry cereal. Of course I add more.

Now watch a cereal commercial. A kid will pour cereal from the box into a bowl and more or less fill it. He or she does not find a measuring cup and make sure only to pour one serving.

No matter what limit on sugar is passed, 8 or 10 grams per serving, a cereal maker only has to reduce their serving size to meet it. Today, the side of the box may say 1 cup of cereal with 10 grams of sugar. Tomorrow, that can be changed to 3/4 cup of cereal with 7.5 grams of sugar. Either way, a full cereal bowl is much more than that.

Another example is a small bag of chips, like you might have with lunch. Look at the number of servings listed in the bag. I was recently surprised to find a major brand said that there were 1.5 servings in a bag. Who doesn't finish that little bag of chips?

The serving size often does not correspond to how much a person might eat at one time. Limiting the amount of sugar in a serving is great, but only if the serving is the actual amount that an average child may eat.