Fix Medical Billing by Reimbursing for Value

Dr. Ralph Snyderman responds to a recent article published in the NYTimes

In her NYTimes article, “Those Indecipherable Medical Bills? They’re One Reason Health Care Costs So Much“, Elizabeth Rosenthal amply describes the complex and arcane medical reimbursement system that drives up health care costs.  A far bigger driver of costs is the ¾ of medical expenses going toward high-tech treatments of episodes of chronic disease rather than for their prevention or effective management.

Health care follows the money and the current “fee for service” system rewards for volume of expensive procedures. Services requiring interactions with patients to encourage prevention or disease management lose money. Thus, the epidemic of preventable chronic diseases needing expensive treatment continues to grow.  Fee for service reimbursement is also responsible for the complexity of billing as payers want to justify what services they pay for, contributing to the coding maze.

A solution to this dilemma is to reimburse for the value of the outcomes of care rather than for volume. “Value based reimbursement” is designed to reward more effective care rather than volume of procedures. The switch from fee for service to value based care, being driven by the Centers for Medicare & Medicaid Services (CMS) is at its infancy but expedited implementation could help eliminate much of the perverse incentives that retard more effective care delivery and encourage the rigging of the system to maximize billing.


Ralph Snyderman, MD is Chancellor Emeritus, Duke University, James B. Duke Professor of Medicine, Duke University, and Director of the Duke Center for Research on Personalized Health Care.