What’s a Global Budget or Global Payment?


Some doctors are on a budget for their patients’ care.  If you are in an HMO plan, this might include you.  Supporters say that giving doctors a lump of money, instead of paying them for each office visit, test of procedure, lets doctors design the best care plan and spend more money on prevention.  But some patients worry doctors will be less likely to recommend tests, prescribe brand name medications and some authorize some procedures.

James Feldman, M.D., MMS Chair of Committee on Quality of Medical Practice

We’ve asked the Massachusetts Medical Society (MMS) to answer these common patient questions.  James Feldman, M.D., chair of the MMS Committee on Quality of Medical Practice, has offered these responses. Dr. Feldman is Professor of Emergency Medicine at Boston University School of Medicine.

1)     Why are doctors setting budgets for patient care?

The cost of health care continues to rise at an unsustainable rate. As a result, insurers and employers – those who pay for health care – are driving the decision to explore options to control costs, not necessarily to reduce costs but to slow the rate at which health care costs are increasing. One option that has taken hold and is beginning to be implemented locally and nationally is called global payments.  This means that payers provide a set amount of dollars to providers – physicians and hospitals -  in order to deliver care to their of patients. Policy makers and some experts believe that setting global budgets will encourage more coordination of medical care. These experts also believe that this payment method can reduce the incentives to pay for volume of care and volume of procedures rather than quality of care and preventive medical care. Physicians always have their focus on quality, but now must also pay attention to living within an appropriate budget as defined by those who pay for the cost of care.

2)      How do I know if my doctor is making the decision based on what they think is best for me or what’s best for their budget?

The physician patient relationship is key.  Trust in your physician and her or his decision-making should be at the foundation of the relationship.  If a patient is concerned that their physician is not asking for a particular test or referral to see a specialist, it would be appropriate to ask your physician why they made that particular decision (or any other decision about your care). While a physician may order a generic medication and simpler test at first, it is also appropriate to ask your physician to explain what next steps may be recommend or taken if this current approach does not provide what is needed.

In the past with managed care, doctors were penalized for caring for patients with more complex diseases or multiple medical conditions. The new payment methods are supposed to account for the fact that some patients will require more attention or treatment to provide appropriate medical care (We call it “risk-adjustment.”). The new models of payment are also designed to encourage coordination of care, preventive care and reduce unnecessary care, such as hospital admissions for patients with chronic medical problems. Your doctor should and will always be interested in providing the best medical care for you. This also means providing care that is the most effective and cost-effective for any medical problem based upon her or his medical knowledge and judgment.

3)     If my doctor says I don’t need a test or won’t prescribe a medication I want to try, or won’t refer me to the doctor I want to see, what should I do?

Honest dialogue is always best. Sometimes a physician will refer a patient to another doctor within their own health care system for ease of communication and also to maintain cost. Other times a patient’s benefits or health plan will not allow them to go outside their primary care doctor’s health care system. Excellent care is available in many institutions, however, and if specific care is needed or requested that is not available in the system that your doctor refers you to, share your concerns with your physician.

4)     Can I ask my doctor if my care is over or under budget for the year or what kind of budget pressure he or she is feeling?

Physicians are usually restricted regarding what they can discuss about their contracts with health insurers.  It also may be more useful to discuss with your doctor specific issues or concerns that are related to your health care. The new payment models and global budgets are intended to improve the coordination of medical care and provide care that is most cost effective. That being said, again, honest discussion is best and sharing your concerns with your doctor is best.

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