today Durham, N.C. Duke University Health System has agreed to pay $1 million to settle allegations that it overcharged government insurance programs, state and federal authorities said Friday. Leslie Johnson, a former employee of a Duke Health-owned firm that handles billing and collection services for the hospital system, filed a whistleblower lawsuit in December 2012 under the False Claims Act, which attracted the attention of the U.S. Attorney's Office and the North Carolina Attorney General's Office. "Health care fraud like this wastes tax dollars, harms patients who need care and drives up medical costs for all of us, Attorney General Roy Cooper said in a statement.
Even with a structure in place, and assuming the massive funding commitment that would be needed to create relative value ratings, it would surely take many years to create anything like a complete set of relative value ratings. This problem, in itself, is not a substantial impediment to RVHI. Currently accepted treatments would have to be grandfathered into the system with a rating of 1 until relative value ratings could be established, while new treatments and technologies would have to demonstrate their relative value before earning a rating and qualifying to be covered by RVHI policies. Thus, the concept of RVHI would be phased in over time. A second practical problem with RVHI is the risk of adverse selection. Specifically, if only sick people choose deeper policies (which cover less cost effective treatments) and the young and healthy choose cheaper, shallow policies, the selection effect might make deeper policies unsustainable, even for customers who prefer to spend a large chunk of their wealth on health insurance rather than other goods and services. To fight this problem, the law would have to have a mechanism to allow insurers to prevent customers who purchase shallow policies from switching to deeper policies immediately after they are diagnosed with a serious illness. A third problem, and one that cannot be satisfactorily solved, is that relative value ratings, although scientific, would necessarily embody certain contestable value choices. Relative value ratings would be based on the quality adjusted life years (QALYs) per dollar expected from a given medical treatment. But there is no single, agreed upon way to measure QALYs. Imagine two treatments with the same cost, one of which provides greater physical comfort for the patient, and the other which preservers greater functional ability. Which one earns a higher relative value rating? There will be many clear cases, of course, but there is simply no way to devise a relative value metric so that every patient would agree that a treatment that earns a score of 4 is actually more cost effective than an alternative treatment that earns a score of 5. For a more in-depth analysis of the obstacles to making relative value health insurance a reality, see my Michigan Law Review article on the subject here . In my next (and final) post on this idea, Ill explain why I think that despite these obstacles and others, RVHI is a more promising approach to controlling health-care cost inflation than the customary proposals of (1) making patients pay more money out of pocket for medical treatments or (2) changing the payment system to compensate doctors and other health-care providers based on the quality of outcomes. Russell Korobkin is the Richard C. Maxwell Professor and the faculty director of the Negotiation & Conflict Resolution Program at the UCLA School of Law, where he writes and teaches in the fields of Negotiation, Behavioral Law and Economics, Contracts, and Health Care Law. <br> Relative value health care: Some obstacles