Tuesday, June 16, 2009


I hope someone in DC is paying attention, because a dose of solid logic just succinctly, realistically, actionably, landed on their doorstep.

I was tipped off by a HealthLeaders article titled, “Healthcare CEOs Offer Quality-Driven Payment Model.” An organization called Health CEOs for Health Reform issued the white paper “Realigning U.S. health Care Incentives to Better Serve Patients and Taxpayers,” and, according to the HL article was led to Congress by the Reform Czar herself, Nancy-Ann DeParle. Having read the 12-page paper, I can see why.

They get it.

They begin by agreeing to quality, affordable coverage for all, with limits (among them, no new public plan – YAY!) and only permitting an individual mandate once coverage systems are proven to be accessible and affordable. No rush to create a mess that would distract from real reform. Good.

Then they spend the next 9 pages succinctly running down how to do the thing(s) that most need to be done – reforming the delivery of care to bring down cost and improve quality facilitated by broad payment system reforms. There’s an old planning adage, “you are what you measure,” and its corollary, “what gets measured gets done,” and they, rightly, frame nearly all their suggestions on the canvas of incentives. Markets work wonders!

“We will not control health care costs until we create clear incentives for providers…to focus on quality and efficiency. Likewise, patients must be encouraged to make healthier choices through changes to their incentives…This will require…courageous provider leadership and significant cultural change.”

The authors present a comprehensive range of ideas, but focus primarily on concrete steps that could be undertaken tomorrow to get us moving down this pathway: End fee-for-service payments, hold providers accountable to cost and quality standards by a specified date, and move to bundled payment models. The last point begs questions (which they address) about how to pull this off. It’s powerful stuff.

A corner post of the plan to move to bundled payments rekindles the 90’s-era conversations around full- and partial-risk contracts and accountable care organizations (called integrated delivery systems back in the day, supported by things like PHO’s). It was a great idea then, it’s a good idea now. But, I wondered, why would it work this time?

A few possibilities came to mind. First is scale. When only capitated HMO contracts were the drivers of these ideas, there was no reason to push ahead, really. It was too small a portion of the payment stream to a hospital/practice to meaningfully change behavior. If fee-for-service goes away entirely and all payers of all stripes move to a bundled methodology, it would force change.

Secondly, the 90's effort emphasized the primary care “gatekeeper” as blocker, er coordinator, of care. Even the phrase “gatekeeper” suggested restricting access. Bad. While the exact specifics of how care organizations are formed and identified for bundled payment purposes are not clear (for obvious reasons) it feels more like primary care physician-as-care-quarterback than as preventer of care.

And that changes because under the old “full risk” models, the PCPs sat on the capitation cash and had to pay bills to others, incentivising the hoarding of cash and a stinginess to refer. If the payer holds the cash and reconciles payments later based on performance it removes that power role from the relationship between providers and might inspire greater care team cooperation. That said, if you don’t capitate, how do you make this work practically? Case rates for inpatient services that cover the right quantity of pre- and post-admission elements of care? On the outpatient side, what? Some modified ICD structure? The devil's in the details.

Lastly, the 90’s model emphasized capturing covered lives. More was better. This compelled odd alliances, irrational hospital system relationships and emphasized scale over outcomes. While Health CEOs for Health Reform do suggest regionalizing high-cost, resource-intensive services, network scale is not necessarily an advantage (fairly, nor a disadvantage). If a small community hospital has a system and processes for delivering excellent outcomes in chronic disease management they can do quite fine financially. That seems sensible.

This opens up a host of strategic, marketing and business planning questions. How should care delivery organization leaders begin to re-engineer their businesses in light of an end to fee-for-service? What are the right business/system organization structures to support clinicians and promote success under bundled payments? If there are national benchmarks for clinical performance with financial penalties for falling below the mark, does quality of care muscle its way back into the strategic plan?

I hope these ideas get some traction on the Hill. They’re offering good advice that wouldn’t cost an arm and a leg to implement and would actually attack the heart of the problem.

However, hope is not a strategy. Maybe I need to email my elected leaders….


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  2. This comment has been removed by the author.

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