Archive for category Payment Reform

MOOPs and Long Term Cost Control

While many people have expressed concerns over the administrations delay in implementing the ACA limits on the maximum out-of-pocket (MOOP), the MOOP delay is a broader reflection of the tension in the ACA between coverage and cost containment. Delaying a requirement explicitly for data linkages either shows the difficulty of moving the complex fragmented US healthcare system or signals an administration that is still focused on coverage and doesn’t have a clear focus on how to solve the cost problem.

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Patients Need to Kill off Fee-for-Service

While many people blame the fee for service system for many of the problems in the health care system there is a reason why the system developed in the first place and remains the primary payment method in many portions of the country.  Fundamentally, we don’t understand what quality care is. This controversial statement doesn’t imply that we don’t know what substandard care is, we can certainly agree on never events, but actually reducing most medicine to an algorithm, Watson not withstanding, is beyond our reach.

For most goods and services, only understanding the outcome is fine.  We don’t need to completely understand how something works as long as we can repeat the outcome, but the goal in medicine is not to do something but ideally not doing something.  We want health which in many cases is the absence of care not a specific service.  How can someone outside the doctor patient relationship understand if lack of activity is a really good outcome because a patient never needs a doctor vs. a really bad outcome because the patient can’t see the doctor?

Fee-for-service provides a remarkably effective solution for this problem.  A provider is paid for what they do.  If a provider does nothing then the provider is paid nothing. The “natural” incentive for patients to avoid care should limit unnecessary care.  But today’s patient’s don’t have an aversion but an affinity for care.  As patients we think there is a solution to all of our ails and seek out the cure.  Any payment reform has to deal with this issue, patient lead care vs. provider care.  Fee-for-service may not hinder this care seeking but when expanded to patients, through co-pays or deductibles, it at least gives everyone a little skin in the game.

Patients not only want care but choice.  What happens when a specific group of providers have been paid for an outcome, a healthy knee following an ACL surgery, and the patient wants to substitute the physical therapist?  Is it the patient responsibility to pay for the physical therapy? Once again fee-for-service makes this system easy to handle.  Each member of the group is paid for the services that are provided. Patients can slice and dice care seeking their definition of health.

Incentives and choice make for a power inertia built into the present system.  Newer payment models will need provide a convincing reason for behavior change from both provider and the patient. Fee-for-service may induce bad incentives in providers but payment reforms also need to take realistic views of what patients get out of the current fee-for-service system.

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Direct Pay Medical Homes and ACA Part II : Qualified Health Plans

In the first part of the series, I discussed how direct pay medical homes (DPMHs) might integrate in health plans sold to larger employers.  In this post, I’ll discuss the additional challenges to including DPMHs in health plans sold in the individual and small group markets.  These challenges include needing to adequately address how the services and costs of the DPMH are included but also include significant information exchanges between the DPMH and the health plan.

Health plans coordinating with a DPMH in the individual and small group market  face the same challenges of including the services of the DPMH in reporting for the health system as the ERISA plans discussed in the first part. Health plans will need to understand how DPHM services are included in actuarial value calculations. Health plans sold in the Exchanges will also need to include the subscriber fee of the DPMH in the premium of the plan for accurate comparison shopping.

Health plans in the small and individual market also need to collect and pass onto health plans diagnostic information for risk adjustment.  The risk adjustment program in the the post 2014 marketplace will require health plans to report information relating to the risk of their members. Health plans who enroll only low risk members will need to transfer money to health plans who enroll high risk members.  The goal of risk adjustment is to disincentivize health plans from cherry picking healthy members.

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Direct Pay Medical Homes and ACA Part I : ERISA Plans

Direct Pay Medical Homes (DPMHs) are provider lead alternate payment models.  The patient pays the provider directly a monthly fee and in return receives as many basic services such as office visits, basic labs, and X-rays for no additional fee.  While there is a provision in the Patient Protection and Affordable Care Act (PPACA) allowing for DPMHs to be included as a portion of a qualified health plan (QHPs) or insurance products offered on the state based Health Exchanges.  However, there are a variety of hurdles to be overcome before such plans can be developed.  Some of these hurdles include understanding how DPMHs will count for ensuring that QHPs provide robust coverage and the information flows that must flow between DPHMs and insurance companies.

Before looking at how DPHMs could be included in QHPs, it is actually easier to understand how a DPHM might be included in a plan sold outside the individual and small group markets.  These plans are sold to employers and allow for more flexibility.  The key requirement these plans need to meet are the employer responsibility provisions.  An employer needs to offer a plan that covers “60% of the allowed medical costs”  of participants and meets an affordability requirement.  How would a DPMH interact with these provisions?

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What’s the Right Primary Care Model?

Wellpoint announced on Friday, a major new initiative in the way primary care providers(PCPs) will be paid.  Sara Kliff highlighted the importance  of PCP payment reform but are Wellpoint’s reforms the right way to pay PCPs?

Broadly, the difficulty with PCP payment is that it is very difficult to measure PCPs effectively.  PCPs basically do three things: provide basic services, coordinating more advanced services, and manage chronic conditions.  Most PCP payment methods to date have targeted one of these functions but aren’t quite able to ensure that all of the roles are compensated. Read the rest of this entry »

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