By Gena Akers
It’s a fact: The decisions you make in your personal life about diet and exercise have a dramatic impact on whether you can get healthy and stay healthy, and what your health care will cost. But beyond these personal health choices, there is broad agreement that one underlying cause of the rise in health care costs is how care is paid for.
Currently, health care services are generally sold through the fee-for-service model in which providers are paid a predetermined amount for each discrete service they provide to a patient. Rather than rewarding the quality of care that’s provided, this model rewards the quantity of care provided.
Health care leaders at the Center for Improving Health Value in Health Care and the Colorado Health Institute have identified three main problems with this model:
- The system encourages providers to deliver more care. There is no disincentive to order additional tests or even duplicate tests.
- Providers are only compensated for the face-to-face contact they have with their patients. No compensation is provided for any consultation provided beyond the clinic walls, such as answering emails or doing phone consultations.
- Providers are not encouraged to coordinate the care they provide. Each provider is paid based on the services that he or she provides, no matter what services are being provided by other providers. Many providers are conscious about health care costs and care coordination, but they are in a system that does not support them or reward them financially.
It’s estimated that these unnecessary costs and duplicative treatments account for 30 percent of health care spending.
To reduce costs and improve care, health care leaders in Colorado are piloting five different payment models. These models are:
- Pay for performance models, which reward providers for meeting or exceeding pre-established goals for care delivery and patient outcomes. For example, a pediatrician may receive additional pay if all of her patients receive their recommended immunizations. While the pay for performance model can improve care delivery for conditions such as diabetes, there is limited evidence that it will achieve significant cost savings.
- Care coordination payments, which give health care providers a monthly payment to pay for the infrastructure needed to offer better care coordination. This includes health information technologies like electronic medical records and disease registries. This payment model is normally employed in the context of medical homes, the practice of delivering team-based care to better manage all aspects of a patient’s health care needs. While there is very little evidence to explain the overall cost-reducing impact, positive preliminary results have been reached in many pilot programs. Readmission rates, emergency room visits and Medicaid costs have all been reduced in care coordination payment pilot projects across Colorado.
- Gain sharing and shared savings, which offers providers a percentage of net savings resulting from their efforts to reduce health care spending while improving health outcomes. Several commercial and Medicaid payers, including Anthem, Cigna and Colorado Access, are incorporating shared savings approaches into their payment structures. For health care organizations, this model is often incorporated with improved care coordination, like medical home adoption. Several pilots are now under way to analyze if this model can reduce health care costs. The San Luis Valley Regional Medical Center is part of this pilot.
- Bundled payment, which provides a single payment to a provider or group of providers for all health care services associated with a defined episode of care. For example, if a 40-year-old woman has asthma, insurance would pay a monthly fee to her health care provider for asthma-related services. If the patient and provider can manage her asthma, then the provider will profit. However, no matter how much care the patient receives, if her asthma worsens, the provider will receive a limited financial return. More so than other models, bundled payment encourages providers to think about quality and outcomes at the start of care delivery. From studies in Massachusetts, the bundled payments model shows the greatest promise for reducing health care expenditures. Locally, health care organizations are participating in a bundled payment pilot known as Prometheus to improve the management of six chronic conditions: asthma, chronic obstructive pulmonary disease, coronary artery disease, diabetes, gastroesophageal reflux disease and hypertension.
- Global payment, which compensates providers for all or most of the care that their patients may require over a contract period. This model significantly increases the risk to the providers since they become responsible for paying for any cost overages. However, with the financial incentives to deliver coordinated, efficient care and to promote preventive and health maintenance activities, research shows that this model could significantly reduce spending on health care services. Soon, Rocky Mountain Health Plans will launch a global payment model on the Western Slope.
No matter which model or combination of models insurance companies and health care organizations implement over the coming years, their goals are clear: to improve the health of the population, to improve the patient experience and to reduce per capita spending on health care in the United States.
For additional information, visit www.sanluisvalleyhealth.org/health-care-101/.
Gena Akers is the project coordinator for SanLuisValleyHealth.org, an education and advocacy website dedicated to increasing access to health for all residents in Colorado’s San Luis Valley. SanLuisValleyHealth.org is a project of the San Luis Valley Regional Medical Center and funded through The Colorado Trust. She can be contacted at [email protected].