This guest post is contributed by Michael Bailit, MBA, President, Bailit Health Purchasing, LLC, and Megan Burns, MPP, Senior Consultant, Bailit Health Purchasing, LLC
There is currently an enormous amount of effort being expended by CMS, states, foundations, multi-stakeholder coalitions, and employer groups to advance payment reform efforts involving providers and insurers. The recognition that fee-for-service is inherently inflationary is finally an undisputed point. Over the past several years, despite this interest and commitment, change has occurred quite slowly in most state markets. Catalyst for Payment Reform (CPR) reported that based on data from selected large commercial insurers, only 11 percent of payments by insurers in the commercial market are value-oriented, and set a modest goal of increasing this percentage to 20 percent by 2020. Yet, the speed at which payment reform initiatives are being tried and tested has certainly quickened over the past year, perhaps due to the effects of the Affordable Care Act. Continued progress will be dictated by the extent that key actors can harness facilitators of payment reform, and navigate around or through certain barriers. Identifying and understanding these facilitators and barriers is the subject of a new report authored by Bailit Health Purchasing on behalf of the Robert Wood Johnson Foundation.
We interviewed nine Robert Wood Johnson Foundation payment reform grantees and reviewed our experiences with other payment initiatives to identify some of the most common facilitators and challenges to payment reform. We found that the interplay of the factors contributing to successful and unsuccessful payment reform efforts is a complicated dynamic. For example, a multi-stakeholder initiative can often make the difference in a market, but can sometimes prove unsuccessful due to other contributing variables. It’s not always clear which factor serves as the tipping point.
We confirmed that all health care is truly local and that the dynamics of the specific marketplace in which a payment reform effort is occurring may be the single most important determinant of the success of an initiative. The characteristics of providers, plans, and purchasers within any given market greatly influence an effort’s prospects for success in implementation – more than the attributes of the design itself. This may explain why health care financing and delivery innovation frequently occurs in the same states, like Minnesota and Oregon. However, the existence of a favorable market does not guarantee success, nor do more imperfect market dynamics necessarily doom an effort. Other factors influencing payment reform efforts include the role of state government, the characteristics of the organizations leading or participating in efforts, and the design of the reform model itself.
Achieving payment reform is clearly not easy and for any successful effort there are many challenges to overcome. The attached table, adapted from our full report, outlines some of the commonly occurring challenges we identified based on the experiences of some early innovators. We additionally offer strategies that payment reform innovators should consider to reduce the likelihood that barriers will negatively influence their efforts. While these barriers may at the outset appear daunting, organizations committed to change are finding ways to overcome them.
Mastering the use of change facilitators to manage and surmount barriers will increase the likelihood that a change will be implemented and that we’ll meet CPR’s 20 percent goal. Then, of course, we need to make sure that the change is sustained and successful. Still, the first challenge for many is simply to implement a change. Time to perfect the change will hopefully follow. As Julie Andrews sang in The Sound of Music, “Let’s start at the very beginning.”