It’s hard to find anyone these days who isn’t concerned about the deficit. Nearly every report that looks at the future fiscal state of the United States shows future spending that is hard to swallow. The vast majority of future spending, and therefore the largest cause of future deficits, is almost always health care. Specifically, future health care costs are pretty much the major driver of future fiscal problems in the US.
Many have posited that the fee-for-service mechanism of Medicare is a real cause of out-of-control spending. By paying for “doing things”, no matter their value, the current state of affairs actually entices providers to provide volume and not quality. Ending this would be a surefire way to reduce spending in the Medicare program.
Doing so is not easy, however. Bundling services and payments can shift risk to hospitals or providers and lead to access problems in the future. Trying to hit administrative metrics can lead to a focus on statistics not closely linked to real outcomes, affecting quality of care overall. The federal government, though the Centers for Medicare and Medicaid Services (CMS), has begun pilot programs to test some of these ideas. It’s not clear if they actually work in practice to reduce costs, or if they wind up negatively affecting quality or access.
Most of these ideas aren’t new, though. In fact, many private insurers have experience with them, and their experience may inform us as to how such reforms would work in the Medicare or Medicaid system. In a recent report at Bloomberg Government, Christopher Flavelle asked five major insurers (United Health, WellPoint, Humana, Aetna, and Cigna) about how their efforts to reduce costs through alternatives to the fee-for-service system fared.
Nearly all of the insurers are participating in some sort of value-based purchasing plan. Further, nearly all have encouraged “accountable care”, where providers can recoup a share of savings achieved through more efficient care. Almost all of these arrangements are employing double-sided risk, where their providers are also on the hook if costs actually go up.
All are experimenting with care-coordination, in an effort to improve quality. They are trying to compensate providers for time spent on ancillary tasks, like email communication or calls to patients, which are not always reimbursed, but could lead to improvements both in outcomes and spending. Some insurers are also providing incentives to provide such care on a per-member basis.
Unfortunately, most of the insurers were unwilling to share the full results of their value-based payment reforms. Anecdotes are positive, but those cannot be substituted for broad systems-level data.
That doesn’t mean we can’t learn from this. Some of the insurers did report some success in terms of reducing spending. That’s good news for Medicare. It’s telling, moreover, that all of the insurance companies report that they plan to expand these projects. If they were total failures, it’s not likely that they would be engaging in this endeavor.
As always, however, the devil is in the details. Private insurers may be more willing to apply sticks. Rule changes in ACOs for Medicare and Medicaid have shown that HHS has given into to pressure to make their plans much more one-sided. It’s possible that CMS may not be willing to make reductions to rate increases that private insurers are. Medicare and Medicaid also take care of a different, and sicker, population than private insurers. It’s unclear whether results in one group can apply to the other.
For the moment, though, as we await results from CMS pilot projects, this report gives us something to think about. Private insurers are moving forward with plans to alter the fee-for-service payment system. They must be doing it for a reason.
--Aaron
[Editor's note: AcademyHealth's 2013 National Health Policy Conference offers two sessions related to this post, "How Employers are Dealing with Cost" with speakers from the Pacific Business Group on Health, CIGNA Healthcare, Mariott International and Carlson Companies, and "New Models to Pay for Health Care" with speakers from the Center for Healthcare Quality and Payment Reform, Puget Sound Health Alliance, Brandeis University and Noth Texas Specialty Physicians. Learn more about the NHPC and register at www.academyhealth.org/NHPC.]