Joined at the hip

Pur­chasers rec­og­nize need to work with providers to re­form pay­ment sys­tems

Modern Healthcare - - Opinions Commentary - Suzanne Del­banco Suzanne Del­banco is ex­ec­u­tive di­rec­tor of Cat­a­lyst for Pay­ment Re­form, San Fran­cisco.

For most of us en­meshed in the dayto-day of health­care pro­vi­sion and pol­icy, it is easy to lose sight that we are head­ing into the maw of a leviathan called pay­ment re­form and that once spewed out, we’ll likely be wad­ing about a rad­i­cally dif­fer­ent pay­ment sys­tem.

You may re­mem­ber me from my days at the helm of the Leapfrog Group, an em­ploy­erled or­ga­ni­za­tion that has helped make the de­liv­ery sys­tem more trans­par­ent and re­spon­sive to pur­chasers and pa­tients. Also led by large pur­chasers, a new group called Cat­a­lyst for Pay­ment Re­form, where I re­cently be­came ex­ec­u­tive di­rec­tor, is work­ing with providers, health plans and con­sumer and la­bor groups to im­prove qual­ity and re­duce costs by chang­ing how we pay for care.

Pur­chasers have lever­age. When Leapfrog started, em­ploy­ers pur­sued three mar­ket­place changes: stan­dard mea­sures of per­for­mance, pub­lic re­port­ing and pay­ment tied to per­for­mance. While mea­sures and re­port­ing have a long way to go, those trains have left the sta­tion.

But we have work on the pay­ment front. Only about 1% of pay­ments re­flect how doc­tors and hos­pi­tals per­form. While no one can say what this per­cent­age should be—10%? 80%?—we can agree it should be much higher. If we do noth­ing, pur­chasers will con­tinue to pay for mar­ket power, care be­cause of com­pli­ca­tions and cov­er­ing the short­fall from Medi­care and Med­i­caid pay­ments. Pay­ing for these waste­ful as­pects of the sys­tem keeps health­care be­yond the reach of mil­lions and en­ables pre­ventable mis­takes and poor qual­ity.

CPR’s ini­tial agenda en­lists sev­eral strate­gies. First, start with re­forms we can im­ple­ment to­mor­row on the rails of the ex­ist­ing sys­tem. We must im­prove value while we test new pay­ment and de­liv­ery mod­els. Fur­ther­more, to­day’s rates are the base­line for next year’s new forms of pay­ment, so con­tin­ued im­prove­ment helps us now and later. One quick win could be ref­er­ence pric­ing where pur­chasers and health plans set prices for spe­cific ser­vices; any amount higher the pa­tient shoul­ders. If de­signed prop­erly, this ap­proach could en­cour­age providers to im­prove qual­ity, cut costs and lower prices for elec­tive ser­vices. An­other ex­am­ple is re­cal­i­brat­ing pay­ment for ma­ter­nity care so that more of­ten it is ev­i­dence­based. This ser­vice line is a prime tar­get for bet­ter out­comes and sav­ings as cae­sarean sec­tion and early in­duc­tion rates break records.

Sec­ond, tie hos­pi­tal pay­ment to pa­tient safety. Dur­ing the next three years, HHS’ Part­ner­ship for Pa­tients aims to save 60,000 lives and re­duce costs $35 bil­lion by pre­vent­ing in­juries and com­pli­ca­tions. We en­dorse the part­ner­ship and have equipped health­care pur­chasers with health plan re­quests for in­for­ma­tion ques­tions to help them align with it. The RFI sig­nals to in­sur­ers that pur­chasers want their hos­pi­tal pay­ments to re­in­force the part­ner­ship’s in­cen­tives, in­clud­ing mak­ing it harder sim­ply to shift costs to other pur­chasers and pay­ers as more and more Medi­care re­im­burse­ment is at risk.

Third, en­sure competition. Re­search shows that qual­ity de­clines and prices rise when hos­pi­tals merge. Vari­a­tion in rates com­mer­cial in­sur­ers paid providers in Mas­sachusetts cor­re­lated with provider lever­age, not qual­ity. A CPR-com­mis­sioned study across eight mar­kets found siz­able vari­a­tion in pay­ments to hos­pi­tals (as much as 484% of Medi­care rates)—ev­i­dence that some hos­pi­tals are us­ing in ne­go­ti­a­tions.

Em­ploy­ers will be weigh­ing in on the new wave of mar­ket con­sol­i­da­tion. As providers form larger or­ga­ni­za­tions to han­dle the de­liv­ery and pay­ment changes re­quired by ac­count­able care or­ga­ni­za­tions, for pur­chasers, the threat of greater pric­ing power looms large. Shared-sav­ings and shared-risk ar­range­ments aim to re­duce or re­move in­cen­tives for providers to de­liver more and more ex­pen­sive ser­vices. But we lack eval­u­a­tions of ACOs. Pur­chasers will want a say in the con­di­tions of their growth and be­lieve providers’ fi­nan­cial suc­cess should hinge on demon­strat­ing cost-con­tain­ment, ac­cess and qual­ity, and safe­guards to de­ter un­der­treat­ment. CPR’s health plan RFI ques­tions prompt di­a­logue among pur­chasers, plans and providers on these is­sues.

Lastly, drive align­ment among pri­vate and pub­lic sec­tor pur­chasers through di­a­logue and part­ner­ship. Bring­ing health­care pur­chasers’ voices and ex­pe­ri­ence to the CMS and its Cen­ter for Medi­care and Med­i­caid In­no­va­tions can lead to sus­tain­able changes to pay­ment and higher-qual­ity, more affordable care, in both sec­tors.

CPR’s pub­licly avail­able tool kit sup­ports pur­chaser-led re­forms and a shared agenda among CPR pur­chasers. The pay­ment re­form prin­ci­ples, formed with in­put from providers and con­sumers, de­scribe a pay­ment sys­tem rad­i­cally dif­fer­ent than to­day’s. Ac­tion briefs il­lus­trate how pur­chasers can ex­tract more value from re­forms. Our com­mon health plan RFI, which CPR pur­chasers com­mit to use, dis­tills plans’ pay­ment re­form ef­forts with ques­tions such as “What pro­por­tion of provider pay­ments is tied to per­for­mance?” and seeks sup­port for care­ful im­ple­men­ta­tion re­gard­ing ACOs and the part­ner­ship. This fall, CPR’s model health plan con­tract lan­guage will give fur­ther shape to the shared agenda now sought by a crit­i­cal mass of each ma­jor health plan’s cus­tomers. A na­tional score­card on pay­ment re­form will track our nation’s progress.

As pur­chasers de­velop their role in re­form­ing pay­ment for a more sus­tain­able health­care sys­tem, they will need to be part of an un­prece­dented col­lab­o­ra­tion among all stake­hold­ers, in­clud­ing providers. The stakes are higher than ever. Through big ideas and team­work, we can tame the health­care pay­ment beast.

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