The case for col­lab­o­ra­tion

Modern Healthcare - - COVER STORY - Me­lanie Evans

Gov­ern­ment should fol­low pri­vate sec­tor: economists

As the na­tion de­bates health re­form along with its choices for pres­i­dent, two health economists last week said the pub­lic sec­tor could best serve in­no­va­tion by fol­low­ing pri­vate mar­kets’ lead.

The economists, Neeraj Sood of the Univer­sity of South­ern Cal­i­for­nia, and Aparna Higgins of Amer­ica’s Health In­sur­ance Plans, made a case for the pub­lic sec­tor as a col­lab­o­ra­tor rather than pi­o­neer in ef­forts to de­velop new health­care pay­ment and de­liv­ery mod­els. The gov­ern­ment can best in­ter­vene, wrote Sood and Higgins, in cases where it could sup­ply the cap­i­tal, data or co­or­di­na­tion to sup­port pri­vate-mar­ket in­no­va­tion.

Pub­lic of­fi­cials should also con­sider more than their cof­fers as they de­bate pub­lic pol­icy. And they should weigh the risks of how mar­kets may re­spond to pub­lic pol­icy, such as the po­ten­tial for providers to exit mar­kets when Medi­care and Med­i­caid cut pay­ment rates.

By closely work­ing with health plans, hos­pi­tals and doc­tors, the pub­lic sec­tor could avoid cre­at­ing ad­di­tional bur­dens on busi­ness with a pro­gram that di­verges from ef­forts emerg­ing in the pri­vate mar­kets, the authors wrote.

Sood, an as­so­ciate pro­fes­sor and di­rec­tor of in­ter­na­tional pro­grams at the USC health pol­icy cen­ter, de­scribed the gov­ern­ment’s role as one that should dis­sem­i­nate in­for­ma­tion—some­thing it has not al­ways done in a timely fash­ion—and fill in gaps where the pri­vate sec­tor stalls, typ­i­cally be­cause of high risk.

Fed­eral of­fi­cials could do more to pro­mote re­search on some tech­ni­cal as­pects of pay­ment re­forms, in­clud­ing how mod­els such as shared sav­ings pro­grams at­tribute pa­tients to providers for qual­ity and cost­con­trol mea­sure­ment, the authors wrote.

Sood said the fed­eral gov­ern­ment could

also cir­cu­late timely in­for­ma­tion about ini­tia­tives across the coun­try.

New pay­ment mod­els may not take hold among small or ru­ral providers, who lack the cap­i­tal and in­fra­struc­ture to adopt new pay­ment mod­els with­out sup­port and can­not at­tract pri­vate-sec­tor cap­i­tal, Sood said. In­deed, the CMS tai­lored one ac­count­able care pro­gram to pro­vide start-up fund­ing for small and ru­ral med­i­cal groups and hos­pi­tals, a pol­icy move he praised.

Sood said a frame­work to guide pub­lic- sec­tor ini­tia­tives would be im­por­tant as mo­men­tum builds be­hind pay­ment and de­liv­ery re­form ef­forts in the wake of the Pa­tient Pro­tec­tion and Af­ford­able Care Act.

Dr. Robert Beren­son, a health pol­icy ex­pert at the Ur­ban In­sti­tute and for­merly head of Medi­care pay­ment pol­icy for the CMS, said the pa­per would stim­u­late dis­cus­sion on the role of the pub­lic sec­tor, a de­bate he called use­ful. But Medi­care should not al­ways de­fer to the pri­vate sec­tor, he cau­tioned.

Beren­son said Medi­care has the size and clout to pro­mote change that play­ers in the pri­vate sec­tor lack. The CMS also fre­quently con­sults the pri­vate sec­tor as it de­vel­ops pi­lots and demon­stra­tions and new poli­cies are vet­ted pub­licly through a com­ment pe­riod.

“I think there are mech­a­nisms for mak­ing sure Medi­care is not do­ing some­thing in iso­la­tion and im­pos­ing some­thing that’s not ac­cepted,” he said.

Beren­son said the pri­vate health­care sec­tor is also rife with “mar­ket fail­ures,” as the authors de­scribed. Those fail­ures, such as a lack of com­pe­ti­tion in lo­cal mar­kets, make the need for Medi­care’s in­ter­ven­tion nec­es­sary. “We need Medi­care to be in­no­va­tive be­cause of mar­ket fail­ure,” he said.

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