Healthcare Reform Models Focusing on Value to Consumers - Part 1

Many important things have been happening in the healthcare industry. What I found most exciting is the recent focus on establishing and supporting:

1. Patient Centered Medical Homes (PCMHs)
2. Accountable Care Organizations (ACOs)
3. Meaningful financial incentives models for clinicians and organizations demonstrating care quality improvement and cost control (i.e., cost-effective healthcare delivery bringing value to patients/consumers).

PCHM

I've written about the PCMH model several times over the past four years (see this link). A PCMH is, in essence, a physician practice headed by a primary care physician, which provides coordinated care through collaborating interdisciplinary teams. These groups of sick-care and well-care practitioners focused on delivering high-quality preventive care and effective chronic disease management focused on demonstrating positive patient outcomes.

ACO

An ACO, which goes hand-in-hand with the PCMH, is a related model that focuses on "…the alignment of incentives and accountability for providers across the continuum of care" [Reference]. Together, the PCMH and ACO "…are helping organizations to create systems where care delivery is performed by a team of professionals led by the primary care physician and are held accountable for the care they provide…[T]he patient and the family are the major focus of the program. Engaging them into the process is key to the success. The programs that have been successful have [been] identifying patients at risk and developing a coordinated plan with the help of a multidisciplinary team" [Reference].

Financial Incentives: Pay for Value

Financial incentives used in performance-based accountability systems (such as the PCMH/ACOs) have been found to help improve performance, resulting in better outcomes (more effective and efficient care). "…But creating an effective performance-based accountability system requires careful attention to choosing the right design for the system, which must be monitored, evaluated and adjusted as needed to meet performance goals" [Reference]. And, I'd add, the incentives must be great enough to matter.

For example, "pay for performance" (P4P) programs that give small financial incentives result in only modest care quality improvements since the potential financial reward represents only a small percentage of the overall physician pay and thus do not serve as a strong incentive. This doesn't surprise me. As I wrote three years ago at this link, we ought to be focusing on transforming from P4P to a "pay for value" (P4V) approach that rewards providers who deliver high-value care to patients/consumers that promotes the cost-effective prevention and treatment of illness, dysfunction and distress. Dealing with such a complex and controversial issue is certainly a challenge.

In any case, the three inter-related transformational models discussed above hold great promise! They provide useful approaches for improving our dysfunctional healthcare system. These strategies and processes are consistent with the Patient Centered Value Chain I wrote about three years ago at this link.

A key question remaining is: How should P4V be implemented so it fosters and supports PCMH/ACOs through adequate incentives and meaningful use of health IT?

Affordable Care Act

The Federal government's Affordable Care Act offers answers to this question, although finding a solution is made more difficult--as stated eloquently by Karen Davis of the Commonwealth Fund--because the healthcare industry:

…is not like markets for other goods and services. Information on prices is not typically available, decisions…are often made in an emergency, and patients lack knowledge about the value of diagnostic and treatment services…or where to go for the best care with the best prospects for full recovery, functioning, and quality of life.

Nevertheless, the Affordable Care Act offers a solution by presenting:

...important provisions to increase access to information on the quality of physician and hospital care and establish multi-payer databases that will provide a more comprehensive picture of patterns of care across providers. It also begins to address the imbalance between primary and specialty care by increasing primary care payment rates under Medicare and Medicaid. [It seeks]…new ways of paying for and delivering health care, including 'bundled' methods of payment to encourage providers to work together across health care settings…[and] rewarding those who offer appropriate, high-quality, and efficient care.

These initiatives represent a move away from the current fee-for-service system…[and] can help improve transitions in care from one provider to another and one care setting to another. Many errors occur during these hand-offs and patients often experience frustrations due to inadequate communication among providers involved in their care. These initiatives are one important step in the evolution of a new payment system that will provide incentives to achieve the best results…and in doing so achieve savings from the elimination of wasteful, duplicative, or avoidable treatment.

[In addition to changing payment methods]…new health care organizations that are accountable for both patient outcomes and the resources devoted to care will need to be formed …[and supported with] better information, tools, and technical assistance to ensure that essential services are provided efficiently while quality, innovation, productivity, and prevention are enhanced. Safeguards will also be needed against potential under-provision of care or exercise of undue market power [Reference].

In my next post (part 2), I examine various financing models for paying for the kind of coordinated, high quality, affordable care PCMH/ACOs can deliver.