Todd Park is known for being excited, but THIS TIME the co-Founder and Executive Chairman of Devoted Health is excited that it’s the 10th Anniversary of Health Datapalooza, a gathering and initiative he had a hand in creating when he served Barack Obama as the Chief Technology Officer of the United States. What else is energizing Todd? How about value-based payment finally taking hold and the opportunities that’s opening up for payment model innovation and that will allow the disruption of healthcare to achieve ‘escape velocity.’
Filmed at Health Datapalooza in Washington DC, March 2019.
Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.
Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health.
Back in 2015, 20 major health systems and payers pledged to
convert 75% of their business to value-based arrangements by 2020. Today, more than
two-thirds of payments from U.S. commercial health insurers are tied to some
kind of value-based model. By 2021, the health plans expect three-quarters of their
payments will be value-based.
However, a recent analysis of Change Healthcare data by Modern
Healthcare found that the percentage of value-based revenue tied up in
upside/downside risk contracts was in the single digits. Among the types of two-sided
risk contracts that provider organizations had were capitation or global
payment (7.3%), pay for performance (6.5%), prospective bundled payment (5%),
population-based payment (5.8%), and retrospective bundled payment (4.1%).
An AMGA survey picked up signs of a recession in risk contracting
in 2016. A year earlier, survey respondents—mostly large groups–had predicted
their organizations would get 9 percent of revenue from capitated products. In
2016, the actual figure was 5 percent, according to a Health Affairs
post by the AMGA’s Chet Speed and the late Donald Fisher.
cited a number of obstacles to the spread of risk contracting, including
“limited commercial value-based or risk-based products in their local markets; the
inability to access administrative claims data from all payers; the massive
administrative burden of submitting data in different formats to different
payers; lack of access to investment capital; and inadequate infrastructure.”
How will the drive to health care value affect health care’s structure? We tend to assume that the health care structure we’re become accustomed to is the one we’ll always have, but that’s probably far from the truth. If we pull levers that incentivize the right care at the right time, it’s likely that many of the problems we think we’re stuck with, like overtreatment and a lack of accountability, will disappear.
A large part of getting the right results is making sure that health care vendors have the right incentives. All forms of reimbursement carry incentives, so it’s important to align them, to choose payment structures that work for patients and purchasers as well as providers. Fee-for-service sends exactly the wrong message, because it encourages unnecessary utilization, paying for each component service independent of whether its necessary and independent of the outcomes. Compare US treatment patterns to those in other industrialized nations and you’ll find ours are generally bloated with procedures that have become part of practice not because they’re clinically necessary but simply because they’re billable.
By contrast, value-based arrangements are really about purchasers demanding that health care vendors deliver better health outcomes and/or lower cost than what they’ve experienced under fee-for-service reimbursement, and the payment structure often asks the vendor to put his money where his mouth is, at least where performance claims are concerned. In a market that’s still overwhelmingly dominated by fee-for-service arrangements, one way for a vendor to get noticed is to financially guarantee performance. Integrated Musculoskeletal Care, a musculoskeletal management firm based in Florida, guarantees a 25% reduction in musculoskeletal spend on the patients they touch. This typically translates to a 4%-5% reduction in total health plan spend, just by contracting with this vendor, a compelling offer in an environment that makes it hard for upstarts to get market traction.
A class action legal ruling this month, on a case originally filed in 2014, found that UnitedHealthCare’s (UHC) mental health subsidiary, United Behavioral Health (UBH), established internal policies that discriminated against patients with behavioral health or substance abuse conditions. While an appeal is expected, patients with legitimate claims were systematically denied coverage, and employer/union purchasers who had paid for coverage for their employees and their family members received diminished or no value for their investments.
Central to the plaintiff’s argument was the fact that UBH developed its own clinical guidelines and ignored generally accepted standards of care. In the 106 page ruling, Judge Joseph C. Spero of the US District Court in Northern California wrote, “In every version of the Guidelines in the class period, and at every level of care that is at issue in this case, there is an excessive emphasis on addressing acute symptoms and stabilizing crises while ignoring the effective treatment of members’ underlying conditions.” He concluded that the emphasis was “pervasive and result[ed] in a significantly narrower scope of coverage than is consistent with generally accepted standards of care.” Judge Spero found that UBH’s cost-cutting focus “tainted the process, causing UBH to make decisions about Guidelines based as much or more on its own bottom line as on the interests of the plan members, to whom it owes a fiduciary duty.”
In a statement to FierceHealthcare, UnitedHealth said it “looks forward to demonstrating in the next phase of this case how our members received appropriate care…We remain committed to providing our members with access to the right care for the treatment of mental health conditions and substance use disorders.”
It is important to be clear about what transpired here. Based on evidence, a subsidiary of UnitedHealthCare, America’s second-largest health care firm, has been found in a court of law to have intentionally denied the coverage of thousands of patients filing claims. The organization justified the restrictions in coverage using internal guidelines tilted to favor financial performance rather than accepted standards of care. In other words, UBH’s leaders (as well as those at UHC) knowingly defrauded their customers and devised a mechanism to rationalize their scheme. In his ruling, Judge Spero described testimony by UHC representatives as “evasive — and even deceptive.”
On one hand, regulators are reluctant to limit private corporate action lest we reduce innovation and patient choice and promote moral hazards. On the other hand, a privatized marketplace for services requires transparency of costs and quality and a minimum of economic externalities that privatize profit and socialize costs.
For over two decades, the HIPAA law and regulations have dominated the way personal health data is used and abused to manipulate physician practice and increase costs. During these decades, digital technology has brought marvels of innovation and competition to markets as diverse as travel and publishing while healthcare technology is burning out physicians and driving patients to bankruptcy.
Back at their desks after the holidays, health care payers, providers and policymakers across the country are staring down their list of 2019 priorities, wondering which they can actually accomplish. Innovation to improve care quality and reduce costs will top many lists, and progress on this front depends, in no small part, on conditions for such innovation in the health care marketplace. Here are three phenomena unfolding there that I’ll be following closely this year to understand what innovators are up against, and how they’re responding.
The legal battle over the Affordable Care Act (ACA). Over 20 million previously uninsured Americans acquired health insurance between 2010 and 2017, many due to the ACA’s premium subsidies, ban on pre-existing condition restrictions, and Medicaid expansion. At the most fundamental level, this coverage expansion has vastly improved one of the most important conditions for a healthy population—access to health care. But it also supports innovation toward better, more affordable care.Coverage expansion means providers get reimbursed for more of the care they deliver to patients who are unable to pay, which strengthens their financial position. It also enables some patients to maintain more continuous health insurance coverage, hence see a doctor more regularly over time. This, in turn, facilitates providers’ development of more effective approaches to management of long-term, chronic disease, which causes untold suffering and costs the U.S. hundreds of billions in direct medical costs. Continue reading…
Today’s opioid crisis is one of the most dire side effects driven by our dysfunctional U.S. healthcare system. A recent JAMA Surgery report found that many surgeons prescribe four times more opioids than their patients use. This opens the door for misuse and abuse later on. In fact, the total combined cost of misuse, abuse, dependence and overdose is about $78.5 billion.
Unfortunately, there’s a direct connection between the low-quality care many patients receive, and the astounding rates of opioid addiction. Often, insurance plans offer access to high-cost, volume-centric physicians and include high deductibles — creating an expensive cycle that doesn’t focus on patient outcomes. Instead of taking the time to figure out what is actually ailing a patient, these overworked and nearly burnt-out doctors get them in and out the door with a referral and a prescription for more pills than they could ever need.
What may surprise you is that employers play a large part in setting the stage for addiction. Millions of Americans get their health insurance from their employer, and a majority of those plans are fully-insured. To determine what insurance plan they offer, employers work with a benefits broker to purchase one from a carrier like Aetna or Cigna. Each year, employers and their broker join together for an annual dance — the broker tells them that healthcare costs are rising so their insurance rates have gone up, usually by 5-20 percent. The employers don’t know better than to accept these increases, filtering them down to employees in the form of higher premiums. Despite costs constantly going up, the quality of care does not follow. Continue reading…
Amazon has transformed the way we read books, shop online, host websites, do cloud computing, and watch TV. Can they apply their successes in all these other areas to healthcare?
Just last week, Amazon announcedComprehend Medical, machine learning software that digitizes and processes medical records. “The process of developing clinical trials and connecting them with the right patients requires research teams to sift through and label mountains of unstructured clinical record data,” Fred Hutchinson CIO Matthew Trunnell is quoted saying in a MedCity News article. “Amazon Comprehend Medical will reduce this time burden from hours to seconds. This is a vital step toward getting researchers rapid access to the information they need when they need it so they can find actionable insights to advance life-saving therapies for patients.”
Deriving insights from data and making those available in a user-friendly way to patients and clinicians is just what we need from technology innovators. But these tools are useless without data. If an oncology patient is hospitalized, her provider may not be informed of her hospitalization for days or even weeks (or ever). And the situation is repeated for that same patient receiving care from cardiologists, endocrinologists, and other providers outside of her oncology clinic. When it comes to personalized health and medicine, both the quantity and quality of data matter. Providers need access to comprehensive patient health data so they can accurately and efficiently diagnose and treat patients and make use of technology that helps them identify “actionable insights.”
In the run-up up to this month’s mid-term elections, health care appears to be just one of many burning political issues that will be influencing Americans’ votes. But delve into nearly any issue—the economy, the environment, immigration, civil rights, gun control—and you’ll find circumstances and events influencing human health, often resulting in profound physical, emotional and financial distress.
Evidence suggests that separating immigrant children from their families could cause lasting emotional trauma. Gun violence and adverse weather events destroy lives and property, and create hazardous living conditions. Structural racism has been linked to health inequities, for instance where housing discrimination leads to segregation of black buyers and renters in neighborhoods with poor living conditions. The list goes on, and through every such experience, affected individuals, their loved ones, and their communities learn implicitly what health care providers have long known: that health status depends on much more than access to, or quality of, health care.
Some of the most influential factors are called social determinants of health, and they include education, immigration status, access to safe drinking water, and others. Society and industry must collaborate to address them if we are to reduce the extraordinary human and economic costs of poor health in our nation. Fortunately, many providers have embraced the challenge, and are tackling it in myriad, innovative ways. Continue reading…
Lawton Burns and Mark Pauly, economists at the Wharton School, just published an article that should be required reading for all policy makers and health services researchers. The article, entitled “Transformation of the health care industry: Curb your enthusiasm,” appears in the latest edition of the Milbank Quarterly.
Burns and Pauly undertook an enormous task and executed it well. They first sought to explain the assumptions underlying Managed Care (MC) 2.0 – the proposals promoted by the managed care movement in the wake of the HMO backlash of the late 1990s. Then they evaluated the probability that the MC 2.0 proposals will work as advertised. To do that, they looked at the relevant research and then at the social conditions that are impeding the implementation of those proposals. That’s a lot to bite off.
This is an unusually valuable article because of its scope, organization, and documentation. I will summarize it first, then discuss it in more detail. I’ll close with a discussion of my one serious criticism of this excellent paper: The authors, having made it clear they think the current “value-based” approach to cost containment is doomed, profess to see no solutions to rising health care costs.
Testing a mantra
Burns and Pauly are among the small minority of health services researchers who seem to be curious about the powerful norms that influence their profession but which are rarely acknowledged and never studied. They do not come right out and say, “Our profession resembles a religion more than a scientific discipline,” but you get the feeling they might agree with that statement if you could talk to them over coffee. They communicate their interest in the undiscussed norms both in the way they treat health policy jargon (they view it with some skepticism) and in their willingness to declare that fundamental assumptions underlying MC 2.0 were never tested.