Rob Houston, MBA, MPPAugust 11, 2014
The Affordable Care Act is supporting state efforts to drive reimbursement for health care away from fee-for-service payments — which reward volume of services — toward paying for quality. Some of these new payment models have become prevalent in accountable care organizations, which hold providers financially responsible for quality improvement and patient outcomes. But do these payment reforms go far enough to encourage true accountability?
In a recent New York Times article, Health Insurers Are Trying New Payment Models, Reed Abelson outlines payment reforms undertaken by health plans, observing the trend that 20 percent of all payments to providers by Blue Cross insurers are now via value-based purchasing initiatives. This is a great first step toward accountable care, but true accountability has not yet been achieved. As noted by Francois de Brantes of the Health Care Incentives Improvement Institute: “Until there’s risk, real financial risk, it doesn’t change anything.”
Global Payments to Drive Accountability
So how can insurers and government payers ensure real financial risk? Global payments may provide one answer. While popular payment reform strategies — including shared savings arrangements, bundled payments, and pay-for-performance initiatives — have shown promise (Minnesota’s Integrated Health Partnerships program recently reported $10.5 million in savings through a shared savings approach), such efforts simply adjust the fee-for-service reimbursement model. Global payments completely replace the status quo by reimbursing providers with a flat per-patient fee, thereby holding providers fully accountable for services included under the payment. Since providers who are held accountable for a group of beneficiaries receive no financial reward for treating sick patients, they are motivated to keep patients well and provide appropriate care in the proper care setting when patients are sick.
A good example of a global payment is found in Oregon’s Coordinated Care Organizations (CCOs). CCOs are ACO-like arrangements that coordinate care for Medicaid patients. Spearheaded by the Oregon Health Authority and championed by Governor John Kitzhaber (who is a doctor), the program is in the process of enrolling every Medicaid beneficiary in the state into a CCO (including individuals dually eligible for Medicare and Medicaid). However, unlike typical Medicaid ACO payment arrangements, Oregon’s CCOs are reimbursed for services by a global payment.
Taking accountability one step further, Oregon’s CCO payment includes not only physical health services (such as primary care visits, medical tests, and ED and inpatient services), but also mental health and substance abuse services; dental services; and some long-term services and supports for disabled and chronically ill individuals. Including these services in the CCO arrangement allows providers to better coordinate and deliver care across multiple care settings.
Early CCO results are positive. In 2013, hospitalization rates for Oregon Medicaid beneficiaries for a number of chronic diseases decreased by approximately 32 percent when compared with 2011 utilization levels, while emergency department visits were reduced by 17 percent. The dramatic decreases in utilization for these expensive services are expected to show significant cost savings.
Toward Totally Accountable Care
Instituting global payments is an important step toward creating totally accountable care organizations (TACOs), a movement that is gaining traction among leading-edge providers. TACOs integrate a full range of physical health, behavioral health, dental services, long-term services and supports, relevant social services, and public health initiatives and pay for these services through a global payment. While other accountable care approaches can help improve patient outcomes and incentivize cost savings, totally accountable care may require a greater effort. For totally accountable care to take hold, it is imperative to reward providers for keeping patients well, not just treating them when they are sick, and global payments offer a possible pathway to achieve this goal.