Transforming Healthcare by Transforming Payment

October 27, 2017

By Abigail R. Barker, Research Assistant Professor, Brown School and Faculty Lead for Data and Methods, Center for Health Economics and Policy, Institute for Public Health

Scholars
Research Assistant Professor, Brown School; Faculty Lead for Data and Methods, Center for Health Economics and Policy, Institute for Public Health

The Center for Health Economics and Policy co-hosted a major health policy event this October. Together with the Clark-Fox Policy Institute, we convened nearly 150 providers, researchers, policymakers, and patient advocates to discuss ideas for transforming healthcare in Missouri.

One theme repeated throughout the day was that we as a society need to shift our focus to prevention and preventive services, and the policy solutions proposed by conference participants reflected the view that these goals need to be addressed by any means available, including outside the traditional medical establishment. However, the thorny question is how to do this in an industry that still relies heavily on the fee-for-service model. An important point often overlooked in the healthcare cost discussion is that all of those expenditures are also incomes earned by people working in the healthcare sector. Thus, we need to think about how payment can be restructured so that the good or service we are paying for is health.

An important point often overlooked in the healthcare cost discussion is that all of those expenditures are also incomes earned by people working in the healthcare sector.

The Healthcare Workforce

Some of the incomes in the healthcare sector are, of course, earned by physicians. Local, regional, and national shortages of physicians exist in many parts of the U.S. already, and are predicted to increase dramatically by 2030 due to population growth and aging. According to the Robert Graham Center, Missouri is projected to need an 18% increase in primary care physicians in 2030 compared to 2010. Given the projected shortages, based upon demographics and numbers trained, it is worth asking whether all of this projected provider need must be filled by physicians. Many states are changing policies to allow advanced practice nurses, physician assistants, and other ancillary providers to assume a greater role in healthcare delivery. In some states, personnel with limited medical backgrounds, such as community health workers, lactation consultants, and nutritionists, are providing services “upstream” that support patients’ health by influencing their environments and behaviors. So one way to shift toward paying for health (without actually affecting physicians adversely over time but rather by lessening the projected shortages) is to change the provider mix. However, the fundamental payment issue – that patients don’t seek out health-related services until they have symptoms of illness – means that this solution will never be a comprehensive one on its own.

Fragmented or Siloed Care

Increasing the range of provider types and the range of services which they cover, while important to shifting the paradigm from treatment of acute episodes to addressing environments and behaviors, also runs the risk of adding to the problem of fragmented or siloed care. Gaps in communication across a patient’s providers are already considered a significant challenge to care coordination; in order for more provider types to improve communication, it seems obvious that one of those provider types should be a medical recordkeeper. While it is possible that payers such as Medicaid and Medicare could be convinced to reimburse this function directly, it is less likely that private insurers would choose to do so when the financial gains from managing a patient’s care are likely to accrue over years, not weeks or months. Thus we are in need of a payment model that allows such gains to be realized in the aggregate (where they could be more significant even in the short run) rather than at the patient level.

Mental Health Concerns

The fragmentation issues common in handling a patient’s physical care are often compounded when mental health concerns also need treatment. Referrals are often needed in order to ensure payment, primary care providers are typically not able to be reimbursed, and the general disconnect between mind and body ensures that many patients will be treated for symptoms arising in one or the other, but not both, by any given provider. A central challenge is that many mental health issues stem from the toxic stress of poverty, lack of economic opportunity, and dysfunctional or absent social support systems. But while a provider can receive payment for prescribing an anti-depressant or anti-anxiety medication, there is no payment model that can address these broad and pervasive issues that are often the root causes. In Massachusetts, the nation’s first Medicaid-funded “Social ACO,” or Accountable Care Organization, has demonstrated the potential for success of an approach that pays to eliminate whatever barriers to health management or improvement exist for the patient. Services might include transportation or childcare for medical appointments as well as connection to sources of social support. In the settings of both physical and mental health, this approach is likely to be cost-effective for the highest-need populations. However, it may be difficult to adapt to Missouri in the short term because of the much higher level of financial obligation of Massachusetts’ Medicaid program to low-income patients, which provides the incentive for Massachusetts to fund such a system.

Addressing the Opioid Crisis

Challenges in delivering both physical and mental healthcare now include addressing the opioid crisis, which is especially virulent in Missouri. Many experts have pointed out that again, the payment system actually contributes to the crisis. Doctors are incentivized to overprescribe pain medications in order to score well on patient satisfaction measures, which in turn influence their Medicaid reimbursement and their overall word-of-mouth reputation. Some physical therapy codes that are necessary for successful rehabilitation after surgical treatment are not covered by Medicaid, creating a situation in which doctors prefer to control the patient’s pain rather than trying to resolve the issue with surgery. There is often a lack of explicit training for providers on best practices for prescribing painkillers appropriately and on recognizing and intervening in incidents of drug abuse. Finally, treatment facilities are overloaded, and increasing capacity and providing interim support for those on waitlists are obvious responses to the problem. However, to truly address this crisis, we need to dig deeper to identify the core reasons why people are in pain. These reasons may come from a number of sources, ranging from work and sports injuries to repetitive stress to diet and nutrition to stress-related issues. Many patients may benefit from physical therapy, an ergonomic assessment of their daily tasks, a dietary overhaul, or stress management. In the long term, some of these reasons may be preventable with the right interventions, although many of these would not be performed by the traditional medical provider.

Addressing the Root Causes of Health Problems

In general, the common element across all of these ideas is that we must find a way to deploy people and resources toward identifying and addressing root causes of health problems, even when these root problems are not directly health-related. Moreover, the ideal way to address such problems, in terms of cost-effectiveness, is before they cause health problems.

To accomplish this, we need to figure out how to pay for such interventions. In a recent op-ed in the Milbank Quarterly, Joshua Sharfstein, the current Associate Dean for Public Health Practice and Training at the Johns Hopkins Bloomberg School of Public Health and former Secretary of the Maryland Department of Health and Mental Hygiene, proposes an intriguing solution: public health bundles. Organized around state or local health departments, public health bundles would collect payments from participating payers (private insurance, Medicaid, etc.) based upon the anticipated healthcare costs incurred for a certain condition (or a certain population). The money would be used both for population-level investment in reducing the incidence, severity, and cost of the condition, and for paying out the actual costs incurred by participating payers. Sharfstein states that public health bundles will work best when “a specific population and outcome can be readily identified” and suggests examples such as prevention of unintended pregnancy, teen automobile accidents, and heart attacks among smokers. He also suggests that public health bundles could be combined with social impact bonds, so that investors would pay up-front for the intervention and would realize a return if the intervention worked at a population level, i.e. if the payers’ claims were less than expected.

Public Health Bundles

The first reason to appreciate the concept of a public health bundle is that it can, in principle, pay for prevention. As discussed in the preceding paragraphs, this is something that is very difficult to achieve within our current structure. The second reason to appreciate the concept is that it is inherently local. In Missouri, there are 115 counties (including the independent city of St. Louis), 8 metropolitan statistical areas, and 20 micropolitan areas. There are 59 rural (neither metropolitan nor micropolitan) counties. There are 115 local public health agencies. If each city, town, or county had the opportunity to manage population health through funded programming targeting a variety of specific conditions, with additional funds available as incremental success is achieved, we would likely see a variety of uses of the mechanism. Each county (or group of counties) could design ways to target the most costly health issues for its residents, and each county could hire community health workers, case managers, care coordinators as appropriate for their population to mitigate some of the other issues discussed above. It could all be determined locally in response to needs and priorities.

Our recent “Transforming Healthcare in Missouri” event, from which proceedings many of the challenges, priorities, and solutions outlined here emerged, was designed to produce innovative yet cost-saving approaches that the state of Missouri could implement. The implicit object of many of the solutions was the Medicaid program, MOHealthNet. Indeed, from the perspective of improving population health, there is no entity so well-positioned to effect change. However, because of low eligibility standards, and because of contracting with managed care organizations, MOHealthNet only bears the direct cost of medical bills for 3.7% of the state’s population. If the managed care companies participated as well, the costs of 16.3% of the population would be involved. While this is small enough to make Massachusetts’ Social ACO model impractical, it is also large enough to roll out a trial of the public health bundle concept. The state could identify 3-5 target areas, including opioids, and could redirect payments to (groups of) county health departments tasked with lowering the prevalence of those specific problems. If successful, savings could be reinvested in further improvements in the original areas, funding to address additional target areas, and ultimately expansion of eligibility for subsidized medical care to the entire Missouri population living in poverty.


This post is part of the “Transforming Healthcare in Missouri” series of the Institute for Public Health’s blog. Subscribe to email updates or follow us on Twitter and Facebook to receive notifications about our latest blog posts.

Tags: , , , ,