Payment Reform

payment reformThe way we pay for health care has consequences for quality and cost.

Under the dominant U.S. system, most health-care providers are paid a fixed fee for each service they provide, in most cases with no limits on those services and without regard for results.

This “fee-for-service” model rewards volume — more tests, more scans, more specialist examinations and more hospitalizations. But it does nothing to penalize poor patient results or redundancies. Some services, such as high-tech tests, are overvalued, while others, like primary care, are undervalued. Even worse, doctors who work to reduce complications and to help keep their patients well receive less reimbursement and can come out financial losers.

The result is the U.S. pays far more for health care than any other nation and is on a path of unsustainable spending growth. Yet we do not receive high-value care in return for our high-level of investment. Rather, studies show that American health care is too often fragmented, uncoordinated and unsafe.

To address these issues, the Maine Health Management Coalition has embraced three payment and delivery reforms that we believe will help lower costs and deliver higher quality care to patients:

pcmh graphicPatient-Centered Medical Homes (PCMHs) – With an emphasis on primary care doctors and teams of coordinators, the goal of the medical home is to help patients—especially those with chronic illnesses—stay healthy enough to avoid hospital trips and expensive treatments, saving money in the long run. Medical home payment models usually reimburse more for primary and preventive care, but may also link to bundled or capitated payments.

In Maine we have over 100 patient-centered medical homes currently taking part in a PCMH Pilot Program.

Episode-Based Payments – Episode-based payment calls for shifting away from separate payments for each discrete service to a single payment for all of a patient’s needs over a particular episode of illness, both outside as well as inside the hospital. This episode-based model was the underpinning of a 2007 initiative by the Geisinger Health System in Pennsylvania, which was characterized as “surgery with a warranty.” Key to the experiment is a flat payment for elective cardiac bypass surgery and all related care for 90 days after discharge. An evaluation in the first year found a 10-percent drop in hospital readmissions, shorter average length-of-stay, and reduced hospital charges.

Another episode-based model, PROMETHEUS Payment Inc., pays clinicians substantial bonuses for reducing potentially avoidable complications while improving quality.

Although neither surgery with a warranty or PROMETHEUS Payment are currently being used in Maine, the MHMC strongly supports both episode-based models.

Accountable Care Organizations (ACOs) – Accountable Care Organizations are coordinated delivery systems that reward providers who deliver lower-cost, higher-quality care for a given population of patients.

A typical ACO would include a hospital, primary care clinicians, specialists and other health professionals. The idea is that the more providers collaborate, and are rewarded for improving the health of a group of patients, the better and more cost-effective our health system will be.

Large, integrated delivery systems like the Mayo Clinic in Minnesota, Geisinger in Pennsylvania and Intermountain Healthcare in Utah serve as real-life examples of accountable entities with reputations for high-value care. Since about 80 percent of clinicians have small practices, however, implementing this model poses structural and political challenges and there are no ready payment schemes.

In Maine we currently have three ACO pilots underway: the PenBay/State Employee Health Commission/Aetna ACO, the MaineGeneral/State Employee Health Commission/University of Maine System/Cigna ACO, and the Eastern Maine Health System/University of Maine System, Anthem Blue Cross Blue Shield ACO.