26 October 2018
Dear Interested Readers,
Doing an “A4” on Payment and Delivery System Reform
If the term “A4” is a fuzzy concept for you, or is not in your vocabulary, let me refer you back to the Healthcare Musings post for October 12 where you can refresh your understanding of this import Lean concept. There you will learn that an A4 process is the right response to the disappointing results of an experiment to test the results of a hypothesis. Most of the “searches for solution,” including the search for how to lower the cost of care while improving the health of the community with higher quality care for every American, can be structured as an “if x where x = the experiment, then y where y= the desired outcome” formulation. If testing the “x” hypothesis does not produce the desired answer “y,” then an A4 is the right next move.
An A4 does not question the validity of the “reason for action,” the problem to be solved. If the “current state” has been accurately described, it is not necessary to repeat that analysis. If the description of the desired state still represents a worthwhile goal, that description need not change, although an intermediate goal may be a good strategic move. The origin of failure is usually the SWOT analysis or some other defect in the formulation of the problem. The proposed solution usually needs redesign or modification. It is often true that new information has emerged from the experiment that reveals that the strategic considerations upon which the solution was devised were incomplete. The new facts can then be used to improve the solution.
If our desired “y” state is lower healthcare costs, universal access, healthier communities, and better care for individuals which we can abbreviate as the Triple Aim, then we must admit that we have failed to prove the hypothesis that if we implemented the ACA, delivered more care through risk bearing institutions like ACOs, and could transition from fee for service to value based reimbursement, we would move toward the Triple Aim. So far all of our efforts have left us wanting more in our progress toward the Triple Aim. If we are making progress, the pace seems slow. Costs continue to rise. Quality is still quite variable from institution to institution or from one episode of care to the next. Medical errors are reported to be the third leading cause of death. People die regularly of conditions that could have been managed if they had better access to care. Even if we consider the small measure of positive results recorded so far to be an adequate proof of concept, we are not sure how to improve the ACA, scale up ACOs, or tune the mechanisms of value based reimbursement enough to say that we are unequivocal in our confidence that the Triple Aim is within our sites, or just down the road and around the corner, if we stay the course that we are on.
In the October 25th issue of the New England Journal of Medicine Hoangmai Pham, MD, MPH from Anthem, and Paul B Ginsburg, PhD from the Brookings Institute and the Schaeffer Center for Health Policy and Economics at USC in LA raise the question of what will be next in the effort to transform care. They make their case in a “perspectives” article that you should read that is entitled “Payment and Delivery-System Reform–The Next Phase.”
I would point out that the article and its suggestions seem primarily addressed to commercial payers. Dr. Pham does work for Anthem. That doesn’t bother me since healthcare seems to be “path dependent” and the majority of Americans who have coverage get it through their employer or buy it directly from an insurance company. The ACA was built on this reality with the exchanges functioning as marketplaces. Remember that many contend that the foundation of the ACA rests on the Republican idea generated at the Heritage foundation that competition will drive down costs in the market. I happen to believe the principle of path dependency is true and that a real market might lower costs and improve quality. I also believe in the benefit of shifting payment from waste producing fee for service mechanisms of payment to value based mechanisms founded in “systemness” and the benefits of population management utilizing “big data” and AI augmented analysis. There is clearly a role for payers playing a central role in “the next phase” even if there is a “single payer.” It is the rare organization or individual who does not respond to how payment arises or the “fairness” of payment. The article spends significant time on these realities. Finally, it is imperative for both systems and individuals to understand and accept how they are paid if payment is envisioned as a tool to drive better results or stimulate innovation.
The article begins with what sounds like a “reason for action.” It is in fact a recognition of some failure which is what makes everything that follows it to be very much the beginning of an A4 analysis:
After nearly a decade of experimentation with value-based payment (VBP), U.S. health care payers, providers, and purchasers are confronting uneven adoption of new care guidelines, modest early results, and still-unacceptable gaps in spending and quality. In determining what comes next, we believe it’s important to extrapolate from the lessons of these experiences to guiding principles for designing new approaches. It’s also essential to recognize that to truly redesign a system, one has to take a holistic approach and move multiple levers in concert, rather than fiddling with individual factors serially and hoping for a coordinated effect. Though we focus on tactics for private payers to consider, many of these principles and a holistic strategy could also be adapted to Medicare or Medicaid contexts.
Their first observation is that the results of transformation and payment reform are spotty. That leads them to suggest that payers focus future efforts on those groups and systems that have shown an understanding and “…commitment to VBP, appetite for financial accountability, and capability to improve care.” They suggest that payers make sure that these organizations are positioned to succeed, or at least supported to succeed. They discuss the theoretical advantages of a “narrow network” of high performers over a “tiered network” offering more choice. They succumb to the reality that the choice offered in a less tightly managed tiered network is appealing to consumers, but make the point that the real extra costs should be included through “steep cost sharing differentials” in the price, and they imply that they usually are not. Their suggestion:
Financial incentives alone, however, will probably be insufficient to motivate true patient engagement. There is a graveyard full of narrow-network products that never garnered the desired enrollment numbers. We believe that providers and payers need to offer patients more positive reasons to use high-value providers.
They go on to say that payers should recognize that the better performers against finance and quality goals have probably taken political risks and made “significant management and infrastructure” investments. The committed few can question the wisdom of their long term strategy for reform if they do not see “proportionate results.” As the CEO of Atrius Health, I often felt that “no good deed went unpunished.” The authors point out that most value based payment mechanisms pit an organization against its own best results rather than against some metric based on the whole market of which they are a part.
The authors are concerned about the imbalance that exists in most ACO arrangements between specialists and PCPs.
…it’s important to acknowledge another shortcoming of many VBP arrangements to date: they’ve placed nearly all accountability for outcomes on the shoulders of PCPs. Though promoting and supporting primary care are critical policy goals, it’s not realistic to expect PCPs, given their limited financial and political leverage, to optimally drive efficient care on their own. PCPs wield influential prescribing, diagnostic, and referral pens, but theirs are often not the most powerful voices in decisions about resource allocation or investments in care infrastructure or process change. When PCPs and specialists belong to different organizations, PCPs may have even less influence over the use of specialty services, unless they’re affiliated with a practice or health system that is large enough to command attention through referral volume.
Their comments are particularly true in hospital centric health systems. I was fortunate enough to have worked in an environment where we could leverage the clinical volume that we managed to achieve better relationships with hospitals and outside specialists. Even with the ability to “direct volume” this is not easy work. Patients often desire referral to a higher cost provider even when data shows that the lower cost alternative offers equal, if not better, quality and service.
In last week’s post I reported Dr. Bob Kocher’s predictions on the tension between PCPs and specialists. Pham and Ginsburg describe that dysfunctional relationship as it is and not as it may evolve. Kocher predicted an increasingly rough road ahead for specialists and eventual relief for PCPs. The authors suggest that payers support this movement toward PCPs through the finance systems of ACOs.
The boldest statement in the paper is a gauntlet that is thrown down at the feet of payers and is a polite way of saying that things won’t get better until they develop the backbone that allows them to stand up to the power of providers:
Payers with fortitude — and large market shares — could also begin to address the underlying price distortions in physician fee structures that lead to the lopsided provision of high-margin services and the incentives to grow volume in those services rather than focus on the total costs of care and outcomes for a population. Current pricing distortions are insidious: they underpin the way spending targets are set in all VBP arrangements, including Medicare Advantage plans and commercial ACO or capitation programs, which follow Medicare relative-pricing structures closely. Unless payers address these structural issues, they will always limit what VBP can achieve in reducing spending and hamper providers’ investments in creative care-delivery improvements, because plans will continue to pay unjustified sums for some services and not enough for other, higher-value services. The United States spends approximately 7% of each health care dollar on primary care services, for example, as compared with more than 20% in countries with better health outcomes and lower spending.
It is a dense article that is packed with comments worth contemplation. When I was finished reading it for the second time I realized that I had underlined almost everything. Nevertheless, there are several points worth deep reflection. I am not being facetious when I say that it feels like an attempt at an A4. The article is deep in analysis and it makes some very specific suggestions as I have noted. I am not sure that the authors’ last suggestion is feasible. It sounds like a strategy that is reflective of a dismal outlook or a steep hill to climb before real payment and delivery reform can occur. They suggest that something that sounds like payer collusion is an ultimate possibility or even a necessity:
Continuing with piecemeal solutions to these design issues is inadvisable: they are intimately interrelated, and it’s hard to solve one without considering the implications for the others. If payers align with one another and pursue a range of complementary solutions simultaneously, they may be able to avoid many more years of ambiguous results — and the disengagement of providers and purchasers that invested in VBP in good faith but cannot justify continued commitment if all key stakeholders don’t make critical trade-offs to build a holistic solution.
As a closing comment, I should add that the entire paper seems to be built on the assumption that after the midterm elections we will be able to return to the pursuit of the Triple Aim. It is hard to imagine any of their suggestions ever being implemented, or even considered, if we are reduced to defending the protection against the denial of access because of preexisting conditions. The last two years have shown that it is hard to have the energy to improve care if the effort to preserve the ACA is an all consuming activity. The ACA is flawed and it needs improving, but it also needs protection. We have data to use in constructing an A4 that could incorporate the thoughtful suggestions of Pham and Goldberg, if that work could be done against the background of a shared vision of what we want for a better future for all Americans facilitated by the vision of the Triple Aim and what experience has already taught us.
Mountaintop Moments
I knew as we walked up the trail last Saturday afternoon toward the granite top of Mount Kearsage that we were a few days late for the peak fall colors. Three days earlier on my late afternoon walk, I had revelled in the brilliant shades of red, yellow, and orange that were mixed with several persistent shades of green. The low angle of the late afternoon sun had turned up the intensity of the experience and had made the colors shimmer.
On Thursday morning I awoke to see a thin blanket of snow covering everything. I was late for an appointment because I had left my car out overnight, and there was a thick covering of ice on my windshield. I had no idea where my scraper had summered. When I finally was able to drive, the first thing that I noted was that all the color had faded. The effect of the change in the weather on the colors was amazing. The overcast sky with fog and low hanging clouds did not help my mood or do anything to suggest that it was not a bone chilling day in late December. The vibrant reds, oranges, and yellows had melded into a melange of dirty rusty brown and dull yellow with a hint of orange that reminded me of an old seventies shag rug in a dimly lit basement family room with a very low ceiling.
We had a big weekend planned. My son who lives in Brooklyn was coming up for a gathering with three couples from his high school days in Wellesley. The plan had been for us to enjoy a glorious fall weekend reunion. One couple was bringing their two daughters. Our relationship goes deep with them since their father lived with us during the last year and a half of high school after both of his parents had died. Two of the men plus our son had been in had been in our Cub Scout den in the early nineties. One of the men who was married to the daughter of close friends was also the drummer in my son’s garageband in junior high school and high school. Things change. He now has a PhD in AI and is working at Google applying AI to ethical issues. It was to be a weekend of extended family, and I had hoped so much that it would be a great weekend for hiking in a wash of color.
Despite the faded colors, on Saturday we “conquered” Mount Kearsage. The header on today’s note is proof of that accomplishment. The youngest in our party that made the summit was the four year old daughter of the fellow who had lived with us. Plans to hike to the waterfall on Mountain Brook in Andover on Sunday were scuttled because of the weather, but late in the day some of us did a four mile jaunt that took in Clark’s overlook on Lake Sunapee. It was not the banquet of color that I had hoped for, but it was great compared to what the weatherman is predicting for this weekend, a Nor’easter. At least I have the World Series to anticipate as excitement for this weekend. I am predicting that the Sox will start their celebration in LA. Perhaps it will be Saturday night, Sunday at the latest.
Wherever you are this weekend and no matter your cares or concerns about the World Series, I hope that you will enjoy some time with family or friends, or if you are really lucky, with both. You need not climb a mountain to have a mountain top moment.
Be well, take good care of yourself, let me hear from you often, and don’t let anything keep you from doing the good that you can do every day,
Gene
