Editor’s Note: This is the third in a five-part Health Affairs Blog series, produced in conjunction with the Bipartisan Policy Center, examining current issues and care models in the delivery system reform effort. Each post will be jointly authored by Democratic and Republican leaders in health policy. Check back for more posts in the series.

While federal policy makers are undertaking controversial and divisive debates over the future of the Affordable Care Act, Republicans and Democrats have had a good track record of working together to improve health care delivery and payment frameworks. Most recently, the bipartisan Medicare Access and CHIP Reauthorization Act of 2015 reformed Medicare’s physician payment system to better link payment to quality, as well as incentivize participation in models of care outside of the traditional fee-for-service system. These alternative payment models continue a history of bipartisan work in delivery system reform by shifting away from fee-for-service (FFS) and toward a more coordinated, efficient system of care. The shared goal of ensuring high-quality, high-performance, and affordable health care presents a unique opportunity for further bipartisan agreement. Building upon this goal, we should also work to advance a more patient- and family-centered approach to delivering care, especially to those with complex, high-cost health care needs.

A good place to start, and an area where policy makers have already placed an increased focus, is on developing solutions within federal health programs to improve outcomes for individuals with multiple chronic conditions and functional limitations. People with multiple chronic conditions typically use more services, such as emergency department visits, hospitalizations, and eventual need for long-term services and support, compared to those without multiple chronic conditions. For those with complex health needs and functional impairment, health care expenditures averaged $21,000 annually, more than four times the average for all US adults. This spending trajectory is unsustainable for both patients’ pocketbooks and the health care system as a whole, and the care they receive is often fragmented and confusing.

An Emerging Consensus For Individuals With Complex Needs

In recent years, public health researchers have joined with health plans and provider organizations to better understand how to care for individuals with complex health care needs. There is an emerging consensus around common elements of successful care models, strategies for stratifying risk to target services for improved outcomes, and the importance of coordinating care and addressing social determinants of health, particularly for low-income patients.

Academic and clinical research suggests that for high-need, high-cost patients, nonclinical interventions and other social services can improve health outcomes and reduce the need for expensive acute care or institutional services. Such interventions can include in-home meal delivery, supportive housing and home modifications, non-emergent medical transportation to medical appointments, targeted care management, and other home- or community-based assistive services to address functional impairment or an individual’s ability to perform activities of daily living such as bathing and dressing. Simply receiving balanced meals, for example, can make a significant difference in an ailing individual’s ability to heal.

However, these services are not reimbursed under Medicare’s fee-for-service payment structure, and other reimbursement structures that work under a capitated arrangement may lack the necessary flexibility to support these types of interventions. Failing to adequately reimburse health care providers for the necessary services to provide person- and family-centered care, including social supports, will only result in a delivery system biased toward more expensive medical care episodes. Fortunately, policy makers are exploring ways to address these challenges and improve health status by integrating traditional medical care with social supports that are not typically covered in Medicare, without adding new costs to the Medicare program. In Medicare, accountable care organizations (ACOs) have allocated independent, non-Medicare-reimbursed resources toward providing short-term housing or home-delivered nutritious meals following hospital discharge for vulnerable patients, in an effort to reduce hospital readmissions. However, 70 percent of Medicare beneficiaries remain in Medicare fee-for-service payment plans, and a relatively small portion of those beneficiaries receive care through risk-bearing ACOs that have the financial incentives to furnish noncovered social supports as a method of controlling medical care costs. More effort is needed to advance modernized care models amongst the Medicare fee-for-service population.

The Centers for Medicare and Medicaid Services has also granted waivers under Medicaid for those states pursuing greater flexibility to cover community-based services as a means to lowering health care costs. However, state variation in Medicaid programs limits the scope of providing health-related social supports to all Medicaid beneficiaries. Additionally, the separation of Medicare and Medicaid benefits, and the “carving out” of certain Medicaid benefits from managed care contracts, can lead to a fragmented care model, in which dual-eligible individuals must navigate multiple plans or payers depending on the type of service being furnished. There remains opportunity within integrated models of care to allow for more extensive social support services to be offered as benefits, which can be upstream solutions that will pay dividends with better health and reduced costs.

In September 2016, the Bipartisan Policy Center (BPC) released recommendations to address challenges in the integration of payment systems and delivery of services to vulnerable populations with complex care needs. The BPC’s new report on Improving Care for High-Need, High-Cost Medicare Patients, released in April 2017, dives deeper, by recommending pathways for Medicare Advantage plans, ACOs, and other providers to better tailor care plans for frail and chronically ill Medicare patients, in a manner that integrates traditional medical care with non-Medicare-covered social supports. These interventions can be particularly valuable for Medicare beneficiaries who are not dually eligible for full Medicaid benefits, reside in the community setting, have three or more chronic conditions, and have functional or cognitive impairment. A data analysis performed on behalf of the BPC found that more than 3.5 million Medicare beneficiaries meet these criteria. The analysis also projects that these beneficiaries incur roughly $30,000 in annual Medicare costs per beneficiary. This is more than twice the national average annual Medicare fee-for-service spending amount per beneficiary.

Progress in Washington—Where We May See Bipartisanship

Fortunately, policy makers have already expressed interest in working together to address challenges related to this complex population. In the 114th Congress, the Senate Finance Committee launched a bipartisan Senate Chronic Care Working Group, which undertook a thorough, deliberative process—including gathering input from the BPC and other stakeholders and policy experts—to introduce the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act (S. 870 in the 115th Congress). The CHRONIC Care Act aims to improve care coordination and health outcomes for chronically ill Medicare beneficiaries with complex needs. Despite the poisonous environment surrounding broader health care reform, the Senate Finance Committee passed the Chronic Care Act in May by a unanimous vote of 26-0. Both the Committee Chairman and Ranking Member have expressed hopes for moving the bill through the Senate this year.

As this legislation and other health care delivery and payment reforms are considered, policy makers must recognize system shortcomings and consider how to better integrate care and improve health outcomes for our sickest and most vulnerable Americans. We hope the actionable recommendations provided by the recent analysis by the BPC, the CHRONIC Care Act, and identified in existing successful care models will form the basis for improved care and outcomes for this population through delivery system reform.