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Pediatric Asthma: An Opportunity In Payment Reform And Public Health


September 18th, 2014

Editor’s note: The post is informed by a case study, the third in a series made possible through the Merkin Initiative on Physician Payment Reform and Clinical Leadership, a special project to develop clinician leadership in health care delivery and financing reform. The case study will be presented on Wednesday, September 24 using a “MEDTalk” format featuring live story-telling and knowledge-sharing from patients, providers, and policymakers. 

The Clinical Challenge: A Chronic, but Manageable Illness

Asthma affects 7 million children – more than 10 percent of kids in the U.S. – and is the most common chronic childhood disease. Yet even with high levels of insurance coverage, 46 percent of pediatric patients have uncontrolled asthma. There are substantial gaps in appropriate prescribing and adherence to effective medications. In addition, a multitude of non-medical issues influence a child’s ability to control their asthma: low parental health literacy, poor quality housing, and environmental triggers such as pests, mold, and cleaning chemicals. As a result 800,000 kids visit the emergency department (ED) for asthma each year.

In 2007 (the latest year which data are available) the U.S. spent over $56 billion on asthma care, of which nearly $27 billion was spent on pediatric asthma. Medicaid is the primary payer for pediatric asthma related hospitalizations with 55 percent of the market. Better control may also mean lower medical costs, due to reductions in ED visits, admissions, and other health care utilization – patients with poorly controlled severe asthma cost nearly $5,000 more per patient per year compared to average pediatric asthmatic costs.

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Reference Pricing And Network Adequacy Standards: Conflict Or Concord?


September 18th, 2014

With benefit designs and enrollee cost-sharing increasingly standardized across health plans under the Affordable Care Act (ACA), one of the remaining levers plans have to differentiate themselves—and to control premiums—is the size of their provider networks. Regulators have been caught in a crossfire between advocates of narrow networks who say they promote quality and keep prices down, and those who feel narrow networks could constrain access to necessary services.

Unfortunately, recent federal guidance – addressing, among other related items, the issue of “reference pricing” — blurs the distinction between in-network and out-of-network providers and may make it more difficult for regulators and consumers to understand the effective “size” of a particular network.

This confusion could undermine the goal of improving transparency in consumers’ health care choices and make it difficult for consumers to use prices in choosing providers. More troubling, expanded use of “reference pricing” under the guidance could leave patients paying unexpectedly large out-of-pocket amounts for services provided by ostensibly in-network providers.

Below, we characterize reference pricing as a “sub-network” contracting strategy, and we describe some of the implications of reference pricing and the guidance for consumers, regulators, plans, and providers.

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Early Observations Show Safety-Net ACOs Hold Promise To Achieve The Triple Aim And Promote Health Equity


September 15th, 2014

Safety-net accountable care organizations (ACOs) have the potential to deliver cost-effective, patient-centered care that engages patients and contributes to achieving the Triple Aim in Medicaid. Safety-net ACOs are playing increasingly important roles in delivering care for vulnerable populations. Active ACO formation is occurring in at least 18 state Medicaid programs with considerable variability across states, although they have been slower to develop than ACOs serving Medicare or commercial populations.

This post will outline five key observations regarding emerging safety-net ACOs and suggest broad policy implications. We are defining safety-net ACOs as collaborative entities of providers and sometimes payers that are 1) accountable for managing the health of their population, 2) assuming upside and/or downside financial risk, and 3) serving predominantly Medicaid (including dual eligibles) and uninsured patients.

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The Latest Health Wonk Review


September 12th, 2014

At Health Business Blog, David Williams is not ashamed to be a wonk in his September 11 edition of the Health Wonk Review. David highlights many great posts, including “The 125 Percent Solution,” suggested by Jonathan Skinner, Elliott Fisher, and James Weinstein on Health Affairs Blog, which would give consumers and insurers the option of paying 125 percent of the Medicare price for any health care service.

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ACOs, Bundled Payment Lead Health Affairs Blog August Most-Read List


September 12th, 2014

Posts on payment and delivery reform head the Health Affairs Blog top-fifteen list for August. Suzanne Delbanco and David Lansky’s post on accountable care organizations was the most-read post, followed by Tom Williams and Jill Yegian’s post on bundled payment, written in response to an article published in the August issue of Health Affairs.

Next is Health Affairs’ Editor-in-Chief Alan Weil’s post on the five engagements that will define the future of health, drawn from his keynote presentation at the 2014 Colorado Health Symposium. This is followed by Rosemarie Day and coauthors’ post on the private health insurance exchange system.

The full list is below.

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The Payment Reform Landscape: Non-Payments


September 4th, 2014

Throughout 2014 here on Health Affairs Blog, I have shared Catalyst for Payment Reform (CPR)’s insights on different types of payment reform, which run along a spectrum of financial risk. We began the year by examining payment models that have “upside only” risk, such as pay-for-performance, which give health care providers the opportunity for financial gain from improving care with no added financial risk.

Then we examined payment models that contain “two-sided risk,” like shared-risk arrangements for ACOs, bundled payment, and capitation with quality, where providers can reap financial gain as well as experience financial losses depending on care outcomes and expenditures.

This month, we examine a model that presents “downside only” risk — non-payment to providers. This payment strategy puts providers at financial risk for care that could or should have been avoided.

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Projected Slow Growth In 2013 Health Spending Ahead Of Future Increases


September 3rd, 2014

Insurance Coverage, Population Aging, and Economic Growth Are Main Drivers of Projected Future Health Spending Increases

New estimates released today from the Office of the Actuary at the Centers for Medicare and Medicaid Services project a slow 3.6 percent rate of health spending growth for 2013 but also project a 5.6 percent increase in health spending for 2014 and an average 6.0 percent increase for 2015–23. The average rate of projected growth for 2013–23 is 5.7 percent, exceeding the expected average growth in gross domestic product (GDP) by 1.1 percentage points.

Increased insurance coverage via the Affordable Care Act (ACA), projected economic growth, and population aging will be the main contributors of this growth, ultimately leading to an expected 19.3 percent health share of nominal GDP in 2023, up from 17.2 percent in 2012.  This compares to the Office of the Actuary’s 2013  report, published in Health Affairs, predicting an average growth rate of 5.8 percent for 2012–22.

Every year, the Office of the Actuary releases an analysis of how Americans are likely to spend their health care dollars in the coming decade. The new findings appear as a Health Affairs Web First article and will also appear in the journal’s October issue.

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The Winding Path To Effective Bundled Payment


August 28th, 2014

Tom Williams and Jill Yegian’s excellent blog post makes a great companion to our recent paper on the evaluation of the Integrated Healthcare Association (IHA) Bundled Payment Demonstration. Williams and Yegian offer lessons from their experience implementing a demonstration project that failed to meet its original objectives. This type of analysis is essential.

It’s not unusual for a demonstration to fall short of its original objectives. Learning from such cases is part of the innovation process. This is especially worthwhile for bundled payment, which has many potential benefits for patients, providers, and payers.

None of the barriers encountered in IHA’s demonstration signal a “death sentence” for bundled payment. However, the demonstration clearly shows that bundled payment is difficult to implement.

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The 125 Percent Solution: Fixing Variations In Health Care Prices


August 26th, 2014

Summer vacation’s finally here. You’re strolling along the beach, not a care in the world when – ouch – you step on a piece of broken glass and need a few stitches at the local hospital. Such routine procedures are painless enough, but depending on where you’re treated and by whom, the real pain could occur when you’re handed the ER bill.

In some of the latest evidence on the crazy-quilt patterns of U.S. health care prices, Castlight Health found prices in Dallas TX ranging from $15 to $343 for the same cholesterol test.  What makes these price variations particularly egregious is that the highest prices are typically reserved for those least able to pay, such as the uninsured.

What’s the solution?  In the long run, we need to establish a more transparent system where consumers can choose easily based on reliable quality and price measures.  But our current measures of quality are, to put it politely, inadequate, and people with insurance are often insulated or can generally afford those higher prices.  Reference pricing, in which insurance pays only enough to reimburse providers with adequate quality and relatively lower costs, would help to restrain high prices, but distracted patients or those with strong attachments to specific doctors or hospitals could still get stung with a big bill.

Capping payments at 125 percent of Medicare rates. We suggest a short-term solution: The federal Medicare program has in place a complete system of prices for every procedure and treatment.  It’s not perfect, but it is uniform across regions, with a cost-of-living adjustment that pays more in expensive cities and less in rural areas.  If every patient and every insurance company always had the option of paying 125 percent of the Medicare price for any service, we would effectively cap the worst of the price spikes.  No longer would the tourist checked out at the ER for heat stroke be clobbered with a sky-high bill.  Nor would the uninsured single mother be charged 10 times the best price for her child’s asthma care.  This is not just another government regulation, but instead a protection plan that shields consumers from excessive market power.

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Arkansas Payment Improvement Initiative: The First Year


August 25th, 2014

Editor’s note: This post is part of a periodic Health Affairs Blog series, which will run over the next year, looking at payment and delivery reforms in Arkansas and Oregon. The posts will be based on evaluations of these reforms performed with the support of the Robert Wood Johnson Foundation. The authors of this post are part of the team evaluating the Arkansas model.

Arkansas payers and providers actively participated in the design of both the episodic payment and patient-centered medical home (PCMH) models the state has recently implemented. We’ve written about each of these components of the multi-payer Arkansas Payment Improvement Initiative (APII) in our previous Health Affairs Blog posts.

The state’s fragmented and largely rural provider environment presents an important test for a novel episodic payment model that may, if successful, have broader applicability in other states sharing a similar health care landscape. Fourteen episodes have now been launched and provider participation is mandatory. While our first posting goes into greater detail on the nuances of Arkansas’ approach to episodes, we provide the following brief summary here to add context to this discussion.

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The “Failure” Of Bundled Payment: The Importance Of Consumer Incentives


August 21st, 2014

Bundled payment for orthopedic and spine surgery and other major acute interventions has many attractive features, in principle. But implementation has been difficult in practice.  The recent Health Affairs paper by Susan Ridgley and colleagues, and the Health Affairs Blog commentary by Tom Williams and Jill Yegian, list quite a few practical implementation problems, and the points raised in both these pieces are well taken.

As leaders in the Integrated Health Association (IHA) bundled payment initiative, we shared the same hopes, devoted the same energies, and share the same frustrations with the modest results.  We feel it is important to emphasize what we consider to be the initiative’s most important design failure: the lack of engagement and alignment on the part of the consumer.  No one will ever reform the U.S. health care system without bringing the consumer along and, indeed, placing consumer choice and accountability at the very center of the reform initiative.

On an optimistic note, this design failure is being addressed by the larger health care marketplace in the wake of numerous failed attempts to reform health care by focusing exclusively on provider payment and incentives.

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Key Success Factors For the Medicare Shared Savings Program


August 21st, 2014

In January 2012 the Centers for Medicare & Medicaid Services (CMS) officially launched the Medicare Shared Savings Program (MSSP) for the formation of national Accountable Care Organizations (ACOs). Early participants were charged with bringing the theory of accountable care into practice.

Premier, a national healthcare improvement alliance of hospitals and health systems, created a population health collaborative in 2010 designed to assist providers with developing and implementing successful ACOs both in the public and private sectors.

Thus far, the Premier collaborative has advised nearly 30 MSSP applicants, and is working with another 30 more, on how to structure and manage an effective ACO. Through benchmarking tools, financial models, the sharing of best (and worst) practices, etc., members of the Premier PACT Collaborative have outperformed the national MSSP cohort.

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Hospital Readmission Reduction Program Reignites Debate Over Risk Adjusting Quality Measures


August 14th, 2014

Do safety net hospitals categorically under perform the national average in terms of managing readmissions? Or is something else triggering higher rates of readmissions in these facilities?  These questions are essential for policymakers to answer as pay-for-performance (P4P) penalties are having a disparate impact on hospitals that serve low-income areas.

Medicare’s Hospital Readmission Reduction Program (HRRP), for example,  links risk-adjusted hospital readmission rates to financial penalties. Hospitals with risk-adjusted readmission rates that fall below the national average are penalized by having their annual Medicare payments reduced by up to 2 percent. In 2015, hospital payments are scheduled to be reduced by up to 3 percent.

But the program’s current system for measuring readmission rates may be flawed. Numerous analyses have found that safety net hospitals, which care for low-income patients, are more than twice as likely to be penalized than hospitals caring for higher-income patients.

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Key Takeaways From The Medicare Trustees’ Report


August 14th, 2014

Depending on which article you read, either the Medicare Trustees think the program is coming to an end, or the news is great and we don’t need to do anything.

The reality is that the recent Trustees’ report contains both positive and sobering news: while costs have been flat for the last two years and growth is expected to moderate for some years to come, Medicare’s financing is still not in good shape over the long run. Current law benefits exceed financing to pay for them, and the Hospital Insurance Trust Fund will be unable to pay full benefits in 2030.

We cannot assume the problem will resolve itself, and action is needed to ensure the program’s stability.  Moreover, health care remains a substantial portion of the national budget – a whopping 25 percent — and addressing federal fiscal imbalances must include health programs.

Below we provide our key takeaways from this year’s Trustees’ report.

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Health Affairs Web Firsts: Two Studies Find Mixed Results On EHR Adoption


August 11th, 2014

Since the Health Information Technology for Economic and Clinical Health (HITECH) Act was enacted in 2009, Health Affairs has published many articles about the promise of health information technology and the challenges of promoting broad adoption and “meaningful use.”

Last week, on August 7, the journal released two new Web First studies, “More Than Half Of US Hospitals Have At Least A Basic EHR, But Stage 2 Criteria Remain Challenging For Most” and “Despite Substantial Progress In EHR Adoption, Health Information Exchange And Patient Engagement Remain Low In Office Settings.” These studies focus on the latest trends in health information technology adoption among U.S. physicians and hospitals. Both studies, which will also appear in the September issue of Health Affairs, show that while basic electronic health record (EHR) adoption plans have moved forward, more significant implementation remains a daunting challenge for many providers and institutions

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An Evolutionary Approach To Advancing Quality Measurement


August 8th, 2014

The Medicare Payment Advisory Commission’s June report, like many current discussions on measuring quality in health care, focuses on the need for measures of overuse and outcomes.  The National Committee for Quality Assurance (NCQA) agrees and is committed to developing better measures for these important priorities.

NCQA’s Healthcare Effectiveness Data and Information Set (HEDIS), a tool used by more than 90 percent of America’s health plans to measure performance, includes a readmissions outcome measure, intermediate outcome measures like blood pressure and blood sugar control for diabetics, and measures of relative resource use.

MedPAC suggests focusing on important resource use outcomes, including preventable admissions, emergency department visits, mortality, and readmissions, as well as healthy days at home. These are important for helping us understand the costs of care.

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Posts On ACA Legal Challenges Lead Health Affairs Blog July Top Ten


August 7th, 2014

Two posts regarding legal challenges to the Affordable Care Act were the most-read Health Affairs Blog posts in August. In the top spot: Tim Jost’s discussion of Supreme Court actions that were arguably at odds with the Court’s Hobby Lobby decision. Next on the list: another post by Jost analyzing two federal appellate court decisions taking conflicting positions on whether consumers may receive premium tax credits under the ACA in states using the federally facilitated exchange.

Number three on the July top-ten list is Suzanne Delbanco’s post on bundled payment, part of her ongoing series on payment reform; Jennifer DeCubellis and Leon Evans’ post on investing in care coordination is next.

The full list is below:

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Having A Baby: Media Confusion Over Charges, Costs, And The Benefits Of Insurance


August 6th, 2014

Recent discussion about the Affordable Care Act has intensified the media’s interest in the cost of medical care. While as health services researchers we are perhaps in the best position to provide information on complex health care topics, we may need to improve our ability to distill information into one minute sound bites.

A particularly interesting example of the disconnect between media reporting and a more nuanced analysis occurred earlier this year, on March 4, when NBC ran a story about the cost of having a baby. The story confused the very different concepts of what health care providers charge, what they are actually paid, and what consumers owe, and in so doing obscured one of the key benefits for consumers of being insured.

We were startled to hear that, according to NBC, the cost of having a baby has increased more than 300 percent in the past 10 years. According to the report, the cost of a vaginal delivery went from $7,700 to $32,000, while the cost of a cesarean birth went from $11,000 to $51,000. A small heading in the table presented by NBC cited Truven Analytics as the source of these data.

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The Payment Reform Landscape: Accountable Care Organizations


August 5th, 2014

“The accountable care organization is like a unicorn, a fantastic creature that is vested with mythical powers. But no one has actually seen one,” said former California HealthCare Foundation CEO, Mark Smith, MD, in 2010. Over the last four years, we’ve certainly seen a proliferation of unicorns and we’re now reaching the point where fantasy—at least in a handful of cases—is becoming a reality.

A growing number of large employers are piloting accountable care organizations (ACOs), working through their health plan; in some cases they are doing so directly with provider systems, such as the new Boeing arrangement with Providence Health and Services, Swedish Health Services, and University of Washington Medicine and Intel’s contracting efforts in Albuquerque, New Mexico and Portland, Oregon. The large employers and other health care purchasers with whom we work — eager, if not desperate, for solutions to contain the costs of health care and improve its quality — are watching these first movers carefully to see if ACOs prove to be a viable strategy for improving population health and bending the cost trend.

These leading purchasers intend to set the bar high. They cannot make the investment to pursue these ACO relationships if they are not assured that their populations will see meaningful, measurable gains in their health care and its affordability, as well as their health. That often means contractual commitments to lowering total costs of care and showing improved patient outcomes for targeted populations — like high risk, medically complex patients. Our purchaser colleagues who have been among the early adopters of ACO arrangements have begun to identify the features critical to successful ACOs; these are the elements other purchasers will look for when deciding if it’s worth proceeding.

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Bundled Payment: Learning From Our Failures


August 5th, 2014

Seeing “IHA” and “Fails” together in the title of an article in the nation’s premier health policy journal was not an outcome that we anticipated when the bundled payment initiative described by M. Susan Ridgely et. al in the August issue of Health Affairs was launched.

The key objective of the Integrated Healthcare Association (IHA)’s initiative was to implement over 20 payer-provider bundled payment contracts, resulting in completion of more than 500 bundled cases within the first two years of the project. During the third year of the project, researchers were to conduct both a clinical and an economic evaluation to test how bundled payments affect the quality and cost of care, in conjunction with an implementation evaluation to determine the scalability of this approach.

Looking back, these targets seem highly optimistic; but at the pilot’s launch, both IHA and its stakeholders had a number of reasons to be confident. The pilot was well funded by a three-year grant from the Agency for Health Research and Quality (AHRQ), building on two rounds of planning and feasibility work over four years funded by the Blue Shield of California Foundation and the California HealthCare Foundation. In addition, there was a high level of interest and enthusiasm among a core group of providers and health plans that had a prior history of collaboration in a California physician pay for performance program.

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