On one hand, the healthcare insurance industry is embracing outcome based reimbursement for healthcare providers for some services, which appears to be a step forward. Unfortunately, without alignment of the consumer/patient with the healthcare provider toward proactive, cost efficient care, how can the provider drive patient adherence and cost efficiency for health insurance plans?
Complexity of the Healthcare Market
The healthcare marketplace in the United States is exceptionally complex. Here, the user of healthcare services (consumer/patient) is removed and isolated from the negotiation of services and even payment of the services from the seller (the physician or healthcare provider). Most consumers/patients receive healthcare coverage from commercial health plans, Medicare or State Medicaids. This forces the consumer to use providers associated with their health plan to take advantage of the negotiated prices. Going outside the health plan, called “out of network”, can create surprise costs and bills that are many times the normal negotiated rates. Many employees in the United States acquire their healthcare coverage through their employer which further separates the user (consumer/patient) from the seller (healthcare provider). Without this direct buyer-seller marketplace, the goals of the entities involved in the transactions are bound to become misaligned.
Current Misalignment of Employer Paid Insurance
Instead of healthcare providers focusing strictly on the care and experience of the patient/consumer, they must coordinate with the patient’s health insurance company on eligibility, medical appropriateness, and whether the particular type of service or medicine is covered or needs preauthorization prior to the services being performed. Health insurance companies must focus on controlling the medical costs for themselves, their employer customer, or the government entity – like Medicare or Medicaid – who contracted them to provide the insurance for the patient. They are not engaged directly with the patient and provider at the time of care and must assess from a distance and typically rely on standards for a larger population. The tendency of consumers (members of health plans) to change their health insurance plans is also fairly high except for Medicare. Health insurance plans are not incentivized to pay for wellness and preventive services when the savings from proactive care is years down the road when the consumer/member is no longer with the same health insurance plan.
Employers are focused on gaining health insurance for their employees at the lowest possible cost that retains employees. The employer may be interested in productivity gains through better health and well-being for their employees, but they may struggle to see the value when compared to the hard savings of lower insurance costs. With the introduction of the ACA (Obamacare) and consumer focused Health Insurance Exchanges (HIXs), the goal was to give consumers without access to employer sponsored health insurance an opportunity to obtain high quality health insurance. A penalty was enacted for employers who tried to push their employees into these HIXs, as it was believed that the employers would not fund the employee using the HIXs at the same level of funding as employer negotiated health insurance. Otherwise, like the change in the last 30 years from employee pensions to 401K plans, many thought employers would back out of providing health insurance for their employees directly and just provide a subsidy for employees to buy their own health insurance.
With these additional entities in the marketplace (health insurance companies and employers), the healthcare provider focuses on the health insurance rules as much or more than the patient. The health insurance company focuses on the employer, as the employer is the purchaser of their insurance services – not the consumer/patient. The employer focuses on insurance costs, not the care of the patient/employee. These misaligned priorities leave the patient struggling with the healthcare provider, the health insurance company, and potentially the employer, without a strong bargaining position.
With the expansion of high deductible health plans where the deductible can be over $5000, the patient is forced to pay most of their healthcare service costs directly to the healthcare provider along with paying for their health insurance, which is financially reminiscent of using hospitalization or catastrophic health insurance. For the healthcare provider, these patients act like self-paying patients as they rarely exceed their deductibles. But the providers must still negotiate with the health insurance plan and abide by their rules, standards, and administrative requirements around filing claims, checking eligibility and garnering authorizations prior to performing some services.
Misalignment of Value Based Reimbursement
The current alignment described above is mainly for fee for service type arrangements typical of primary care physicians and specialists. The health insurance company, or patient with an unmet deductible, pays for the services rendered without any guarantee of outcome. Many services performed at the hospitals have moved to a bundled payment system, a form of value based reimbursement. The bundled cost is a single payment for the stay or for each day of the stay, compared to paying for every item comprising the surgery and recovery. Typically, the physician’s and specialists’ services are still separate costs.
The industry, especially Medicare, has been working to create a reimbursement structure that better aligns payment to outcomes which is referred to as Outcome Based Care, Value Based Care, Value Based Reimbursement, and other similar names. The goal with these reimbursement structures is a) to better align costs to the entire episode of services and b) the outcome achieved. Savings from reductions in costs can flow back to the healthcare provider, but the overages in costs can also flow back to the healthcare provider. Although this helps align costs to final outcomes for the patient, it holds the healthcare provider responsible for not only the care of the patient, but also the patient’s adherence to their care plan and the healthy, or unhealthy, decisions of the patient. Unfortunately, the majority of the United States population is not highly adherent to their treatment plans and medication plans, so the provider is assigned responsibility for a patient that they do not control.
True Owner of Healthcare
Let’s compare this situation with a normal marketplace with just a buyer and a seller who hold each other accountable. The consumer/patient must be the owner of their healthcare to truly take charge of their own health. The paternalism and lack of both price transparency and health education by the healthcare industry has limited the consumer’s ability to fully own their own care. Healthcare provider’s focus on medicine and surgical therapies is also problematic. These services are completely controlled by healthcare providers and can create a misalignment of financial incentives. Fitness, environment, and nutrition are also important to the patient’s health and should be addressed as part of a care plan for patients. For a patient to be successful with both the medical and non-medical aspects of their health, the physician and patient must partner around preventive, proactive healthcare.
Make the Problem Bigger
As President Dwight Eisenhower stated, “Whenever I run into a problem I can’t solve, I always make it bigger. I can never solve it by trying to make it smaller, but if I make it big enough, I can begin to see the outlines of a solution.” In this same vein, the current efforts to change the United States healthcare system may be too limiting and confined. These constrained efforts don’t take into account the underlying misalignments and problems with the system that have created the lack of cost control and increase in waste which is present. As we define the future of healthcare, we need to reexamine our artificial guardrails which avoid disrupting the current healthcare stakeholders. There must be a) an alignment of costs with efficient and effective health outcomes for the consumer and b) a consumer who is informed and engaged in the decisions regarding the care plan and costs. Only then will the proposed solutions be able to align the clinical and financial requirements of the consumer and their care.
Back to the Future – Concierge Medicine
Concierge Medicine and Direct Primary Care with their a) subscription model of payment, b) focus on overall health of the patient, and c) alignment of financial incentives to the health of the patient may be a step in the right direction, even if it is a step back to the older ways of delivering healthcare which are reminiscent of Marcus Welby, M.D. These models or similar subscription based models, where the consumer is buying directly from the healthcare provider or clinical team, aling the consumer and clinical team to improve the patient’s health, reduce costs, and provide proactive and preventive care that reduces the chance of serious conditions. This alignment is key to long term healthcare savings. The consumer/patient must be engaged in their care and complaint to the care plan. Concierge practice’s patients are highly compliant, typically over 90%. This situation may be driven from the type of consumers attracted to and able to pay for this additional, high touch care, but it may also be due to alignment of the physician and the patient to move the patient to their optimal health.
Realigning Consumer, Clinician, and Coverage
With this subscription model of healthcare directly between the physician and the patient, many of the administrative requirements and unnecessary rules associated with claims based reimbursement are reduced or eliminated. The ability to support phone, text, or tele-health based interactions between the patient and the clinical team are supported and encouraged. The easiest, most effective way to interact is always the best way to interact. If the patient does not need to come into the clinic or get an expensive diagnostic service, then it isn’t done, as it reduces the value for both the patient and the clinical team. If you can go to the pharmacy for a strep test and inform the physician of the results via phone or text with an image of the test results, then the physician can prescribe the medication while you are at the pharmacy. Current health plans, even if you had a positive self-test for strep, would require you to schedule an appointment, have another strep test, and be examined by the doctor before getting the prescription to allow you to return to the pharmacy for the medication you knew you needed in the first place.
If Concierge Medicine or Direct Primary Care can provide hospitalization or catastrophic health insurance through a health insurance plan or through the self-insurance employer, the consumer/patient, the clinical team, and the health insurance become better aligned to a) improve the overall health of the patient, b) reduce unnecessary services and administrative costs, and c) avoid the major costs and consequences of issues resulting in hospitalization. There is also the opportunity to drive down the actuarial estimates for this population, and therefore reduce the cost of the health insurance due to a) better adherence of the Concierge Medicine patients to their care plans and b) the effectiveness and efficiency of more proactive care.
Consumer Centric Care
In the end, the improvement comes from alignment of the patient, clinical team, health insurance plan, and the employer to providing proactive care to support the consumer’s journey to optimal health for their age and physiology. If the consumer is engaged and educated in the diagnosis, care plan, and costs of care, the likelihood of improving their health while reducing the cost of care is greatly increased. Healthscient is a supporter of putting the consumer/patient in the center of the healthcare process and making their engagement and understanding a focal point. After all, an engaged and informed person is more likely to accomplish any task.
Supporting the Patient Support System
In the next article, “Supporting the Patient Support System”, the discussion will focus on the value of engaging the family and caregivers in the care of young, elderly, or critically ill patients, and improving the collaboration with the primary care clinical team with the patient’s support system.
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by Matt Larsen, Principal, Healthscient
Published on Healthscient.com: August 8, 2017