The private sector seems to be leading the way in reforms aimed at promoting coordinated care—but it’s still a somewhat bumpy road for providers. 


This month, the Centers for Medicare & Medicaid Services (CMS) again made clear that it is not yet ready to move forward with adopting either bundled payments or ACOs. Meanwhile, the private side of the healthcare industry is bustling with new risk-sharing arrangements that incorporate strategies for managing population health. Priority Health in Michigan has demonstrated positive outcomes when moving patients from Medicare fee-for-service to Medicare Advantage. CalPERS (the California Public Employees’ Retirement System) has created millions in savings by coordinating payers and providers. And UnitedHealthcare has announced large increases in accountable care contracts.

We are starting to get data confirming that coordinating care among providers is indeed a powerful tool for reducing cost while bolstering organizational effectiveness. Defragmentation of the industry is necessary and has been a long time coming. However, it’s not all smooth sailing. At the very least, there is anecdotal evidence that some of these current risk-sharing arrangements may be overreaching.

Reliable sources have privately shared with me that many systems moving into accountable care are struggling to obtain data and manage risk effectively. This issue has always concerned me, and HFMA has covered it extensively, most recently in the Value Project report on business intelligence (Building Value-Driving Capabilities: Business Intelligence). The situation is great for my many consultant friends, who are ready to step in and help—for a fee, of course—but not great for the systems that may have tried to do too much, too quickly.

Although there are certainly barriers to better care coordination, many examples show that markets can bring down costs while enhancing quality by reducing unnecessary utilization and avoidable complications. It works best when payers and providers work together. Yet all the data, intentions, and rhetoric will be of only marginal help unless we move away from fee for service and toward contracts that align providers. If we can’t eventually make that move, then we’ll be swimming upstream forevermore.

That being said—and I’ve said it before—providers need to understand what risks they are assuming, what data they need, and what investments they need to make in intellectual assets to manage risk. And they should be clear on all of these points before they “do the deal.” However, it is doable and—I believe—necessary.

For the foreseeable future, providers will be living in a sort of dual world while they make these transitions. They will have to straddle two realities. My bet is that the actions to coordinate care will help hold down healthcare costs.

And as finance people, we know the power of payment methodologies to influence behavior.

Publication Date: Sunday, September 01, 2013

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