February 11, 2010

HEALTH CARE REFORM:
THE ABC'S OF DELIVERY SYSTEM REFORM

Two of the key goals of health care reform are achieving higher quality health care and increasing the cost-effectiveness of the health care that is received. These two areas are inextricably linked. Many experts believe that unless we link payment reforms to improvements in the quality and structure of our health care, we will continue to be faced with rising medical costs and declining health outcomes.[1] However, from the perspective of beneficiaries and their advocates, it is most important not to link access and coverage to cost-effectiveness. The Centers for Medicare & Medicaid (CMS) has long sought to make such a link and has been repeatedly rebuffed by advocates and by health care suppliers and manufacturers.

Though the goal of more cost-effective, and higher-quality, health care is an important one, the means to achieving this remains complicated. The health care reform bills now before Congress include several different proposals for changing the methods undertaken by health care providers and payers to get people the care they need and to which they are entitled. These methods are commonly referred to as delivery systems.

The proposed delivery system changes would help achieve the key goals discussed above. Some of the reforms are complementary and could be implemented in conjunction with other reforms. Some of the proposed reforms present different models for achieving similar goals. Still others are independent and could be implemented separately. Proposed delivery system reforms include options for managed care systems; quality control approaches that attempt to evaluate services, quality, and costs; and approaches that emphasize greater innovations in the use of health information technology as a tool for care coordination and for monitoring the utilization of services.

What to do in health care reform, how to do it, and how to measure its success are at the heart of our nation's intense health care reform debate. In an effort to clarify some of the delivery system reforms that have been proposed, we define some of the terms being used in this ongoing debate.

Glossary of Terms

Accountable Care Organization (ACO) - A health care provider organization that has as its mission the management of its patient population's entire continuum of health care needs. This continuum spans all patient contact with the medical/medical social services network – from the physician or therapist's office, to the hospital, to the rehabilitation hospital, to the skilled nursing facility (SNF), to home health care, to hospice. Physician-directed medical practices meeting certain CMS-established standards can apply to be an ACO. The ACO is financially responsible for the overall costs and quality of care for the population it serves and shares in any cost savings achieved relative to a risk-adjusted projected spending target for particular patient populations. Proponents of the ACO delivery model believe that it will improve care coordination. Detractors say that ACOs are simply a slight variation on a familiar managed care theme that hasn't kept costs down or quality up.

Bundled Payments - A payment approach or system through which health care providers are paid to deliver an entire package of health care services based on the particular diagnosis and the complexity of a patient's condition. Bundled payments may reflect an episode of care or treatment that is defined by the frequency of service or the type of services provided, such as a broken hip or pneumonia. This is another iteration of the Diagnostic Related Groups (DRGs) or Resource Utilization Groups (RUGs) approach to paying for health care services that are currently in use for hospitals and nursing homes in the Medicare program.

Capitation - A payment system through which health care organizations are paid a fixed amount for each person served, and, in turn, are responsible for the health care needs of those persons. Under such systems, health care organizations bear at least partial risk for the cost of providing care. Medicare Advantage (MA) plans and Health Maintenance Organizations (HMOs), are examples of capitated payment systems.

Comparative Effectiveness Research - An evaluation of the impacts or outcomes of treatment options that are available to treat a given medical condition for a particular set of patients. Comparative effectiveness research may test clinical effectiveness, cost effectiveness, or the effectiveness of a treatment option on a specific patient type. Although sometimes touted as cost-savers, these approaches have not always shown savings. However, they can be useful as a best practice tool.

Coordinated Care - A delivery of service approach that purports to oversee the various health care needs and services of a particular patient, where those needs involve the delivery of medical and medical social services by multiple service providers. Care coordination can be performed by a variety of service providers, including physicians, nurses, social workers, family members, geriatric care managers, and others. Real care coordination should be a part of all delivery systems approaches.

Evidence-Based Medicine - A quality of care and payment strategy based on the notion of using and paying for only those medical practices and procedures that have been determined through research and testing to be the most efficacious way to deliver a particular medical service or procedure, given such factors as the patient's diagnosis and condition. A significant limitation is that such approaches are often rigid and do not necessarily account for alternative usages of certain drugs, tests, and procedures, which compounds issues of access.

Gainsharing - An arrangement by which hospitals and other health care organizations promote cost-savings by creating incentives for their physicians to adhere to established standards and norms in the utilization of health care services, supplies, and resources. Under these arrangements, a percentage of the resulting cost-savings is distributed among participating physicians as bonus payments. Examples include meeting or exceeding payer-established goals for diabetes management or the reduction of medical errors in a particular medical discipline.

Medical Homes - An approach to delivering medical services by providing comprehensive primary care and care coordination. The medical home practice facilitates and provides information to specialists that are involved in the care of the patient. Modifications in payment systems, such as capitation and bundled payments, are also contemplated as a way of recognizing various levels of care coordination.

Value-Based Purchasing - A strategy that aims to link a health care provider's payment to enhanced performance or better outcomes. Defining enhanced performance may or may not be evidence based and can represent provider-set targets.

Conclusion

A major, and increasingly difficult, goal of advocates in the health care reform debate is to ensure access to services of the highest quality, at an affordable cost. Balancing cost and quality with access is essential to efficient health care delivery. In addition, an integrated, patient-centered health care delivery system should allow multiple providers in multiple settings to share information quickly, utilizing the latest health information technologies. Similarly, such systems should be held accountable for medical outcomes that are consistent with best practice norms and standards for the individual patient's particular diagnosis and condition.

For more information please contact attorney Alfred Chiplin (achiplin @ medicareadvocacy.org) in the Center for Medicare Advocacy's Washington, DC office at (2020 293-5760.

[1] Ledford, Meredith, Jeanne Lambrew, David Rothman, and John Podesta. The Health Care Delivery System: A Blueprint for Reform. Issue brief. Center for American Progress, Oct. 2008. Web. 8 Feb. 2010. http://www.americanprogress.org/issues/2008/10/pdf/health_delivery_intro.pdf.

Copyright © 2010 Center for Medicare Advocacy, Inc.