Using Strong Carrots and Sticks To Drive Health Care That Works

Brian Klepper

Posted 5/09/13 on Medscape Connect’s Care & Cost Blog

ALP_H_BK_0010On a recent call with a large manufacturer, my company’s team expected to describe how we develop primary care medical homes that become platforms for managing comprehensive health care clinical and financial risk. But the team on the other end of the phone beat us to it. Their remarks – that health care cost is a multi-headed monster that requires a broad array of simultaneously executed approaches – were a breath of fresh air.

They wanted to avoid approaches that don’t work or are designed to accrue to a vendor’s disproportionate financial advantage, and focus instead on mechanisms that measurably improve health and reduce cost. Their conventional current clinic vendor wasn’t onboard, philosophically or in terms of capabilities, and so wasn’t getting results. They were looking for a replacement vendor that could help them drive more appropriate care, with clear rules for patients and providers.

Often we have to cajole clients into more aggressive actions: restructuring their benefits or their PBM formularies, redirecting care to high performing doctors or hospitals, direct contracting for advanced images or ambulatory surgeries, creating stronger incentives for approaches that are most likely to produce better results. But now we’re finding more employers exhausted and eager to pursue out-of-the-box approaches that can drive more appropriate care and cost.

Since the end of World War II, when employers began offering health benefits to recruit and retain better employees, a tug-of-war has been waged over the rules of engagement. Employers want competitively healthy and productive work forces, but see health care as an unpredictable significant cost that must be managed. Employees may bristle at participating in risk assessments, or seeing certain doctors or to working toward a healthier lifestyle. These may be seen as brazen invasions of privacy, as work overflowing into personal life, as constraints on patients’ abilities to obtain quality care.

Until now, most employers have been reluctant to be too dictatorial. But the financial threats of relentlessly surging cost – 4.5 times general inflation for more than a decade – and overwhelming evidence of industry excess have been impossible to ignore, fueling a focus on using strong carrots and sticks to steer behaviors that follow what works.

This is no small task, because a profiteering health care industry has developed scores of ways to extract more money than it is be entitled to. Low primary care reimbursements have translated to rushed visits, driving up specialty referrals, diagnostics, procedures and costs for complicated patients. Egregious unit pricing on drugs, devices and specialty procedures – think stents, advanced images and complex spinal surgeries – encourage delivering more unnecessary products and services. Yellow-pages provider networks give patients “choice” to unwittingly see lousy doctors who consistently produce poorer outcomes at higher episodic cost, or get care in hospitals where there are higher opportunities to experience an error or acquire an infection. Leaving all this to health plans that have, for decades, been unwilling or unable to manage these vectors or control costs is repeating a behavior while hoping for a different result.

Last year, Walmart contracted for heart, spine and transplant surgeries with six Center of Excellence health systems around the country. These organizations use salaried specialists who are more likely to diagnose and treat correctly the first time for lower overall utilization and cost. They use and share evidence-based protocols, share data and coordinate care with local providers. Walmart employees who visit these Centers pay nothing. Many large and mid-sized firms are now pursuing this design.

Jerry ReevesJerry Reeves MD, a medical management innovator, structured an alternative health plan design for one of his clients. His plan used rules that strongly encouraged approaches that work. Employees who adhered to the rules paid about one-third less for their coverage. But the program required a commitment. Participants who signed up had to use one of eight primary care medical homes that had been established. They needed to visit within 90 days for an exam, including a biometric profile. If the medical home called to recommend visiting a nurse coach, the patient needed to do that. Patients seeing specialists needed to make sure that the specialist information came to the primary care doctor. The medical homes were structured to accommodate walk-ins, so urgent care visits in Emergency Departments were not covered until after hours. There were other rules as well.

There are rules for doctors and hospitals too. To participate in good standing, they had to develop and sign documented care plans for patients, so patients and physicians could know what to expect. They had to be able to exchange clinical information so care could be better coordinated.

Patients failing to follow any of these rules would receive “strikes,” and three strikes would land the patient in health care timeout for a year, back to the original health plan, with more choice but 35 percent more cost.

Dr. Reeves numbers were striking. 97 percent of the group signed up for the plan, and only one person struck out. Hospital days dropped 55 percent. Advanced images dropped 35 percent. Health improved and costs plummeted.

Employers are waking up, and are tying stronger incentives to approaches that get results. On the hook for exorbitant health care costs, employers and employees are game to know who delivers value and what works. They want good care for their families without financial peril. And they want help orchestrating that process without financial conflict.

More employers are making this shift. Broad-spectrum medical management organizations see this as an opportunity to succeed by bringing health care back into balance.

About Brian Klepper

Brian Klepper is a health care analyst and the Chief Development Officer of WeCare TLC onsite clinics.
This entry was posted in Benefits, Conflicts of Interest, Health Care Cost, Innovation, Market Dynamics, Medical Management, Policy/Law/Regulation, Quality and tagged , , , , , , . Bookmark the permalink.

4 Responses to Using Strong Carrots and Sticks To Drive Health Care That Works

  1. Blane Bachan says:

    What is a medical home?

  2. m weaver says:

    Health care time-out doesn’t sound like a good idea when it’s your blood vessel that’s on the firing line, expectation should provide the patient with what they need. First do no harm innovation; a language issue perhaps..

  3. Kevin Denton says:

    Very Informative! Thanks, kd

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