Achieving Integrated Care as the foundation of Pop Health Management

In this post, I’ll focus on two drivers that are particularly relevant in the U.S.: financial and legislative.

Financial Drivers

There are key financial drivers for integrated care. Current statistics show that nearly $1.2 trillion of the $2.2 trillion spent globally on healthcare is wasteful. There are different buckets of wasted spending: money spent on preventable conditions related to obesity and weight, unnecessary emergency room visits, duplicate medical testing, and inefficiencies in the system.

To address this, traditional payment and service models are being deconstructed. Around the world, healthcare delivery models are shifting from a traditional fee-for-service (FFS) model to a value-based care (VBC) model. The focus is moving from volume of services toward delivering improved outcomes. The premise of VBC payments is to align physician and hospital bonuses and penalties with cost, quality, and outcome measures.

The U.S. is leading the charge on VBC initiatives to drive efficiencies into the healthcare system with the objective of achieving the “Triple Aim”: improved healthcare outcomes, improved patient experiences, and overall reduced healthcare costs. We’ve introduced several significant pieces of legislation—most notably the Patient Protection and Affordable Care Act of 2010, commonly referred to as the Affordable Care Act or “Obamacare”—to address the financial drivers for integrated care.

Obamacare introduced several measures that prompted payers to increase health insurance coverage and affordability, which resulted in payers being required to cover all insurance applicants within new minimum standards and offer the same insurance premiums regardless of pre-existing conditions or gender. At the same time, the legislation introduced incentives through the government insurers, Medicare and Medicaid, for healthcare providers to operate more efficiently through the establishment of accountable care organisations (ACOs), and for those ACOs to have the ability to benefit from a “shared savings program.” More complex payment models have also emerged—from bundled payments to pay-for-performance (P4P)—with significant reporting requirements around quality measures needed to qualify for payments.

We’ve yet to understand the effects of the recent U.S. presidential election on existing healthcare legislation. But one thing’s for sure—healthcare cost containment must remain high on the agenda.

Legislative Drivers

There are two additional factors that are likely to accelerate consolidation in the U.S. healthcare provider industry and the adoption of value-based payments, propelling the healthcare system toward integrated care: the Medicare Access and CHIP Reauthorisation Act of 2015 (MACRA) and the Cadillac tax.

MACRA establishes a new way to pay physicians who treat Medicare patients; it’s the largest-scale reform in the U.S. since Obamacare came into force. Among other things, it changes the way Medicare doctors are reimbursed, ending the Sustainable Growth Rate formula that was designed to specify the yearly growth rate targets for physicians’ services under Medicare, with a view to control the aggregate growth in Medicare expenditures for physicians’ services. Under MACRA, physicians can choose a Merit-based Incentive Payment System (MIPS) or an Advanced Alternative Payment Model (APM).

Although Congress recently delayed the Cadillac tax—the excise tax on high-cost, employer-sponsored health coverage (which will now come into effect Jan. 1, 2019)—employers and health plans are likely to continue to consider its impact on their offerings. The result is that there will continue to be a proliferation of high-deductible plans and growth of private exchanges, which will directly impact health providers. MACRA and the Cadillac tax are likely to accelerate the consolidation in the provider industry and the adoption of value-based payments.

Now that we understand the drivers for integrated care, we need to figure out how healthcare organisations can take on the challenge to deliver it. In many cases, this requires re-architecting care delivery models. One of the most complex and critical aspects of that is building an IT infrastructure that enables all participants in the healthcare system to access and share the information they need, and to streamline and automate their processes to ensure the most efficient clinical and administrative workflows—all with the result of improving outcomes and reducing costs. This will be the subject of my next blog post. 

For a comprehensive overview of this subject, please download our white paper, “Navigating the Journey to Integrated Care”