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A Tale of Two Taxis: The Evolving Role of Acute Unscheduled Care in U.S. Healthcare Delivery Payment Reform

December 07, 2015

Consider the following two scenarios: in the first, you hail a taxi and pay the driver an extra dollar for every half mile she drives getting you to your destination. In the second, you pay the driver a set cost.

The first scenario incentivizes the driver to go further, consuming more of your time and cash in the process. In the second, you incentivize the driver to get you to your destination in the most time and resource efficient manner.

As the customer, you would prefer the second option. So, why should your healthcare be any different?

by Giffin Daughtridge, MPP’16

The United States has historically reimbursed its healthcare providers through a payment model called fee-for-service, the equivalent of the first taxi payment model. In other words, providers get paid for each diagnostic test or therapeutic treatment they complete.

This model has at least partially contributed to a system in which up to 34% of healthcare spending is wasteful or excessive.[1]That is a concerning amount, especially when you consider that the U.S. spends $3.1 trillion on healthcare annually and healthcare spending accounted for 17.4% of the United States GDP in 2013.[2]

To combat the healthcare cost crisis, the US Department of Health and Human Services is attempting to reform the way that providers are reimbursed to closer resemble the second taxi scenario. This payment reform uses incentives to motivate value-based care by tying payment to value through alternative payment models (APMs). It is part of a larger effort called Delivery System Reform (DSR), which was announced by HHS Secretary Burwell earlier this year.[[3]

US Health Care Spending as a Percentage of GDP

APMs range from Bundled Payments to Accountable Care Organizations. In a Bundled Payment, a provider is paid a set amount for an entire episode of care. If they deliver that episode of care for less than the bundled amount, they keep that savings. If they spend more, they lose that much money. For example, a provider might receive $30,000 to do a patient’s knee replacement. The provider then uses that money to do the operation and care for the patient for the 30 days after the surgery. In this way, the provider is incentivized to care for the patient in a low cost and high quality manner.

An ACO functions similarly, except the ACO is paid a certain amount of money per month or per year to care for a patient. All health care expenses for that patient then come out of that amount. DHHS goals aim to tie 50% of payments to quality or value through APMs by the end of the year 2018.

This is a significant shift considering the size of the US healthcare system. In order to meet these goals, all healthcare system sectors will need to take an active role in reform efforts. One important sector is the acute unscheduled care (AUC) system, which serves as the safety net for Americans and is a litmus test for strong, overall patient- and community-centered healthcare delivery.

The AUC system comprises care modalities used by patients for unplanned injuries or illnesses, including retail clinics, urgent care centers, primary medical care offices, emergency departments, telemedicine, and paramedicine. This sector of the healthcare system is vast (it provides over a third of outpatient physician visits annually) and critical because it is often the gatekeeper to hospital admissions (the most expensive component of the healthcare system).

The goal of APMs is to integrate all components of a patient’s care. Since every patient is susceptible to acute unscheduled injuries, the AUC system must be included in that effort.

With that in mind, the Brookings Institute convened an expert panel this past May titled Reimagining emergency medicine: How to integrate care for the acutely ill and injured. The synopsis was that the AUC system has the potential to aid payment reform efforts, but the following four steps must be taken to do so:

  1. Align incentives – The healthcare system must find a way to pay AUC providers for care that keeps patients healthy. This requires a culture shift as historically we have paid providers for seeing patients, not for care that keeps the patient from needing healthcare. Examples the panel described of initiatives that can contribute to payment reform goals are reimbursing patient navigators, who can take time to deal with non-clinical issues like housing and transportation and a patient call back system where doctors are paid to call their patients after an ED visit. Only 15% of emergency physicians are currently in alternative payment models. This number must increase, and we must redesign our metrics and incentives in order to incentivize the acute care sector to administer high-value care.
  2. Improve information systems – it is impossible for the AUC system to optimally coordinate care between its many modalities and the remainder of the healthcare system without a robust healthcare information exchange system.
  3. Engage acute care providers– in order to design a system that integrates the AUC system in a way that is palatable to the providers of that sector, they must have an active voice. As one panel member said, if you aren’t at the table, you are on the menu. Acute care providers must use their experience and perspective to take an active role in designing this new system.
  4. Bolster the acute unscheduled care system’s role as a safety net and disaster response unit – the acute care system provides a convenience factor by being open every hour of every day that is essential to the rest of the system. Additionally, it maintains a capacity to respond to disasters. Both of these roles are critical and cannot be lost in the pursuit of cost savings.

Integrating the AUC system in a manner that allows it to align with payment reform incentives is an essential component of DSR goals. Though difficult, each panelist agreed it was doable. The AUC system has a choice to make—let’s hope it hails the right taxi.

References

  1.   [1]Berwick DM, Hackbarth AD. Eliminating Waste in US Health Care. JAMA. 2012;307(14):1513-1516. doi:10.1001/jama.2012.362.
  2.   [2]Hartman M, Martin AB, Lassman D, Catlin A. National health spending in 2013: growth slows, remains in step with the overall economy. Health Aff (Millwood). 2015 Jan;34(1):150-60.
  3.   [3]Burwell, S.M., Setting Value-Based Payment Goals — HHS Efforts to Improve U.S. Health Care. New England Journal of Medicine, 2015. 372(10): p. 897-899.
  4. Pitts, S.R., et al., Where Americans Get Acute Care: Increasingly, It’s Not At Their Doctor’s Office.Health Affairs, 2010. 29(9): p. 1620-1629.
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