‘Show me’ payments spawn risk-sharing efforts

This article is Trend No. 1 of 5 in Drug Store News' overview of the current state of the healthcare market.

Want to be paid in full for your patient care efforts? Prove they’re making a difference. That’s the message health systems and physician groups are getting from government health plans as the Affordable Care Act spurs a shift in federal payments to evidence-based care. And in response, hospitals and other health providers are working urgently to lower costs and spread the responsibility for care to every facet of the health system.

In short, health reform is forcing all stakeholders to rethink the way they market to and serve the health system. And it’s spawning new risk-sharing patient-care initiatives that are shifting the focus of health delivery: from traditional fee-for-service, sky’s-the-limit reimbursement models borne largely by public and private insurers, to one of accountability, cost management, collaborative care and a focus on the long-term health and wellness of the patient.

In this post-ACA world, “the health industry has been spreading and shifting risk … to not only include traditional insurers, but also hospitals, physicians, pharmaceutical companies and consumers,” noted PwC’s Health Research Institute. The goal for all those groups, according to HRI, is “learning to compete under an evolving set of rules, limited resources, increased transparency and a focus on value rather than volume.”

“The ACA fueled this trend,” HRI reported. “For providers, the law took steps to change how Medicare pays for care by offering financial incentives and penalties that encourage better care coordination, higher-quality outcomes and less fragmentation.”

Through the Medicare Shared Savings Program and other new reimbursement schemes, the Centers for Medicare and Medicaid Services already has begun penalizing poor hospital performance and rewarding health systems that reduce hospital-acquired infections and patient readmissions. In turn, that shifting payment model already is spawning new, coordinated-care programs in many communities “as the law fuels the trend toward consolidation and partnerships,” HRI said. Hospital groups are allying with local pharmacies, outpatient clinics and insurers to form a post-discharge continuum of care designed to keep patients on track with their long-term medication therapy and care goals, and away from hospital readmissions.

The drive-by health providers and insurers to spread the risks and costs of care will only increase as more and more payments are based on providers’ ability to demonstrate better management and prevention of disease for patients. Indeed, HRI said, “The administration recently unveiled a framework that would put as much as half of what it spends on Medicare into alternative payment models by 2018. The move quickens the long-anticipated shift from fee-for-service payment that rewards the number of procedures performed to paying for the value or patient outcomes of the care provided.”

For drug manufacturers, too, the risk/reward payment model gradually is shifting drug makers’ go-to-market strategy. “Pharmaceutical companies have begun to see their influence over product selection and marketing wane,” HRI reported. A 2014 survey by the institute found “a growing willingness by pharmaceutical executives to cede more authority to the Food and Drug Administration to judge new medications based on clinical and economic effectiveness.”

The rise of accountable care organizations and capped payments is forcing drug developers to “respond to cost pressures by health plans and providers,” in part by engaging health systems “in new ways, seeking their insights into product development and outcomes research.” In this arena, noted researchers, products “that increase cost with no appreciable gain in clinical performance” will face increasing scrutiny and “harsh coverage decisions” from purchasers.

Patients themselves also are feeling the sting through new, high-deductible insurance plans. “Less insulated from healthcare costs, Americans want a healthcare market that can compete like a more traditional, retail-oriented system,” HRI noted. “Retail clinics, urgent care centers and even some outpatient departments — all of which typically have more flexible hours, more convenient locations and clearer pricing — have begun siphoning away business from traditional doctor offices and hospitals.”