Population Health Management (PHM) is a systematic way of managing personal health behavior to improve the overall health of a specific population. It sounds a lot like the generally unsuccessful Managed Care and HMO initiatives of the 80’s and 90’s, and in some respect, it is similar. So why should we expect it to work now when it failed miserably in the 80’s and 90’s? The answer is in the Affordable Care Act initiatives, CMS (Medicare) risk shifting initiatives with providers, a population that is much more focused on wellness than previous generations, and the availability of Population Health Management tools to make all of the moving parts come together.
Managed Care was predicated upon the principal that carriers could provide much richer benefit levels, embedded with wellness and prevention incentives, could offset the added cost of coverage, and lower the cost of claims, simply by keeping people healthier. Primary care physicians were “anointed” as “gatekeepers” and were responsible for guiding their patient to the appropriate level of care and were often paid a capitated amount per patient, whether they provided treatment or not. That would guarantee that patients would receive the routine care they required and avoid the unnecessary expense of entering the medical system at the specialist level and limiting unnecessary hospitalizations. However, it often resulted in a provider signing up as many patients as possible to increase their capitated monthly revenue, irrespective of the amount or quality of the care they provided.
Keeping people healthy and avoiding unnecessary care and treatment were laudable goals. However, the Managed Care system was flawed and failed to work except in a very few areas of the country. In addition, carriers had few systems to measure the quality of provider care and whether patients were even receiving the minimum standards of preventive care that every provider was required to provide. Data systems were inadequate, and carriers could not easily measure the quality of care a patient received or the cost or quality of an episode of care. Moreover, their lack of disease management systems prevented the carriers or providers from identifying gaps in patient care and reaching out to patients who required care.
The goal of Managed Care was the same as it is under Population Health Management; seeing that each patient received the right treatment, at the right time, from the right provider, who was providing the right care. However, because of a lack of disease management systems and data accumulation, Managed Care went from managing care to rationing care, in order to reduce cost. HMO’s went from the architects of a strategy to improve the health of a population, to the “enemies” who rationed care to reduce their costs. Almost every day there was a published news article or television story of a severely ill person that was being denied care by the “evil HMO”.
Since its early inception, the primary purpose of health insurance was to provide financial protection to a participant who had the misfortune of contracting a serious medical condition. That purpose did not change as the various delivery mechanisms changed from Protection Associations, of the 1800’s, to true Group Insurance through your employer, but will change as the Affordable Care Act regulations emerge. Employers will still buy insurance from a carrier (or self insure), carriers will pay claims incurred by eligible participants, providers will treat patients, and only one thing will have changed since the late 1800’s. All of these partie will have a very keen interest in keeping their employees, patients and insured members healthy.
As I said previously, Population Health Management (PHM) is a systematic way of managing personal health behavior to improve the overall health of a specific population. It’s goal is to see that all participants receive the right treatment, at the right time, from the right physician, who is doing the right thing. Achieving these objectives would implicitly incorporate wellness incentives, behavior modification, disease management, healthcare coaching, provider profiling and predictive modeling, all wrapped around robust data analysis. That’s right. In the new and emerging world of PHM, data is king and converting data into actionable information to improve the health of a specific population becomes the primary objective.
When applied within a typical employer/employee population, the goal would be to improve the overall health of the population, and in so doing, to reduce the overall cost of claims. When applied to a provider’s group of patients, such as an Accountable Care Organization, the goal is to work with all patients in order to improve their health and achieve more cost effective outcomes. In the Medicare Shared Savings Program, hospitals and other large provider groups will receive compensation, not solely based upon the services provided, but rather, based upon how healthy they can keep their assigned population. In addition, under some models, they may be at risk for failing to improve their patient’s health.
Population Health Management is a new delivery mechanism, yet still involves the same players as the 1800’s, but with different roles:
- Employer based health coverage is still the primary source of healthcare for most working Americans. However, the employer’s role under PHM will go much further than contracting with a carrier, choosing an “off the shelf” carrier plan design, and perhaps, contributing to the cost of coverage as part of employee compensation. They will need to create an environment where participants are encouraged to accept responsibility for their own health, by offering a benefit plan that encourages wellness (now required under the Affordable Care Act (ACA)) and by actively promoting wellness initiatives through legal incentives and disincentives, such as, contribution rewards and penalties for appropriate or inappropriate participant health behavior. Under the ACA, an employer can have up to a 30% contribution differential based upon wellness and as much as 50% for smokers.
The days of employer cost containment being defined by changing carriers each year for a lower rate are over, and if that is still your yearly approach to cost containment, you or your agent are naïve. If employers are serious about permanently controlling their cost of healthcare insurance, they need to become actively involved in promoting behavior modification, disease management and wellness amongst their employees, and most importantly, their eligible dependents. (On our block of 35,000+ participants, the rate of childhood obesity, high cholesterol and pre-diabetes is alarming. These are accidents looking for an expensive place to happen. Very scary!)
- For most plan participants, healthcare coverage is an entitlement and the value of a plan is determined by how rich the benefits may be and how little participants have to pay for medical care treatment. That will change under PHM and effective Chronic Disease Management programs. We are able to identify gaps in patient care and our tools allow us to predict future medical problems and costs with surprising accuracy.
If we can identify these gaps in patient care and identify and rank participants based upon how likely they are to have some future medical problems, why would some participants fail to participate in their own health? Participants have to be held accountable for refusing to participate with the nurses that reach out to them, and the penalties need to be significant, but not because they had the misfortune of getting sick. Rather, they should be penalized for failure to take ownership of their own health and participate in programs designed to improve their health. More than 70% of most medical problems are avoidable through early intervention and basic chronic disease management.
One of the major flaws in the Accountable Care Act is that it failed to hold participants accountable for their own health in any meaningful way. That will place the burden of health and wellness on the employer or the carrier. That is tantamount to treating the symptom rather than the illness.
- The value of a Carrier/TPA has always been measured based upon the accuracy and timeliness of their payments and the quality of their Customer Service. Today, I believe that these old measurements are totally irrelevant, unless you screw them up, which we all try hard to avoid. Otherwise they become the most important thing that we do. I believe that our value proposition is much more important than simply providing good service.
The real value of a payor is the data associated with the clams that we process. In the past 15 years in Naples, we have processed more than $1.5 billion of Florida claims. I can tell you about the treatment patterns of the providers with whom we work, how effective they are in keeping their patients healthy, the cost of their episodes of care, how they compare with their peers regarding cost and quality measures, and those with treatment patterns that are “outliers”. We even rank providers based upon a Cost Efficiency Index, by Specialty and yes, our nurses attempt to “soft steer” patients away from the least effective providers. The data also allows us to identify potential gaps in care and based upon this data, our nurses attempt to engage the participant in a program to complete the necessary care.
- The role of providers is also changing. Payor payment protocols, as well as Medicare and Medicaid, have recognized the value of Population Health Management. They have or will soon begin to pay providers not solely based upon the services that they provide, but rather upon measurements which reflect how healthy they keep their patients. Under the Medicare Shared Savings Programs, hospitals will be compensated, in part, based upon their ability to successfully meet or exceed 33 goals established by CMS to measure hospital performance. In some instances, hospitals will enter into a gainshare arrangement with CMS and could financially benefit or be penalized based upon their ability to meet or exceed the CMS performance measures.
Under Population Health Management programs, providers will be profiled based upon universally accepted cost and quality measures as developed by HEDIS and other professional organizations. They will be compared against their peers and PHM will compare provider cost efficiency, ranking them based upon the cost efficiency of their clinical outcomes. Providers who are “outliers” will not be able to participate in any gainshare arrangements and will not be attractive partners within the emerging ACO marketplace, or both.
The Affordable Care Act is far from perfect, a fact that I have pointed out in many prior articles. However, in all fairness, it has been the catalyst for many new and innovative programs, which will forever change the manner in which medical care is delivered today and in the future. Medicare has become the leader in creative cost reduction through the creation of provider incentives and disincentives, all of which focus on the quality of care, wellness, and avoiding unnecessary procedures.. Population Health Management and its use of claims data to predict future conditions/costs and profile providers, will be the engine that drives this change.