Newtown, CT – March 11, 2016
A survey by the New England Journal of Medicine Catalyst shows that health care organizations are much less ready to face into the new world of APMs than physicians – There are several important findings from that survey. First, most providers aren’t feeling the effects of alternative payment models. Second, in the words of the authors: “in short, the picture painted by these data is that, at this point, provider organizations tend to deal with pressure for efficiency by adding systems (i.e., care coordinators) and trying to increase their market share of care that is delivered. Changing how care is actually delivered is a less attractive option.” The respondents indicate that their main concern is to reduce the volume of services delivered outside the system, which can only reduce costs and improve efficiency if the services delivered within are less expensive than outside. Third, physician organizations are doing what you would expect when they’re in charge of patients, which is to find the least expensive, more efficient and effective ways of managing patients. Fourth, health systems and physician organizations are clearly more comfortable focusing on improving quality. None of this is surprising and begs the question about what exactly was CMS celebrating about recently when claiming that they had reached a milestone in moving payment to alternative forms to fee-for-service.
What this means to you – Our own survey of health plans and providers indicates that the vast majority of “alternative payment models” are simply add-ons. There’s no real financial risk involved. The most popular (for obvious reasons) Medicare APM is the shared savings program, which is upside only. The vast majority of health plans have similar programs and when we ask why they haven’t introduced downside risk yet, the answer is usually that providers aren’t ready. The NEJM Catalyst survey tells us that providers will never be ready, so while the health plans are waiting for providers, the providers are waiting for the health plans. Payers, including employers, have to take this to heart. Unless they start implementing APMs that includes downside financial risk, the system will not change. That said, it is pretty clear that physician organizations, whether formal independent physician associations or medical groups, are far more able to produce efficiencies than health systems. The physicians are busy trying to find the best site of service for the patients, while the health systems are busy trying to find ways to lock patients in. For the former, the patient management philosophy is generally about what’s good for the patient, while for the latter, it’s usually about what’s good for the organization. States, contrarily to the federal government, have understood this and developed programs that are not just hospital or health system-centered. Instead they engage clinicians in making good decisions for patients, and for themselves, and are putting them in the driver’s seat to bring about the needed change we all want. The NEJM Catalyst survey shows how right States are in their approach and how wrong the federal government’s approach has been and continues to be.
Francois de Brantes