Offering Up Relief in the Dog Days of Summer

Submitted by on Friday, August 29, 2014 - 12:28

In the dog days of summer we opened up the cooler to give everyone some lasting relief – Implementing innovative payment models is hard work, and it’s made all the harder when there’s endless discussions and debates about the boundaries of an episode of medical care for which a physician or hospital will take financial risk. Invariably these discussions center on how broadly or tightly the episode is defined. If it’s too tight, then payers aren’t interested because the volume of patients having those episodes will be too low, and the variability in costs and outcomes that we know exists will artificially disappear. If it’s too broad, then quasi-random variation is introduced which can put the provider at financial risk even when the management of the patient is excellent. To a certain extent, these decisions can be arbitrary and since neither party truly trusts the other, an entire effort can get bogged down or even defeated because no one can agree on the boundaries of a medical episode. These decisions have far more impact when there is a multi-payer initiative or when there’s little opportunity for back-end reconciliations. To-date, there haven’t been standard definitions around which we can establish some form of consensus. And that’s the relief we’re offering up.

What this means to you – During the past seven years, with the help and support of charitable foundations including the Commonwealth Fund, the Robert Wood Johnson Foundation, New York State Health Foundation and Colorado Health Foundation, we’ve been developing and field testing the definitions of our episodes, which we call Evidence-informed Case Rates (ECRs). While we certainly don’t claim they’re perfect, they have proven to be resilient enough to be useful and valuable in many implementations. We’ve now released them as open-source definitions that everyone can use for whatever purpose they may see as useful and valuable. Employers should consider using them to help define the prices for certain medical events such as elective procedures, whether it’s to provide those prices in transparency tools or to contract with providers in “carve-out” arrangements. That’s because methodology really matters when defining a medical episode for price comparisons, and we’re co-hosting a webinar in a few weeks with CPR to discuss some of these related issues. Health plans should consider using these definitions as the basis for their bundled payment arrangements to increase the level of acceptance by providers. To facilitate that acceptance, we’re openly explaining the rationale for how we’re building ECRs, and engaging in open discussions with clinicians and others via free monthly webinars focused on specific clinical domains. We’re going to continue to work very hard to refine the ECR definitions in a collaborative and open way so that, at the end, they can become a standard on which everyone can build innovative payment and benefit design solutions. And, hopefully, the relief we’re providing now to all who are toiling hard in the field can be enduring.