The States Will Lead

Submitted by on Monday, June 8, 2015 - 09:27

Newtown, CT – June 6, 2015

States will lead – that was the conclusion from the Fifth Annual Bundled Payment Summit in Washington DC, and an apt one. While the federal government has certainly been the spark that ignited payment reform, the fire is being built up and stoked by the States. From Oregon to Maine, and Texas to Minnesota, different models are being tested, refined, modified, and adapted to the idiosyncrasies of the local health care markets and generating very positive results. The risk they all now face is that of the blundering mammoth trampling on the fires. After several years of piloting the bundled payment for care improvement, the flaws in the design of that program, which, as one participant aptly put it, has transformed the vision into a game, continue to fall on deaf ears. The reason became clear during the presentation and follow-up Q & A with Rahul Rajkumar, a CMMI official in charge of some of the new payment programs. The feds believe – against facts and proof to date – that only ACOs can solve the problems of uncoordinated care. This dangerous ideology, which is widely rejected by the private sector because of the considerable price inflation that provider consolidation brings, and also rejected by many states, is going to put the federal government at odds with the rest of the nation….at least until the next election. But until then, CMMI is putting its eggs in the ACO basket and ignoring the potential of bundles, continuing to plod along with a suboptimal program and ignoring calls to expand what does work.

What this means to you – earlier this week the State of Connecticut passed an omnibus bill on health care transformation that finally puts a halt on provider consolidations, accelerates the pace of transparency in price and quality, and sets up the state for significant payment and delivery system reform. At the Bundled Payment Summit, Jason Helgerson (who runs the Medicaid transformation program) showed everyone how a large state can balance the need for controlling total costs of care while pushing through delivery system innovation with innovative payment models. Contrarily to the feds, New York will try out chronic care "super bundles", recognizing that physicians and facilities might want to organize around that care, but not other forms of care, nor want to take insurance risk on things they simply can't control. Tennessee, Ohio and Arkansas are all piloting chronic and acute care bundles, helping specialists focus on reducing costs while improving quality. Brooks Daverman of Tennessee was quite clear that the last thing they want to see emerge is consolidation of providers that can inflate prices on the private sector. As such, spurring competition at the level of a bundle is a far better way to stimulate care reengineering. And if you think that's only the payer's perspective, you're wrong. Representatives from cancer centers, cardiology and orthopedic centers of excellence, as well as birthing centers all echoed the strength of this policy. In simple terms, it's a lot easier to get providers engaged in transformation when it's done at the locus of their control. States get it, providers get it, employers get it. The only ones who don't are the feds, and so it's time for the pendulum to resolutely swing back to the States, and none too soon.