Health Care Service Delivery Reform


The National Quality Strategy (NQS), established as part of the Affordable Care Act, serves as a catalyst for a nationwide focus on quality improvement efforts and approaches to measuring quality. The NQS has three goals: better care, healthier people and communities, and lower-cost care. In order to achieve these goals, all care should be person-focused—individuals (and caregivers, if appropriate) need to be full partners in all discussions and decisions related to care. This individualized care encompasses compassion, empathy, and responsiveness to the individual’s expressed preferences. For many Americans, health care is uncoordinated, quality is uneven, care can be difficult to obtain, and the cost is increasingly unaffordable. The prevailing method for paying for health care—fee-for-service, where each health care service is paid for individually—encourages fragmentation because it offers little incentive for clinicians, hospitals, and other providers to coordinate care.

Cost is an issue for employers as well. Individuals and families with employer-based insurance often experience discontinuity due to coverage changes that their employers make in search of lower premiums. Such changes make it difficult for patients to receive continuous care and establish trusting clinician-patient relationships that foster effective communication.

The Affordable Care Act (ACA) included several provisions to address affordability and quality concerns, including those aimed at improving the delivery of primary care and the development of financial incentives to improve care.

The ACA established the Center for Medicare & Medicaid Innovation, which is testing payment and service delivery models designed to reduce spending while enhancing quality of care. The center gives preference to programs that improve the coordination, quality, and efficiency of patient-centered health care; it also promotes broad payment and practice reform. Other provisions authorize pilot testing of new care models, such as medical homes and accountable care organizations. The strategies in the law that address delivery reform, quality improvement, and the primary care workforce signal Congress’s belief in a multidimensional approach to reform. Beneficiaries will benefit if innovative approaches and other reforms improve care quality and affordability.

Primary care: Primary care is usually the entry point to the health care system.

Practitioners triage and address new conditions and needs, encourage and initiate preventive health activities, and coordinate with other parts of the system. Research suggests that health care systems with a strong primary care foundation have better quality, lower costs, better population health, and fewer health disparities.

Thus, growing shortages in the primary care workforce and the wide gap between payment for primary care and that for specialist services are issues of concern. Approximately 84 million Americans live in officially designated primary care health professional shortage areas. Experts observe that the disparity in incomes between primary care physicians and specialists discourages medical school graduates from choosing primary care careers. To help address this problem, the ACA mandated a 10 percent Medicare bonus payment for primary care services from January 1, 2011, through December 31, 2015 (see this chapter’s discussion of Medicare payments in Health Care Coverage: Medicare).

Team-based care: Patients also benefit from well-coordinated care managed by a team of professionals with the necessary skills to serve patients’ needs. The numerous demands, range of needed skills, and expectations of primary care suggest that primary care is best provided by a team whose members consult and coordinate with one another, as well as with the patient (and any caregivers, if appropriate). Professional team members practice to the full extent of their licenses and provide services with a clear definition and understanding of roles and responsibilities.

People with multiple chronic conditions, in particular, can benefit from treatment by health professionals from a variety of disciplines. The team’s composition may vary according to patient needs. Customarily it includes physicians, Advanced Practice Registered Nurses, social workers, pharmacists, nutritionists, family caregivers, and home and community-based service providers.

Value-based purchasing and value-based benefit design: A growing practice among large purchasers and employer coalitions is to offer financial incentives to health plans to improve their clinical and service performance. Such “pay-for-performance” systems can take many forms. Still, all these initiatives are intended to reward enhanced quality of care, greater efficiency, or a demonstrated commitment to quality and the public reporting of performance. Incentive programs assess clinical care, member access to services, and patient-reported experience. They should be grounded in evidence-based measures. Some insurance designs include consumer incentives (e.g., reduced cost-sharing for specific services) that are intended to encourage appropriate use of services (see also Value-Based Purchasing in Medicare).

Employers can provide information about quality and efficiencies to consumers and can encourage them to use this information when they choose health plans and providers by giving them comparative cost and quality information.

Value-based purchasing (VBP) advances the idea that buyers should hold providers of health care accountable for the cost and quality of care, that is, the “value” of care they provide. VBP provides incentives for providers and consumers, such as lower payments to providers who do not meet targets and reduced or increased charges as a means to encourage consumers to achieve healthy behaviors. Although improvements in quality can reduce costs, they may also increase costs or be cost-neutral. While cost is a critical concern for consumers, cost alone is not a measure of quality. It cannot serve as the sole determinant of value.

Commercial health plans and public payers use financial incentives in benefit design by lowering or removing cost-sharing for high-value services or well-performing providers. For example, the ACA eliminated cost-sharing for specified, evidence-based preventive services. Incentives are most effective when those directed at consumers and those directed at providers are mutually reinforcing.

Provider incentives: Clinicians and other providers will drive the transformation of the delivery system, but consumers, purchasers, and payers must also participate. Provider incentives often take the form of increased or reduced payment. For example, providers who achieve high quality and efficiency may receive bonus payments or higher volume. Providers who perform poorly may be subject to penalties, such as the denial of payment increases. Nonfinancial incentives directed at providers also can affect quality. One example is found in Medicare Advantage. Health plans that achieve 5 stars, the highest quality score, are open for enrollment at any time during the year, not just during the once-a-year enrollment period.

Consumer incentives: Individual consumers can play a role in promoting better care and making the best use of health care resources. Generally, incentives are intended to make consumers more cost-conscious and price-sensitive in their health care choices. Some purchasers or payers offer incentives to encourage beneficiaries to use particular services (e.g., evidence-based preventive or screening services) and go to physicians and hospitals that achieve higher-quality results and use resources more efficiently. Under the latter incentive, a payer creates “high-performing” mini-networks in which cost-sharing is lower than it is for providers in other networks.

Reference pricing: Reference pricing is a mechanism used by a health plan, employer, or payer to set a maximum payment (i.e., the “reference price”) for a specific service. Usually, the limit is set to ensure a sufficient number of providers for beneficiaries to choose from. This allows consumers to choose other providers but at a higher cost if a consumer selects one who charges more than the reference price. Large, self-insured employers often have information from claims data about how service costs vary. They also can measure the quality outcomes of specific services. If made available to consumers, this information on quality and cost can help them make informed decisions about where to seek care.

All-Payer Claims Databases (APCDs) play an important role in promoting health transparency, quality care, and payment reform. APCDs include medical, pharmacy, dental, eligibility, and provider files from private and public payers and can provide critical information about health care utilization and costs. However, the U.S. Supreme Court’s Gobeille v. Liberty decision limited states’ ability to directly require reporting from self-funded employer-sponsored health plans.



Value Based Purchasing (VBP)

In designing value-based benefits and engaging in VBP, public and private payers should be required to employ incentives that ensure the most effective use of health care resources so that health care is affordable.

Cost alone is an inadequate indicator of value.

Supply actionable and accurate information that is readily understandable to most consumers.

Incentives should not create access barriers or discourage consumers from seeking care.

Consumer incentives should not be based on attaining bio-metric goals such as weight loss, hypertension control, etc.

(See also policies in Value-Based Purchasing in Medicare).

VBP: Reference pricing

Reference pricing for services should be employed when:

  • price variation for the same service is known and documented;
  • patient outcomes for the specific service are measured;
  • consumers receive information that compares the quality and cost of the providers offering the service; and
  • there are sufficient providers available who accept the reference price.

Establishing all-payer claims

State policymakers should establish and develop all-payer claims databases. In developing these databases and public reporting and transparency efforts, states should consult with stakeholders, including consumer representatives. States should also be encouraged to standardize data to allow for greater comparability and analysis.

States’ ability to collect comprehensive data from all sources is critical to the accuracy and effectiveness of all-payer claims databases. Since the Supreme Court’s Gobeille decision has resulted in a significant exclusion of data and potentially skewing analysis, efforts to continue to collect comprehensive information, including self-insured plan data, should be supported. These efforts include state voluntary data collection efforts, state provider reporting requirements, or establishing a federal reporting requirement.

Found in Health Care Service Delivery Reform