Reforming the Delivery of Health Care Services


The National Quality Strategy (NQS), established as part of the Affordable Care Act (ACA), 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. To reach these goals, all care should be person-focused—each individual (and/or caregiver, if appropriate) needs to be a full partner in all discussions and decisions related to his or her care. This individualized care encompasses compassion, empathy, and responsiveness to the individual’s expressed preferences.

For most Americans, health care is uncoordinated, quality is uneven, and cost is increasingly unaffordable. Care can also be difficult to obtain. The prevailing method for paying physicians, fee-for-service, encourages fragmentation because it offers little incentive for clinicians or health plans to coordinate or integrate 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, develop meaningful clinician-patient communication, or establish trusting relationships with clinicians.

The ACA includes several provisions to address affordability and quality concerns. 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. A recent study reported that only 42 percent of visits for treatment of a new health problem are made to an individual’s personal physician. The other 58 percent are made to emergency departments, specialists, and hospital outpatient departments.

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 widening gap between payment for primary care and that for specialist services are issues of concern. Approximately 65 million Americans live in officially designated primary care 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 the section Health Care Coverage: Medicare.)

Team-based care—patients 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). Each professional team member practices to the full extent of his or her license and provides 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, but it customarily includes physicians, advanced-practice registered nurses, social workers, pharmacists, nutritionists, and family caregivers and home and community based services providers.

Value-based purchasing and value-based benefit design—a growing practice among large purchasers and employer coalitions is to offer health plans financial incentives to improve their clinical and service performance. Such “pay-for-performance” systems can take many forms, but 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, and should be grounded in evidence-based measures. Increasingly employers are implementing benefit designs that include consumer incentives (e.g., reduced cost-sharing for specific services) that are intended to reinforce provider incentives. (See this chapter’s section Health Care Coverage: Medicare—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 and 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 transformation of the delivery system, but consumers, purchasers, and payers must also participate. Provider incentives often take the form of increased or reduced payment (e.g., 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 (MA), where 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 to 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 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. This information on quality and cost—if made available to consumers—can help them make informed decisions about where to seek care.

Reforming the Delivery of Health Care Services: Policy

Value-based purchasing (VBP)

In this policy: FederalState

In designing value-based benefits and engaging in value-based purchasing, public and private payers should be required to employ incentives that improve quality and 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.

AARP opposes incentives that create barriers to access to necessary care or discourage consumers from seeking necessary care.

AARP opposes consumer incentives based on attaining bio-metric goals such as weight loss, hypertension control, etc.

(See also policies in this chapter’s Medicare section Value-Based Purchasing in Medicare.)

VBP: Reference pricing

In this policy: FederalState

AARP supports reference pricing for services 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.

Found in Reforming the Delivery of Health Care Services