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By CYNDY NAYER, President and CEO, Center for Health Value Innovation

The nation is undergoing profound change as the enormity of the expense of poor health weighs on a stalled economy. The bad news: The "system" that we thought we built cannot deliver what we really need: efficiency and quality. Why? Because the healthcare system is suffering from friction: the fragmentation of information and the misalignment of incentives on cost compression instead of improved health.

Through the analysis of over 200 total surveys, and the accumulation of business-based evidence, the likelihood of success for companies as small as 100 employees to move into a self-insured, value-based design can be plotted. Further, health plans are launching models for fully insured products that will enable small employers to enter the value-based space.

Over 100 levers have been identified--plan designs, incentives and disincentives--that promote the value of the investment in health and the link to care coordination. The levers range from health risk appraisals to biometric screens, from waived co-pays for medications and labs to mandatory enrollment in condition management, and they include increased reimbursement to the physician/clinician teams that manage complex adherence (and, sometimes, not-so-complex, like convincing a patient to get the flu shot).

DRIVING THE DIVIDENDS OF VALUE-BASED DESIGNS

The evidence of patient-centered, coordinated care grew out of earlier work at Fortune 100 companies and health plans that provided a baseline of evidence in consumer-directed as well as value-based designs. From it, the value-based decision process became clear: data drives decisions, design is accomplished through benefits and incentives, delivery includes resources to support the behavior change desired, and the result is the dividend of improved health and reduced cost trend.

Specifically, the following was revealed about philosophy, leadership, and culture change:

1. Successful implementation of value-based designs begins with a philosophical shift focused on expanding access to prevention and wellness screenings and care. No companies have been successful in value-based designs without this shift, driven from the C-suite and amplified at all levels throughout the company.

The consistent message is that people--their health and productivity--must be at the core of all the plan designs and incentives. We label this "individual health management," and it is a core principle for engaging employees and dependents in the management of their health.

2. Early-on value-based designs were focused on chronic condition management. Usually, the early entrants began with diabetes, but diabetes, while a complex chronic disease with high-levels of co-morbid conditions (high cholesterol and hypertension), is also a condition that has a short list of defined interventions and care paths.

By starting with diabetes, an employer could build competency and, at the same time, benchmark success against the icons in reducing emergency room visits, disability days and health cost trends. It's important to note that last word: "trends."

Because there is an up-front investment in care, from scheduled exams and labs to increased medication usage in the diabetic population, the goal is to flatten the inflation curve. Evidence has shown a company can flatten the curve up to 50 percent over time, armed with a strategic plan to support the healthcare with communications, education and condition management--and this comprehensive support became the first evidence of the importance of the link to patient-centered, coordinated care.

As more and more companies analyzed their data and experiences, as they were ramping up the incentives--or disincentives--for people to be compliant and adherent in the diabetes care through enrollment in condition management, the evidence began to emerge: Dividends accrued at a slightly faster rate (e.g., reduction in HbA1C, medication compliance for controlled hypertension and hyperlipidemia, reduced absenteeism, reduced inpatient days and amputations) when people were counseled by peers and experts and motivated with incentives/disincentives.

3. The connection to the care coordination team was a stellar discovery in the trajectory of value-based designs. The experiences of Caterpillar; QuadMed (a subsidiary of Quad Graphics); Gulfstream; the city of Springfield, Ore.; and others showed that improved outcomes for the patient as well as the corporation that sponsored the benefits were dependent upon the aligned incentives for the care coordination team.

When everyone was aligned with the patient at the center, the outcomes for all were improved. The result was a healthier, more productive person who could focus on work and manage his or her health with coaching from the physician/pharmacist/ educator/stress manager. Results also show a reduction in the health cost trend.

Now, the health value derived from the value-based trajectory can be tracked and monitored across the delivery supply chain. What developed was the Health Value Continuum, a conceptual graphic that illustrates an employer's philosophical shift, from prevention and wellness (we call these employers the "entrants"), to the manipulation of incentives and plan design to manage chronic conditions ("fast followers"), to the use of coordinated care and communication that drives innovation for total health improvement and gradual flattening of health cost trends ("innovators").

OUTCOMES-BASED CONTRACTING

In early 2008, we called for outcomes-based contracting as a natural extension of value-based design because it would link the care coordination to the improved health status of the person and the population. By removing the incentives for reimbursement based upon product placement or widget output and, instead, rewarding the appropriate evidence-based care and hard work that drives sustainable health improvement, the contract would support healthier workforce and communities. In the past year, these outcomes-based contracts have been started, which is, again, a new benchmark in the trajectory of value-based designs.

When the purchaser of health services asks the question, "How many units of health will that dollar get me?" the focus of healthcare shifts from managing restrictions to care (how many people do we pay to say "no"?) to managing access to health (how many of those people could be put to better use and focus on better outcomes by saying "yes"?). There is less waste in the system due to underdiagnosed or undertreated conditions when the question becomes "purchasing health," which leaves enough dollars to create incentives for everyone to do better.

There is inefficient output when a value-based design is put into place without a coordinated incentive. Unless everyone is working on the coordinated production line of improved health status, no one will achieve it due to the friction of misaligned levers. The machine works when all the parts are moving smoothly and in synchronicity. That is the remarkable outcome, the accrued dividend, of aligning value-based design and patient-centered coordinated care.

October 1, 2009

Copyright 2009© LRP Publications