2/2/2015…seems a bit odd to be typing that date. Still hard to believe it’s 2015 and suddenly the first month of the year is in the history books. Much has happened since we rang in the New Year. We heard from the President about the State of the Union (apparently 7th-year State of the Union addresses have a very short shelf life), Coach K joined Pat Summitt with his 1,000th division one college basketball victory, and just last night we had that annual commercial festival (the one where they play football between advertisements). Hard to believe we have covered so much ground in such a short period of time.
In the midst of last month’s excitement I discussed the CMS triple threat. Today I’d like to explore another trifecta, the Triple Aim. Less than ten years ago, Don Berwick and his colleagues at the Institute for Healthcare Improvement (IHI) coined the phrase “triple aim.” In a paper published in Health Affairs, Mr. Berwick and colleagues eloquently described the need to pursue policy which would result in three concurrent goals:
- Improving the experience of care for individuals
- Improving the health of populations
- Reducing per capita healthcare costs
During his tenure at CMS, the agency made a commitment to “transform Medicare from a passive payer to an active purchaser of higher quality, more efficient and effective healthcare.” Within this context the concept of value-based purchasing emerged.
Volume vs. value
At the risk of using a worn out cliché, value-based purchasing represents a paradigm shift with respect to the existing health economic framework most of us have grown up with. Today’s fee-for-service (FFS) environment is rooted in a transactional framework, one in which we are paid for volume as opposed to value. This “do more, collect more” structure creates perverse financial incentives within the practice of medicine.
Let’s look at a hypothetical example. Suppose my wife, who is also a physician, and I happen to see identical twins on the same day with the same problem. The twins present with cough and shortness of breath. My wife sees twin 1, makes a diagnosis of pneumonia, starts an antibiotic, and ultimately collects $75 from twin 1’s payer. Twin 1 quickly recovers and is back at work in no time. I see twin 2 and decide the symptoms are more likely a congestive heart failure (CHF) issue. I prescribe a diuretic, order an echocardiogram and ultimately collect $75 from twin 2’s payer. Of course I missed the boat and twin 2 returns the next day with a fever. Recognizing this is not a CHF flair, but instead a case of pneumonia, I now start an antibiotic and ultimately collect another $75 from twin 2’s payer.
Of course this silly scenario could be much worse if instead of returning the office the next day, twin 2 shows up in someone’s ER and is admitted with pneumonia. If I am involved with twin 2’s inpatient care, I am doing more work and will be collecting additional payment for services rendered. Finally, imagine the twins work for the same employer (who happens to be the entity purchasing health coverage for the twins). The employer takes a productivity hit because twin 2 will be out of work longer than twin 1.
Value-based purchasing is an attempt to mitigate the unusual financial incentives that reside within our current fee-for-service environment. In contrast to the fee-for-service arena where providers are rewarded for volume, the value-based purchasing framework rewards providers who deliver value. How is value defined? In this context it is loosely defined as quality divided by costs, or stated another way value is the cost-efficient delivery of quality. Many of us are exposed to some component of this broad push today. Accountable care organizations, ESCOs, the ESRD QIP, and hospital value-based purchasing programs are all examples of programs that impact the practice of nephrology today.
Look whose paying attention
So why bring this up on 2/2/2015? Perhaps it’s just me, but there seems to have been a flurry of activity related to this topic over the past few weeks. Take the opinion piece in JAMA from Dr. Ferris and colleagues at Harvard. Granted, this is perhaps only tangentially related, but managing care for high-risk (read economically expensive) patients is certainly something that should attract the attention of nephrology. Next, check out Secretary Burwell’s blog post from last week. In pursuit of the triple aim, CMS intends to tie 30% of all Medicare provider payments to alternative payment models by 2016. The expectation is this figure will rise to fully half of Medicare payments by 2018. Later in the post the secretary announces a second goal to tie all Medicare FFS payments to quality and value (85% in 2016 and 90% in 2018). Finally, in case you believe this transformation is confined to CMS, United Health Group, among the largest commercial payers in the country, recently announced a significant expansion to its migration from fee-for-service to value-based payment programs.
2015 is well underway and there are plenty of signals announcing the slow but steady migration away from the transactional fee-for-service model that dominates the market today. Nephrology practices should be well positioned to weather this transformation, and in fact prosper in this environment. We provide care to a remarkably complex and expensive patient population, and today that care is not well coordinated. A seat at this table will require more than “business as usual” and the change involved will be uncomfortable for many. But it’s typically better to have a seat at the table, than to be part of the meal. What are your thoughts about the triple aim and value-based purchasing? Drop us a comment and join the conversation.
Terry Ketchersid, MD, MBA, practiced nephrology for 15 years before spending the past seven years at Acumen focused on the Health IT needs of nephrologists. He currently holds the position of Chief Medical Officer for the Integrated Care Group at Fresenius Medical Care North America where he leverages his passion for Health IT to problem solve the coordination of care for the complex patient population served by the enterprise.