Commonwealth Care Alliance

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Getting A Grasp On Global Payments: Prix Fixe Vs. ‘I’ll Have The Lobster’

As the Patrick administration pushes Massachusetts forward toward the cost-cutting phase of health reform, one of its guiding concepts is to shift the state from “fee for service” to “global payments.” That is, instead of being paid for each bit of care they give, health care providers will be put on an overarching “global” budget for each patient.

But how do we know that global payments work? And do they really save money? WBUR’s Martha Bebinger asks those important questions today in her report here, and takes a look at the early experience of some local global-payment hotspots: Commonwealth Care Alliance, Harvard Vanguard and Blue Cross Blue Shield. Already, she reports:

There’s a lot going on behind the scenes. Physicians are joining large practices so they’ll have help managing budgets. Clinics, rehab centers and hospitals are forming new alliances that put all our care under one umbrella group. And health insurers are negotiating contracts that send nurses to patients’ homes to avoid a hospital stay, but hold providers financially responsible if they don’t stick to a budget. In theory, these connections are supposed to lead to better care and lower costs.

“That makes a lot of sense in theory, but in practice, what does it mean?” asks MIT economics professor Jon Gruber. “What is the global budget?

“Who sets the global budget and for which payers? How much uprooting do you want to do, based on the limited evidence we have, that this will solve our theoretical problems?” Gruber continues. “I think it’s great we’re having this conversation. I just think it’s premature to say it’s a solution.”

Yet another early adopter of global payments, Lowell General Physicians Hospital Organization, is featured in a piece by Pippin Ross in the latest issue of the magazine CommonWealth, here.

Read both pieces and you come away with the impression that there are some positive initial experiences, but the jury is still very much out on whether global payments are a major solution for ever-rising health costs. And then, as Paul Levy hammers home on his Not Running A Hospital blog here, there’s the transparency problem: It’s awfully hard to tell how well even initial global payment experiments are working when so many of the financial figures involved are not publicly available.

Well, at least I picked up a couple of wonderful new analogies: In Pippin’s piece, Dana Safran of Blue Cross says that the current fee-for-service system creates a mentality of “If you’re paying, I’ll have the lobster.” In contrast, the story’s headline describes a global payment system as “prix fixe.”

Profiles In Health Innovation: Better Care, Lower Cost

The March issue of the journal Health Affairs is devoted to various experiments in health care that are actually working: producing better medical outcomes at a lower cost.

The introduction to this edition quotes Don Berwick, who at the moment is fighting, probably fruitlessly, for his job as administrator of the Centers for Medicare and Medicaid Services. “There’s never been a better time to be an innovator in health care,” Berwick tells Health Affairs. (Unless, of course, you’re a recess appointment facing seething Republicans. Then it’s best not to be innovative.)

Anyway, the innovations profiled here span the country, from “medical homes” in Vermont to new kinds of end-of-life conversations in California. Two are local and have been featured previously by CommonHealth:

The first is Bob Master’s Commonwealth Care Alliance, which we profiled last year. Here’s what Health Affairs has to say:

Key Innovation: Providing individualized primary care, coordination, behavioral health, and social support services in the home and community through multidisciplinary teams, thus reducing the need for hospitalization and nursing home placement for the elderly and disabled.

Cost Savings: Sharply reduced use of nursing homes by eligible older people led to an average growth in total medical spending of just 2.1 percent from 2004 to 2009, sharply below fee-for-service rates. For disabled patients, monthly medical costs were $3,601 in 2008, compared to $5,210 for Medicaid fee-for-service patients.

Quality Improvement: Results In 2009, Commonwealth Care Alliance scored in the ninetieth percentile or above on Healthcare Effectiveness Data and Information Set measures for comprehensive diabetes care, monitoring patients on long-term medication, and access to preventive services.

The other local example is the asthma program at Cambridge Health Alliance:

Key Innovation: Partnering with the public health system and drawing on other community resources to improve patients’ health and reduce their need for acute care. The alliance’s Childhood Asthma Program has dramatically reduced hospitalizations and emergency department visits through optimal medication management for children. Teams of registered nurses and community health workers make home visits to help parents reduce or eliminate asthma triggers. The alliance is taking similar approaches to reducing obesity, managing diabetes, and improving complex care among the patients it serves.

Cost Savings: The alliance says that the asthma program has shown a return on investment of about $4 for every $1 invested.

Quality Improvement: Results For children in the asthma program, annual pediatric asthma-related admissions to alliance hospitals dropped 45 percent and annual pediatric asthma-related emergency department visits fell by 50 percent in the period 2002–09. In another program, Healthy Living Cambridge Kids, the prevalence of healthy weight increased by 2.4 percentage points (), a 5 percent change, and the prevalence of obesity decreased 2.2 percentage points (), a decline of 11 percent, among the cohort followed for three years.