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Real Reform...A Bird In the Hand Is Worth 2 In the Bush

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The strategic agenda for real reform lies in creating a value-based health care delivery system. As stipulated by Porter and Lee in 2013, health care will be organized and paid for differently in the near future.  Six critical steps in reform as as follows [modified]:

  1. Separate primary from preventive care; reorganize care around patient medical or surgical conditions, forming what they call “Integrated Practice Units” (essentially team work);
  2. Measure to manage the outcomes from the patient’s perspective and costs of the longitudinal view, the “cycle” of care of every patient;
  3. Convert from fee-for-service or prospective payments to bundled payments for episodes of care.  [See “Bundled Payment Incentives: Risk or Reward? ”]
  4. Health Care Delivery Systems must be collaborative; thus, they should be well-integrated and interdependent arrangements.
  5. Take into consideration all, meaning not just local care.
  6. Use information technology to integrate, bring together disparate elements of care and understand what happens to “whom,” “where” and “when,” and what works or does not, and communicate to improve efficiency and effectiveness.

Michael E. Porter and Thomas H. Lee in “The Strategy That Will Fix Health Care.” Harvard Business Review. October 2013 

More by Michael Porter On "Value": A healthcare value plan espoused by Michael E. Porter (Harvard Business School) is that “value for patients should be the overarching principle for fixing our broken system.” Indeed, practitioners and patients alike need to know that value in this context requires a balance between the health outcomes patients want and the cost incurred to achieve them. That means we all must “measure outcomes of care more regularly [while taking] a hard look at health care costs.”

Comment: You will find that the Harvard Business Review transformational piece referenced above dismisses prior authorizations, bureaucratic hurdles, efficiency goals and looking at outcomes like mortality or survival rates for prostate cancer, for instance. Rather, the authors speak about “integrated health care SYSTEMS” and “outcomes” as patients see them, in other words, ‘measuring and managing’ how the patient is doing, feeling, functioning and of course, what’s happening to the disease or condition lab data markers.  It is noteworthy and refreshing to see health care as a patient-centric activity where collaboration and sharing information is vital and where fractionalization (piecework) is discouraged and care is viewed over time, regardless of setting.

Realigning Incentives in Real Reform

Given this paradigm shift let me say that I agree with Porter and Lee—Models that fail to develop collaboration are out and given that, Integrated Practice Units and payment bundling are in. Capitation (CAP) does not cut it simply because under it, the incentives are to do less. Also, CAP frustrates because a lot goes on that the provider cannot control. And, we all know the problems of fee for service, private practice, etc. – it fractionalizes care and leads to unnecessary services and over-utilization.

Co-Op Plans

What do the following three (3) statements, decrying a co-op plan instead of a public health insurance option have in common?

1.     Cooperatives "lack the scale and authority to negotiate lower rates with drug companies and other providers, collect wide data on outcomes, or effect major change in the system."

Reich RB. "Why We Need a Public Health-Care Plan (Former Secretary of Labor and professor at the University of California)

2.      Cooperatives might be able to provide some backup in some parts of the nation, but they are not going to have the ability to be a cost-control backstop, much less a benchmark for private plans, because they are not going to have the reach or authority to implement innovative delivery and payment reforms.  And so [the Chairman of the Senate Budget Committee, Kent] Conrad's idea appears to be yet another compromised compromise that cuts the heart out the idea of public plan choice on the alter of political expediency.

Hacker J. "Un-Cooperative: The Trouble with Conrad's Compromise," (political scientist, U.C. Berkeley and Author of Health Care for America.)

3.     "For the record, neither regional health cooperatives nor state-level public plans, both of which have been proposed as alternatives [measures to effect health care reform], would have the financial stability and bargaining power needed to bring down health care costs."

"Health Care Showdown," by Paul Krugman (Health care economist and New York Times columnist)

Ans:  All three suggest that co-ops don’t have the muscle, reach or power to do what a government sponsored 'managed competition' would do.  #1 wants data, but has no method for measuring what is being done to or for patients and if it helps (i.e., managing the care); #2 doesn't define "innovative delivery" or "payment reforms"; #3 thinks the health care crisis is just a matter of haggling for lower prices.
Fortunately, David Riemer* and Alain Enthoven*, point the final pathway to reform in their NY Times, Op-Ed piece, "The Only Public Health Plan We Need," saying:
"What we need instead is a public plan that will impose a stern and lasting discipline on our insurance market — and at the same time insure everyone, provide excellent benefits and offer abundant choices."
They also discuss health insurance 'exchanges,' (where you comparison-shop for coverage and where risk is 'community'-rated (as opposed to 'experience'-rated).
The exchange applies market power to pressure insurers to lower the costs and improve the care. But, how does it get that power? First, it has critical mass, including at least 20% of those who currently do not receive either entitlement program—Medicare or Medicaid. "Second, the exchange would need to ensure that no subsidies for health insurance, whether provided by employers or the government (through the tax system), exceed the price submitted by the lowest-bidding qualified insurer and benefit package. All individuals in the pool would be free to join any insurer that submits a bid. But enrollees would have to pay out of pocket — and preferably with after-tax dollars — any amount above the price of the lowest-bidding plan."
The 'Pièce de résistance' Argument
"How would insurers lower prices and raise quality? By passing their incentive along to doctors and hospitals. To maximize their revenue from insurance companies, doctors and hospitals would need to provide better care at a lower price — something they can accomplish only by squeezing out error, waste and inefficiency."
* David Riemer is the director of Community Advocates Public Policy Institute in Milwaukee. Alain Enthoven is a professor emeritus of management in the Graduate School of Business at Stanford.
It is relevant to point out that recent debates on how to pay for health care reform that suggest cutting Medicare spending, cutting doctor and hospital reimbursement, cutting tax breaks (or capping the value of benefits that go untaxed), curtailing income tax deductions for high earners, etc. are missing the point!— THE REAL REFORM IS TO IDENTIFY AND PAY FOR WHAT WORKS IN THEORY AND IN PRACTICE and THE OBVERSE—STOP FUNDING THE OPPOSITE.
The essence of reform is observing what is and what is not working with the objectives of delivering the right care or intervention at the right time and place (i.e., practitioner, setting, coordination, collaboration and accountable communication). That means integrating all forms of care management: regular and alternative venues of care with timely event monitoring (real-time analytics wherever and whenever possible), UM/QA and good accessibility, connectivity and excellent interoperability of all relevant and appropriate process management across systems.  Briefly, this necessitates capturing and sharing data, being able if not reminded about taking action.

watch: how big data and automation are disrupting healthcare

"Technology and automation are facilitating healthcare reform under the rubrick of value-based care.  We see in that payers and providers beginning to leverage big data, which is also empowering healthcare consumers. Verscend’s President and CEO, Dr. Emad Rizk discussed this 'metamorphosis' at the 2017 Health Care Forecast Conference held at the Paul Merage School of Business at the University of California, Irvine." [This excellent interiew is published, online by, March 10, 2017]

Also relevant are:
  • The Shewart Cycle–Plan Do, Check and Act of care coordination, follow-through and follow-up, sharing data and system using the rules of Service-Oriented Architecture (SOA), and ending up with complex decision support at the point of contact with the patient or responsible party.
  • "Advancing Care Coordination and Engaging Communities Through Strategic Interoperability." [video].  Source:  InterSystems
  • Communication–Elements, Standards and Proper Implementation, particularly Certification and Standards Criteria. For example, to successfully attest for Meaningful Use of Core Measures, see Core Measure15 of 17 in "Summary of Care" and review the 2014 Edition of "EHR Certification Criteria Grid Mapped to Meaningful Use Stage 2" for more information. 

See "The Complete Guide To College Students & Healthcare Reform." This excellent resource by Desiree Baughman helps college students understand what healthcare reform is and what it means for them.  It is clear and well written.  To learn more about the ACA in general and as it applies to college students, check out these resources: U.S. Department of Health and Human Services  Affordable Care Act and Student Health Insurance  

From:    Fredrick H (MD, PhD, JD):
Date:    June 25, 2009 10:39:56 PM EDT
Enthoven loves the Kaiser system. Need I say more?
So here's a plan only a business school professor could love.
Make HMOs bid to provide insurance, accept the low bidder and pay no one else any more.
It's easy to bid low - HMOs can always provide minimal coverage and drag quality down far enough to just cover profits. And, there's not a WORD about maintaining quality in this proposal.
What do we do about the people who buy the best plan they can afford, and have an expensive uncovered illness? Require that all plans cover funeral costs?
Medical Coverage is NOT an end in itself! It is a Means to the end of medical Care!