New Marketplace
Navigating the Good Ship Payment Reform (09:12)

“Think of the last time you bought something. You traded some money for a good or a service and then miraculously you and the seller from which you made your purchase walked away thinking that you each got the better end of that deal,” says Griffin Myers, Chief Medical Officer for Oak Street Health. This is mutually beneficial exchange, and it powers human cooperation around the globe.

But in U.S. health care, neither side likes their deal. Patients are spending more and receiving less in quality and experience, and clinicians feel overworked and underappreciated — burnt out. “How can we change the terms of the transaction so that both sides find that mutually beneficial exchange?” asks Myers. In other words, how can we get more value?

Navigating payment reform implies two things: (1) that we have a destination — we know where we’re going because we are navigating there — and (2) that we want to go to that destination. The destination and the motive will tell us a lot about the health care system going forward, says Myers.

Where are we navigating? When will we know that we have “finished” payment reform? Payment is money changing hands, says Myers, traditionally from an individual or employer to a payer (government or health plan) to a clinician. “Which payments do we want to reform? I would argue that we should reform every single payment if it leads to improvements in how care is delivered.”

Oak Street Health, a network of primary care centers for patients on Medicare and Medicaid living in traditionally underserved neighborhoods, is a value-based practice at full risk. They pay the bills for all care for their patients, even care outside of Oak Street, such as specialist appointments and hospitalizations. “Are we done with payment reform? We think not,” says Myers. “While we agree that we are a very long way down that path, our team still believes there is a long way to go in terms of payment reform to unlock better care for our patients.” For example:

  • Driving better outcomes for patients via greater economic alignment between primary care clinics and partners. “When all stakeholders are operating under some sort of value-based payment methodology, it requires that in order for market participants to thrive, patients must thrive first,” says Myers.
  • Sharing the rewards of better care with providers. If the organization is providing better care and saving money, those savings should be shared with the people who make that happen, via bonuses or other compensation.
  • Having patients share in the rewards. “What if we supported or even encouraged patients with financial nudges to make behavior change that contributed to better outcomes and, ultimately, to lower costs?”

There is no one single answer, says Myers, no single payment reform destination for every practice environment and patient. “Rather than things getting simpler, things are going to get and payments are going to get way more complex, through improvements to every single payment in the system,” he says.

“Payment reform is big, hard, and expensive change,” and not everyone is in favor. Why would you want to navigate somewhere a lot more complex? What’s the motive? “It’s really simple,” says Myers. “It is not about the money. It’s about the care.” It’s a tool for reforming patient care and improving health outcomes — real change in health care for real patients.

If the FDA approved an implantable device or drug supported by the best evidence to deliver better outcomes and lower costs, would we use it? Of course we would, posits Myers. “Why would we exclude a payment reform that does the same thing?”

“Payment reform is really about reengineering how the delivery system is organized,” says Myers. “And if you’re not prepared for major organizational change, you are missing the point, and you are not ready to embrace payment reform.”

Oak Street invests in longer visit times, smaller patient panels, transportation services, integrated behavioral health, and practices where need is greatest. They’ve seen hospitalizations drop by over 40% in their populations, according to Myers, and that means cost savings reinvested in further improvements in their care model. “Most importantly, it’s a meaningful number of patients who are staying healthier,” says Myers. “Payment reform has allowed us and even encouraged us to change how we deliver care. This is not a financial engineering scheme; it’s a mechanism to invest in what matters. And what matters is evidence-based, equitable, accountable care.”

So, in payment reform, rather than things getting simpler, they’ll become more complex. And though reform may start with money, it will end with a “radical reorganization of the health care system.” Those two ideas may seem to present a volatile picture of the next few years, but, argues Myers, “payment reform is and will inevitably occur organically in ways that you are probably not even going to notice.”

“Rather than a reimbursement cut that you knew about ahead of time, what if your patient just never showed up?” he asks. What if she never came to the clinic for a consult or pre-op evaluation, or was never admitted to the ED because she never called 911 — and didn’t need to? “That’s where our health care system is headed,” says Myers. “Payment reform is happening organically already today in thousands, perhaps millions of different arrangements and transactions, and it’s leading to changes in how care is organized around what patients need, which is staying happy, healthy, and out of the hospital.”

“That’s what’s coming. I think we should all celebrate it. And I encourage you all to share this optimism and join us on the trip.”

From the NEJM Catalyst event Navigating Payment Reform for Providers, Payers, and Pharma, held at Harvard Business School, November 2, 2017.

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