If you pilot changes, healthcare can be reformed

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Most of the major payment changes to the healthcare industry—those that could substantially realign incentives, reduce costs and help drive delivery system reform—are associated with various pilot projects or other initiatives that will come out of the Innovation Center at the Centers for Medicare and Medicaid Services (CMS), according to Gail R. Wilensky, PhD, senior fellow at Project HOPE, a global health education and humanitarian assistance organization.

Published in the spring edition of Economic Outlook, a publication from healthcare organization Premier, Wilensky wrote while many agree healthcare should shift away from current fee-for-service reimbursement, there is less agreement about what should replace it. This was the rationale for establishing the CMS Innovation Center.

“Criticized by some for taking too long to get going, the center now seems to be moving ahead with some interesting pilot studies,” she wrote. “These include a bundled payment initiative announced last November, a group of pioneer accountable care organizations (ACOs) started over the summer and a variety of initiatives that support the expansion of primary care.”

Wilensky noted the projects will test a variety of models involving different combinations of providers, how payment is determined and distributed. She added it’s curious, given its newness, that the ACO concept wasn’t subjected to pilot studies before put into legislation. However, time will tell if the concept is ready for the big show.

Unless the assumption is most physicians will be part of hospitals or integrated delivery systems within the next five years, she wrote it’s hard to imagine much of an improvement in incentive alignment or delivery systems. “That’s because physicians, who currently serve as the captains of the health team, are being reimbursed using a fee schedule that includes more than 7,000 different billing codes that reward neither efficiency nor quality,” Wilensky clarified.

The amount of experimentation is impressive, “but the difficulties in going from interesting, small-scale pilot projects and demonstrations to changing how healthcare is organized, delivered and financed cannot be overemphasized.” Addtionally, challenges in the private and public sectors are somewhat different.

In the private sector, large groups have difficulty making an impact unless their models are adopted by other private payors to determine if they are scalable and politically viable. The public sector adds perpetually changing leadership both in the Department of Health and Human Services and the White House to those that the private sector also faces “since most pilots require anywhere from five to 10 years from point of design to evaluation.

“[W]e must not underestimate the importance of involving consumers and patients in driving change in healthcare [in addition to changing provider incentives and behaviors],” she concluded.