Alternative Payer Models Show Improved Health-Care Value

Alternative Payer Models Show Improved Health-Care Value

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Alternative Payer Models Show Improved Health-Care Value

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  • Implications for Health Care Decision Makers

    Our research suggests that successful U.S. Medicare Advantage plans offer a powerful model for improving health care quality. These plans have found a way to engage the right set of clinicians around the objective of delivering improved health-care value. They have also effectively realigned financial incentives to help realize improved outcomes.

    This conclusion has important implications for the debate about the future of health care. First, the claim—still heard frequently in debates about health care costs—that more managed care-delivery models achieve cost savings only by eroding the quality of care appears untrue. The more managed plans that we studied delivered better care than traditional fee-for-service medicine.

    Second, our findings also put into question the commonly held notion that allowing patients to have an unrestrained choice of providers will lead to quality outcomes. Even as the fee-for-service model is coming under growing criticism in the U.S., many publicly financed health-care systems (for example, in certain regions of Sweden) are encouraging private providers to offer care covered by fee-for-service reimbursement as a means to expand consumer choice and bring market forces into play. But unless such delivery models utilize the organizational mechanisms we describe, they are unlikely to contribute to improved value. In fact, they may end up reducing value

    Third, the critical issue is whether a given delivery or reimbursement model has put in place the right organizational mechanisms and incentives to effectively change provider behavior, to increase innovation and experimentation, and to encourage those clinical practices that deliver cost-effective quality care.

    Given their track record, we believe that U.S. private insurers have a major role to play in the ongoing national efforts to improve health care value. They have accumulated considerable experience toward achieving this goal, and all stakeholders should learn about and take advantage of their efforts. Typically, private health insurers in the U.S. are seen as “middlemen” who help manage the system’s risk but with little direct impact on the actual quality of care. Our research suggests otherwise: that private insurers have created an operating model that can deliver better care at a lower cost. In this respect, they represent important catalysts of innovation in clinical practice. Their role as a third party, along with their correspondingly greater scale, broad access to data, and lack of fixed infrastructure (and the corresponding fixed costs that such an infrastructure represents), put them in a position to bring about changes in clinical practice in partnership with the clinical community.

    But we also believe that the alternative delivery and reimbursement models represented by these Medicare Advantage plans have the potential for broad applicability, whatever the mix of private and public health insurance in a nation’s health care system. Health care systems around the world can adopt components of what has made these alternative care-delivery models successful. In order to do so, however, payers, providers, and policymakers must know precisely what it takes to implement these organizational mechanisms effectively and how to replicate them across different types of health care systems. We will explore these issues further in subsequent research.

    See Marty Makary, Unaccountable: What Hospitals Won’t Tell You and How Transparency Can Revolutionize Health Care (New York: Bloomsbury Press, 2012).