Payment Reform is Refueling the Wellness Movement: Is This the Solution to Our "Sick Care" Problem?

Pharmacy Practice in Focus: OncologyOctober 2015
Volume 2
Issue 4

Payment reform has been proceeding at a brisk pace and is now seemingly unstoppable.

Payment reform has been proceeding at a brisk pace and is now seemingly unstoppable. At the federal level, the Centers for Medicare & Medicaid Services (CMS) has announced that by 2016, 85% of all fee-for-service payments will be linked with some type of quality measurement system, and by 2018, 50% of all Medicare payments will operate under an alternative payment model that may include full capitation (ie, not fee-for-service) ( Additionally, CMS has emphasized to the states that they expect similar changes to come to Medicaid over the next few years. In the private sector, accountable care organization (ACO) and ACO-like contracts continue to proliferate.

Managed Care 2.0 Requires High-Quality Care Delivery

What makes this era of payment reform different from iterations of the past is the enhanced emphasis on quality and improving health trajectory as the means by which to manage costly, unwanted, and cost-ineffective health care utilization. Unlike conventional capitated payment models, nearly all alternative payment models have quality components as part of the risk/reward corridor, wherein financial risk and penalties for low-quality and worsening health status ultimately get pushed down to service providers such as physicians, hospitals, and now, pharmacies.

Payment Reform Encourages Patients to Have “Skin in the Game”

Though a much less talked about aspect of payment reform in provider circles, the proliferation of high-deductible plans and increasing patient cost-share is (finally) driving a fundamental shift in the nature and intensity of patient participation in their own care delivery and purchasing decisions. This trend will only accelerate with the soon to arrive “Cadillac Tax” in 2018, wherein employers will have to pay additional taxes on health benefits that exceed a pre-determined threshold. Employers may then be encouraged to transfer the benefit to the employee in other ways, such as forgoing some of the benefit to provide a higher salary, moving to a health savings account (HSA; often called a consumer-directed account) contribution, or providing financial assistance in enrolling the employee in a private or public exchange. More than 80% of large employers will offer a high-deductible plan with an HSA next year. Add to that the increasing prevalence and discussion of “lifestyle provisions/plans/rates” for smoking or high body mass index, and the patient/member/consumer is much more likely to play an active role in the delivery and financing of their own health care.

Moving Away from “Sick-Care” and Toward “Wellness” Models of Care Delivery and Financing

This national experiment represents a fundamental shift in risk, away from purchasers and sponsors of insurance and toward providers and patients/members/consumers. This shift may lead to the solution of one of the most vexing conundrums that has plagued the long-term sustainability of our private system of health care: the 1-year time horizon emanating from the employer-sponsored benefit, which prevents insurers from investing in long-term health and wellness. With all of our efforts and expenditures to improve the health of our citizenry, the net result of our one-year benefit cycle has led to a very well-funded system of “sick care,” with the vast majority of resources devoted to treating illness (particularly chronic illness) expended after the fact, and gargantuan sums of time and energy (and money) expended to rescue patients at late-stage progressions of chronic illness. If the purchaser or sponsor of health insurance has a short risk horizon, then the purchaser lacks the incentive to invest in a better health trajectory. Early indications are that the shift in risk-bearing to the provider and the patient/member/consumer is leading to a stronger focus on the longer risk horizon. This has profound implications for pharmacy practice since medications and the optimization of those medications are often meant to affect health trajectory and produce positive long-term downstream outcomes.

Features of Wellness That Are Congruent with Payment Reform and Practice Transformation

The wellness movement has many features that are congruent with payment reform and, subsequently, practice transformation. In addition to whole-person orientation, its patient-centeredness foundation aligns with emerging strategies for patient activation and shared decision-making. Wellness is closely tied to behavioral and mental health status, and aligns well with mental health parity as one of the key components of the Affordable Care Act. Wellness is also longitudinal in practice, with a focus on ongoing, repeated, and lifelong behaviors and modalities, rather than episodic and point-in-time treatment. Ironically, the wellness movement’s greatest historical limitation (lack of financial rationale for investment in wellness where the return may be limited over a short time horizon) may end up proving to be most advantageous to its adoption over the next few years (as the patient becomes more central to health care decision making and purchasing when the patient has a strong self-interest and financial stake in the longer term time horizon). Wellness products and services have been historically free to adopt and embrace all of the characteristics that align with payment reform, mostly because it’s been viewed as unconventional and not relevant to a medical benefit (usually not a covered benefit) that lasts a year, and thus, our system of financing and insurance has left the movement to evolve on its own, without restriction or focus on immediate return on investment. Moving health care purchasing decision-making to the consumer, rather than the employer, insurer, or taxpayer, may lead to an explosion in the offerings and sophistication of the wellness product and service marketplace.

Features of the Wellness Movement That Are Congruent with Payment Reform

  • Patient centeredness
  • Focus on prevention
  • Focus on behavioral health (and mental well-being)
  • Ongoing instead of episodic intervention
  • Oriented to the long term

Troy Trygstad, PharmD, PhD, MBA, is the director of the Network Pharmacist Program and Pharmacy Projects for Community Care of North Carolina (CCNC), a parent organization of 14 regional care management networks. These networks bring together medical practices, county health departments, hospital systems, and mental health providers to integrate care delivery for Medicaid, Medicare, private plans, employers, and the uninsured. CCNC and its networks are responsible for developing and evaluating accountable care systems in North Carolina. Under his direction at CCNC, the Network Pharmacist Program has grown to include pharmacists who are involved in a number of diverse activities including medication reconciliation, e-prescribing facilitation, and management of pharmacy benefits. He has also been involved in novel adherence implementations, as well as the development of adherence technologies that use administrative claims data to predict, intervene, and triage adherence interventions and coaching opportunities. Dr. Trygstad received his PharmD and MBA degrees from Drake University and a PhD in pharmaceutical outcomes and policy from the University of North Carolina. He is co-editor-in-chief of the Pharmacy Times series Directions in Pharmacy.

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