Effective Public/Private Collaboration in Health System Reform

Portrait of Dr.NeerajWashington, D.C. – As payment and delivery system reform expands across the country, it is critical that public sector initiatives complement and build upon the successful efforts currently underway in the private sector, according to an article in the latest edition of Health Affairs. The new analysis, by researchers at University of Southern California and America’s Health Insurance Plans (AHIP), outlines the optimal role of the government to help accelerate delivery system reform.

For the past few years, health plans have entered into partnerships with providers to change payment models to move away from the outdated fee-for-service system to one that rewards quality, value, and better health outcomes. These initiatives, such as the patient-centered medical home, accountable care arrangements, and bundled payments, have demonstrated positive outcomes in improved quality of care and a slowdown in the growth of health care costs.

The new analysis in Health Affairs, “Posing A Framework To Guide Government’s Role in Payment And Delivery System Reform,” by Neeraj Sood, an associate professor at the USC School of Pharmacy and director of international programs at the Leonard D. Center for Health Policy and Economics at the University of Southern California, and Aparna Higgins, vice president for private market innovations at AHIP, presents a framework for the role of the government to help advance delivery system reform across the health care system.

As the article notes, “Actions taken by the public sector can result in spillover effects in the private sector and vice versa, because both public and private payers operate in the same market and contract with the same providers.” Furthermore, the authors state that “Ultimately, the pace of development and the success of payment and delivery reforms will depend on whether the public- and private-sector actions either reinforce or are at odds with one another. Therefore, a systematic approach to determining the government’s optimal role in health reform is needed.”

In the article, the authors present a framework for policymakers to define the appropriate role of government as purchaser, regulator, and research funder to help advance delivery system reform.

Government as a Payer

The authors urge the Centers for Medicare and Medicaid Services (CMS) and policymakers to consider opportunities for joint public and private sector participation in payment reforms already underway.

According to the article, implementing new payment models across the public and private sector “allows providers to invest in practice redesign across all patients and spread their investment costs over greater numbers of patients.” In contrast, if Medicare introduces models that differ from ongoing private-sector efforts, it could “increase the administrative burden on the providers who would have to participate in both competing models.”

While innovation could increase when the public and private sectors test alternative models, the authors caution that “the multiplicity of models may also make it more challenging to identify the most effective interventions.”

Government as a Regulator

According to the article, government intervention is most needed in instances of market failure, such as lack of competition in the marketplace, where “there are barriers to reform that government leadership can more easily overcome than could more private sector efforts.”

As provider consolidation continues, raising affordability concerns for consumers and payers, the government should “actively monitor provider activities to ensure markets remain competitive.” CMS can also take the lead in directing financial investments back to small practice providers “that are less likely to participate in payment reform efforts in the private sector” due to limited resources or failure to meet certain criteria for involvement.

Government as a Funder of Research

The government can help accelerate payment and delivery system reform efforts by funding scientific research, according to the authors.

Importantly, the government can play a vital role in disseminative information on which payment models work, and for whom. “Overall, the government should provide a broad forum for additional learning from the implementation of payment and delivery system reforms,” the authors note. “To enable rapid cycle innovation, timely and up-to-date information tailored to the business needs of health plans and providers is essential. The goal of the public sector should be to make such information readily available.”

The information should highlight successes and failures; management and leadership structures that work best; the types of business process changes that are needed to successfully implement reforms; and the impact these initiatives have on costs, efficiency, and quality.

Read the article http://content.healthaffairs.org/content/31/9/2043.abstract.