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The American Journal of Managed Care August 2014
Personalized Preventive Care Reduces Healthcare Expenditures Among Medicare Advantage Beneficiaries
Shirley Musich, PhD; Andrea Klemes, DO, FACE; Michael A. Kubica, MBA, MS; Sara Wang, PhD; and Kevin Hawkins, PhD
Impact of Hypertension on Healthcare Costs Among Children
Todd P. Gilmer, PhD; Patrick J. O'Connor, MD, MPH; Alan R. Sinaiko, MD; Elyse O. Kharbanda, MD, MPH; David J. Magid, MD, MPH; Nancy E. Sherwood, PhD; Kenneth F. Adams, PhD; Emily D. Parker, MD, PhD; and Karen L. Margolis, MD, MPH
Tracking Spending Among Commercially Insured Beneficiaries Using a Distributed Data Model
Carrie H. Colla, PhD; William L. Schpero, MPH; Daniel J. Gottlieb, MS; Asha B. McClurg, BA; Peter G. Albert, MS; Nancy Baum, PhD; Karl Finison, MA; Luisa Franzini, PhD; Gary Kitching, BS; Sue Knudson, MA; Rohan Parikh, MS; Rebecca Symes, BS; and Elliott S. Fisher, MD
Potential Role of Network Meta-Analysis in Value-Based Insurance Design
James D. Chambers, PhD, MPharm, MSc; Aaron Winn, MPP; Yue Zhong, MD, PhD; Natalia Olchanski, MS; and Michael J. Cangelosi, MA, MPH
Massachusetts Health Reform and Veterans Affairs Health System Enrollment
Edwin S. Wong, PhD; Matthew L. Maciejewski, PhD; Paul L. Hebert, PhD; Christopher L. Bryson, MD, MS; and Chuan-Fen Liu, PhD, MPH
Contemporary Use of Dual Antiplatelet Therapy for Preventing Cardiovascular Events
Andrew M. Goldsweig, MD; Kimberly J. Reid, MS; Kensey Gosch, MS; Fengming Tang, MS; Margaret C. Fang, MD, MPH; Thomas M. Maddox, MD, MSc; Paul S. Chan, MD, MSc; David J. Cohen, MD, MSc; and Jersey Chen, MD, MPH
Potential Benefits of Increased Access to Doula Support During Childbirth
Katy B. Kozhimannil, PhD, MPA; Laura B. Attanasio, BA; Judy Jou, MPH; Lauren K. Joarnt; Pamela J. Johnson, PhD; and Dwenda K. Gjerdingen, MD
Currently Reading
Synchronization of Coverage, Benefits, and Payment to Drive Innovation
Annemarie V. Wouters, PhD; and Nancy McGee, JD, DrPH
Economic Implications of Weight Change in Patients With Type 2 Diabetes Mellitus
Kelly Bell, MSPhr; Shreekant Parasuraman, PhD; Manan Shah, PhD; Aditya Raju, MS; John Graham, PharmD; Lois Lamerato, PhD; and Anna D'Souza, PhD
Optimizing Enrollment in Employer Health Programs: A Comparison of Enrollment Strategies in the Diabetes Health Plan
Lindsay B. Kimbro, MPP; Jinnan Li, MPH; Norman Turk, MS; Susan L. Ettner, PhD; Tannaz Moin, MD, MBA, MSHS; Carol M. Mangione, MD; and O. Kenrik Duru, MD, MSHS
Does CAC Testing Alter Downstream Treatment Patterns for Cardiovascular Disease?
Winnie Chia-hsuan Chi, MS; Gosia Sylwestrzak, MA; John Barron, PharmD; Barsam Kasravi, MD, MPH; Thomas Power, MD; and Rita Redberg MD, MSc
Effects of Multidisciplinary Team Care on Utilization of Emergency Care for Patients With Lung Cancer
Shun-Mu Wang, MHA; Pei-Tseng Kung, ScD; Yueh-Hsin Wang, MHA; Kuang-Hua Huang, PhD; and Wen-Chen Tsai, DrPH
Health Economic Analysis of Breast Cancer Index in Patients With ER+, LN- Breast Cancer
Gary Gustavsen, MS; Brock Schroeder, PhD; Patrick Kennedy, BE; Kristin Ciriello Pothier, MS; Mark G. Erlander, PhD; Catherine A. Schnabel, PhD; and Haythem Ali, MD

Synchronization of Coverage, Benefits, and Payment to Drive Innovation

Annemarie V. Wouters, PhD; and Nancy McGee, JD, DrPH
Implementation of payment reform, without a corresponding change to coverage, benefit, and other payment requirements, creates conflicting incentives that may nullify the intended aim of payment reform: to improve health outcomes, while saving costs.

Shifting greater medical management authority from CMS to PABs is a gradual process, as shown by the experience of commercial payers who have partnered with ACOs. For instance, Fairview Health Services in Minnesota, which has been working with accountable care models for over 10 years, is continuing to take on more duties around care management that were traditionally assumed by health plans.43 One of the many lessons learned from Premier’s Partnership for Care Transformation (PACT Population Health Collaboration is the importance of creating new divisions of labor between providers and payers around responsibilities for care management.44 

In 2010, the experiment of UnitedHealthcare (UHC) that provided an upfront “episode payment” for the treatment of selected cancers to medical oncologists, rather than fee-for-service reimbursement, demonstrated that payment, coverage, and benefit silos can be effectively synchronized to deliver better health outcomes at a reasonable cost within a system of care.45,46 In this case, a team of oncologists acted as the PAB, evaluating clinically equivalent regimens and developing recommendations for coverage based on cost. They also incorporated the flexibility to accommodate other treatment regimens based on a patient’s unique profile. The net effect was to disconnect the income of the oncologist from the sale and use of specific drugs, while covering the most effective treatment regimens in order to improve patient outcomes.46 Both the American Society of Clinical Oncology and the American Cancer Society–Cancer Action Network issued positive statements about the new program, because at a minimum, it allowed UHC to test whether or not the change in payment methodology actually influenced drugs that physicians prescribed for their patients.47 UHC undertook several measures to ensure appropriate patient care. For example, a team of oncologists developed evidence-based clinical pathways that guided patient care.Only when pathways were deemed to be clinically equivalent was the least expensive regimen selected.48

As shown in Figure 2, transitioning the role of medical management from CMS to PABs, including the ability to modify coverage, benefits, and payment requirements, can be viewed as a continuum that includes 3 main stages. The stages are tied to the PAB’s degree of financial risk sharing, as well as the scope of the episode. PABs assuming minimal financial risk would fall under Stage 1 and receive limited delegated authority focused primarily on modifications of payment requirements directly relevant to the payment methods being replaced (eg, prior 3-day inpatient stay for covered skilled nursing facility services; 3-hour therapy inpatient rehabilitation rule). PABs assuming greater financial risk, (eg, prospective bundled payments for selected patient conditions) would fall under Stage 2 and would have the delegated authority to modify not only payment policy requirements but also coverage policies for the patient conditions they are targeting. PABs assuming full financial risk for a comprehensive set of clinical conditions would fall underStage 3 and would be delegated even more authority, allowing them to modify benefit policies. Except for changes in benefit policies, these stages, for the most part, could be implemented without legislation and in ways that satisfy the statute to provide reasonable and medically necessary care.

National and local coverage policies would be the starting point for any explicit coverage policy for a PAB. In Stage 2, however, the PAB would be able to expand/ limit coverage or even cover otherwise noncovered services (by overturning a local or national noncoverage policy), allowing more opportunities for medical innovation. For example, based on an evidence- and consensus-based

approach, the medical leadership team could choose to cover an otherwise noncovered innovative diagnostic or treatment service for their population. The PAB could target provision of the service within a carefully defined clinical pathway.


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