Payment reform

The Health Policy Institute of Ohio has recently adopted a three-year strategic plan that identifies four strategic objectives for informing health policy development. One of those objectives is aligning public and private payments with better health quality outcomes for all Ohioans.

Through a partnership with HPIO, Catalysts for Payment Reform, a national non-profit organization of large employers/health care purchasers, has selected Columbus as one of three test markets for its Market Assessment Tool, which it is developing to measure market readiness for payment reform. The finalized tool is expected to be released publically next year.

Click here to view a Nov. 3, 2011 presentation from Guy D'Andrea, President and Founder of Discern Consulting, about the results of the payment reform Market Assessment Tool pilot testing in Columbus

Efforts are ongoing at the federal, state and local levels -- in both the public and private sectors -- to explore and implement payment reform strategies that are likely to lead to better health outcomes and reduced health care costs.

HPIO’s decision to focus on payment reform and specifically, aligning public and private payments with better health quality outcomes for all Ohioans, is based on several key factors:

• Inflationary Cost of Health Care. National health care spending increased to 17.6% of gross domestic product (GDP) in 2009 and continues to outpace overall inflation, according to Kaiser Family Foundation research. According to Ohio’s Metropolitan Chambers of Commerce and the Ohio Chamber of Commerce, health care spending in Ohio totaled $89 billion in 2008 and could reach $200 billion by 2018. The continuing rise in health care costs has placed a growing financial burden on Ohioans receiving health care services. Ohio Business Roundtable identifies health care costs as the “leading driver of labor cost increases for Ohio’s employers.
• Volume-Based Payments. According to Rand Corporation research, the present use of the fee-for-service payment model in health care has incentivized an increase in the volume of services provided to patients without incentivizing higher quality care, efficiency, or better health outcomes for patients.  
• ACA Provisions. At the federal level, the 2010 Patient Protection and Affordable Care Act (ACA) emphasized payment reform through the promotion of global payments, Accountable Care Organizations (ACOs), and performance based incentives.  While many of these payment reform strategies were aimed at improving health care coordination, quality, and cost containment in Medicare, the ACA provisions were tailored to promote similar strategies in Medicaid as well.
• State Innovations. As reported in the journal Health Affairs (July, 2011), a growing number of states are addressing the rising costs of their Medicaid programs by implementing initiatives, such as the patient-centered medical home, to decrease costs and increase quality and access to care.  Ohio has authorized in the biennial budget a federal Medicaid option to provide coordinated care through “health homes” to Medicaid recipients with chronic conditions.  
• Consensus for Change. There is an emerging national consensus for the need to align public and private health care payments to achieve greater efficiency, quality, and value across health care systems. Without payment alignment, health care systems and providers are likely to face conflicting incentives, more reporting requirements, and increased administrative demands leading to higher health care costs, according to a study published in the New England Journal of Medicine (Jan. 7, 2010). Within the private sector, a number of large employers, such as IBM, Boeing and General Electric, have engaged in value-based purchasing to encourage reduced costs, higher quality and evidence-based practices in health care, according to the Agency for Healthcare Research and Quality.

HPIO will inform health policy development within the payment reform arena by working to:

• Analyze and educate policymakers
• Convene stakeholders around payment reform strategies
• Foster the spread of payment reform practices and programs that are producing promising results

Questions?

If you have questions about HPIO's payment reform work or would like more information, please contact Reem Aly at 614.224.4950 x316 or raly@healthpolicyohio.org.