HMGT 435 WEEK 8 DISC 8

CHAPTER

89

6REALIZING THE TRIPLE AIM

Learning Objectives

After reading this chapter, students will be able to

• explain what the Triple Aim is, • discuss several strategies for realizing the Triple Aim, • describe several strategies for improving the experience of care for

patients, • propose several strategies for improving population health, and • identify several ways to reduce cost per service.

Key Concepts

• The Triple Aim seeks to improve the experience of care for patients, improve population health, and reduce per capita costs.

• Multiple public and private trials of payment innovations are underway. • Healthcare spending depends on price and volume. • Private prices are high in the United States. • The full effects of provider and insurer innovations will not be known

for years.

6.1 What Is the Triple Aim?

In 2008 a team from the Institute for Healthcare Improvement argued that the United States should try to reach three aims simultaneously (Whittington et al. 2015):

1. Improve the experience of care for patients. 2. Improve population health. 3. Reduce per capita costs.

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C o p y r i g h t 2 0 1 9 . H e a l t h A d m i n i s t r a t i o n P r e s s .

A l l r i g h t s r e s e r v e d . M a y n o t b e r e p r o d u c e d i n a n y f o r m w i t h o u t p e r m i s s i o n f r o m t h e p u b l i s h e r , e x c e p t f a i r u s e s p e r m i t t e d u n d e r U . S . o r a p p l i c a b l e c o p y r i g h t l a w .

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Economics for Healthcare Managers90

This framework became a part of national strategy with the implementation of the Affordable Care Act (ACA) in 2010. In addition to major changes in Medicare payments, this framework has led most major commercial insurance firms to significantly modify how they pay providers. For example, Anthem Blue Cross Blue Shield has redesigned payment models to align financial incentives and move away from visit-based payments (Anthem Blue Cross Blue Shield 2018). Likewise, many Medicaid agencies have made realizing the Triple Aim a goal.

Public and private insurers have proposed four new payment models that are designed help realize the Triple Aim:

1. accountable care organizations (ACOs), 2. bundled payments, 3. patient-centered medical homes (PCMHs), and 4. value-based insurance designs.

Some observers call these models “value-based payment systems.”

6.1.1 Accountable Care Organizations ACOs can take many forms, although most continue to pay providers on the basis of volume (e.g., per visit or per procedure) but add incentives to improve quality or reduce costs. Early evidence for Medicare ACOs—more a prescription for health system redesign than an organizational model—sug- gests that some savings have been realized, while measures of quality have remained stable (Nyweide et al. 2015). For example, the Meridian Alliance ACO, which is based in Hackensack, New Jersey, is a Track 1 participant in the Medicare Shared Savings Program (meaning that it is not exposed to losses if it does not generate savings). It generated more than $50 million in shared savings in 2016 and had a quality score greater than 92 percent, so it distributed $22,835,022 to its participants (Hackensack Meridian Health 2018). Most ACOs do not yield this sort of payment. Less than a third actu- ally had savings to share, as savings vary considerably across ACOs, payers, and populations (Kaufman et al. 2017).

Originally a Medicare payment model, ACO contracts have become more common in private insurance than in Medicare or Medicaid (Muhles- tein, Saunders, and McClellan 2017). This is not surprising. Private ACOs can reduce costs and improve quality by creating networks of higher-quality, lower-cost providers. (Medicare has fee schedules, not negotiated prices, and cannot exclude any eligible provider.) For example, the Alternative Quality Contract in Massachusetts resulted in higher quality and lower costs, although not enough to offset the costs of running the ACO (Song et al. 2014).

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Chapter 6: Real iz ing the Tr iple Aim 91

6.1.2 Bundled Payments Bundled payments pay a fixed amount for an episode of care, such as a knee replacement. As with ACOs, bundled payments are commonly seen as Medi- care innovations that were authorized by the ACA. In fact, bundled pay- ments are not new. Medicare’s DRGs (diagnosis-related groups) are a form of bundled payment, and Medicare tested bundled payments for coronary artery bypass grafting in 1991 (Slotkin et al. 2017). Like ACOs, bundled payments usually base payments at least partly on quality. Early results of bundled payments are promising, showing lower costs with no reduction in quality (Sullivan et al. 2017). Because Medicare patients tend to require sig- nificant amounts of postsurgical rehabilitation, bundled payments may save more for Medicare than for commercial insurance.

For example, NYU Langone Medical Center chose to participate in a Medicare bundled payment program that included costs for the three days before the procedure plus hospital, physician, and rehabilitation costs and any additional costs for 90 days after discharge. NYU reduced readmissions by 38 percent and cost per episode by 20 percent (Dundon et al. 2016). NYU developed protocols that reduced length of stay and operating room time; lowered implant, supply, and drug costs; and improved discharge planning. Virtually all the savings were due to reductions in use of inpatient rehabilita- tion facilities and reductions in readmissions.

Although commercial bundled payments are similar to Medicare’s, important differences exist. Commercial bundles have fewer opportunities for savings because rehabilitation and readmission costs are much smaller (Elbuluk and Bosco 2016). Commercial prices are higher than Medicare’s, however, so discounting may create opportunities for saving. In addition, many employers and insurers plan to expand the use of bundled payments, often in centers of excellence (which will be discussed in section 6.1.4).

6.1.3 Patient-Centered Medical Homes Like ACOs and bundled payments, PCMHs are hard to define. For example, the Patient-Centered Primary Care Collaborative (2017) defines them “as a model or philosophy of primary care that is patient-centered, comprehensive, team-based, coordinated, accessible, and focused on quality and safety.” A difficulty with this definition is that some PCMHs have implemented the model more completely or more effectively than others, and some practices that are not considered medical homes may have implemented many of the features of a PCMH without seeking certification. In addition, good evi- dence about what elements of the PCMH model are most important is not available. Some evidence suggests that enhanced care coordination, continu- ity of care, access to care, and communication improve clinical quality the most, but this needs to be confirmed (Nelson et al. 2017).

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Economics for Healthcare Managers92

Can Patient-Centered Medical Homes Help Realize the Triple Aim?

A PCMH emphasizes a team approach to care, typically including physicians, advanced practice nurses, physician assistants, nurses, pharmacists, nutritionists, social workers, educators, and care coor- dinators. This team cooperates to improve access (e.g., after-hours care and same-day visits), patient engagement (e.g., teaching patients how to manage their care and contribute to decision making), care coordination (e.g., tracking care plans among providers and improving transitions from hospitals to home), quality (e.g., improving patient satisfaction and tracking compliance with practice protocols), and safety (e.g., decision support for prescribing and tracking abnormal test results). Despite broad similarities, PCMHs vary in their emphases and implementation strategies. Not surprisingly, reviews find weak, variable evidence that PCMHs save money, although the evidence is stronger and less variable for high-risk patients (Sinaiko et al. 2017). Similarly, some studies find improvements in patients’ experiences in PCMH practices, whereas others do not (Sarinopoulos et al. 2017). How much PCMHs improve quality and safety also remains unclear (Green et al. 2018).

An analysis of Geisinger Health System’s implementation of PCMHs offers some strong evidence that they can reduce costs (Maeng et al. 2015). An integrated health system that offers PPOs and HMOs for Medicare, Medicaid, and the ACA marketplace, Geisinger’s PCMH approach differs from most others in a number of ways:

• Geisinger used a standardized model.

• Geisinger had clear incentives to reduce cost and improve quality because it offered an HMO.

• Geisinger had a long history of experimenting with PCMH models.

• Geisinger focused on high-risk patients.

• Geisinger used a mix of volume-based and quality-based payments.

The Geisinger study found that implementation of a PCMH significantly reduced costs (primarily by reducing hospitalization), and the size of the reduction grew with experience as a PCMH practice. An earlier Geisinger study found that patients perceived that some aspects of

Case 6.1

(continued)

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Chapter 6: Real iz ing the Tr iple Aim 93

6.1.4 Value-Based Insurance Designs In response to rising spending, employers and insurers have sought to identify benefit designs that would simultaneously reduce spending and improve the health of beneficiaries. These goals can conflict. For example, increasing deductibles appears to reduce use of services and therefore costs. Unfortunately, patients appear to reduce use of effective and ineffective services, often including preventive care that is covered in full (Agarwal,

care had improved and some had not (Maeng et al. 2013). Only modest evidence about quality and safety has been analyzed. For this highly inte-

grated system, PCMHs appear to contribute to realizing the Triple Aim. Can becoming a PCMH help other practices realize the Triple Aim?

Green and colleagues (2018) suggest that the evidence is clearer than it seems. Their analysis focused on conditions that were targeted by Blue Cross Blue Shield of Michigan and measured how many PCMH components each practice had implemented (which had seldom been done before). Their analysis found that emergency department costs and hospitalization costs fell for all conditions but fell by much more for targeted conditions and for practices with more complete PCMH implementation. An earlier study that analyzed data for only two years of PCMH implementation (Paustian et al. 2014) found that full implementation was associated with higher quality and significant cost reductions for adults. Partial PCMH implementation was associ- ated with higher quality but not with cost reductions. A separate study found that the patient experience was rated more highly in PCMH prac- tices (Sarinopoulos et al. 2017).

Discussion Questions • Why does offering HMO plans affect incentives?

• How could improving access reduce costs?

• How could improving care coordination reduce costs?

• Why is the evidence about effects on cost so varied?

• Why is the evidence about effects on quality so varied?

• Why is the evidence about effects on the patient experience so varied?

• How would a successful PCMH program affect patients? Hospitals? Participating practices?

Case 6.1 (continued)

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Economics for Healthcare Managers94

Mazurenko, and Menachemi 2017). Reducing use of effective services can harm population health.

Reference pricing represents one strategy to reduce costs without harming population health. An insurer sets a reference price for a product, and the patient is responsible for the entire amount in excess of the reference price. Originally used in Europe to steer patients toward less expensive drugs, reference pricing also appears to lead firms to cut prices (Herr and Suppliet 2017). Commonly used in the United States to reduce spending on high- cost products, reference prices typically shift market share to less expensive providers and induce expensive providers to lower prices.

Centers of excellence represent an alternative strategy for reducing costs and improving population health. From a patient perspective, a center of excellence offers access to a high-quality, high-volume provider with minimal out-of-pocket expense. From an insurer perspective, a center of excellence offers high quality with savings primarily due to reductions in intensity of care. Most centers of excellence adhere to evidence-based guidelines and reduce volume-based compensation for practitioners, seeking to avoid invasive pro- cedures if possible unless they are what is most appropriate for the patient. Zhang, Cowling, and Facer (2017) found that reference pricing and centers of excellence both steered patients to high-quality providers and reduced spend- ing. However, the mechanisms differed: Reference pricing design reduced average prices sharply but did not reduce utilization. In contrast, the centers of excellence reduced utilization sharply but did not reduce prices.

One function of insurance coverage is to signal that a covered prod- uct is valuable. Reducing out-of-pocket costs for effective products also increases their use and improves patient outcomes (Kesselheim et al. 2015). Value-based insurance reduces or eliminates out-of-pocket costs for cost- effective products, but designing such a plan is demanding. It requires accurate measurement of health outcomes, accurate measurement of total costs (not just the cost of the product), and payment changes to create the proper incentives for patients and providers. (How to change the payment is not always obvious.) Good data on outcomes are often available for drugs, so changes to drug benefits are more common than other changes. Many insurance plans now incorporate free preventive services (e.g., vaccinations and mammography), but patients and providers are not always aware of these changes.

Another approach to value-based insurance is pay-for-performance, which gives bonuses for high-quality care and imposes penalties for low- quality care. Although pay-for-performance sounds plausible, there is little evidence that it works (Mendelson et al. 2017).

Yet another approach involves public reporting of cost and quality measures. This approach is much less obtrusive than pay-for-performance

reference pricing A maximum that an insurer will pay for a product. Patients typically must pay the full difference between the product’s price and the reference price.

center of excellence An integrated program to treat a condition (e.g., breast cancer). Certification is possible, but structures and approaches vary. From an employer or insurer perspective, a center of excellence is defined by the contract with the provider and by demonstrated high quality and efficiency.

value-based insurance Health insurance that is designed to encourage use of highly effective services (usually by reducing cost sharing for these services).

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Chapter 6: Real iz ing the Tr iple Aim 95

and involves potentially powerful incentives. Patients are apt to prefer pro- viders with high ratings (Werner, Konetzka, and Polsky 2016), meaning that poor performance can have significant financial consequences. However, because quality is a complex, multifaceted concept and the evidence is often confusing, reporting it in a way that the public and referring physicians can understand is a challenge.

Centers of Excellence

It is easy to understand why JetBlue Airlines helped to establish the Employers Centers of

Excellence Network. JetBlue and its partners shifted from paying highly variable prices for care of variable quality to paying a set price to a small group of organizations with a history of offering excellent quality. Prices are typically 10 to 15 percent lower, but the real savings occur because patients are often steered toward less invasive, less costly care. For example, local providers had recommended surgery for nearly all 450 spine patients who went to centers of excellence, but the cen- ters recommended surgery for only 62 percent of them (Slotkin et al. 2017). The centers instead proposed physical therapy, pain treatments, weight loss, and other alternatives.

It is also easy to understand why an employee would be willing to seek care from a center of excellence. Travel, lodging, and care are covered by the program, so out-of-pocket costs are typically much lower. Some of the patients avoid unnecessary surgery, and the quality of care appears to be higher at centers of excellence. Claims data from Lowe’s (another partner in the Employers Centers of Excellence Net- work) show sharply lower readmission rates, much less use of skilled nursing facilities, and high rates of employee satisfaction (Slotkin et al. 2017).

Why are centers of excellence limited to US providers? The answer is unclear. Excellent providers are available in other countries for much lower prices. For example, US private insurers paid an average of $29,067 for hospital and physician services for hip replacement. Swiss insurers paid an average of $17,112, and Spanish insurers paid an average of $6,757 (International Federation of Health Plans 2016). A hospital in Cancún, Mexico, advertises a price of “from $22,004” (Qunomedical 2018).

Case 6.2

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Economics for Healthcare Managers96

6.2 Improving the Experience of Care

PCMHs and ACOs might improve patients’ experiences of care, but the evi- dence is mixed. As noted in case 6.1, a Michigan study found that a mature, multipayer PCMH offered patients better access, better communication,

One alternative to a center of excellence is a high-performance network, which identifies high-quality, cost-effective providers. No explicit

contract may be required. In 2017 only 11 percent of employers offered high-performance networks. This percentage is expected to more than quadruple in 2018. Currently, centers of excellence are much more common, and they are expected to be available to a majority of work- ers in 2018 (National Business Group on Health 2017).

Discussion Questions • Why do prices vary so much?

• Why does clinical quality vary so much?

• Why do patient experiences vary so much?

• What employers are participating in centers of excellence?

• What services do centers of excellence typically offer?

• Why might low-quality care be more expensive than high-quality care?

• Have you or someone you know used a center of excellence? What was their experience?

• Why would risks for providers be higher for a center of excellence?

• If you ran an ACO, would you choose a center of excellence or reference pricing?

• Have centers of excellence grown as expected? Have high- performance networks?

• Would you be willing to go to a center of excellence if you needed spine surgery?

• Would you be willing to go to Cancún, Mexico, if you needed a hip replacement? What about Zurich, Switzerland?

• What are the alternatives to a center of excellence program?

Case 6.2 (continued)

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Chapter 6: Real iz ing the Tr iple Aim 97

better coordination, and more comprehensive care (Sarinopoulos et al. 2017). Some other studies, but not all, have linked improvements in the patient experience to PCMH conversion. Only a limited number of analyses have emphasized the patient experience.

Likewise, patients seem to be somewhat more satisfied with the care provided by ACOs, but responses do not differ greatly. In addition, most analyses have focused on costs, suggesting that costs are more important.

6.3 Improving Population Health

6.3.1 What Is Population Health? Population health is “the health outcomes of a group of individuals, includ- ing the distribution of such outcomes within the group” according to David Kindig and Greg Stoddart, who first coined the term (Kindig 2015). Originally meant to describe populations in geographic areas, population health now sometimes means clinical populations (e.g., the patient panel of a practice or patients on a heart failure registry). The Triple Aim emphasizes improving care for clinical populations, but it has also heightened interest in traditional public health approaches to improving population health.

Population health’s focus on the distribution of outcomes emphasizes disparities in health outcomes. For example, because the infant mortality rate for non-Hispanic blacks is more than double the rate for non-Hispanic whites and Hispanics, reducing the infant mortality rate for non-Hispanic blacks would improve population health and reduce disparities (Kaiser Fam- ily Foundation 2018). (Overall improvement would be desirable. Among the well-to-do countries of the world, only Chile, Mexico, and Turkey have higher infant mortality rates, according to the Organisation for Economic Co-operation and Development [OECD 2017].)

Not all disparities reflect advantages to whites. At age 65 Hispanics have a life expectancy that is 3.3 years longer than that of non-Hispanic whites and 6.9 years longer than that of non-Hispanic blacks (National Cen- ter for Health Statistics 2017).

Some disparities can be reduced by changes in the healthcare system, so disparities are relevant for managers. For example, before the implementa- tion of the ACA, Latinos and African Americans were less likely to be insured than whites and less likely to have had a physician visit in the survey year (Chen et al. 2016). Between 2011 and 2014 these differences narrowed, primarily as a result of the ACA. Other health disparities can be reduced by modifying social determinants of health.

social determinants of health Factors that affect health independently of healthcare (e.g., education and housing).

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Economics for Healthcare Managers98

6.3.2 What Are Modifiable Social Determinants of Health? Many social determinants of health are modifiable. Some involve health systems. For example, follow-up after a missed primary care visit might identify lack of transportation as the cause. The health system could con- nect the patient with an insurance-provided transportation service or a social service agency that provides medical transportation. Some changes require more effort from patients. For instance, improved diets, increased physical activity, smoking cessation, and other patient-managed activities can significantly improve the health of individuals with diabetes (American Diabetes Association 2017). Especially for patients with language, financial, or cultural barriers that complicate patients’ efforts to manage their health, a health system that simply recommends changes and fails to follow up will have poor outcomes.

Not all changes to social determinants of health need to be financed by the health system. The local government or a local charity may offer a subsidy program for medical transportation. Alternatively, a health system, a local government, a local school, or a local charity might develop user- friendly tools that simplify the process of booking a ride for patients or providers. Likewise, other community organizations may support programs to improve health self-management (or be encouraged to do so by the health system).

Other modifiable social determinants may not involve health systems at all. For example, low-income children are 49 percent more likely to have asthma than higher-income children (Forum on Child and Family Statistics 2017), and non-Hispanic blacks are 86 percent more likely to have asthma than non-Hispanic whites and are 185 percent more likely to die as a result of asthma (Centers for Disease Control and Prevention 2018). One strategy for reducing the severity of asthma is to change a child’s home environment (e.g., reducing mold or exposure to tobacco smoke). Such changes can be supervised by housing code officers, community health workers, or public health workers. Alternatively, some well-designed educational programs can improve health and economic outcomes enough to yield a substantial return on investment (Thornton et al. 2016). Typically, health systems would play little or no role in such programs.

6.4 Reducing Cost per Capita

Cost per person depends on services per person and the price of each of those services, so costs can be reduced in two ways. One way is to reduce service

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Chapter 6: Real iz ing the Tr iple Aim 99

use. The other way is to reduce the price per service. Both of these ways require changes in behavior, and these changes in behavior require changes in incentives.

Prices are high in the United States and appear to be the main driver of the nation’s higher costs. For example, the average amount paid for a magnetic resonance imaging scan was $1,119 in the United States, $503 in Switzerland, and $215 in Australia (International Federation of Health Plans 2016). Likewise, the average amount paid for a hospital day was $5,220 in the United States, $4,781 in Switzerland, and $765 in Australia (Interna- tional Federation of Health Plans 2016).

These price differences are large enough to explain why spending per person is higher in the United States. Average spending per person was $9,036 in the United States in 2014, $7,536 in Switzerland, and $4,289 in Australia (OECD 2017). Although the intensity of treatment may be higher in the United States, physician visits and hospital discharges per thousand are lower (OECD 2017; National Center for Health Statistics 2017).

Why are prices so high in the United States? First, insurers and provid- ers view the prices that they have negotiated as trade secrets. Providers do not want insurers to know that they are paying more (or less) than a rival insurer. Insurers do not want providers to know that they are being paid more (or less) than a rival provider. Second, many insurers have weak bargaining posi- tions and modest incentives to strike hard bargains. Insurers have difficulty selling plans that exclude major health systems, and employers have not traditionally focused on premium costs. Third, although governments have created fee schedules for Medicare and Medicaid, most have not tried to influence private prices (Rocco et al. 2017). (Those that have tried have gen- erally had too little public support to be effective, and most of these efforts have been abandoned.) Fourth, healthcare financing in the United States is so opaque and complex that employers, policymakers, and the public have not seen a way to change it.

The other mechanism for reducing cost per capita is to reduce ser- vices per capita, especially if those services are not effective. Medicare ACOs have been linked consistently with lower inpatient use, lower emergency department use, reductions in low-value services, and improvements in preventive care (Kaufman et al. 2017). Medicaid ACOs have been linked to lower emergency department use and improvements in preventive care. The evidence about private ACOs is limited, but centers of excellence appear to reduce the intensity of treatment for private patients (Zhang, Cowling, and Facer 2017).

low-value service A service that has little evidence of benefit or is likely to do more harm than good.

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Economics for Healthcare Managers100

Would Medicare for All Reduce Costs?

This question actually has two parts, because cost has several mean- ings. Moving to Medicare for all would reduce administrative costs for insurers and providers. Overall, private insurers’ administrative costs average 13 percent of premiums, and Medicare’s administrative costs are less than 2 percent of total spending (Congressional Budget Office 2016). This change could save as much as $125 billion per year. How much dealing with just one insurer would reduce providers’ costs is not clear. It could be as little as $125 billion per year or as much as $500 billion per year if capitation were the norm.

From the perspective of patients, moving to Medicare for all would reduce some prices and increase others. If Medicare gradually replaced private insurance and kept Medicare prices, provider revenues would fall, because Medicare prices are lower than private prices. (This decrease would be partially offset by higher revenues if Medicare replaced Medicaid.) Overall, Medicaid fees average 72 percent of Medi- care fees, but state averages range from 38 percent in Rhode Island to 126 percent in Alaska (Kaiser Family Foundation 2017). Private physi- cian fees average 125 percent of Medicare rates, and private hospital prices average 189 percent of Medicare rates (Maeda and Nelson 2017). When Maryland moved to a global budget model for hospitals, it used prices between Medicare rates and private rates (Haber et al. 2017), so it is not completely clear how large a reduction would occur.

In 2016 private insurance spent $1,123 billion ($5,721 per person for 196 million beneficiaries), Medicare spent $672 billion ($12,046 per person for 56 million beneficiaries), and Medicaid spent $566 billion ($7,941 per person for 71 million people) (Hartman et al. 2018). Out-of- pocket spending was $353 billion, and 29 million people lacked health insurance. Savings could be up to $455 billion if private prices were cut to equal Medicare prices. Spending could increase by up to $160 billion if Medicaid prices were increased to Medicare levels. Spending could increase by $100 billion to $165 billion if all the uninsured were covered.

There is one more possible source of savings (apart from cost reductions resulting from the shift from volume to value): lower phar- maceutical prices. Per capita spending for pharmaceuticals is $1,112

Case 6.3

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Chapter 6: Real iz ing the Tr iple Aim 101

6.5 Conclusion

The payment system in the United States is changing. The evidence does not clearly tell us what works or for whom. Nor does it tell us how the various approaches will change over time.

The best evidence suggests that costs are high in the United States because prices, especially private prices, are high. Of the initiatives that this chapter discusses, only reference pricing and (to a lesser extent) centers of excellence directly address prices. Private ACOs tend to shift care to less costly sites and may have indirect effects on price.

Medicare and Medicaid prices are lower than private prices. Their efforts to reduce spending emphasize delivering care more efficiently and more effectively (by decreasing low-value care and increasing high-value

in the United States versus $740 in Germany and $656 in France (Sarnak et al. 2017). If Medicare negotiated pharmaceutical prices, savings of $120

billion to $140 billion might be possible.

Discussion Questions • How much would moving to a single payer plan reduce

administrative costs?

• How much would provider revenues fall if Medicare replaced private insurance?

• How much would provider revenues rise if Medicare replaced Medicaid?

• How much would spending change if Medicare replaced private insurance and Medicaid?

• How much would provider revenues rise if all the uninsured were eligible for Medicare?

• How fast has spending per person been increasing for private insurance?

• How fast has spending per person been increasing for Medicare?

• Has Maryland’s global budget plan helped realize the Triple Aim?

• Has Vermont’s Medicare and Medicaid ACO helped realize the Triple Aim?

• Do you favor Medicare for all? The status quo? Some other alternative?

Case 6.3 (continued)

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Economics for Healthcare Managers102

care), thus improving the health of beneficiaries. The early evidence from Medicare and Medicaid ACOs, bundled payments, and PCMHs is fairly posi- tive. Spending seems to have dropped, quality seems to have increased, and the patient experience may have improved.

One factor in the poor health of Americans may be our weak primary care system. Support for PCMHs seems likely to enhance the capacity of primary care (if only because it creates a model that allows nurses, nurse prac- titioners, and physician assistants to play a larger role). A number of insurers have initiated programs to pay primary care practices to coordinate care for patients with complex problems. These programs can increase primary care revenues and capabilities.

Medical care is but one input into population health. For some people, access barriers make effective use of medical care impossible. For others, the factors that limit health are public health problems (e.g., unsafe water, local environments). For still others, the factors that limit health are social prob- lems (e.g., poor housing, poor diets, unsafe neighborhoods). Efforts to make healthcare safer, of higher quality, and more affordable are apt to be only part of efforts to improve health.

Exercises

6.1 An insurance market consists of high-risk patients, who average $40,000 in spending per year, and low-risk patients, who average $1,000 per year. Overall, low-risk patients represent 90 percent of the population. What would average spending be for a population like this?

6.2 Refer to exercise 6.1. What would average spending be if low-risk patients were 92 percent of the population?

6.3 Refer to exercise 6.1. If an insurer sold 100,000 policies at $6,000, what would revenue be? What would medical costs be if the insurer paid for everything and low-risk patients were 90 percent of the population? How would that change if low-risk patients were 92 percent of the population?

6.4 Why did hospitals have limited incentives to reduce readmissions before the ACA?

6.5 What are some examples of modifiable social determinants of health that would be feasible for an ACO to influence? For a health system not in an ACO? For an insurer?

6.6 Where are reference prices being used? What have their effects been?

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Chapter 6: Real iz ing the Tr iple Aim 103

6.7 Go to the Centers for Medicare & Medicaid Services Innovation Center website (https:// innovation.cms.gov) and see what ideas are being tested in a state of your choice.

6.8 Why would a system launch a medical home that is intended to reduce its revenues?

6.9 How are a narrow network and an ACO different? 6.10 What recent evidence about the performance of ACOs can you find?

Are they growing? Are they saving money? Do enrollees seem to like the care they get? Is the quality of care good?

6.11 What recent evidence about medical homes can you find? Are they growing? Are they saving money? Do enrollees seem to like the care they get? Is the quality of care good?

6.12 What recent evidence about bundled payment programs can you find? Are they growing? Are they saving money? Do enrollees seem to like the care they get? Is the quality of care good?

6.13 What recent evidence about Medicare Advantage HMOs can you find? Are they growing? Are they saving money? Do enrollees seem to like the care they get? Is the quality of care good?

6.14 How much did cost per Medicare beneficiary go up last year? The Kaiser Family Foundation publishes these data (www.kff.org/ state-category/medicare/).

6.15 Why would a health system want to participate in a trial of bundled payments?

6.16 What risk does a health system bear when it agrees to a bundled payment?

6.17 What risk does a health system bear when it agrees to accept capitation?

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