If we look at the bell curve of adopting healthcare delivery models in the United States, rest assured we are still early adopters of the quality variety in 2019. Take the Medicare Access and Chip Re-Authorization Act (MACRA) which has been the flavor for Medicare Part B’s quality reimbursement programs since 2015. The Merit-Based Incentive Payment System (MIPS) and Alternate Payment Model (APM) are the two reimbursement tracks within MACRA that have emerged as the primary payment mechanisms of Medicare Part B services. Roughly 45% of all Medicare spending comes from Medicare Part B so the implications of the success of its delivery systems cannot be overstated. Picture this though, the same people that quizzed Mark Zuckerberg about privacy concerns on those congressional committees are from the same cloth as the ones who helped construct our existing healthcare delivery models and are creating the frameworks for future healthcare delivery.
Kahneman and Tversky would unduly appreciate the fallacies that operate within the regulatory bodies that design, create, and manage these programs. However, there is one Medicare delivery system that is gaining momentum and look no further than our friends in the Little Havana region for a picture of that model working well. Medicare Advantage (MA) enrollment has doubled in the past 10 years without as consistent of a change in nomenclature as its Part B brotheran (See the evolution of Meaningful Use if you have interest). Could the MA model’s architecture be the blueprint for future healthcare interactions across consumers, payers, and providers?
Medicare Advantage plans are capitation-based models that operate within a finely defined demographic of Americans. Despite Medicare Advantage being a supplement to traditional Medicare, three major players and several others provide Medicare beneficiaries coverage from the private industry. To be sure, a single payer healthcare system is very difficult if you are looking to retain efficacy, competition and openness in the marketplace. The healthcare operations within states, payers, and healthcare systems are successful based on a significant amount of regional and local dependencies. Side note, blockchain stands to be a boon to the healthcare industry if we can pull the nation’s healthcare backbone software languages into this century. But I digress.
Coupling the rise of electronic clinical documentation with a litany of reimbursement models has created one of the largest randomized trials on healthcare outcomes in the history of man. Now that Electronic Medical Record Systems abound in the U.S. healthcare system, the network effect and aggregation theory are reducing the asymmetry of effective models for managing populations. These evolutions have prompted employers and health systems into realizing the significant power they possess, supply and demand. So, where is all this going?
We are in the herd adoption phases of healthcare organizations recognizing the value of the data that they own. Why else is the rise in data breaches so exponential? While protecting patient information is critical, executing on leveraging that information to administer better and more cost-effective care is still very much in the early adopter phases. Look no further than the relationship between record labels, Spotify, and Spotify’s subscribers for an analogous scenario to summarize what the majority of healthcare payment models still represent.
On a micro-level, consumer spending power is aggressively increasing as we become more liable for costs through High Deductible Health Plans. I’ve previously mentioned that some healthcare organizations are aggressively skating towards NPS scores and the consumerization of healthcare. As healthcare provider outcomes data continues to come online through an internet connection near you, the power consumers have over understanding who their healthcare providers are, what their track records are, and where they get their care grows every day. As these market pressures continue to collide, our examination of the overall healthcare experience will only increase.
As an aside, the cost buckets that make-up our healthcare delivery system will start to encounter literate healthcare consumers, oh my! To that end, at the top of the list of scrutinized cost buckets should be our good friend, The Medical Loss Ratio (MLR). I am not saying Martin Shkreli is operating our countries health plans, but to say that health insurance organizations could also use a nudge towards humanity would be an understatement. In time, private insurance companies will have no choice but to toe the line on profitability.
The Medicare Advantage model is showing promise operating within those market pressures of consumer preference (demand), services and data (supply). By engaging patient populations, producing quality outcomes, and bending the cost curve, these plans are able to provide dental care, gym memberships, transportation, human interaction (what a concept), healthy food options, etc. Those social determinants of health that were neglected for so long yet are proven to be more magnitudes more impactful on healthspan than actual medical care. Quality experiences and value-added benefits create brand awareness that foster mindshare. Take Uber and Lyft for instance, what percentage of people pick up the phone and call a taxi anymore? Are the same folks organizing their entire lives electronically willing to continue sitting in waiting rooms for routine, elective, and/or care management services? Mindshare people!
Access to care is still an issue within some of the Medicare Advantage narrow-network plans. However, the amount of data we have and will continue to gather around this model will allow us to evaluate how these value-oriented architectures stress-test at the local and regional levels. Right now, today, healthcare systems have the power to work directly with employers and consumers, cut out the middleman, and offer an uptick in patient experience.
The United States is built on an idea-meritocratic system of innovation. That’s what sets us apart from the rest. Capitalism works when executed effectively and what Peter Drucker said is more applicable to healthcare than any other industry, the goal is to be both productive and humane. Medicare Advantage plans are jockeying towards that balance and health systems are in the catbird seat.