Health Reform/Legislation


Prevention Institute’s “How Can We Pay for a Healthy Population” webinar recording and slides are now available here. The webinar covered four strategies to secure sustainable funding for community prevention efforts:

  • Accountable Care Communities
  • Health Impact Bonds
  • Hospital Community Benefit funding
  • Wellness Trusts

Presenter Q&A is also available here.

A new report and upcoming webinar hosted by Prevention Institute presents strategies to shift health care financing from treating illness to keeping people well.

  • The report, How Can We Pay For a Healthier Population?, highlights wellness trusts, social impact bonds/health impact bonds, community benefit funds, and accountable care organizations/accountable care communities with the potential for replication and scaling.
  • The webinar on March 6 (2:00pm-3:30pm EST, 11:00am-12:30pm PST) will explain more about how these approaches can create healthier community conditions that improve health and financial outcomes at the population level.

“With a 20% countywide pediatric asthma rate, Fresno, California, is the first U.S. community to test a health care funding strategy that could both reduce treatment costs and provide a financial incentive to investors.” – coverage in Environmental Health Perspectives (web, PDF), published by the National Institute of Environmental Health Sciences (NIEHS).

Other recent coverage in ForbesThe Bond Buyer, Fast Company, and Nikkei (PDF in Japanese).

Arkansas is moving from “fee-for-service” payments, “in which each procedure a patient undergoes for a single medical condition is billed separately,” to a “bundled” approach, in which “the costs of all the hospitalizations, office visits, tests and treatments will be rolled into one ‘episode-based’ or ‘bundled’ payment” (NYT, Sept. 5, 2012).

Aligning payment systems with outcomes vs. medical procedures makes sense. But what’s in the ‘bundle’?

The evidence is clear that social determinants (the conditions and choices where we live, work, learn and play) account for more than half of what sends us into the medical care system in the first place. Payment systems need to incentivize primary prevention that improves the environment and behaviors essential to health.

Anything less and we’re still spending our money in the wrong place.

There’s a lot of hope bundled up in “bundled payments.” The approach, which was made possible by the Affordable Care Act and is being supported through Medicare pilots, is defined as the reimbursement of health care providers (such as hospitals and physicians) “on the basis of expected costs for clinically-defined episodes of care.”

So, for example, a complicated episode of care like a knee replacement, which entails a host of clinical procedures delivered by a dizzying array of medical professionals (perhaps not always well coordinated end-to-end), would be reimbursed through a single “bundled” payment, with the intention of creating greater efficiencies and less waste.

Considering the vast inefficiencies in the health care system, bundled payments seem to be a step forward. One study found that reducing complications during and after a total knee replacement would save an estimated 20% of total care costs for Medicare and 10% for commercial payers.

Still, a few questions come to mind:

  1. How can this new payment approach be extended to cover non-clinical health factors? We know that social and environmental contexts (housing conditions/safety, social connections/caretakers) play important roles in recovery; these factors can either support or jeopardize a successful knee replacement outside the hospital. If we don’t consider non-clinical factors as part of the “episode of care” we miss an essential opportunity to reinforce what happens in the clinical setting.
  2. How can bundled payments – or other innovative health financing strategies – be used to move care upstream to prevention? The best way to reduce the cost of joint replacement (or any treatment) is to make sure it is not needed in the first place.
  3. How can innovative payment strategies support population-based approaches (vs. individual treatment)? Imagine here that we are addressing clinical and non-clinical conditions that support healthier populations (prevention) and recovery environments.

As the knee replacement study indicates: “when case costs are higher than average, that excess is almost exclusively caused by (potentially avoidable complications).”

So, what are the sources of those complications? This might reveal opportunities for a bigger bundle – and a more sustainable impact.

The Affordable Care Act (ACA) encourages care coordination and payment structures — accountable care organizations (ACOs), patient-centered medical homes (PCMH) and medical neighborhoods — that promise more efficiency and integration of clinical services. But these models will have limited impact if they fail to address non-clinical factors that account for more than half of what makes us healthy or sick in the first place.

After all, what good is a ‘health home’ if it’s in the middle of an unhealthy neighborhood?

The Prevention Institute has created a framework for Community-Centered Health Homes that integrates clinical care and community prevention “in order to reduce demand for resources and services; improve health, safety, and equity outcomes; and”  — here’s the really cool part — “provide medical providers with skills and strategies to change the social circumstances that shape the health of their patients.”

Download the report PDF here.