As we’ve expanded our strategic focus at the Foundation to examine how to rebuild trust in healthcare, one thing that’s hard to ignore is the effect that health care costs are having on the relationships between patients and physicians, as well as physicians and the system at-large. I’ve been hearing of growing support for bundled payments lately, as CMS recently launched an extension of the initial Medicare bundled payment program that began in 2018.
Bundled payments pay providers and health care facilities a single payment for a single episode of care. Per NEJM Catalyst, “Bundled payments require participant providers to assume risk, as they must cover costs that go above the target price for an episode of care including those that arise from complications and hospital readmissions. On the upside, providers share in the savings if they keep costs below the target price while maintaining quality standards.” To me, this kind of payment model addresses more than just costs; it can also serve to reinforce the goals we at the Foundation are trying to advance—professionalism, trust and choosing wisely.
I decided to ask my friend François de Brantes for his thoughts on all this. François is the Senior Vice President of Commercial Business Development at Remedy Partners. He has spent close to two decades working to transform the U.S. health care system by improving incentives for physicians, providers and consumers in order to encourage optimal care decisions. So I—and many others—consider him an expert on these matters.
François, I’ve been thinking a lot about bundled payments lately, and how they kind of embody all that we are focused on here at the Foundation… trust, professionalism, Choosing Wisely. Can you explain how bundles relate to professionalism?
Payment is a mechanism. Ultimately what you‘re trying to figure out is, “Does the payment encourage or reinforce professional behavior or does it potentially conflict with or come between the patient and the professional in the best exercise of the care of the patient?”
Episodes by their very nature, because they’re designed—or should be designed—around a medical episode of care, typically act as a reinforcement mechanism for the professionals. If it’s done right—and that’s always a big if—you do have that fundamental reinforcement of ‘hey whatever you do for the patient, however good the outcomes are tied to that episode, that’s the goal,’ it’s not going to conflict with anything that the physician wants to do to build trust with the patient.
In theory, the patient should trust the physician more but I think that sometimes also is a function of the financial incentives embedded in the health plan benefit design. You can trust your doc but if you’re feeling the pain because you have to shell out a bunch of money, it becomes problematic.
Why would this make the patient trust the physician more?
Because inherently, if you’re managing the total costs around an episode, you’re not going to churn and burn. There’s no financial motivation to do that. So again, I think of it often as reducing potential conflicts rather than optimizing behavior.
The whole optimization of behavior is somewhat futile in a sense. I think clinicians wake up in the morning wanting to do the right thing and then they have this onslaught of negative incentives that hit them in the face continuously during the day. In that respect, an episode-of-care payment could potentially reduce that onslaught.
In our language, bundled payments give the doctor more autonomy to do the right thing. The barriers to payment are reduced—they have a certain amount of money for the episode and they’re free to do what they can to manage the best care, without the obstruction of “that’s covered, that’s not covered, you don’t get paid for that, you get paid for that.” That all goes away.
Yes, I think you regain your autonomy. And if you regain your autonomy, then I do feel that, just purely from a behavioral standpoint, the relationship with the patient becomes more natural. The physician isn’t sitting there thinking, “Ugh, I have to send you to this place because that’s what the plan ordered” or whatever. They regain that autonomy also with a consciousness around what matters to the patient both financially and physically.
I keep emphasizing that financial incentives are an exercise in minimization of bad incentives. It’s not a question of optimizing some magic formula that’s going to solve all your problems. It’s really a question of reducing the incentives that could come counter to what you’re trying to achieve—a trusted relationship between the patient and clinician, the judicious use of resources. All of that matters and if that’s the case, then episodes of care are one layer, total costs of care are another layer and these things work in concert, they don’t work in competition.
How can you position Choosing Wisely as a help to physicians when they’re thinking about bundled payments?
In an episode-of-care payment model, you’re encouraged to deliver the appropriate care to the patient so anything that is extraneous, inappropriate or not recommended doesn’t make any sense. In well-run programs—if you’re a health system—you want to provide information to the physicians who are engaged in an episode of care payment model about the stuff that potentially they could address in order to avoid overutilization of unnecessary services, which is the essence of Choosing Wisely. At Remedy, we’re building these Choosing Wisely prompts as part of the tools that we deploy to providers as we engage in episode-of-care payment programs because it is one of the elements that is going to help them succeed. “Don’t do x test because there’s no fundamental reason to do it and by the way, you know it’s not necessary and you’re going to save money on the episode by avoiding it,” which is good for the health system and for you and, as importantly, good for the patient.