Supporting Studies, Literature and Theories

The MedEncentive Program solves the Triple/Quadruple Aim by improving doctor and patient behaviors. The Program accomplishes this objective with a web-based system that uses fast-acting, but short-lived financial incentives to invoke longer lasting psychosocial motivators proven to improve human compliance and performance. The developers of the Program use descriptive terms to help explain this process, such as “precision-guided financial incentives,” “doctor-patient mutual accountability,” “information therapy,” and the “knowledge-empowerment-compliance response.”

 

The following is a discussion about other methods that have attempted to solve the Triple/Quadruple Aim, why these approaches continue to fail, and what is different about this program that makes it effective.

 

Impact of Human Behavior on Health and Costs - Numerous studies have determined that unhealthy and risky human behavior, such as tobacco use, poor diet and eating habits, physical inactivity, alcohol and drug abuse, unsafe sex, and lack of sleep, account for a high percentage of premature deaths, significantly diminished quality of life, and hundreds of billions of dollars in healthcare expenditures. Therefore, this section centers on motivators that have proven both effective and ineffective at modifying human behavior in a manner that improves health and lowers overall medical expenditures.

 

Incentive Misalignment – In an article published in the Annuals of Family Medicine, entitled “Misaligned Incentives in America’s Health: Who’s Minding the Store?,” the authors argue that:

 

Improving the health of the American public will require a societal commitment at all levels, a systematic and structural reengineering of the public health and health care enterprises that support their working together synergistically, and alignment of incentives across all stakeholders, including government, private payers (e.g., employers and insurers), health care delivery organizations (e.g., managed care organizations, pharmacy benefits managers, nursing homes) and patients, and consumers.

 

As this article implies, the American health delivery system is dysfunctional, chaotic and expensive because perverse and misaligned incentives abound.

 

Therefore, experts agree that the secret to improving health and healthcare in a manner that lowers costs, is to align the interests of the key healthcare stakeholders—consumers (patients), providers, and insurers—like a three-legged stool.

 

For decades, there have been two approaches to incentivizing the healthcare stakeholders for the purpose of controlling costs – one in which the health insurer offers medical providers a financial incentive to improve care, and the other in which the health insurer offers the patient/plan member an incentive to be more responsible for adopting and maintaining good health behaviors.

 

Proponents of these two approaches have attempted all variations on the same theme, to no avail.

 

The fact that the medical provider incentive approaches have always been separate and distinct from the patient incentive approaches speaks to a fundamental misalignment that has rendered these methods ineffective. Aligning the provider, patient and insurer incentive processes is one of the key features of the MedEncentive Program, and helps explain why it is effective.

 

To fully understand the differences between traditional incentive methods and the Program’s methods, warrants an examination of these approaches, along with the studies that support the underlying concepts.

 

Misaligned Provider Incentives – Historically, medical providers have been compensated based on the volume of care they render. The most prevalent form of volume-based healthcare is called fee-for-service.

 

As the term implies, fee-for-service financially incents providers, including hospitals and physicians, to render as much healthcare as possible. This incentive to overtreat is exacerbated by the practice of “defensive medicine,” in which providers order tests primarily to prevent being sued by their patients.

 

The other form of volume-based healthcare is called capitation (i.e., capitated HMOs), in which a provider organization (hospital system or physician group) is prepaid a fixed amount per person covered, per some period of time, typically monthly, to provide some or all of the healthcare for the population of covered persons (beneficiaries). The intent of this form of provider compensation is to incent providers to manage the care of beneficiaries such that the costs do not exceed the capitated prepayments. This means that some or all of the risk of underwriting the beneficiaries’ health insurance coverage is borne by the provider organization. If there is a surplus after all medical expenses are paid, then these profits can be shared with the individual providers of the provider organization as bonuses. If there are losses, the provider organization could go bankrupt. As a result, providers are incented to withhold or ration care in order to preserve the capitated revenue.

 

This is exactly what happened during the heyday of HMOs in the 1990s. There were a number of high profile lawsuits that found HMOs guilty of harming or killing beneficiaries as a result of rationing care. This brought about threatened Patient Bill of Rights legislation and the eventual demise of most HMOs across the country.

 

An important observation regarding our country’s experience with capitated HMOs is how everyone jumped onboard without carefully examining the associated incentives and the potential for unintended consequences. This “ready-fire-aim” approach is repeated time and again, as new and different healthcare cost containment concepts have been introduced.

 

After the decline of HMOs, the country experienced a period of hyper-inflation, fueled by the fee-for-service model. In an attempt to control costs and counter the criticism of HMOs, healthcare delivery experts developed an approach that focused on care quality and efficiency, referred to as pay-for-performance (P4P). This approach improved the quality of care, but failed to control costs.

 

Eventually the P4P movement lost favor, and experts moved on to “value-based healthcare,” as opposed to the volume-based, fee-for-service or rationed-care methods. Value-based healthcare is defined as:

 

…a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way.

 

Value-based care differs from a fee-for-service or capitated approach, in which providers are paid based on the amount of healthcare services they deliver [volume-based healthcare]. The ‘value’ in value-based healthcare is derived from measuring health outcomes against the cost of delivering the outcomes.

 

Two forms of value-based healthcare were codified in the federal government’s Affordable Care Act (ACA), namely accountable care organizations (ACOs) and patient-centered medical homes (PCMHs). These methods intend to resurrect the capitated HMO concept by assigning some of the health coverage risk to providers, only with a P4P quality-of-care component that incorporates advanced health information technology (HIT), data analytics, treatment protocols and patient engagement methods.

 

While there has been progress in getting medical providers to adopt the quality initiatives associated with ACOs, there has been a resistance by providers to accept financial risks under these arrangements. Much of this is due to the fact that ACOs have not demonstrated convincing evidence that the improvement of care quality and health outcomes generate enough savings to offset the required ACO investment, let alone assume the financial risk of underwriting part or all of a population’s insurance coverage.

 

In 2012, Health Affairs reported:

 

In theory, paying providers for achieving better outcomes for patients should improve those outcomes, but in actuality, studies of these programs have yielded mixed results.

 

To date, ACOs continue to demonstrate mixed results, which points to the fundamental flaw in this approach. This flaw is best described by famed Harvard professor Clayton Christensen and his colleague, in a Wall Street Journal oped entitled “The Coming Failure of ‘Accountable Care’”:

 

The Affordable Care Act's updated versions of HMOs are based on flawed assumptions about doctor and patient behavior.

 

Christensen et al, go on to pose an important question:

 

In other words, ACOs hold caregivers accountable without requiring patient accountability. How can this work?

 

This misalignment can be illustrated using the three-legged stool imagery, in which providers are financially rewarded by insurers for assuming exclusive accountability for outcomes…while patients are left out of the equation.

 

The developers of the MedEncentive Program agree wholeheartedly with Christensen et al.’s statement about the accountability asymmetry of ACOs and other provider pay-for-performance schemes. Further, they submit that the Program’s modest, but impactful level of doctor-patient mutual accountability, resolves the problem that Christensen et al. describe so well.

 

Misaligned Patient Incentives – As previously mentioned, health plans have attempted for decades to motivate beneficiaries to engage in healthy behaviors by means of financial incentives. These efforts include wellness and prevention initiatives, and high-deductible consumer-driven health care, most typically promoted by self-insured employers.

 

Reward-induced Wellness Programs - A common method for controlling healthcare expenditures is financially incenting people (plan members) to engage in better health habits. This approach is most prevalent among self-insured employers. Typically, these incentives are paid to plan members for participating in wellness, fitness, prevention and care management programs.

 

Workplace wellness programs include health screenings and interventions. Screenings include health risk assessments (HRAs) and biometric testing to identify risk factors. Health interventions typically include smoking cessation, weight loss, nutrition, fitness, alcohol/drug abuse, stress management, telemedicine, wearables, health coaching and disease management programs.

 

There have been numerous studies conducted to determine the effectiveness of reward-induced, workplace wellness programs. The results of these studies have been mixed, at best.

 

First, these programs tend to attract healthy people and people who are predisposed to participate, leaving behind unhealthy people who are disinclined to participate.

 

Second, many of the studies deeming wellness programs effective, suffer from self-selection bias, by incorrectly comparing the outcomes of participants to non-participants. This method of analysis skews the outcomes in favor of wellness programs, while failing to measure the impact of these programs on the whole population - participants and non-participants alike.

 

Further, wellness interventions often exhibit characteristics that impede success. Risk assessments and biometric screenings are typically conducted annually, which prevents behavior conditioning (Pavlov). Without some kind of follow-up mechanism, these tests do not serve to improve health behaviors or lower costs, in and of themselves.

 

In addition, health screenings and preventive exams are well known for stimulating short-term medical utilization, as patients work with their physicians to resolve findings. One study that compared utilization of plan members who participated in a risk assessment (HRA), with those who did not participate, found:

 

greater overall costs for the [participating] group than for the [non-participating] group during the period immediately following the initial HRA completion. Taking the HRA may have alerted [participants] to their health risks, thereby stimulating them to seek health care services. Importantly, however, by the end of the [three year] study period, overall costs for the study group were lower than for the comparison group, consistent with the hypothesis that costs ultimately will decline because of HRA completion and subsequent medical attention prompted by the HRA [in] a manner that improves health or lowers costs.

 

It should be noted that, while this study confirms the shortterm increase in utilization due to screenings, it is plagued by the self-selection bias, described by the University of Chicago researchers, previously.

 

Other popular types of wellness interventions are smoking cessation and weight management programs. While no one would argue the appropriateness of these programs, these interventions tend to be slow acting, taking years to manifest themselves in measurable improvements in health and cost outcomes. Case in point is a study published in Health Affairs, in which the researchers reported:

 

We reviewed results of randomized controlled trials and identified challenges for workplace wellness programs to function as the [ACA] intends. For example, research results raise doubts that employees with health risk factors, such as obesity and tobacco use, spend more on medical care than others. Such groups may not be especially promising targets for financial incentives meant to save costs through health improvement.

 

Disease management (DM) is another health improvement/cost-containment model popular among employers. The concept originally involved assigning a health coach to manage the care of a patient with chronic disease. Typically, health coaches are centrally located, remote from their patients. The coaches use telephone communications to get acquainted with their patients, and engage them in recommended treatments and healthy behaviors. By its very nature, DM is a labor intensive, and therefore, relatively expensive and non-scalable intervention.

 

At one-time, disease management companies, such as Healthways, Health Dialog, and LifeMasters dominated the cost-containment movement in the U.S. A landmark study involving Medicare beneficiaries, found that "fees paid to date [to DM companies] far exceed any savings produced." Numerous other studies also found disease management ineffective at controlling costs. In one of these studies, reported in Health Affairs, researchers stated that:

 

…we find evidence of substantial quality improvement but not cost savings. The causal pathway—from improved care to reduced morbidity to cost savings—has not produced sufficient savings to offset the rising costs of improved care. We conclude that the rationale for [disease management] programs, like the rationale for any medical treatments, should rest on their effectiveness and value.

 

As a result, disease management quickly fell out of favor, and those DM giants that dominated the industry, no longer exist.

 

Today, DM has moved on to care management and population health management. Like DM, care management intends to manage patients with chronic conditions, using a team-based approach, advanced analytics and more efficient telehealth methods to monitor and mentor.

 

Population health evolved from DM when it became clear that merely focusing on chronic patients, while ignoring pre-chronic patients and healthy individuals, would never achieve the desired outcomes. Thus, population health attempts to improve the health and lower the costs of care for an entire population. It also relies more heavily on health IT, predictive analytics, and patient engagement than did disease management in its early incarnations.

 

Currently, there is a lack of studies and evidence that have definitively determined the effectiveness of care management and population health management in solving the Triple/Quadruple Aim, especially with regards to controlling costs. However, it seems clear that the fundamental flaws that afflicted disease management are present in these more recent methods, namely a failure to tap into the doctor-patient relationship to promote health literacy and compliance.

Content taken from the 2018 MedEncentive Study: 'Analysis of the cost containment capabilities of the MedEncentive Program in normally distributed employee health plans;' Studies that support the theories put forth are cited throughout the 2018 MedEncentive Study

Control healthcare costs

Call us today 855-289-0365

  • Facebook Social Icon
  • Twitter Social Icon

© 2005-20 MedEncentive, LLC