The difficult journey to success in outcomes-based commissioning: is there an easier path?

13 December 2015

About 7 mins to read
Mark McClellan

In their recent review of experience to date in outcomes based commissioning (OBC) in the National Health Service (NHS), Richard Taunt and colleagues at the Health Foundation highlight the 'Need to nurture' based on early findings in the NHS experience and abroad that are suggestive and potentially encouraging - but not clearly or consistently compelling. In some ways, the UK experience with OBC parallels the experience with implementing accountable care reforms in the United States. As Taunt and colleagues note, these two concepts – OBC and accountable care - are similar and share some of the same implementation challenges.

The core premise of accountable care involves aligning health care payments with desired results for health care providers. The goal is to give providers more flexibility to redirect resources to deliver better care to patients while also including some accountability for efficient overall use of resources at the same time.  Accountable care can enable a reallocation of resources to telemedicine and wireless services, new kinds of care teams, care coordination, and many other services that can provide higher-value care for particular patients, but are typically not well-supported in siloed and activity-based payment systems.

Designing contracts and payments to support redirecting resources to higher value to improve outcomes and lower costs is not a new concept to the NHS, the US, or the rest of the world, as the King’s Fund and Health Foundation have pointed out. But there is growing experience worldwide with accountable care now, and a main conclusion of that experience is that, like most things in life, describing the goal and path is much easier than actually achieving the result. For example, alongside some successes, Taunt and colleagues note that OBC has faced implementation challenges such as limited capacity to measure outcomes and analyze data to track progress, contributing to delays and mixed results to date.

The US experience

As they also note, the US experience has been mixed as well. We recently reviewed the latest experience of the US Medicare’s accountable care organization (ACO) initiatives. Medicare ACOs have grown rapidly, with now over 400 ACOs and around 18% of Medicare beneficiaries in an ACO – and the ACOs have shown to notable improvements in many important dimensions of quality of care, such as reduced hospitalization rates, better control of chronic diseases, and better patient experience with care. But overall savings for Medicare have been modest. Accountable care in US Medicaid and private health insurance also continues to expand, with some notable results but many implementation challenges as well. 

Two things are clear. First, it is possible to succeed in improving care and lowering costs: some ACOs have achieved substantial reductions in spending growth and care improvements, and ACOs that have been at it longer are doing a bit better. Second, clear successes remain more the exception than the rule: most Medicare ACOs did not achieve significant improvements in both quality and costs of care. It is not easy.

Given the challenges for commissioning organizations and other health care providers, Taunt and colleagues conclude appropriately that faster progress will require steps to make it easier for organizations to know what to do to succeed. Indeed, one advantage of the growing experience with successes and failures is that it is now much more feasible than it was a few years ago to describe the key capabilities and competencies for providers to succeed in accountable care arrangements. 

As Taunt and colleagues note, efforts to more fully describe and share these experiences are underutilized resources. This is why we are directing a major effort to assessing and supporting the development of key competencies in the next phase of work of our ACO Learning Network, and identifying and sharing practical insights for success is also the focus of international collaborations such as those supported by the Commonwealth Fund. The US Centers for Medicare and Medicaid Services is reinforcing these efforts through its support for a private-public collaboration, the Health Care Payment Learning and Action Network.

Key steps for policymakers to consider

In addition to learning more rapidly from the growing worldwide experiences with accountable-care or outcomes-based payment reforms to support improvements in care, there are other key steps that policymakers in the UK can consider.

As experience accumulates, policymakers can help create a more favorable and straightforward environment for outcomes-based commissioning reforms to take hold. This includes lowering the cost and uncertainty of implementing an outcome-based contract. For example, growing experience with identifying valid outcome measures, developing terms for incorporating them into contracts, and addressing other technical components that must be incorporated into an outcomes-based contract (e.g. methods for setting benchmarks for quality and resource use, and methods for attributing patients) could permit the development of best or standard practices, just as there are standard practices in traditional health care payment contracts. 

A more favorable environment could include standards and pathways for more timely sharing of the highest-priority patient data elements to enable providers to improve care in the new models. It could also include providing a clear longer-term vision to create better predictability for providers in the new arrangements, so that they will have more confidence that fundamental changes and investments that they undertake now to reform care will have a clearer payoff later. The Five Year Forward View describes such a vision, with a focus on encouraging integration across care settings and increasing prevention, reducing variation in quality care, and promoting greater efficiency. But more can be done to link this vision to steps that providers can take now.

An important part of such predictability, though one that also presents political challenges, is sending a clear signal that OBC that succeed will be supported by significant shifts in resources. In the US, some of the most successful ACOs in the Medicare Shared Savings Program are 'physician-led,' in which a group of physicians – typically primary-care physicians – take on accountability for a population of patients with the opportunity to share in savings if quality and overall spending trends improve. When these accountable physicians prevent hospitalizations or find less costly alternatives for post-acute or specialty-care needs, they know that they will accrue a large part of those overall savings, enabling them to sustain and expand care improvement activities that typically do not involve as much reliance on traditional hospitals and other services.  

This new financial support comes from the 'automatic' shift of resources away from their traditional uses, because those providers lose the payments from the services that were avoided. This automatic shift enables the new care approaches to be implemented while still reducing overall costs. In contrast, the financial benefits and net savings are less clear for the 'integrated' physician-hospital ACOs, who gain the shared savings but lose the activity-based revenues associated with their hospital and specialty services. Perhaps for this reason, those integrated physician-hospital Medicare ACOs have been less successful in reducing costs with shared savings payments. In contrast, integrated systems have been more successful in the 'Pioneer' Medicare ACO program, in which the participants have contracts that move beyond shared savings to sharing in risk and partial capitation.

While the NHS does not rely on fee-for-service (FFS) payment, it does have different payment systems for different providers and trusts, so that resources may not be 'synced up' to shift automatically to support the successful implementation of OBCs. Taunt and colleagues note that many contractors have had difficulty setting up sustainable contracts with hospital trusts and other providers, perhaps in part because (understandably) those other providers are concerned about losing resources as the delivery of care changes.

To address this, policymakers could create a clearer mechanism to enable an OBC lead organization – such as a primary care group or other organization of innovative providers – to get more financial support from the redirection of resources when the OBC provider succeeds in reducing use of traditional facilities like hospitals and improving patient care. Even if policy changes are only incremental in this direction – for example, just involving a fraction of the savings – such automatic reinforcement of successful OBCs, coupled with the other steps noted above to make accountable-care contracts more straightforward and predictable, could create a stronger dynamic for quicker and more meaningful collaboration among the OBC providers and other providers in a region.

Finally, attention to patients is critical. In the US today, most patients receiving care from providers in ACOs and other outcomes-based payments do not even know they are in such systems. But that is changing. More commercial ACOs are giving beneficiaries the option of lowering their out-of-pocket payments if they work more closely with their ACO providers, and Medicare has proposed initial steps in the same direction for its ACO program. As supporting data and tools improve, ACOs are also getting better at identifying and communicating with patients who are likely to benefit the most from the additional services offered. Patient engagement, through demonstrating both in their individual care and in their published results that care is better and less costly, may end up being the most critical factor for success.

Clearly, the NHS is not alone in facing a challenging path to reforming health care payment to support higher-value, prevention-oriented, and personalized care. Policymakers, payers and providers around the world are innovating and experimenting with ways to get from here to there. Despite the large differences across these health systems, there are untapped opportunities to share lessons across borders in supporting innovative care.  

Mark McClellan is the former head of the U.S. Food and Drug Administration and Centers for Medicare and Medicaid Services and now directs the Robert J. Margolis Center for Health Policy at Duke University and is joining the faculty at Dell Medical School at the University of Texas

This blog was co-authored by Andrea Thoumi, Research Associate at Duke-Margolis Center for Health Policy. 

Further reading


Need to nurture

September 2015

This paper examines what outcomes-based commissioning means, the evidence to support it, progress to...

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