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The Framework for Healthcare Reform Starts with Value

August 12, 2020

Most stories about U.S. healthcare today note that we endure far greater costs with inferior results compared to other advanced countries. Costs have been escalating for decades, but in recent years no discussion of cost is complete without addressing the concept of value-based financing. Yet this national discussion about value has not permeated discussions within behavioral healthcare.

Value is a concept that combines cost and quality. This is an expectation that has been introduced as part of reform within both government-funded and commercially insured programs. While there is no consensus about how to reorganize healthcare delivery or change its financing, there is agreement that we must simultaneously improve cost and quality components.

Fee-for-service medicine is both a way of organizing and financing medical care. It is widely attacked as the source of many problems because the financial incentive to increase the volume of services is insidious. Ideas for reform have grown due to CMS value-based programs, new models such as the accountable care organization, and islands of innovation around the country.

The critique of fee-for-service reimbursement in behavioral healthcare has been more muted because overall costs are less problematic. Calls for quality are less vociferous as well, partly because the focus for improvement is less well-defined. Yet cost is still a concern preventing many people from getting needed behavioral services, and quality can be measured and improved when so desired.

Value in medical care

There are alternatives to fee-for-service, including so-called bundled payments. This might involve payment for a specific condition or for an episode of care, while a common model is to pay for a covered population (e.g., per member per month). Value-based arrangements may also “pay for performance” so that specific financial incentives and disincentives can potentially motivate better care delivery.

It is not possible to discuss changes in the structure and financing of medical care without noting the surge in mergers and acquisitions. This is occurring across all sectors of medicine, from primary care to hospital care, and it means that many professionals today are employees of large corporations. Physicians routinely contribute to discussions of reform, but increasingly big business is leading the way.

The need for cost control is longstanding, and quality measures have been promoted by accrediting bodies like JCAHO and NCQA and by regulatory agencies at both state and federal levels. Yet the combination of these demands into the concept of value is also well established. It was articulated in clear, strong terms 15 years ago by Porter and Teisberg in their seminal work, Redefining Healthcare.

They argue that we should not be narrowly focused on standardized care and evidence-based medicine. We should instead be creating value-based competition on results. This approach to cost and quality integrates the two into a unitary concept. They define value as being the health outcomes achieved per dollar expended. Greater value means getting more clinical outcome for each dollar.

Value in behavioral healthcare

The focus on cost containment in behavioral healthcare has largely focused on hospital days and therapy sessions provided. The norm is for inpatient stays to be closely reviewed, while outpatient care gets reviewed only when outlier criteria are triggered. There are surely outpatient episodes with too many or too few sessions, but they are generally unexamined since few cases get flagged for review.

When more sessions are provided than necessary, it is a cost concern. When too few sessions are provided, it is a quality concern. It is only possible to clearly identify these concerns if the clinical results of care are monitored during each treatment episode. Such monitoring can then function as the backbone of a value-based system of care. It can ensure the highest outcome for the least cost.

A value-based approach is also able to differentiate the new products being implemented today for virtual and digital care. For example, if the companies providing cognitive-behavioral tools online are getting comparable clinical results at a fraction of the cost of in-person services, then these high-value products are ideal for filling the many gaps in the supply of clinical services throughout the country.

This assessment of the value of programs and products has also been referred to as studies on cost-effectiveness. Once we have identified how effectively a program or service performs on key measures of clinical results, then we can determine how much it costs to achieve those results. We want to enhance the value or cost-effectiveness of all our programs.

Mind and body in one system of care

Another change in healthcare is upon us, and it is developing faster than value-based delivery systems. As noted earlier, big business will drive many changes. Business is now eliminating the Cartesian divide between mind and body in health services, regardless of what the theoreticians decide. For example, a former employer of mine with $1 billion in behavioral healthcare revenue is now part of Anthem, Inc.

This means that medical and behavioral systems will be moving into alignment since there will be one structure for all. This does not guarantee the optimal organization or financing of care, but it does mean that value will become a guiding concept. Value-based systems may point in the right direction, but the proof rests with the details around goals and measurement. The focus must be broader than diagnosis.

Our new anchors will be health, wellbeing and behavior change. This is a departure from today’s idea of integration. Most existing efforts to promote medical-behavioral integration are founded on psychiatric diagnosis. This ranges from improving depression treatment in primary care to addressing comorbidities in chronic care. Total health improvement requires more than good psychiatric care.

Behavior is a primary determinant of health status, apart from any psychiatric diagnoses. Changing health behaviors is essential for health and wellbeing. Our field should increasingly adopt this focus. Value then expands beyond calculation of treatment outcomes per dollar expended. Value remains the critical question, but the new calculation addresses changes in health behaviors per dollar expended.

Many businesses tend to focus largely on issues impacting their relative advantage in the existing marketplace. This is a poor strategy in a rapidly changing environment. No business in healthcare can be narrowly focused today. Behavioral healthcare has long been cut off from the rest of healthcare, pursuing parochial interests. We need to refocus our sights on value. Let us strive to maximize it.

Ed Jones, PhD, is senior vice president for the Institute for Health and Productivity Management.

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