[Skip to Navigation]
Sign In
Invited Commentary
Health Policy
July 12, 2019

Achieving Success Under Payment Reform—More Questions Than Answers

Author Affiliations
  • 1Department of Health Policy and Management, Harvard T.H. Chan School of Public Health, Boston, Massachusetts
  • 2Division of General Medicine, Department of Medicine, Beth Israel Deaconess Medical Center, Boston, Massachusetts
  • 3Division of General Internal Medicine and Primary Care, Department of Medicine, Brigham and Women’s Hospital, Boston, Massachusetts
  • 4Department of Health Care Policy, Harvard Medical School, Boston, Massachusetts
JAMA Netw Open. 2019;2(7):e196947. doi:10.1001/jamanetworkopen.2019.6947

A fundamental premise underlying health care payment reform in the United States is that the right financial incentives will lead to new models of care delivery that result in higher quality of care while also reducing spending.1 There is little debate that the status quo of health care delivery built around fee-for-service payment is unacceptable, which has led to broad experimentation with alternative payment models by the Centers for Medicare & Medicaid Services and other payers. For instance, many have been optimistic that the incentives in accountable care organization (ACO) contracts, in which groups of physicians and sometimes their affiliated hospitals are at risk for the costs and quality of care for a defined population of patients, will lead to better overall care at lower costs. The largest and most well-known ACO programs in Medicare have demonstrated consistent, if modest, savings over time with stable to improved quality and patient satisfaction.2 What is not clear, however, is what exactly health care systems and practitioners should do to succeed under new payment models. There are many options to choose from and no clear path to success.

One popular school of thought suggests that the top priority for organizations in new payment models should be to focus resources on improving the care of high-cost, high-need patients through high-risk case management programs.3 It is well known that health care spending is strongly concentrated in a small percentage of high-risk patients, with the top 5% of patients accounting for approximately 50% or more of health care spending in the United States. Because these patients disproportionately account for so much spending, many organizations have decided to go where the money is. Programs to manage high-risk patients typically use predictive analytics to identify patients who have or are at risk for high spending and then assign them to intensive care management, which could involve additional services and supports that range from in-home monitoring to transportation programs to facilitate keeping appointments. Although intuitively appealing, little evidence so far supports the effectiveness of strategies such as these.4,5 More importantly, even if it is possible to save money on the most expensive enrollees, appropriate targeting of these resource-intensive programs is difficult, which also lessens their overall effectiveness.

Ouayogodé et al6 have made important, if disappointing, progress on this question. Their study used the most recent wave of the National Survey of ACOs from 2017 to 2018 to analyze the association between ACO care management activities and a broad array of outcomes related to spending and quality of care assessed using claims data from Medicare. The survey, which achieved a 69% response rate, collected data on a broad set of 12 care management and coordination activities, including analytics to identify high-risk patients, long-term care management, and different aspects of managing care transitions between facilities and home. The authors then consolidated these activities into a composite care management and coordination score for each ACO and used standard regression models to assess the association between ACOs’ care management scores (categorized into tertiles) and spending, quality, and health care use for patients with complex needs (defined using 2 complementary methods). Although there was a wide range of health care delivery methods adopted by the ACOs, the authors found no association between ACO care management and coordination scores and any of the outcomes that they studied. Even the point estimates of their nonsignificant results were small enough to be inconsequential if they had been statistically significant.

There are 2 broad explanations for these null results. First, there are important limitations to the study design that could explain these findings. Second and perhaps more importantly, the ability of ACOs to affect costs and quality using these types of mechanisms might be limited, as suggested by the results of this study. The implications of the former are that more and better research is needed. The implications of the latter are that ACOs need to direct their limited resources to investing in other approaches to care that might be more effective in supporting their aims.

The limitations of the study are important, and all were acknowledged by the authors. First, the authors only analyzed a single year of data (2016) with cross-sectional methods. Many unmeasured factors could confound the results in this analysis. For instance, if ACOs in parts of the country with better outcomes had less use of care management practices, this could bias the results. Second, the comparison was limited to ACOs, which does not allow for control of local factors. Potentially, the right comparison group for this analysis may not be ACOs with high vs low levels of health care delivery change but non-ACO practitioners in the same regions. Finally, their survey relied on responses from only 1 or a few people in the organization, who might not have had full knowledge of the programs. Thus, this study provides some evidence about care management programs adopted by ACOs, but more definitive research is required.

Despite these issues, the consistency of null results in this analysis raises important questions about payment reform and the health care delivery system. What does it mean for an organization to say that it is implementing new care management strategies? All the strategies assessed in this study seem like good ideas that could improve quality and possibly even lower cost. However, saying that your organization is doing something says little about how effectively a program is implemented. This problem has relevance beyond evaluation methods. The fundamental challenge is that any health care delivery system change is only as effective as its implementation. It is not enough to implement a health care delivery change; it has to be done well. It is likely that the ACOs in this analysis have highly variable approaches to ostensibly similar programs, obscuring any change that we might see in effective organizations. In addition, as multiple studies have shown, context is important, and the needs of an ACO caring for an underserved population might differ substantially from one caring for a wealthier population.

Thus, still unanswered is whether care management strategies, when implemented well, improve outcomes or lower spending. Again, the evidence is largely disappointing. On the one hand, this study adds to a series of studies2,4 that suggest that the savings achieved by ACOs, in general, are not associated with improved care coordination and case management. For instance, when examining savings from ACOs, McWilliams et al4 found that the relative savings rate was similar across enrollees of all risk strata, and there were no differences in measures that might be expected to be associated with improvement in better care coordination, such as ambulatory care sensitive admissions, readmissions, or emergency department visits. In contrast, however, at least 1 study7 found a modest benefit from a comprehensive care management program, and there are several examples of innovative care organizations, such as ChenMed, Oak Street Health, and CareMore, that have implemented similar strategies to care for Medicare Advantage enrollees with apparent commercial success, at least in controlling health care utilization. However, none of these programs to our knowledge have been rigorously evaluated in the peer-reviewed literature.

These results force us to reconcile the necessity of payment reform with the disappointing evidence that few, if any, of the specific health care delivery system changes that have been implemented have led to measurable improvements in cost and quality. One possibility could be that outcomes that we traditionally focus on, such as total spending and readmissions, may not always be the best measures to judge the success of programs that aim to improve health outcomes (although measuring true outcomes of care is technically challenging). There is little question that many of these programs, such as medication reconciliation, are common sense and likely contribute to a culture of quality and safety. Therefore, if the benefits of some care coordination strategies are too clear to eliminate, perhaps the problem is that our expectations that these health care delivery reforms can change outcomes, such as total spending, are unrealistically high. Another answer is that it is possible that the benefits of health care delivery reform may not manifest as slower increase in costs and improvements in health for many years. Finally, we may also need to distinguish programs that are designed to affect total medical expenditures (eg, by eliminating waste or providing incentives to choose lower-cost options) from those designed to improve health outcomes.

To succeed, ACOs and other organizations seeking to improve the value of care will need guidance from well-designed studies of health care delivery models. Although the study by Ouayogodé et al6 provides disappointing results, efforts to identify effective health care delivery models must continue to realize the vision of reforming payment and building a better health care system.

Back to top
Article Information

Published: July 12, 2019. doi:10.1001/jamanetworkopen.2019.6947

Open Access: This is an open access article distributed under the terms of the CC-BY License. © 2019 Barnett ML et al. JAMA Network Open.

Corresponding Author: Bruce E. Landon, MD, MBA, MSc, Department of Health Care Policy, Harvard Medical School, 180 Longwood Ave, Boston, MA 02115 (landon@hcp.med.harvard.edu).

Conflict of Interest Disclosures: Dr Barnett reported receiving personal fees from Greylock McKinnon Associates outside the submitted work and has been retained as an expert witness for plaintiffs in lawsuits against opioid manufacturers and distributors unrelated to this work. No other disclosures were reported.

Orszag  PR, Emanuel  EJ.  Health care reform and cost control.  N Engl J Med. 2010;363(7):601-603. doi:10.1056/NEJMp1006571PubMedGoogle ScholarCrossref
McWilliams  JM, Hatfield  LA, Chernew  ME, Landon  BE, Schwartz  AL.  Early performance of accountable care organizations in Medicare.  N Engl J Med. 2016;374(24):2357-2366. doi:10.1056/NEJMsa1600142PubMedGoogle ScholarCrossref
Blumenthal  D, Chernof  B, Fulmer  T, Lumpkin  J, Selberg  J.  Caring for high-need, high-cost patients: an urgent priority.  N Engl J Med. 2016;375(10):909-911. doi:10.1056/NEJMp1608511PubMedGoogle ScholarCrossref
McWilliams  JM, Chernew  ME, Landon  BE.  Medicare ACO program savings not tied to preventable hospitalizations or concentrated among high-risk patients.  Health Aff (Millwood). 2017;36(12):2085-2093. doi:10.1377/hlthaff.2017.0814PubMedGoogle ScholarCrossref
Colla  CH, Lewis  VA, Kao  L-S, O’Malley  AJ, Chang  C-H, Fisher  ES.  Association between Medicare accountable care organization implementation and spending among clinically vulnerable beneficiaries.  JAMA Intern Med. 2016;176(8):1167-1175. doi:10.1001/jamainternmed.2016.2827PubMedGoogle ScholarCrossref
Ouayogodé  MH, Mainor  AJ, Meara  E, Bynum  JPW, Colla  CH.  Association between care management and outcomes among patients with complex needs in Medicare accountable care organizations.  JAMA Netw Open. 2019;2(7):e196939. doi:10.1001/jamanetworkopen.2019.6939Google Scholar
Hsu  J, Price  M, Vogeli  C,  et al.  Bending the spending curve by altering care delivery patterns: the role of care management within a pioneer ACO.  Health Aff (Millwood). 2017;36(5):876-884. doi:10.1377/hlthaff.2016.0922PubMedGoogle ScholarCrossref
1 Comment for this article
Power Law Distribution Analysis
Paul Nelson, M. D., M. S. | Family Health Care, P.C. retired
The current data most applicable to reducing health spending for very complex health care needs can be viewed from the Medical Expenditure Panel Survey of 2014 performed by the federal Agency for Healthcare Research and Quality. For the civilian noninstitutionalized population, 50% of these persons used 2.8% of health spending, 70% of these persons used 9.9% of health spending, 90% of these persons used 33.8% of health spending, and 95.2% of these persons used 49.6% of health spending. It is likely that each of the expenditure levels involves persons who die at a higher level of consumption and also involves persons who move in and out of various levels of consumption. To my knowledge, the character of this migration is not known. But, this study indicates that current efforts have very little effect on health spending levels for complex health care needs once they have been initiated.

My own opinion, with no verifiable evidence, is that an advanced level of primary health care will be required for each citizen as a basis to alter the initial phase of any possible impending need for "complex health care." Remember, our nation has no nationally structured process to assure that enhanced primary health care is equitably available to and ecologically accessible by each citizen within every community. And, we have no semblance of the importance that this primary health care is certifiably justly efficient and reliably effective, community by community.

The axiom of Eleanor Roosevelt should apply: "It's better for everybody when it gets better for everybody." And, the design principles for managing a common pool resource have already been established and vetted by Nobel prize winner Elinor Ostrom. See http://dx.doi.org/10.1016/j.jebo.2012.12.010

It is my view that the cost and quality problems of our nation's healthcare will not be solved without a "shoot the moon" strategy to establish a high priority for managing the primary health care needs of each citizen. Achieving a strategy to lower health spending growth to 0.5% less than economic growth for 10 years will be required as well. Hint: How about a national outcry for Nobel prize winner, Richard H. Thaler to devise a funding process for enhanced primary health care that would create the incentives necessary to achieve a change in the trajectory of our nation's increasing health spending? Professor Thaler wrote, "Misbheaving: The Making of Behavioral Economics" published in 2015.