The Medical Management Conundrum

Brian_Klepper_Health_CarBy Brian Klepper
One challenge for American health care derives from our faith in longstanding medical management solutions that presumably improve health outcomes and cost. In fact, often these solutions fall short of our expectations, not because they can’t work, but because they’re conflicted, poorly operationalized, or flawed in some other way.
There’s the fact, for example, that self-insured health plans, in the main, control costs no better than fully insured health plans. Most of us, industry insiders included, have simply assumed that the opposite is true. On the face of it, self-insured plans have every advantage, an argument health benefit consultants enthusiastically embrace when urging their employer clients to move to self-funding. Plan sponsors can avoid the costs of state mandated benefits. They can define their benefit designs and, to a large extent, designate which providers their enrollees will use and which vendors will manage complex processes.
Average-Annual-Premiums-Family-CoverageBut as this chart shows, for the last 20 years average annual family coverage premiums from self-insured and fully insured health plans have tracked remarkably closely. Either our assumptions are misplaced or the vendors who administer self-funded plans have different goals than their clients.
I’m speculating here, but I’d be willing to make a sizable bet that, as a group, enterprise TPAs deliver self-insurance premiums that are generally far lower than those facilitated through major health plans’ (i.e., the Blues, United, CIGNA, Aetna, Humana) Administrative Services Only (ASO) arrangements. And further, that a few TPAs – organizations like Group & Pension Administrators, HealthScope, EBMS, and Flume Health – are focused on managing clinical and financial risk and, as a result, likely deliver better health outcomes and lower costs than those offered by ASO providers as well as the rank and file of other TPAs. In other words, organizations that have made high performance medical management a core value proposition, have learned to do it better than those who haven’t made it a priority.
Accountable Care Organizations (ACOs), as a group, haven’t set the world on fire either. As Harold Miller recently wrote, “multiple studies have shown that the Medicare Shared Savings Program (MSSP) has at best been able to reduce spending by about $100 per beneficiary per year, an amount equivalent to one fewer office visit with a physician.” Rounding error-level savings hardly inspire confidence that this model is the right answer.
Organizations sponsoring ACOs may worry that success with that program will translate to lower per patient revenues, a clear conflict of interest that could compromise performance. Both the ACO’s professional and support staffs may be more experienced and comfortable with fee-for-service medicine, and may lack the training required to make a full transition to value-focused medicine.
Leveraging primary care to drive better results has also been disappointing. The Center for Medicare and Medicaid Innovation (CMMI) ran six Primary Care Initiatives evaluating advanced primary care’s capacity to improve results. On the four core outcomes – Medicare expenditures before fees, outpatient ED visits, hospital admissions, and 30-day readmissions – there was no significantly different collective impact in four of the six initiatives over a cumulative three-year period relative to a comparison group. Almost half of the primary groups involved improved at least one core outcome (p<0.10). That said, the improvements were generally modest, and only three of 22 groups improved at least two core outcomes.
The meager primary care performance described in these CMMI initiatives has been echoed in other demonstrations. In May 2018, Mathematica Policy Research issued a report on its evaluations of the Comprehensive Primary Care demonstration and the followup CPC+ demonstration. In a damning conclusion, it found that “reductions in total Medicare spending for the patients receiving care from participating practices were not sufficient to offset the additional payments made to the participating primary care practices.”
It’s worth noting that Medicare’s generally poor experience with advanced primary care is at odds with performance I’ve witnessed or am aware of in commercial onsite and nearsite clinic firms catering to Medicare Advantage plans and to mid-sized and large employers. These organizations, including Vera Whole Health, Iora Health, CareATC, ProactiveMD, Marathon and HealthStat, typically are accountable to their clinic sponsors, and often will offer performance guarantees.
What gives here? Why are these structures not consistently delivering better results?  It’s obviously not enough that organizations are financially incentivized to deliver better, more efficient care. It goes without saying that health care processes are complicated, and that some organizations manage them far more effectively than others. There are lots of variables. Skill matters. So does intention.
One answer is the expertise and capability of the management organization, and the fact that the dominant programs and tools are still, for the most part, blunt rather than precision instruments. The basic tools of medical management – e.g., large case management, care coordination, concurrent and retrospective utilization review, direct contracting, predictive analytics – as they are primarily practiced today, have been around for 30 years or more. In many cases, the failure to improve care and cost is rooted not only in poor clinical or financial practices, but in poorly realized oversight through medical management as well.
Against this backdrop, the recent explosion of new medical management companies and programs is reinvigorating medical management’s capabilities. Focusing on high value niches – e.g., claims review, drug management, cancer care oversight, musculoskeletal care or cardiometabolic management – these next generation approaches are more evolved, sophisticated, targeted and effective than similarly oriented programs a decade ago. Along with a growing market demand for transparent and accountable value, these new tools are changing health care management processes at an accelerating rate.
With so many vendors and relatively few true high performers, the tricks for purchasers are figuring out what a vendor does differently to obtain a better result, and whether that better result can be quantified and scaled.
This is the critical point. Poor medical management performance is a reflection of poor conception and execution, but does not mean the discipline is worthless. Identifying excellence within high value niches is everything. For patients and purchasers, the only sure way to know whether a program will perform is to scrutinize its approach and the data it uses to justify its performance. Because few possess the in-depth expertise to properly evaluate an organization’s performance claims, especially for a wide range of vendors, it makes sense to require independent third-party validation, so all parties can be comfortable that actual performance aligns with promises.

Brian Klepper is a health care analyst and Executive Vice President of  Validation Institute.