Prometheus- A Titan In Payment Reform?

One of the basic lessons you learn in Economics 101 is the fact that price is always a function of supply and demand. At least it should be. But, as we’ve seen, that doesn’t always apply to health care. Health care pricing has turned into a convoluted mess of cost shifting and political negotiations with little relationship to supply and demand. The ultimate result- those that deliver the care usually receive less “per unit” and total costs to the system continue to go up.

The Patient Protection and Affordability Act sets minimum standards for what health plans (or other payers) are required to pay in “medical costs” and what they may retain in “administrative costs.” This will ultimately drive the setting of prices set with employers and consumers. A study of literature by the Deloitte Center for Health Solutions found health plan administrative costs ranged from 9% to 41%. Obviously, there is no set definition of what is included as an administrative cost from a health plan perspective. You can expect the pricing manipulations to continue as the PPAA rolls out.

One thing is clear- how our health care system reimburses care providers needs to change if we’re going to get a handle on the costs. Until it changes, those responsible for the financing of health care (the health plans, the government, and payers) are going to continue to focus on obtaining lower per unit costs for services or eliminating them altogether if there is no evidence that the service works. This process will ultimately impact the quality of care received from the patient.

We’re starting to see some movement to changing the fee-for-service/volume-driven payment system we have today. The American Board of Internal Medicine (ABIM) Foundation recently put forward some guiding principles designed to “produce a health care system that reflects societal values more accurately than do those inherent in existing payment methodologies.” Almost everyone agrees on the need to change the financing and payment for health care services.

We’re seeing pay-for-performance methods, episode-based payment models, accountable care organizations, and medical homes as the new financing ideas for health care delivery. There are already many derivations off of the main ideas (baskets of care, etc.) Each idea has strengths and weaknesses but none have proven to be the “silver bullet” that will encompass all aspects of care delivery, reasonably reimburse providers, and assure quality care and manage the costs of delivery.

The Robert Wood Johnson Foundation has put a lot of money into the Prometheus Payment System to explore new payment models in care delivery (go to www.prometheuspayment.org). Prometheus (Provider Payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle-reduction, Excellence, Understanding, and Sustainability) is an episode-based payment structure. The idea is to determine a total budget for all providers involved in treating a particular episode of care. Prometheus has developed 21 Evidence-Informed Case Rates (ECR) that establishes a comprehensive budget within which a payer or multiple providers negotiate their price to provide all of the care for a specific patient for a specific condition.

In its payment algorithms, Prometheus also establishes a budget amount for Potentially Avoidable Complications (PAC) that have been identified in specific cases as the “deficiencies in care that cause harm to the patient yet might have been avoided with more proactive care.” The Prometheus data indicate up to 40% of every dollar spent on chronic conditions are a result of PAC. If PACs are avoided, the providers keep the money.

We've included a study on our web site providing more details of the Prometheus model as it applies to primary care and medical homes.

The Prometheus model is currently being tested in four markets with expansion planned in the future.

Prometheus obviously had to stretch quite a bit to make an acronym for what it intends to do. However, the definition of Prometheus (defiantly creative) seems to define the intentions best.

We need more defiantly creative ideas introduced that can change the way health care thinks and begin to fix the mess we continue to face today.

Be Well

Social Determinents of Health- How We Live Influences Our Health

Several months ago a doctor and I were discussing the challenges facing us in health care today. I have always been a big believer in the concept of “integrative healthcare” and the need to expand our definition of health as a society to fix the mess we’ve created. From a purely business and consumer perspective I had always wondered how we can expect to change the trajectory of increasing costs when all we are talking about is fixing the end-result (the diseases). My arguments didn’t go very far inside the system. The system is still focused on only addressing the end-result.

Yes, the system has created the idea of health coaching and health promotion but it’s all still very clinical from my perspective. Health care has not embraced them as critical elements to the solution. The incentives are in treatment- not in the other stuff. We’re identifying risks, then trying to get people enrolled in specific programs to address the risks. We’ve had moderate success. The new reform legislation includes rules and initiatives focused on prevention, health promotion, and community health but they remain a separate world from the developments in technology, telemedicine, pharmaceuticals, and all the rest that are more part of our “standard” sickness system. We have not yet integrated our culture and social well-being into the equation. We’re talking about it- but we have a long way to go.

The doctor turned me on to the work of Sir Michael Marmot. Professor Marmot is a professor of epidemiology at University College London. His work looks at the social aspects that can have a dramatic influence on the health of any population. His conclusions: the social (cultural) factors we encounter each day can influence how healthy or how “sick” we are. We’ve posted the World Health Organization’s Social Determinants of Health (of which Professor Marmot was a contributor) on our web site. You can get it by clicking here.

This report looked at nine different social influence's that have a dramatic impact on the health of a population. These included:

*Stress- which is largely influenced by the socioeconomic status and self-perception of an individual

*Early Life- which includes how we set the foundation and example for our children early in life.

*Social Exclusion- which evaluates the social connectedness we have in our lives

*Work- looking at the relationships and satisfaction in our work

*Unemployment- evaluating the effects our professional lives have on our health, and especially when a person is out of work

*Social Support- the culture of support and guidance available to a population

*Addiction- the impact drugs, alcohol, and tobacco have on health and well-being

*Food- The nutritional make-up of our lives

*Transport- which essentially equates to getting out of the cars and exercising by walking and looking at other means of transportation.

These factors have a dramatic influence on the health of any population. Employers are making some progress individually but the engagement rate of consumers in the “risk based” models being introduced today remain relatively low. Some of the social factors identified by the WHO report are dealt with indirectly but are certainly not part of the overall platform that is evolving in the health care system we have today.

Our culture is stressed, 71% are not enamored with their work, our unemployment rate is high, we’re overweight and don’t exercise, and the social support available is being reduced simply due to the economy. We are not a healthy population.

It’s time we start building these social factors into what we traditionally define as “health care.” Until we do, all the medical homes, baskets of care, and other new ideas in the world aren’t going to make a difference to the costs we will pay if we just keep getting sicker.