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Mark Lutes Discusses Health Care Industry Progress and Challenges in MCOL ThoughtLeaders

MCOL ThoughtLeaders

Mark E. Lutes, Chair of the firm’s Board of Directors and Member of the Firm in the Health Care & Life Sciences practice, in the firm’s Washington, DC, office, was featured in an MCOL ThoughtLeaders newsletter, discussing the following: “Of the most significant challenges now facing healthcare stakeholders, such as the Opioid Epidemic, Medicaid funding/coverage; Cybersecurity, Specialty Drug Pricing, ACA unraveling; etc., which specific major challenge do you think will experience the most positive progress in the next two years, which will have the least progress, and why?”

Following is an excerpt:

Four trends are converging to allow material positive progress over the next two years in moderating the trend of expenditures by self-funded employer health plans. Those same trends are creating the conditions for improving the quality and efficacy of the care paid for by such plans.

First, there is an increasing recognition among self-funded employers that the cost shift that occurred through high deductible health plans has reached its limits. Those limits do not simply arise from the increased competition for talent that employers face. High deductible plan designs have the potential to incent beneficiaries to avoid necessary care—both diagnostic and preventive. Employers are increasingly willing to consider plan designs that mitigate out of pocket exposure for beneficiaries willing to use providers who have partnered with self-funded plans around cost and quality.

Second, various conceptual frameworks now exist for tracking the cost and quality of episodes of care. Those frameworks are going to facilitate new purchasing strategies by self-funded plans. They have created the framework for plans to seek a “new deal” wherein providers take responsibility forth cost and quality of episodes of care. As more episodes are contracted, plans will be able to “move the needle” on plan spend and improve outcomes to keep employees present and productive.

Third, vendors of episodes and care paths — had the opportunity to “cut their teeth” in CMMI’s bundled payment programs as conveyors and are now available to do the contracting and administering that self-funded plans need to accomplish their goals. Concurrently, forward thinking administrators have recognized the need for plan administration that accommodates episode contracting by self-funded plans. Convenors can incorporate telehealth and digital components particular in chronic condition episode solutions.

Finally, providers have increasing motivation to conceptualize the sale of their services to self-funded plans around episodes. Some of that emanates from Medicare’s bundled payment initiatives. Adding to that is impetus toward recasting physician outputs to support “advanced alternative payment methodology” classification for MACRA payment purposes. Moreover, as fraud and abuse law interpretation evolves to be more favorable toward “gain sharing”, those provider groupings will have a wider market than they currently do for their efforts around improving the cost and quality of the episodes of care they deliver. They will increasingly perceive the benefit of evolving their “product” from the sale of procedures, testing and facility stays to one where they sell episodes, to self-funded plans and other payors, where they are materially rewarded for performance against cost and quality metrics.