Bundled Episodes of Care vs.
The great majority of health care services purchased by employers are paid for on a fee-for-service (FFS) basis. This payment model was devised nearly 100 years ago upon the emergence of the first third party payer (Blue Cross) a few decades after medical care delivery began to move from the home to hospitals.
Not surprisingly, the model no longer works very well. The common, and escalating, criticism of FFS is that it rewards the quantity of care delivered but not the quality or efficiency of that care. The more unsettling fact of the matter is that FFS actually rewards poor outcomes. Falling short of resolving their health problems leaves people dependent on the healthcare system and drives further utilization of the services for which providers are paid.
In short, the FFS payment model drives costs and arrests the value-focused innovation needed to advance medicine in the interest of society.
With regard to employer health and wellness programs, companies commonly rely on a questionable application of a capitated payment model by paying for services on a Per-Member (or Employee) Per-Month (PMPM of PEPM) basis. In this arrangement, vendors are paid a small sum for each employee or plan member regardless of whether they use the service or not.
The concept appears utterly ridiculous at first blush as clearly, this is a structure that motivates the vendor to do as little as possible without being terminated.
This arrangement evolved from the fact that employers desire to implement value-enhancing companion services to their health plans (e.g. wellness programs, disease management programs, second opinion services, etc.). Yet they also recognize that they alone control the ability to promote these services to their employees and plan members. Given this reality, employers have established a pattern of assuming all of the employee/ plan member engagement risk.
LeadHealth employs a different payment model that is ideally suited to its value proposition and neatly aligns the incentives.
The unique value LeadHealth offers to employers is the opportunity to apply expert-delivered, root-cause medicine to specific groups of chronic high claimants (e.g. people with advanced autoimmune conditions such as rheumatoid arthritis, ulcerative colitis, and Crohn’s disease).
The plan members the company targets share three common characteristics:
They are chronic high-claimants heavily and perpetually reliant on medications and the healthcare system.
Their primary condition has a strong likelihood of being reversed (rather than “managed”) by identifying and addressing its underlying causes.
They actively desire to shift the trajectory of their health.
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LeadHealth has concluded that autoimmune conditions are the ideal starting point for this type of program for three related reasons:
- The disease management pathway for autoimmune conditions leads to reliance on expensive specialty medications (e.g. Humira, Enbrel, etc.). These drugs suppress the patient’s immune system, leaving them vulnerable to infections and a host of other costly health complications.
- Conventional management of autoimmunity focuses on suppressing the immune system without exploring why it is triggered in the first place. A large number of people suffering with these conditions have the potential to dramatically deescalate and even reverse the disease by finding and addressing its underlying causes.
- Autoimmune conditions are frightening, uncomfortable and disruptive to people’s lives at home and at work. As a result, 62% of people that meet the health claims cost criteria to participate in the program are very willing to engage.
With average of $79,000 in annual medical and pharmacy claims, these members commonly consume 10% or more of total health care dollars each year. While their costs are high, they are few in number. Typical prevalence rates are approximately 1% of the adult plan member population.
The process of addressing the condition using this form of precision medicine is highly participatory and requires a multi-disciplinary care team working with the patient over an extended period of time (12-months in the case of advanced autoimmune patients).
For all of these reasons, LeadHealth decided to bundle its autoimmune program into a 12-month episode of care. To mitigate financial risk for the employer, it uses a pay-as-you-go model, breaking the cost of the bundle into quarterly increments and only billing for members who are actively engaged in the program.
Because of the highly-targeted nature of its programs, LeadHealth doesn’t need or expect employers to mount an employee communications campaign. Instead, the company performs direct outreach to eligible plan members based on their health claims profiles.
What LeadHealth does ask of employers is to ensure that all obstacles for participation are removed for the member. For example, employee participants who are paid hourly may take part in virtual appointments while on the clock.
Aside from its inherent fairness, the model focuses LeadHealth on continuously on value-optimizing its episodes of care – discovering new ways to improve outcomes more efficiently while optimizing the patient experience.
I have no pain in my fingers and joints, increase in energy, and was able to do yard work which I was unable to do last year.