UnitedHealth Group's Center for Health Reform and Modernization has released a report outlining policy ideas for improving the nation's financial and physical health, with proposals for nationwide diabetes prevention campaigns, the use of risk coordinated care and alternative Medicare payment systems designed to eliminate the problems associated with fee-for-service payments.
Medicaid and Medicare account for about 20 percent of federal spending currently, and over the next 25 years the programs are expected to grow to 40 percent of the national budget.
As a new generation of Americans enters Medicare, half a century after it started as part of Lyndon Johnson's Great Society, the program's long-term sustainability has been called into question, with a variety of policy ideas proposed for adapting government social services to the 21st century.
By righting the incentives for patients, providers and payers (including taxpayers), Minnetonka, Minnesota-based UnitedHealth estimates that these policies could yield $542 billion in federal savings between now and 2022, when annual U.S. healthcare spending is expected to be more than $4.5 trillion.
The report argues that "the root of the U.S. healthcare system's problems with quality and efficiency" is the fee-for-service payment model. Accounting for about 75 percent of the $1 trillion spent in Medicare and Medicaid annually, fee for service has led to several "structural problems," such as disparate funding streams, complex administrative costs, variation in quality and "a one-size fits-all approach to managing costs through the crude lever of administered price controls."
With commercial payers now covering about 25 percent of seniors with Medicare Advantage health plans and with more than 30 states having some form of Medicaid managed care, UnitedHealth thinks the Center for Medicare & Medicaid Services (CMS) could use administrative contractors following an "administrative services only" (ASO) model, similar to how self-insured employer health plans use third party administrators.
Without taking on the insurance risk of the population, Medicare ASOs would receive a per member fee in return for managing administration and offering forms of managed or coordinated care and customer support. "Provider programs and rewards could be used to align payments with high-quality care," the report says. "Opportunities for reduced cost sharing or direct rebates or benefits could provide consumers with incentives and decision support tools to choose high-performing providers."
UnitedHealth's report surmises that CMS could continue to set reimbursement rates that Medicare ASOs would pay providers, or the agency could base payments on historic rates per beneficiary trended forward for expected growth in seniors' healthcare costs. The ASO idea, the report says, is also compatible with partial-risk arrangements that base the ASO fee on performance shared savings models based on accountable care organizations and self-insured employers, as a way "to align incentives for the employer sponsor and the ASO provider."
In effect, the company says, ASOs would be similar to Medicare administrative contractors, but "going significantly beyond the traditional and passive core functions of MACs." Just as self-insured plans are doing, UnitedHealth thinks ASOs could offer wellness, prevention and chronic disease management services. UnitedHealth says more innovative insurers providing third party administration to self-funded plans "provide a customized approach for the employer's population that relies on analysis of data and trends, evaluation of interventions and employee engagement."
The company's report outlined policy proposals in a number of other areas, including what some of have called an epidemic of diabetes and associated health problems -- issues UnitedHealth was focused on recently at the Consumer Electronic Summit.
Reed Tuckson, MD, UnitedHealth's executive vice president and chief of medical affairs, pointed out that the problems of diabetes aren't uniquely American, with China's estimated 100 million diabetic population expected to grow to 300 million by 2020. But health is certainly a function of lifestyle and behavior. "All they need to do is spend three or four more hours a day in front of the TV and they could turn into us," said David Lareau, CEO of Chantilly, VA-based health IT vendor Medicomp Systems, commenting on the growth of American fast-food restaurants in China.
UnitedHealth and a lot of other organizations are broadly interested in encouraging exercise, especially with children and young adults. Meeting them halfway, and targeting those who may be at high risk of slipping into a non-active lifestyle, UnitedHealth and tech firm KONAMI are launching a pilot project with several elementary schools, bringing them active video games or "exergaming," like "Dance Dance Revolution."
More nationally, UnitedHealth argues that diabetes prevention and intervention campaigns, especially in government health programs, could go along way to improving quality of life and saving money over the next several decades. "Social norms, changing living and work environments, and health habits all contribute to the growth in chronic conditions. By the time many people become Medicare-eligible, their medical conditions are already costly and advanced. The complexity of the medical system for high cost treatments aggravates this problem."