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Seeking ROI With PHM

Karen Minich-Pourshadi, for HealthLeaders Media, June 13, 2012
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Improving the quality of care patients receive, most notably for chronic care patients, is the rationale for establishing PHM programs; but of no less interest to healthcare leaders is the need to see patient care costs decline. With the passage of the Patient Protection and Affordable Care Act, health plan medical loss ratio calculations were revised, placing a higher value on wellness and care coordination services. PPACA simultaneously provided a benefit package for health insurance exchanges that includes prevention, wellness, and chronic care services. Although HIXs aren't set to start until 2014, the Centers for Medicare & Medicaid Services  is expected this year to define structures and an essential benefits package that all plans must offer. CMS officials have indicated that there will be a focus on population health management services.

PPACA created a $15 billion prevention and public health fund (which was reduced to $10 billion over 10 years in 2012) and directed Medicare to add annual wellness visits and expanded coverage of obesity and cardiovascular disease prevention services. All of these programs are designed to offer the financial incentives for healthcare organizations to invest in population health management programs, and it's working, albeit slowly, based on the growth in the number of medical homes and accountable care organizations.   

"Some of this slow start comes from physicians," says Armstrong. "They're a bit apprehensive about having someone intrude into their practices. They all feel they do a good job of caring for their patients, and they don't want someone saying they aren't. But once these get started, the sharing of info is very well-received."

Both providers and payers want population health management to succeed to drive down costs, and collaborations and communication between the pair is essential, according to Armstrong.

"We started out looking at how to help primary care physicians do better in their practices with controlling the downstream costs and to develop pay-for-performance—and P4P has a component that's like population health management," says Armstrong. "So pay-for-performance helped our PCPs learn to manage their populations."

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