In managed care, risk can be distributed among so many stakeholders that the financial pie of savings becomes thin. In this diluted pie, some stakeholders are held accountable for others' spending without proper coordination. Additionally, there's a lack of clarity about who has priority for attribution, leading to inefficiency and lack of accountability within the care model.
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Looking at this problem within the context of full-risk primary care in Medicare Advantage (MA), the plan benefits from cost and quality improvements and pays for programs to do so. A full-risk primary care provider (PCP) is an example of such a program, who is accountable for the cost of all the programs an MA plan purchases. Different health plans have varying policies, but generally, risk-bearing PCPs must opt-in to all of these other programs, complicating buy-in, funding, and implementation. PCPs often feel excluded from the decision-making process when they see a program's cost in their financials that the MA plan approved, but they have not. The ROI formula over hundreds of thousands of lives may be reasonable when the MA plan decided on the program, but in smaller populations, which the PCP is managing, the ROI will look vastly different.
“When we reviewed our financial reports we questioned some of these obscure sounding programs that we were paying for but never had the chance to vet ourselves. We never really felt like we were the customer, and while we knew exactly what the programs cost our medical group, evidence on the value delivered for our patients was difficult to ascertain.” - ex-Iora Exec
Making maters more complicated, many high-performing PCP groups, like Oak Street, already invest in similar programs, creating conflicts with MA plan partners who argue their programs are more effective. To give you a sense of how this pie can be broken down, buckets 2 and 3 below can include programs that Oak Street has bought into (e.g., Strive Health) and the MA plan (i.e., patient engagement tools). If the MA plan purchased a patient engagement tool, Oak Street and Strive don’t know about it, and they use their own tools, so everyone is overpaying.
Looking at this problem within the context of value-based specialty care, MA plans and full-risk PCPs should only hand-off risk for select number of specialties to properly incentivize stakeholders, such as nephrology and oncology. For both diseases, their discrete nature and high cost require the specialist, rather than a PCP, to be the “quarterback” of care.
Kidney disease (~stages 3 through ESRD) is a discrete disease state where a specialized care model requires a nephrologist, rather than a PCP, at the helm. Additionally, ESRD comprises 1% of Traditional Medicare enrollment but 7% of spending. Part of this exorbitant spend spend is due to ESRD patients’ ability to enroll in Medicare, regardless of age. This shift toward innovative kidney models has generated cost saving and improved outcomes through increasing home dialysis, optimal starts, or preventing “crashes” into dialysis, and delayed disease progression.
Like kidney disease, oncology is a discrete disease state where oncologists are the “quarterback” of the patient’s care journey. Cancer care costs have risen from $57 billion in 2001 to over $200 billion in 2023. This cost centers around drug costs and preventable admissions. Additionally, the quality of cancer care varies greatly between providers and treatment settings. With an oncologist aligned to value-based incentives, some of this variability can be mitigated.