The present fee-for-service payment model that dominates healthcare doesn’t begin to meet what needs to be done to properly treat people with open wounds and diabetes.
That was the primary complaint heard at an experts panel that the life sciences trade group LifeScience Alley held in downtown Minneapolis on Wednesday. The hope that many at the gathering expressed is that health reform will spur the government and private insurers to compensate in different ways and that, in turn, could spur innovation.
Kevin Nickels — who was CEO of Eden Prairie, Minnesota-based wound treatment company Celleration for nine years and is now president and CEO of Advanced Vein Therapy — urged health insurance companies to make clear where treatments could improve and then seek out medical technology companies with solutions. Nickels said there needs to be “clarity of need” and “support after the fact” for the device makers.
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“We have to realize we’re all in this together. It’s not about pushing it on the payer, the provider, the supplier,” Nickels said. “I think you could find some incredible ideas bringing things forward.”
For now, needs aren’t so clear, Nickels said. He recounted how Celleration approached the Centers of Medicare and Medicaid Services (CMS) nearly 10 years ago about a wound treatment device and was told they needed a solid, multimillion-dollar study to back it up. A few years later, CMS wanted three studies, then five. The original CMS official Nickels had spoken with had left by then.
“You couldn’t leave and get back from the moon fast enough with the rising expectations,” Nickels said.
Meanwhile, open wounds that aren’t treated properly are costing billions of dollars a year for Medicare alone, Nickels said.
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Government programs such as Medicare and private insurance companies still mostly pay health providers for each office visit, each test, each procedure and hospitalization. Wound care doesn’t fit into that model because it really requires monitoring of patients to make sure they’re following physicians’ instructions when they’re not around.
“Whenever you have a treatment that goes on and on and on, payers get skeptical,” said Barb Peterson, founder of Minnetonka, Minnesota-based Emerson Consultants. The irony is that “payers would love to see treatments that get these wounds closed; that get people out the door.”
Nickels remarked that he recently tried to convince a health insurer to cover a device that allowed patients to take pictures of their wounds at home and transmit them to health professionals who could assess whether the wounds are healing properly. The problem was that the device didn’t fit what the insurer usually covers. “It wasn’t a diagnostic tool. It wasn’t an intervention tool. It was a monitoring tool,” Nickels said.
All of the experts at the Wednesday gathering were hopeful that the situation will soon change because the largest healthcare payer in the United States, the Medicare health insurance program for seniors, will start setting up a new payment model called accountable care organizations (ACOs) next year. Health providers and private insurers across the country are already experimenting with such arrangements in anticipation of the changes.
Under an ACO, payers hold a health provider or group of health providers accountable for patients who frequent their primary care clinics. There are still fees for each service, but there are also financial bonuses for meeting goals with the patients, such as better chronic disease management, that control costs in the long run.
The ACOs are meant to fix a major flaw in the U.S. healthcare system: “If you’re sick, we’re great at treating you. But we’re not very good at keeping you from getting sick,” said Patty Curoe-Telgener, vice president of reimbursement services at Emerson.
Telgener pointed out that diabetes is already getting attention as a chronic disease that obviously needs better management. Medicare has already increased reimbursement for diabetes management programs and is looking to get rid of co-pays in the area.
Because ACOs have health providers doing more with preventative health, organizations such as UnitedHealth Group Inc.’s OptumHealth subsidiary that provide wellness programs to employers see an opportunity setting up similar programs at health providers — or even offering them directly to individuals, said Sue Willman, vice president of disease solutions product at OptumHealth.