Friday, July 8, 2011

AHIP Institute 2011 Perspective: Scale Innovation to Achieve Affordable, High Quality Healthcare

Author: Sam Muppalla

Affordable Care Innovation. It was a universal theme. Politicos called for it while outlining doomsday scenarios. Employers demanded it in their presentations. Senior health plan executives discussed results of their Affordable Care innovation initiatives. Technology vendors showcased tools to enable it. The industry was clearly responding to the mounting pressure for Affordable Care.

Even cynics would be impressed by the convergence of external pressures, innovation results and an acknowledgement of need for action by all the key stakeholders. The era for Affordable Care Innovation seemed to be unfolding rapidly. There were three areas of innovation highlighted through different presentations from various organizations in the market:

1. Care Model Design – Discussion centered around lessons and results from PCMH implementations and around design and implementations of Accountable Care Organizations. Movement towards Population Management was also a clear take away from these sessions.

(Sample of agenda topics below)

o Patient Centered Medical Home – CareFirst
o Creating Sustainable Accountable Care Models – Deloitte
o Collaborating to Improve Care – CIGNA

2. Payment Design – Episodic payments and population based payments such as gain sharing were widely discussed. There was a clear recognition FFS is not going away anytime soon but the experimentation with the emerging payments models is well on the way. There is a growing recognition for the need to mix and match payment arrangements to support the transition as well as to truly optimize the medical expenditure.

(Sample of agenda topics below)

o Succeeding in a Changing Marketplace – AmeriHealth Mercy
o Re-Engineering the Health Plan Business Model to Succeed in a Post Reform Market – Wellpoint
o Considerations Around Episode Based Payment – UnitedHealthcare

3. Product Design – Value Based Insurance Design was the core focus for product innovation. Discussions brought together the view point of the employers, health plans and academia.

(Sample of agenda topics below)

· The Future of Employer-Based Health Insurance Following Health Reform – The Large Employer Perspective – Towers Watson
· The Synergistic Role of Comparative Effectiveness Research and VBID in Reform
· The Latest Approaches, Research and Trends in Benefit Designs

Against this backdrop, I was privileged to share a podium with Dr. Kritzler, Deputy C.M.O of Johns Hopkins Healthcare. Our discussion was focused on scaling innovation into affordable care. As we all know, the key to affordable care is enabling every member to get the Right Care by the Right Provider at the Right Time for the Right Price. A study of this equation highlights the interdependencies of design of care models, payment, products and networks.

Steering the member to the Right Provider at the Right Setting is influenced by the member incentives built into the product design and the provider choice component of the network design. The Right Care is depended on the care model design and the provider reimbursement design. Overall affordability of care is obviously tied to payment design. Not so obvious are the dependencies between product design and payment design. The member behavior targeted by product incentives should be reinforced by the provider engagement influenced by reimbursement design. All these interdependencies necessitate alignment between Product, Care Model, Reimbursement and Network Design. We believe this alignment is fundamental to scaling innovation.

In the next posting of this blog, we will discuss barriers to achieving this alignment, the unsung role of network design in scaling it and how to leverage an integrated approach to cost effectively orchestrating the alignment.

About the author:

Sam Muppalla is the executive vice president, chief strategy and marketing officer for Portico Systems, the leader in Integrated Provider Management (IPM) solutions for payers. Learn more about Portico Systems at, and follow the company on Twitter at @porticosys and Facebook at

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