What management advice did executives read last year? There were two themes—strategy and sustainability. And, that’s no surprise. There is lots of uncertainty in the health and human service field.
The big questions? Will Obamacare be repealed (see Congress Unveils American Health Care Act As Potential PPACA Replacement)? Will the Centers for Medicare & Medicaid Services change their long-held policies under the guidance of a new administration (see Medicaid Work Requirements Moving Ahead With 10 States In The Mix and Reimbursement Changes In Store For Behavioral Health At CMS)? Will Medicaid and Medicare face program cuts (see Ryan says Republicans to target welfare, Medicare, Medicaid spending in 2018)?
This “top of mind” uncertainty seems to be driving interest in sustainability, spending, and building new strategies. The most read articles are listed below, just in case you missed them. With 2018 shaping up to be another year of uncertainty, stay tuned. We’ll be covering the developments as they occur—and providing strategic perspectives on how to thrive in a changing market space.
Over the past year, I’ve done a lot of thinking about the possible changes in the health and human service market, and more specifically, mental health. Behavioral health spending reached $213.6 billion last year – for an increase of $25.2 billion, or 13.4%, since 2011. The majority of that total was for mental health services, which accounted for 84%, or $195.6 billion, in spending.
Behavioral health spending reached $213.6 billion in 2015 – an increase of $25.2 billion, or 13.4%, since 2011. The majority of that spending was for mental health services, which accounted for 84%, or $195.6 billion, in spending. (The remaining 16%, or $36 billion, was for addiction treatment services.) The mental health market is defined as treatment services for mental and emotional health and psychiatric care. Mental health services are provided by a wide array of professionals, including certified counselors, psychiatrists, psychologists, and neurologists.
When I started my career in health care, quality improvement was the domain of “numbers types” who reported up to operations. But those were different times. Health care services were bought (and sold) like commodities – all licensed professionals and programs were assumed to be roughly the same. Payment was made for every unit of service and the role of health insurance companies was limited. They processed claims for services and charged an administrative fee for doing it. Everyone (except the payer) – the consumer, the health care organization, and the insurance company – profited from higher service utilization.
To discuss the “superutilizer effect” first you need to know what we mean when we say “superutilizer.” This cohort is the small percentage of the population that is responsible for the majority of health care spending, thanks in large part to high rates of multiple chronic conditions (MCC). As health plan managers evaluate strategies for improving the effectiveness of their population health management programs, addressing this high-needs population is most often near the top of the list.
When discussing health care strategy, priorities are often determined by market size. Medicaid is a big and growing market – spending is now $575.9 billion, covering more than 72 million consumers, and representing 22% of the U.S. population. Not only is Medicaid a large market, it is also a disproportionately large source of funding for consumers with complex conditions. There are 4.8 million consumers with serious mental illness enrolled in Medicaid, representing 6% of the Medicaid population and 33% of the population with a serious mental illness.
“Fasten your seatbelts. It’s going to be a bumpy night.” – Bette Davis. Over the past month I’ve done a lot of thinking about the possible changes in the health and human service market. With 29% of health care expenditures coming from the federal government, a new Administration with new appointees, and a new Congress really do matter. What first came to mind was the above quote from Bette Davis. I think it’s going to be a bumpy year (or two, or four). My concern is that many executive teams will use this uncertainty as a reason to put a halt to the very planning and development they need to be successful in the future. To combat that, this issue of the OPEN MINDS Management Newsletter is focused on the tools for success in an uncertain time.
Medication is a growing proportion of U.S. total spending. An expenditures report for health spending growth in the United States in 2014 shows that prescription drug spending rose 12.6% ($425 billion) from the previous year – and it now accounts for 9.9% of total costs. It is expected to increase to 10.4% of total health care spending by 2024. Integrated care coordination models are looking at “total spending” (including medications) as a value measure in state Medicaid vertical carve-out models like Arizona and Florida, where integrated primary and behavioral health programs are responsible for all services and pharmacy benefits.
In the health and human service sector, it is often consumers with disabilities who get the most attention. Why? Consumers with physical, intellectual, and/or cognitive disabilities have complex support needs in terms of both health care and social services. This often makes this population more expensive to serve, more difficult to treat, and more complex to navigate through the health care financing system. As the market changes, we’re seeing new complications for serving this complex consumer population. These consumers often need long-term services and supports (LTSS) and are dually eligible for both Medicare and Medicaid benefits.
I wince when I’m at a meeting and someone from a correctional facility introduces themselves as running the largest mental institution in their state. (This is not ancient history – this happened last week.) Access to mental health and addiction treatment services is certainly better than it was a decade ago. There now is parity in health plan coverage for behavioral health treatment services. And, 32 states have expanded Medicaid, so newly-released offenders are more likely to be eligible for coverage.
The focus on the “consumer” in health and human services has changed over the past decade. Consumers pay more and choose more. We expect by policy and practice for consumers to do more about their own health. And a consumer’s actions (or lack of action) can affect the “value equation” of health and human services. Consumers are more than individuals that health and human service professionals “act on.” We now need consumers to view our organizations favorably and to engage with our organizations, which brings us to our new competency requirements – in customer service, consumer engagement, and consumer experience. These terms are often confused or used interchangeably. I would say they are related but distinctly different.
Where is the U.S. health and human service system headed? The picture from Washington is a bit unclear at this time. And, new technology and new competition makes that picture a little more uncertain. So, how to lead in these uncertain times? My experience over the past few years is that leadership is the most defining factor in the success of an organization in the field. Even the best strategy will fail with poor leadership of strategy implementation. At a recent dinner with my OPEN MINDS colleagues, we discussed that age-old Malcolm Forbes adage – “An organization can never rise above its leader”
The shift in provider organization reimbursement from volume to value is visibly happening. We’ve covered many related initiatives. I think (and I’m not alone in this professional opinion) that even if we see a major shift in national health policy and legislation, the proposed changes would actually speed the adoption of value-based reimbursement (VBR). Currently, we’re on the front end of this transition. Health plans and provider organizations alike are just developing the systems to participate in VBR. But, over time, there will be increased competition between VBR models and rates – and a fine-tuning of the ability of provider organizations to compete on value. There is no “Plan B” when it comes to health care financing and provider reimbursement.