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What if instead of paying doctors based on their number of visits with patients we paid them based on how well they improved the health of their patient? Say how well they controlled a diabetic patient’s blood sugar or a heart attack patient’s cholesterol?

This outcome-based payment model is the bet North Carolina, backed by the state’s Department of Health and Human Services (HHS) and Blue Cross Blue Shield of North Carolina, is taking. The state believes the turn away from a fee-for-service model will improve health and cut costs overall. The change comes despite the legislature’s refusal to expand Medicaid to non-elderly adults with incomes up to 133% of the federal poverty level.

As reported by The New York Times, the new payment model is expected to increase the share of total health care dollars that go to primary care physicians from 6 to 8 percent to 10 to 13 percent. Primary care physicians and nurses’ work of “firsthand longitudinal health care” will prove to be crucial. North Carolina Dr. Amy Sapp says this includes knowing people long-term and being aware of their living circumstances and their life changes. The model will also ask primary care doctors to investigate further into social determinants of health, such as diet and housing.

Blue Cross Blue Shield has already signed contracts with five of the largest health systems in the state, connecting payments to total costs of care for patient populations and quality measurements instead of to hospital visits and surgeries. First, the contracts will offer two years of incentive payments to expand physician services. The provider is then paid a fixed amount, typically a monthly fee per patient. But if quality outcomes are insufficient, the contracts call for cuts in reimbursement.

Some criticize the outcome-based payment model for its assumption of doctors’ altruism. If doctors are paid based on health outcomes, the less scrupulous of them may be inclined to only accept clients who are healthy. This could lead to discrimination against minority, poor, sick and aging communities, improving the health of only the already healthy.

Doctors question the presumption of patient compliance. They claim to already struggle with patients not returning for follow-up appointments and disregarding their prescriptions to quit smoking and exercise more. If patients continue to fail to observe their advice so health outcomes do not improve and reimbursements are subsequently cut, doctors wonder why they should be financially punished.  

A retiring primary care doctor also faults the outcome-based system for assuming an individual doctor can impact one’s social determinants of health. He claims these determinants can only be addressed with a ground-up “system or culture that allows and encourages good health care choices way before a patient shows up in my office.”

North Carolina is addressing this critique with $650 million in state and federal dollars to fund pilot projects to address social determinants of health. Technology plays a key role in many of the projects. For example, its NCCARE360 online service, which will be implemented across the state by the end of 2020, directs consumers to services, such as food pantries and homeless shelters. Doctors can track whether patients ever actually visited these services.

Starting next year, Blue Cross Blue Shield of North Carolina will also share claims information with health care providers doctors and hospitals will share clinical data. This data will then be analyzed to flag patients most in need of care or counseling.    As other hospital systems and states have implemented an outcome-based payment system in the past, it is worth seeing if North Carolina’s experiment brings more definitive evidence as to whether such a system can truly cut costs. It is clear, however, that the fee-for-service model has not solved the nation’s health and health care cost crises. We are long overdue for a fix.  



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