Solving the Biggest Health Care Challenge of Them All

We all know the basis of the 80/20 rule, also known as the Pareto principle, where “for many events, roughly 80% of the effects come from 20% of the causes.”

Basically, it’s a rule designed to show how a small subset of a defined population can have a significant impact on a population. In health care, the following clearly illustrated this concept:

• “HOW 15% OF SENIORS ACCOUNT FOR NEARLY HALF OF MEDICARE SPENDING”

This was the headline for an insightful study on Medicare published yesterday by USA Today. The story showcases the scope of the challenge facing the health care industry as the baby boomers age into Medicare.

My Own Experience

As I’ve written before on numerous occasions, the retirement of the baby boomer generation is expected to increase the Medicare population to 81 million by 2030. I’ve also noted that “chronic illnesses account for 75% of the $2.2 trillion we spend on health care each year in the U.S” and its impact on the system. While this is a challenge that’s clearly going to test our resolve and resources, we’ve already taken steps towards solving the problem.

As the president and CEO of Humana, a health and well-being company that provides Medicare Advantage coverage to more than three million individuals nationwide, the majority of whom are over 65, I’ve seen firsthand the impact multiple chronic conditions have had on our Medicare population.

I’ve done everything from observing focus groups to visiting our members in their own homes. One thing is certain: many caregivers who care for loved ones suffering from chronic conditions have a difficult task that is becoming more difficult.

A Systemic Problem

The challenges these Medicare beneficiaries face were detailed in the USA Today study, which included an analysis of county-level Medicare data. Here are some of the findings:

• An Unhealthy Population: “Two-thirds of traditional Medicare beneficiaries older than 65 have multiple chronic conditions.”
• Sickest Drive Costs: “More than 4 million — about 15% — have at least six long-term ailments” and that “those sickest seniors account for more than 41% of the $324 billion spent on traditional Medicare.”
• Cause and Effect: “The number of counties where three-quarters of senior Medicare beneficiaries have multiple chronic conditions has gone up 20%” since 2008. The results also found that “in Texas, for example, 24 counties see at least 85% of all Medicare's medical spending go toward a small number of the sickest seniors.”

Based on the results, it’s clearly evident that a small proportion of the Medicare population is driving these health costs. Factor in the impact of multiple chronic conditions and you can see how the health care system is being challenged.

Our health care system needs to evolve to meet the personalized health needs of the 21st century consumer. The USA Today analysis clearly shows that if we want this evolution to occur, we must address the strain that chronic conditions have on the structure of our health care system.

But in order to pave the way for change, it’s important to understand the roots of these issues and how they need to change.

A History of Complexity

For the last century, the health care system has been focused on episodic care as opposed to holistic care. Under this structure, the more health services that were performed, the more providers were reimbursed. This not only led to an era of misaligned incentives, but also challenged the system from evolving to handle the holistic needs of the individual. It’s known as “fee-for-service.”

When it comes to managing chronic conditions, the transactional fee-for-service approach doesn’t work because it’s equivalent to plugging your hands in the wall of the dam to stop the water when what you really need to do is address the system’s structure.

The complexity of the system has also restricted physicians, specialists and others from easily sharing patient information that could be vital to improving health outcomes, which has also contributed to misaligned incentives. This is particularly a problem in underserved areas where health literacy is extremely low; there is lack of timely prevention and limited access to care; and to lifestyle modification programs.

As the USA Today article points out, when specialists are not communicating with one another, about medication interaction and other health matters, the element of risk is much greater.

How We Solve

So how do you have a real impact when addressing the chronic condition dilemma? It’s an approach that’s rooted in a holistic approach to the individual’s health and the system is incentivized to help the individual achieve his or her best health. It’s known as Medicare Advantage and more than 16 million people across the country are members.

Any company that provides Medicare Advantage (alternative Medicare Parts A and B health plans offered by private companies) is directly responsible for the holistic health of the member. Companies are required to take anyone that signs up for Medicare Advantage. The company has the responsibility for the health of the member, and it’s a responsibility that I’m proud we handle each and every day.

With Medicare Advantage, there is a clear and paramount focus on improving the health of the individual. Combined with the competition, which creates an abundance of choices for the consumer, the result is a holistic health approach founded in innovation, dedicated to the individual. An important element of the success of Medicare Advantage is the programs embrace of value-based payment models, which, unlike fee-for-service, reward physicians and other health care practitioners for the health outcomes of the people they serve, not the services they perform for them.

At Humana, we’ve seen some great results from our own membership. For example, we found that the one million of our Medicare Advantage members who are treated by providers in value-based reimbursement models experience better health than those treated in fee-for-service and original Medicare. Our results also found that these members experienced seven percent fewer emergency room visits per thousand and four percent fewer inpatient admits per thousand than those in traditional, fee-for-service settings.

The move to value-based reimbursement payment models is further exemplified by the Department of Health and Human Services Secretary Sylvia M. Burwell, who announced earlier this year a goal of “tying 30 percent of "traditional, or fee-for-service Medicare payments to quality or value through alternative payment models” by the end of next year. The Centers for Medicare and Medicaid (CMS) also released physician payment data, which the agency is hoping “will give patients, researchers, and providers continued access to information to transform the healthcare delivery system.”

Make It Personal

Transforming the health care system to better address the continued rise of chronic conditions goes well beyond payment models and technologies. If you want to have an impact, you need a trusted, personalized relationship where the member and the primary care physician are on the same page. You not only need the primary care physician serving as a quarterback – enabling communication among specialists that the USA Today article was smart to call out - but an infrastructure designed to facilitate this experience.

At my company, we’re focused on building trusting relationships with our members that enable us to get to know them; understand how their chronic conditions impact their health; and help them address it. Through an approach that leverages clinical engagement, physician partners and the consumer experience, we put the member’s health at the center.

We also use data and analytics, technology and partnerships to identify, seize and act on moments of influence that can help improve the health of our members. Success is dependent on deep consumer analytics, which requires the necessary workflow and channels of information flow, and aligned incentives to reward people for taking positive steps to improve their health.

This holistic approach to care helps our members with chronic conditions and is reflected in our Humana At Home division, which is designed to help our members live independently in their home instead of having to go to one. A recent Humana study showed that, on average, our Medicare Advantage members enrolled with Humana At Home lived longer than those who were not enrolled. For example, we helped secure 496,000 more days at home for newly-managed Humana Chronic Care Program members.

Making a Difference

It’s important to remember that the wave of chronic conditions can be made smaller by helping people of all ages make better decisions about their health, whether it’s about exercising regularly, eating the right foods and avoiding habits that are detrimental to our health. This is about helping people make changes in their lifestyles.

The rise of chronic conditions will challenge our health care system. We’ll make progress, but we’ll also experience challenges. Through its holistic approach to care, combined with the innovation that is driven through competition, the Medicare Advantage model has shown that we can make an impact for the better.

For the last three years, I’ve seen the benefits of this holistic approach with my own eyes. I’ve shaken the hands of our members and have been amazed at the connections they’ve made with the nurse practitioners and other health care professionals we’ve sent to their homes to help them with their health. As we continue our journey to transform the health care system and address challenges like chronic conditions, let us never forget that it takes a team effort whose sole purpose is to improve the health of the people they care for.