Population Health, also known as pop health or population health management, is a mindset among healthcare providers and leaders that the goal of healthcare spending is to improve both clinical and financial outcomes for large groups of people. In 2021, the United States spent a record-high $4.3 trillion on healthcare, with costs remaining on the rise. As a result, providers must proactively identify and assess risk for the development and progression of disease to sooner see measurable improvements in clinical outcomes and a lower overall cost.
Population health management is a facet of value-based care. This is in opposition to the fee-for-service model, which has long been the dominant framework for healthcare spending in the United States. Value-based care attempts to align payment with some qualitative measure of perceived value, as opposed to a readily quantifiable interaction (e.g., office visits, procedures, or tests ordered). Given that value in healthcare is broadly defined as quality divided by cost, we can increase value by improving quality at the same or lower cost, or by lowering cost while maintaining or improving quality.
Population health matters to all stakeholders in our massive healthcare ecosystem because it directly impacts incentives that drive behaviors, programs, and, more generally, the flow of dollars. The Centers for Medicare and Medicaid Services (CMS), for example, has moved aggressively over the past decade or so toward value-based care through several initiatives that have led to a redesign of the healthcare industry. One such initiative, spearheaded with the passing of the Patient Protection and Affordable Care Act of 2010 (PPACA, or more commonly, ACA), was the creation of Accountable Care Organizations (ACOs). In ACOs, providers come together and take responsibility for a group of patients’ total healthcare costs, quality, and experience. They do so by utilizing a financial arrangement that allows for sharing of cost savings achieved with the ACO while maintaining or improving quality for the aligned patients. Over 12 million Medicare enrollees receive care from providers who are part of at least one of over 500 Medicare ACOs nationally. Commercial insurance plans and, particularly, Medicare Advantage plans, have also been growing their own ACO-like arrangement with the provider community, aiming to encourage providers to enhance quality while lowering costs for their plan members.
A second initiative that seeks to improve value was created with the passage of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), which repealed the long-standing Medicare Sustainable Growth Rate (SGR) formula that had repeatedly triggered physician payment cuts. In its place, a new mandatory participation system for all providers was created, the Quality Payment Program (QPP). Today, clinicians participate either in the Merit-based Incentive Payment System (MIPS) or the Advanced Alternative Payment Models (APMs), with increasing proportions of payments tied to performance in these programs. The default MIPS program is comprised of four categories of performance that lead to improved value: quality, performance improvement activities, promoting interoperability (i.e., meaningfully using an electronic health record to engage patients and improve outcomes), and cost.
It’s critical for the life sciences industry, and particularly for team members that interact directly with providers and healthcare delivery systems, to gain an understanding of population health, especially as it has expanded its reach geographically and in terms of payer types. More and more, providers with whom pharmaceutical industry professionals interact are no longer operating as solo practitioners, but rather as members of a larger integrated delivery network (IDN), be that an ACO or large healthcare system. Decisions around which pharmaceuticals and devices to prescribe and use are increasingly being made at the IDN or ACO leadership level, where costs and outcomes are taken into serious consideration, alongside tolerability and the patient experience. For example, within a population health mindset and infrastructure, a medication’s impact on the total cost of care is more relevant than its impact on a targeted outcome for which the drug sought and obtained approval. Moreover, studies indicate that a medication’s utility in reducing potentially avoidable hospitalizations or Emergency Department visits through a more favorable side-effect profile are becoming ever more important than the cost of the medication itself.
Ultimately, the pharmaceutical industry, providers, insurers, and patient communities can only chart a mutually productive path forward by collaborating on real-world outcomes studies of selected therapeutics, targeting these concepts surrounding total cost of care. Team members who can best actively listen to the provider’s perspective, and understand what is driving their behavior and decisions, will lead the pack in establishing and strengthening these new partnerships in population health management.