The State Comptroller’s Office is undertaking payment reform for the very costly state employee health plan without public accountability or transparency. The controversial plan to pay for health care in bundles and reward high quality providers for the plan’s 250,000 members could be a gamechanger, but it could also fail. The problem is that we may never know which happened.

It’s very popular now to blame all health care problems on fee for service, the prevalent payment model in which providers are paid for the services they provide. The theory holds that when providers are paid more for each service, we get more services, including some that we don’t need. The popular solution to this theory is to reverse the incentives, to put providers at financial risk for the total cost of our care so providers are rewarded if they bring down those costs. Opponents are concerned that if providers are paid more to provide less care, we will get less care, including some that is critical.

Both camps are wrong. Better, more efficient care comes from monitoring for appropriate care, paying fair prices and rewarding better health outcomes.

The new model for the state employee plan relies on the provider risk model to improve quality while lowering costs. Large health systems will be paid one set fee for an episode of care, such as a joint replacement or maternity care, regardless of how many services are delivered. If patients have good outcomes, get out of the hospital and back to work sooner, costs will go down and providers will keep the extra money. If patients get poor quality care and experience a relapse, a medical error, or an infection, providers have to cover the extra costs.

Bundles are less problematic for patients than other provider risk models. Bundles only apply to patients who already have a diagnosed condition and need a knee replacement or are pregnant. The evidence on bundles from other programs is very mixed. There is weak evidence of savings from some plans and no evidence of quality improvements. Because the bundled health condition is discrete, the list of things that can go wrong is not long and it’s pretty easy to identify bad outcomes with basic monitoring.

Independent quality monitoring and public reporting is the backstop to be sure that doesn’t happen, but we don’t know anything about that monitoring for the state employee plan’s bundles. Patients won’t know if their health problem is something that could be an outcome with the best care, or if they didn’t get the right care. We aren’t the experts, we are the patients. Our provider has no incentive to tell us about more expensive, more effective treatments with fewer side effects. Patient grievances and satisfaction surveys are very poor indicators of care quality, which makes sense. Patients are experts on how we are treated, but not on evidence-based medical care.

In fact, we know very little at all about the state employee plan – basics like the costs of care per member, how many people are readmitted to the hospital after discharge, and how many had a preventable emergency room visit or hospitalization. We know all these things about Connecticut’s Medicaid program, which is also funded by taxpayers, but is fully disclosed and publicly available online. We know more about private insurance in Connecticut than the state employee plan. Meetings of the Cost Containment Committee that oversees the state employee plan routinely go into non-public executive session very quickly after convening. Most reports and important decisions are made outside the public’s view.

If bundles work, they could save the state a lot of money on a very expensive health plan. Bundles could improve the quality of care for everyone – and there is a lot of room to improve in Connecticut. The model could facilitate coordination between providers, reduce wasteful duplicative services and unnecessary care such as follow-up visits that could be done by phone or email. But it could also fail badly, denying people the care they need and leaving them in poorer health. Monitoring and public transparency are the keys to holding the system accountable; it’s hard to see how the new model will succeed without that.

Ellen Andrews, PhD, is the executive director of the CT Health Policy Project. Follow her on Twitter @CTHealthNotes.

The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of

Ellen Andrews avatar

Ellen Andrews, Ph.D.

Ellen Andrews, Ph.D., is the executive director of the CT Health Policy Project. Follow her on Twitter@CTHealthNotes.

The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of or any of the author's other employers.