Coordinating Care in an Uncoordinated Health System: The Development and Implementation of Coordinated Care Trials in Australia


Current Issues Brief 11 1998-99

David Marcus
Social Policy Group
11 May 1999

Contents
Major Issues
Background and Origin of the Coordinated Care Trials
Introduction
COAG Process
Problems in the Australian Health and Community Services system
Conceptual Origins and Precedents
What is 'Coordinated Care' and Why is it Significant?
Key Elements of the Model
Implementation of the Trials
Initial Stakeholder Reactions
Impact of 1996 Election
Emergence of Indigenous Trials
Rural Difficulties
Evaluation
Current Status and Issues
Policy Controversies and Parameters
Trials, Health Care Reform and Managed Care
Emergence of Related Reforms
Futures and Prospects of the Trials
Lessons from Implementation
Endnotes
Appendix A
Appendix B
Appendix C
Appendix D

Major Issues

Coordinated care is currently being trialed in Australia. Although it is a concept which is difficult to define concisely, it is notable in Australia for two key innovations. Coordinated care involves, for the first time, a case management approach to the full range of health care services provided to people with complex and/or multiple needs. These are people who are most at risk of receiving inadequate or even inappropriate care because of the rigidities of Australia's health system. The second innovative aspect of the trials of coordinated care is the pooling of funds by the Commonwealth and the States and Territories to finance the provision of health care services to people participating in the trials.

The provision of health care is a costly business. In Australia, total health expenditure reached $43 billion in 1996-97.(1) A major issue driving the Council of Australian Governments (COAG) reforms in the mid-1990s and complaints from some States was the way the chronically ill fared in the health and welfare system. It has been estimated that this proportion of the population (around 10 per cent) use around 50 per cent of health care resources. Yet it is exactly this group with multiple, complex needs that have the greatest difficulty getting help from programs designed to meet single needs. There are concerns that due to the complexity of funding and program arrangements between the Commonwealth and the States the health system may not be working well for the people who use it most-the chronically ill.

At the meeting of COAG in Hobart in February 1994, Heads of Government endorsed the need for reform of health and community services so as to 'better meet people's care needs and provide better value for money for taxpayers'. COAG eventually identified that profound structural change was needed in the health and community services system and proposed a model consisting of three 'streams' of: general care; acute care; and coordinated care. The latter stream was to be the priority for reform. The Coordinated Care stream was intended to recognise the complexity of the Australian health system, and allow freer flow of resources to follow the patient, rather than be locked up in individual providers and programs.

In mid-1995 the Commonwealth developed proposals for a set of Coordinated Care Trials ('the Trials') to test whether wider reforms were possible. Thirteen Trials are currently being run in 15 locations across Australia.

Trials consist of:

  • a Trial sponsor (such as an area health service or Division of General Practice) which is contracted to State and Commonwealth governments to manage
  • a funding 'pool' which combines funds drawn from a range of Commonwealth and State health care programs such as the Medicare Benefits Scheme (MBS), Pharmaceutical Benefits Scheme (PBS) and hospital funding; which can be used to buy any services for individual patients thought appropriate; and which supports
  • a care coordination process which can be undertaken by a person (say a local GP or designated coordinator), a service (such as an Aged Care Advisory Team) or even through a computer system, and which deals with
  • a defined client group (usually people with high care needs with a particular diagnosis or condition, or those with a range of chronic illnesses).

One of the more interesting aspects of the Trials was the emergence of a distinct stream of indigenous proposals. Despite not being considered likely to be fertile ground for Trial development, there were several proposals that addressed the needs of indigenous communities. These Trials are, however, significantly different from the mainstream Trials.

The Trials are now in their latter stages and their evaluation is due in a matter of months. Now is an appropriate time to consider the Trials' status and what lessons are already emerging. Perhaps the greatest and most important lesson is simply that reform is possible. Whether or not all of the hypotheses for the Trials are proven, early results are promising and the Trials have already shown that:

  • funds pooling between Governments is possible, and that providers can cooperate at a local level to design and develop a radically new approach to health care in Australia
  • the Australian health care system can develop and implement world class information management and care planning systems, and
  • major cultural shifts away from traditional antagonism and rivalry between different players in health policy and toward cooperation are possible.

The importance of coordinated care has been demonstrated clearly in a range of initiatives announced in the Commonwealth's 1999-2000 Budget. In a significant boost to funding, the Budget provides $54.5 million over four years for the involvement of general practitioners in coordinated care planning. A further $33.5 million is to be provided over four years for new and existing trials of coordinated care.

Alongside these positives, however, there are still a number of questions to be answered:

  • is Coordinated Care sustainable outside the Trials? Most Trials appear to be still getting some direct support from governments. It is not clear if any will be able to be truly self-sustaining and whether they are finding sufficient savings to pay for their administration and care coordination costs
  • are the Trials replicable? As with many innovations, the Trials have committed reformers driving them and it is uncertain if they will work in a less controlled environment.
  • are more Coordinated Care services needed? Many Trials have found it difficult to recruit patients. It could be that the numbers who could possibly benefit are smaller than first thought
  • is Coordinated Care value for money? The Trials have been expensive to establish. Are there better investments elsewhere in the health care system? Have they delivered greater improvements in health outcomes than might have been achieved in other, less-expensive ways?
  • is Coordinated Care creating a third-tier of health care and funding ? Already cursed by the State-Commonwealth split, do the Trials create an additional level that needs to be included at the bargaining table?

Background and Origin of the Coordinated Care Trials

Introduction

'Coordinated Care' can mean many things. In Australia it has come to mean a particular way of funding and delivering a mix of health and community care in the context of a range of Coordinated Care Trials (hereafter called 'the Trials') being conducted by Commonwealth and State Governments.

The Trials have their roots in several related attempts to improve and reform the Australian health care and community services system, including a review by the Council of Australian Governments (COAG) and its response to the acknowledged problems in health care financing and delivery in Australia.

COAG Process

At the meeting of COAG in Hobart in February 1994, Heads of Government endorsed the need for reform of health and community services so as to 'better meet people's care needs and provide better value for money for taxpayers'.(2)

A task force of Commonwealth and State officials was established to review the health and community services system and make recommendations to COAG for reform. The task force issued its report 'Health and Community Services: Meeting Peoples' Needs Better' in January 1995. In essence, the report recommended that profound structural change was needed in the health and community services system and proposed a model consisting of three 'streams' of: general care; acute care; and coordinated care.(3) The latter stream was to be the priority for reform because, although it focused on the needs of a relatively small part of the Australian population, the needs were more urgent. The report defined Coordinated Care as involving:

the provision of a mix of services over a long period of time which are difficult to arrange effectively through self-management. Existing examples of coordinated care include nursing homes and hostels for the frail aged, Community Options projects, disability accommodation and support for people with long term mental illness. In many cases, reform in coordinated care is needed to match frail or disabled people's desire to be supported in their own homes as long as possible rather than enter various forms of residential care.(4)

A key issue for reform was the existence of a multiplicity of rigid programs (one commentator had estimated that there were over 60 different programs in the health and community services sector).(5) Thus hospital funds could only be spent on acute care, MBS funding could go only to doctors for particular services, PBS funding only to purchase pharmaceuticals. The rigidity was seen as a problem because it prevented substitution. Substitution was intended to be the way microeconomic reform was introduced into the health and community services system. The aim was to separate funds from providers and instead tie them to client needs. Thus once money was pooled, it could be spent on any service or provider as long as it improved the patient's lot. The main direction of substitution was hoped to be from hospital care to community care, whether delivered by GPs or other providers. For example, if a person with diabetes experiencing foot problems needed care on weekends (when only hospitals were open) the aim was to avoid a costly admission by using some of the money that would have been spent on the admission for an on-call podiatrist to visit the person in their home. But to do this, hospital funds had to be available to be spent on podiatry in the community.

Problems in the Australian Health and Community Services system

Problems faced by the chronically ill

The Australian system performs worst for the people who are sickest and most dependent.(6)

A major issue driving the COAG reforms and complaints from some States was the way the chronically ill fared in the health and welfare system. It has been estimated that this proportion of the population (around 10 per cent) use around 50 per cent of health care resources. Yet it is exactly this group with multiple, complex needs that have the greatest difficulty getting help from programs designed to meet single needs. As one commentator put it:

A range of small local providers may appear to offer choice and provide assistance on a human scale. But finding out who does what can be come a complex nightmare, wearying all but the most determined and informed consumers. And if the consumer needs a comprehensive package of assistance, a number of services are likely to be involved, each with their own administrative and data holding system, assessment and priority systems and so forth.(7)

The Coordinated Care stream was intended to recognise this complexity, and allow freer flow of resources to follow the patient, rather than be locked up in individual providers and programs.

Cost-shifting and perverse incentives

In any system where two funders are potentially liable to fund a service, each has an incentive to pass the cost to the other. Behind the COAG proposals lay a long history of problems with cost-shifting between the States-Territories and the Commonwealth and increasing pressure from their constituents to get things right. As one commentator put it:

policy analysts have highlighted the plethora of uncoordinated health programs and, more fundamentally, the irrational dichotomy of the administration and financing of Medicare between two fractious and quarrelling authorities, namely, the State and Commonwealth governments. The health sector has been more characterised by cost and blame shifting than by cooperation and coordination.(8)

The scale of cost-shifting can be judged by the initiative of the Commonwealth Government in the 1996 Budget to recoup some of the funds it considered were being saved by the States-the proposal estimated that over $80 million a year would be gained. Typical cost-shifting tactics included shutting down public outpatient departments and referring patients to Medicare funded GPs, or limiting the amount and size of prescriptions to patients on discharge and asking patients to get new scripts from a GP.

Conceptual Origins and Precedents

As well as the broad sweep of the COAG agenda, the development of the Trials was based on a range of other services, pilots, trends and existing models. Existing service models that influenced the Trials' design included:

  • care coordination models such as Community Options (Linkages in Victoria) which provided a range of aged care support services to high-need frail elderly on an individual basis
  • development of care-path-based coordination systems, especially in Victoria
  • limited funding flexibility through Multi-Purpose Services which sought to combine Commonwealth and State aged care funding to create new, flexible services in rural areas that might otherwise not be able to support stand-alone facilities such as hospitals, nursing homes and hostels, and
  • funding for Aboriginal Medical Services that 'cashed out' MBS funds.

In addition to these existing programs there was a growing list of new funding approaches and concepts from overseas that were scrutinised for their applicability. These included:

  • GP budget holding in the UK, especially the development of 'MultiFunds' that combined several practices to give comprehensive coverage for larger populations. These were based on the allocation of a per-capita amount for each enrolled patient in the practice (capitation(9))
  • the experience of Germany and other European countries with the use of third parties such as insurers to manage and control health funding
  • American experience with Health Maintenance Organisations (HMOs) and managed care
  • emergence of managed health 'carve outs' in the US showing cost-savings of around 40 per cent in some areas(10)
  • purchaser provider reforms in New Zealand, including the emergence of primary care groups such as Prime Care in Auckland, that effectively brought all that city's GPs under one umbrella, and
  • the spread of the concept of 'managed competition' from the US.(11)

Finally, from time to time, State Governments proposed various pilots for new funding approaches. Around the same time as the Trials were developed the South Australian Government proposed a model very similar to that which became known as Coordinated Care.(12)

What is 'Coordinated Care' and Why is it Significant?

Thirteen Coordinated Care Trials (nine mainstream and four Aboriginal Trials) are currently being run in 15 locations across Australia (a full list of the Trials, their location, client groups and other relevant information is at Appendix A).

At its most general, the Coordinated Care model consists of:

  • a Trial sponsor (such as an area health service or Division of General Practice) which is contracted to State and Commonwealth governments to manage
  • a funding 'pool' which combines funds drawn from a range of Commonwealth and State health care programs such as the Medicare Benefits Scheme (MBS), Pharmaceutical Benefits Scheme (PBS) and hospital funding; can be used to buy any services for individual patients thought appropriate; and which supports
  • a care coordination process which can be undertaken by a person (say a local GP or designated coordinator), a service (such as an Aged Care Advisory Team) or even through a computer system, and which deals with
  • a defined client group (usually people with high care needs with a particular diagnosis or condition, or those with a range of chronic illnesses). According to the Trials' architects:

The coordinated care stream is intended for those with more complex, ongoing needs who find it difficult to find their way around the service system and obtain the right mix and balance of services that will ensure the best possible care.(13)

The aim of the Trials is to see whether:

by breaking down these [individual program] boundaries and maximising funding and service flexibility, in conjunction with an agreed and coordinated care plan, the health and well-being of these people can be improved for any given dollar input. By pooling the funding from a variety of Commonwealth, State and Commonwealth-State programs, it should be possible to substitute the spending for a less needed service for one of higher priority and better potential outcome.(14)

In other words, the aim is to get better value for money by untying money from particular programs, and instead allocating according to assessed need.(15)

Importantly, the Trials are to be budget neutral. That is, the cost of care for people in the Trials should be no more than it would have been had there been no Trials.

Diagram 1: Organisational arrangements for trials

(Source: Call for Expressions of Interest in Coordinated Care Trials, DHCS, 1995)

Coordinated Care Trials are significant because they are the first serious attempt to find a way to break down the funding and program boundaries between Commonwealth and State health care systems. Diagram 1 below (taken from the original call for expressions of interest) shows the organisational and funding arrangements for the Trials.

Key Elements of the Model

The Pool

Sources of Funds for the Pool

The unique aspect of Coordinated Care Trials is their use of pooled funding. Funds are drawn from a range of Commonwealth and State health and community services programs including:

  • Commonwealth Medicare Benefits Scheme (MBS)
  • Commonwealth Pharmaceutical Benefits Scheme (PBS)
  • Joint programs such as the Home and Community Care Program (HACC), and
  • State-Territory Hospital funds.

The size of the pool should be no larger than the amount of funds the Trial clients would have used were they not in the Trial. As with State hospital and other services (but in contrast to the open-ended MBS and PBS) the Trial pool is in effect 'capped'. The Trial must work within this pool to fund services for clients and must work hard to manage its budget.

All the client's needs are to be met from the pool without any double-dipping into the mainstream system and subject to risk sharing arrangements (see below). Although initially considered for inclusion, residential aged care programs (such as nursing homes and hostels) were excluded as the funding could not be easily transferred into the pools because these services were often privately owned.

One particularly difficult issue was the handling of user charges. Patients already pay a substantial amount toward their own care (in some cases up to a third) through gap payments to GPs and full payments for ancillary services. Unless this revenue continued to be raised the Trial pools would be losing a significant source of funds.

Once an estimate for a Trial client's needs for a particular service is calculated (that is, their need were they not to enter the Trial-see the section on calculating the pool below) these funds are typically notionally allocated to the Trial and funds transferred monthly. Providers then bill the Trial (or in the case of MBS-PBS, the Health Insurance Commission (HIC)) and funds flow between the Trial and providers.

Estimating the Size of the Pool

The challenge in creating the pool is mainly to ensure that it is the right size. If it is bigger than it should be it will divert funds from the mainstream system. If it is too small then it will not have enough money to care for its clients. In broad terms, a three-step process has been used to estimate the pool (with many variations in specific Trials):

  • first, the Trial compiles detailed historical information on clients' actual use of services during a 6 month 'tracking' phase prior to commencing actual care coordination. During this time a sample of potential clients agree to have their use of services monitored but do not receive any services from the Trial
  • this data is then compared with other data available on client usage (either individual or as a group, say for asthmatics or particular demographics) to see if any adjustments are warranted (this is referred to as risk adjustment), and
  • finally, once the Trial has started, use the consumption of services in the control group as a guide or benchmark to assess whether the pool is too high or too low and adjust accordingly.

The Trials then receive a payment for each client (capitation), which is combined into the program contribution to the pool. A different method was adopted for funding the Trials in Aboriginal communities, which is discussed below.

If capitation payments were not adjusted, that is the Trials received a uniform payment for all clients, there would be an incentive for the Trials to avoid potentially expensive clients and attract those they consider would cost little. This would contradict the aim of the Trials, which is to improve care for just this high-cost, complex group. While this is impossible to completely prevent, Commonwealth policy is that clients are not to be excluded from the Trial because of excessive costs or non-compliance with care plans. A key role of the local and national evaluations will be to examine exits of clients from the Trials to see if there is any pattern. The evaluation will also assess the methods for estimating the pool.

Care Coordination

The actual process of care coordination is entirely open to Trials to decide. Trials can use any personnel or process to do this - it is their responsibility to develop the most efficient and effective method given their client group and model. Trials are using GPs, specialised staff who are either stand-alone or based in GP surgeries, computer based systems and coordination teams. One of the key issues for the Trials' evaluation will be to identify the strengths and weaknesses of the different approaches. One example of a Trial's care planning process is at Appendix D.

The Target Group

Trials used a variety of methods to choose their target groups. Some looked for general indicators of complexity, such as number of diagnoses, repeated hospital admissions or high costs and have clients generally described as 'frail aged' or 'with high needs'. Others focused on conditions where it was known that community interventions could avoid hospitalisation or intensive episodes of care. These latter Trials often have client groups defined by diagnoses such as diabetes, asthma or cardio-pulmonary disease.

Managing Risk

No matter how good the estimate for the pool is, there are bound to be inaccuracies. The policy of budget neutrality requires that a Trial is to spend no more on its clients (in total) than equivalent clients in the mainstream system would cost. This is one reason why the control group will give useful information-by monitoring their use of services Trials and funders will be able to detect if the Trials are under or over spending. There are limits, however, to what risks the Trials can bear, given their relatively small size. In the mainstream system the cost of expensive treatments such as heart transplants or dialysis can be spread nationally, or at least across a State-Territory. In a small Trial, such events could easily blow a budget. Random or catastrophic acts happen, and, generally speaking, the larger the group of clients in a pool the more comfortable managers can be that their costs will not be blown out by a cluster of expensive episodes, such as hip replacements, cancer or HIV/AIDS.

Risk management is the term used to describe how managers in any capitated (such as the Trials) system try to control these risks (sometimes legitimately) and tools at their disposal include:

  • biased selection (try to only have the more healthy or easily managed clients in the pool)- whether the Trials have done this will be assessed in the evaluation
  • stop-loss arrangements (have a cap on individual client costs, with another party available to pick up costs over a dollar limit-in effect this transfers risk to another party). In the context of the Trials, this could mean Governments agreeing to pick up unusual costs, on an agreed shared basis and some Trials have negotiated such arrangements
  • restrict the range of services available (i.e. catastrophic or other ultra-high cost events or procedures such as heart transplants would not be covered, and a client would exit the Trial and be served through mainstream Medicare services). Similarly, if a client becomes eligible for residential care they would also exit the Trial
  • have a large enough pool size to reduce the impact of unusual costs or seasonal variation (such as a 'flu epidemic)-this was partly the reason Trials were required to have at least 800 clients, and
  • guide provider behaviour through incentives (to be economical in ordering tests, for example) and the use of agreed guidelines for care-a common strategy that most Trials will attempt and which will require sensitive negotiation with providers, especially GPs.

How the Trials manage risk will be another key focus of the evaluation.

Implementation of the Trials

Initial Stakeholder Reactions

Immediately the Trials were announced there was controversy over what they might represent. Partly fuelled by the vagueness of many of the concepts, a range of groups were concerned at how they, or their clients and patients, might fare under the new approach-a common reaction in health reform.

Consumer Views

Consumer groups have been seeking reform of the health and community services sector for many years. The complexity, confusion and perceived narrow medical emphasis of many programs have also been criticised. Nevertheless, groups such as ACOSS and the Consumers' Health Forum expressed concern that the Trials could put consumers' privacy and choice at risk. According to the CHF its current policy is:

'cautious enthusiasm'. Enthusiasm because coordinated care represents a major, if potential, shift in the way that health care is delivered to people with chronic and complex health needs. Caution because of the relatively poor knowledge base upon which some of the Trials were founded, their lack of clear objectives and the haste with which they were commissioned.(16)

State and Territory Attitudes

States and Territories were generally wary of the Trials on several grounds. The first was that they considered that there was too great a focus on initiatives on Coordinated Care at the expense of other areas of reform, such as hospital funding and the creation of a more genuinely national system. In addition, the particular model of Coordinated Care was criticised in 1996 on the grounds that it would:

  • place Trial sponsors at risk for service utilisation they could not reasonably influence or control
  • create new layers of care managers and bureaucracies and new forms of dependency, instead of looking for the simplest, most efficient and most self-managing forms of care for given conditions or illnesses
  • impose a costly care management system when many clients merely need help to navigate the system better
  • subject the most frail, ill and disadvantaged members of the community to the risk that they will receive no or inadequate services because of unforeseen demands made by other clients on the Trial's resources, and
  • undermine primary care, and hence diminish systemic capacity to meet current and future demands.(17)

Despite these concerns every State-Territory Government is supporting at least one Trial in their jurisdiction. States are undoubtedly wary of being locked into any future reforms until the evaluation is finished and the impact on funding (and risk) is clarified. One State Premier recently expressed caution about the move to managed/coordinated care:

It is unclear whether a formalised managed care system will achieve sufficient benefits compared to the unofficial managed care to warrant extra costs that may arise with a formalised system.(18)

GP Organisations

The most concerned and strident critics were the medical organisations-the Australian Medical Association (AMA) and the Royal Australian College of General Practitioners (RACGP). Already engaged in a dispute with then Minister Lawrence over private health insurance reforms and 'managed care', GPs saw the Trials as yet another nail in the coffin of their professional independence. This was compounded to some extent by the open-ended definition of 'coordinator'. It implied that other professions might take on a role of coordinating care to the GP's patient. A Vice-President of the AMA asked:

How many people would be happy to have a government-appointed agent select and purchase their weekly groceries? Very few I suspect. Yet the Department of Human Services and Health believes it can entice a substantial portion of the chronically ill in our society to do the same with their health care.(19)

While acknowledging that this care coordination role was often poorly done (if at all) by GPs, GPs were nevertheless concerned to be involved in any such process if it affected access to their care and their patients.

Even where GPs or GP Divisions supported exploring the possibilities of the Trials, they were quick to make their model one that had GPs at the centre. As the Trials developed, support from local GPs soon emerged as a crucial element. No Trial could hope to succeed without the active support of the local GPs. Those that failed to see this, failed to proceed to implementation.

Gradually, more GPs on the ground have taken an interest in Coordinated Care and think it worthwhile. By July 1997 a national pool of 440 GPs found that 72 per cent supported Coordinated Care and 20 per cent opposed it.(20)

Impact of 1996 Election

Coalition Policy and Coordinated Care MkII

Coordinated Care became a minor issue during the 1996 Federal Election campaign. Although featuring in some debates, it was subsidiary to the main question of each party's plans and attitudes toward Medicare. The Coalition policy document A Healthy Future was cautious on the Trials, stating that they would have to be carefully reviewed once in government and stressed the need for GPs to be at the centre of the process. Although in the end the Trials were given a green light, this review process, following on from the caretaker period, inevitably meant a significant delay in the development process.

When the Trials were finally approved by the new Minister for Health, Dr Wooldridge, in May 1996 it was with some significant changes. The principle shift was towards a GP-based approach. A specific policy on GP involvement was prepared in consultation with the AMA and RACGP and disseminated to the Trials. Although not going as far as some GPs would have liked, the policy guidelines were an important reassurance to GPs that they would not be squeezed out of the Trials. Around this time the Government also issued a statement on broader health services and funding reform. In this 'framework' the Government reaffirmed:

Above all a commitment to the Medicare principles of: universal coverage; bulk billing; free access to public hospital care; access to doctor of choice for out of hospital care; and the general freedom of doctors, within accepted clinical practices, to identify the appropriate treatment for their patients.(21)

While the framework did not specifically mention coordinated care, these principles were a reference point for their future development. In particular, the last statement was seen as an important marker for how far the Government was willing to go in coordinated, or managed care.

Emergence of Indigenous Trials

One of the more interesting aspects of the Trials was the emergence of a distinct stream of indigenous proposals. Despite not being considered likely to be fertile ground for Trial development, there were several proposals that addressed the needs of indigenous communities. These Trials are, however, significantly different from the mainstream Trials as they:

  • include a wider range of services, and have a population rather than an individual focus
  • have a clearer independence from current funders and providers, as all have some form of community control, in some cases through especially established Health Boards
  • counter historical patterns of perceived under-funding by seeking to capitate funds above the current level of expenditure for the MBS and PBS. For these programs a national capitation figure was set at $330.05 per person per annum for MBS and $206.40 per person per annum for PBS. This compares with an estimated public expenditure on these programs totalling $118 per person per year in 1995-96 which is what Trials would have received had the typical cash-out process of the mainstream Trials been followed(22)
  • capitate funds on the basis of estimated populations to be serviced, rather than enrolled clients, and
  • would tackle some of the worst inequalities in health in Australia.

Of course, given the poorer state of health infrastructure in these communities, the Trials also had a greater task ahead of them in getting established. Also, because of the greater difficulties of finding matching populations, the Aboriginal Trials do not have control groups and are adopting a pre- and post-intervention evaluation. The Trials that emerged as serious contenders and which were subsequently established were in the Tiwi Islands off the coast of Darwin, the areas south-west of Katherine in the NT, at Wilcannia in NSW and a multi-site Trial in Western Australia (see Appendix B).

Rural Difficulties

During the initial tender phase a number of proposals were received from rural areas, yet none (except for a part of one Trial) proceeded to the live phase. This is despite rural areas already having implemented limited forms of coordination and funds-sharing in the Multi Purpose Services. There seem to be several reasons for this:

  • rural areas are generally less well endowed with the necessary infrastructure. This goes beyond the crucial elements of costing systems and information technology, but includes the lack of a large pool of skilled people such as health planners and policy planners to draw on
  • the particular problems of dispersed populations and large catchment areas. Potential clients were diffused through the population and would be difficult enough to recruit in an urban area, let alone an even more dispersed rural environment, and
  • the politics of health care in rural areas are more intense. The limited range of providers and resources means all the greater tension over how those resources are to be allocated. The attitude of local GPs is particularly important, and it appeared that rural GPs were more wary of involvement than their city counterparts. This last factor seems to have been crucial, with potential Trials in northern NSW and the Yorke Peninsula in South Australia both failing to gain strong GP support.

The only rural area to be part of a Trial is the Eyre Peninsula in South Australia, which is part of the HealthPlus Trial.

Evaluation

The Trials were also innovative in that their evaluation was planned from the start. An evaluation framework was developed which was then used to guide the collection of data and the design of local evaluations.

An interim evaluation is due June 1999, with the final evaluation expected in the middle of 2000. The evaluation operates at two levels, national and local. The local evaluations focus on the detailed processes of implementation and design-in other words, what is different about the Trial (such as its aims and processes), and look at Trial outcomes and performance measures. A national dataset is collected and forwarded onto the National Evaluator(23) who will review overall trends and outcomes. This dataset is expected to be very valuable to researchers, as it will probably be Australia's largest dataset of individual health status, linked to consumption of health services.

Day to day monitoring is done by a series of Commonwealth-State 'Joint Monitoring Groups' which meet regularly with Trial managers to discuss progress.

 

Current Status and Issues

Early Results

As at the end of 1998 there were 13 Trials in total.

Early results appear promising. For example, in the HealthPlus Trial the hospitalisation rate in the 'intervention' groups is running at about a quarter of that in the control groups. One case study in this Trial demonstrates what was intended with Coordinated Care:

the experience of a 63-year-old retired bank manager in South Australia is an example of what can be achieved. Because of his severe asthma, the man had been admitted to hospital every year of his life (three times a year on average). But when his GP was paid to keep him well, the man for the first time managed to go a year without hospitalisation. The extra $400 spent on improving GP care saved $4,000 in hospital costs. (24)

The 9 mainstream Trials:

  • have around 12 000 clients (with about a third of these in control groups having their usage monitored but receive no services from the Trials)
  • have over 2,000 GPs involved in their operations, and
  • have combined funding pools of about $40 million per year.

However, it also appears that some Trials are still getting direct assistance from governments for their set-up and design costs. Unless this is wound back quickly this support suggests that the goal of self-sufficiency is not being met.

How much have the Trials cost to set up?

The costs of the Trials can be separated into those of the set-up and design costs to design and develop systems, test care protocols and other developmental costs and the costs of the services delivered through the Trials (which is also equal to the Trial pool). The Commonwealth contributions are summarised below in Table 1.

Set-up and infrastructure Costs

While the Commonwealth and States both contribute (about equally) to the cost of services provided in the Trial, the start-up costs for establishing Trial infrastructure has been almost entirely provided by the Commonwealth. As at early 1999 the estimate for the Commonwealth contribution to establishing the Trials was a total of about $31 million. Spread over the nine mainstream Trials this gives an average cost of about $3.5 million per Trial. The cost of local and national evaluations are included in these figures.

While these substantial (over $3000 per client) costs should be amortised over time, they indicate the extra costs associated with care management. A test for the Trials will be to keep these costs as low as possible.

Services Costs

The estimate for the cost of services delivered through the Trials from Commonwealth sources over their life is nearly $80 million. It should be noted that these costs are not additional to the health budget-the funds have been transferred from the MBS and PBS. Overall the Commonwealth has provided 52 per cent of the services costs and the States 48 per cent (with States' hospital costs being about 90 per cent of their contribution, or about 46 per cent of the total). In 1999-00 the estimate for Commonwealth service costs is just over $20 million-when combined with State-Territory contributions this implies a total bill for services delivered through the Trials of about $40 million.

Table 1: Commonwealth Contributions to the Coordinated Care Trials

 

Budget Services $'000

Actual Services $'000

Budget Setup $'000

Actual Setup $'000

Total Budget $'000

Total Actual $'000

A

B

C

D

A+C

B+D

1995-96

5 120

-

1 000

882

6 120

882

1996-97

7 960

-

17 000

12 099

24 960

12 099

1997-98

41 570

15 838

20 605

13 883

62 175

29 721

1998-99

4 333

23 475*

4 494

4 251*

46 817

27 726*

1999-00

20 320

901

21 221

Total

79 303

39 313

44 000

31 115

161 293

70 428

* Full year estimate

Source: Departmental response to Senate Community Affairs Committee

Policy Controversies and Parameters

Impact on Private Health Insurance (PHI)

The likely impact of the Trials on private insurance rates is difficult to estimate. Trial clients were in effect entering another financing system. Clients without PHI would have access to services for free that they would otherwise have had to pay, and possibly insure, for. There was a real concern that faced with this situation clients already carrying PHI would simply opt out of insurance completely, compounding the decline in insurance levels and posing an embarrassment for the Government. On the other hand, a shift of a substantial number of high-cost clients out of PHI could also be of benefit to individual funds and, through reduced premiums, may make private health insurance more attractive to younger uninsured people.

Information Management and privacy

One of the most challenging aspects of the Trials was their move to a far greater and more intensive management of individual client information than had occurred in a wide-spread way before. In entering the Trial, potential and actual clients had to agree to have all their usage of a range of services closely monitored, in particular their use of hospital, medical and pharmaceutical services. This information was initially needed to estimate the size of the pool needed, and later to allow charging of all services back to the pool and to check on the implementation of care plans. A specific privacy protocol was developed in consultation with the Privacy Commissioner.

Cost-cutting or cost-containment?

As mentioned above, the Trials were to be cost-neutral, apart from the initial design and set-up costs. The Trials were not meant to be an additional source of funding for new and additional services. Policy makers already knew that putting more money into the system would increase the services available and probably health outcomes. The aim of the Trials was to see if better health value could be extracted from existing funding levels. This posed a double challenge. First, to find better mixes of services that met needs at less cost (in order to fund the overhead costs of care coordinators and administration) but second to ensure that existing levels of funds were maintained. Maintaining funds was difficult as in Australia nearly a third of total health expenditure is by individuals (via gap fees and out of pocket expenses) and health funds. This meant that Trials had to make arrangements for clients to continue paying an equivalent amount. Behind the rhetoric of 'more efficient' services and substitution lies the reality that the money allocated to the Trials for services will have to be spread more thinly if they are to succeed.(25)

Coordinated Care is an intensive and expensive form of care. Coordinators (whether stand-alone or pre-existing such as GPs) need to be paid. Care planning takes time and resources. Outcomes monitoring, feedback, guideline development and more intensive information management also are costs. All of these costs need to be found from within the services pool. One of the key pieces of information to come out of the evaluation is how much of the services pool is going on services and how much to administration and coordination of care. Experience with precursors such as Community Options suggest that care coordination costs could easily be 20 per cent of the pool. This implies that at least this amount must be found to pay for coordination before any other money can be freed up to engage in substitution. And this amount has to be found without 'stinting' on care given to patients.

Achieving this will be a major challenge for the Trials.

Trials, Health Care Reform and Managed Care

Coordinated Care Trials have been variously attacked, and supported, because of their alleged resemblance to managed care. Managed care can be described as a general way for organising doctors, hospitals, and other providers into groups in order to enhance the quality and cost-effectiveness of health care. More specifically it has been defined as:

A system of providing health care through which access, cost and quality are controlled by direct interventions either before, during, or after service delivery. Managed care organisations use a variety of techniques, such as utilisation review, quality assurance programs and pre-admission certification to better manage the care delivered.(26)

While space does not permit a full comparison it would be useful to list the common tools used in managed care and the way they are used (if at all) in Coordinated Care Trials.

Tool

Managed Care Organisation

Coordinated Care Trial

Transfer risk from funder to a third party

Yes-fundamental.

partial

Intensive client-level data management

Yes

Yes

Use specific formularies for pharmaceutical access

Yes

Partial (Trials are not limited by PBS listing and authorisations)

Funding by risk-adjusted capitation

Yes

Attempting to do this

Provider/service guidelines

Yes-often rigid limits on entitlements

Some-negotiated with providers and clients. Access to mainstream system preserved

Utilisation review

Yes

Yes

Client choice of provider

Limited

Negotiated

Pre-admission review

Common

No. For example GP retains autonomy to admit

Negotiated payments with providers, can include performance payments and withholds

Yes

Limited

Limitations/exclusions on care available

Yes, depending on plan funded by employer

Negotiated as part of care planning process

Gatekeepers to control access

Yes

Limited, negotiated care plan should allocate all roles

Outcomes monitoring and management

Yes

Yes

Quality Assurance

Yes

Yes

In summary, while there are definite similarities between managed care and the Trials, the latter differ in that patient and provider autonomy is greater and patients can return to the universal mainstream system at any time. In a sense, while managed care is often the only option for patients and providers in the US, in Australia patients can potentially gain some of the benefits of a more integrated, planned approach to their care with far less cost.

Emergence of Related Reforms

A range of related reforms are now being tested. Some were developed before the Trials, some flow directly from the Trials. These reforms include the National Prescribing Service, the establishment of Comprehensive Care Plans by the Department of Veterans' Affairs, the use of 'Measure and Share' in health care agreements (for an extract of a typical agreement see Appendix C) and an expanded role for the Health Insurance Commission (HIC) in national health information management.

Futures and Prospects of the Trials

With the Trials nearing their end, the Commonwealth is discussing their future with State Governments and sponsors. At this stage it is likely that States will want the Trials to continue, possibly with continuing government support and with some modifications.

Until the final evaluation is available, it will be difficult to say whether the Trials have been a success-and final impacts may need to be assessed after more time has passed. This is because, with delays in implementation (recruitment, care planning and substitution), the affect of substitution may not have emerged fully when the evaluation is completed.

The political future of the Trials seems settled. An initiative of a Labor government, the Trials are now supported by the Coalition (in its 1998 election policy the Coalition promised to '...continue the innovative Coordinated Care Trials with general practitioners at the centre'). The Prime Minister recently announced support for the Trials(27) and funding has apparently been promised for a further round of Trials for older people.(28)

Nevertheless, the heat that surrounded the Trials' genesis could easily return. Consumers and providers are still uneasy about the similarities to managed care. And it remains to be seen if the Trials can continue and their lessons be disseminated outside the uniquely cooperative and well-funded atmosphere of a set of national pilots (a situation common with many pilots). If more constraints need to be imposed on consumers and providers in order to make the Trials work in the longer term, then there could be new battles.

Lessons from Implementation

Perhaps the greatest and most important lesson is simply that reform is possible. Whether or not all of the hypotheses for the Trial are proven, the Trials have already shown that:

  • funds pooling between Governments is possible, and that providers can cooperate at a local level to design and develop a radically new approach to health care in Australia
  • the Australian health care system can develop and implement world class information management and care planning systems, and
  • major cultural shifts away from the traditional antagonism and rivalry between different players and toward cooperation are possible.

As mentioned above, early signs are positive, however there are still a number of questions to be answered:

  • is Coordinated Care sustainable outside the Trials? Most Trials appear to be still getting some direct support from governments. It is not clear if any will be able to be truly self-sustaining and whether they are finding sufficient savings to pay for their administration and care coordination costs
  • are the Trials replicable? As with many innovations, the Trials have committed reformers driving them and it is uncertain if they will work in a less controlled environment. Also, have they picked up the easiest clients whose health outcomes could be improved relatively cheaply? Finally, given the wide variation in the cost of services, Trials whose approach is viable in one location may not save enough money to survive in another, cheaper jurisdiction
  • are more Coordinated Care services needed? Many Trials have found it difficult recruiting patients. It could be that the numbers who could possibly benefit are smaller than first thought
  • is Coordinated Care value for money? The Trials have been expensive to establish. Are there better investments elsewhere in the health care system? Have they delivered greater improvements in health outcomes than might have been achieved in other, less-expensive ways?
  • is Coordinated Care creating a third-tier of health care and funding? Already cursed by the State-Commonwealth split, do the Trials create an additional level that needs to be included at the bargaining table? A related issue is whether we have seen the first step in a new battle over who controls funds pools-State governments or independent parties such as GP divisions and health insurers.

 

Endnotes

  1. Health and community services: meeting people's needs better, A Discussion Paper prepared by the Council of Australian Government's Task Force on Health and Community Services, January 1995.

  2. Australian Institute of Health and Welfare, Health Expenditure Bulletin, November 1998.
  3. 'A general care need is one which is met through a walk in -walk out type service. It also covers promotion of health and well-being and preventive community and health measures as these are generally provided in the primary care sector. The GP has an important role in managing or assisting in the management of many facets of an individual's general care needs.... An acute care need is identified by a 'professional' and is met by an 'episode' of treatment, often involving three phases: preparation, delivery of a procedure and recovery...', Health and community services: meeting people's needs better, op.cit., pp. 14-15.

  4. ibid., p.13.

  5. J. Paterson, National Healthcare Reform: The Last Picture Show, Department of Human Services of Victoria, 1998, p. 13.

  6. ibid., p. 14.

  7. Michael Fine, Coordinating Health, Extended care and Community Support Services: Issues for Policy Makers and Service Providers in Australia, Social Policy Research Centre, 1997.

  8. J. Richardson, Funding and Future Options for the Reform of Medicare, Centre for Health Program Evaluation, 1998, p. 3.

  9. Capitation is described as a payment system whereby managed care plans pay health-care providers a fixed amount to care for a patient over a given period. Providers are not reimbursed for services that exceed the allotted amount. The rate may be fixed for all members or it can be adjusted for the age and gender of the member, based on actuarial projections of medical utilisation.

  10. A carve-out is where a particular group of patients, usually sharing a particular condition or diagnosis, are moved out of a general managed care program to one specialising in treating their condition. In some ways such carve-outs are analogous to the Trials moving a particular group of patients out of mainstream Medicare. See Health Affairs, .Mar/Apr 1998; vol. 17, no. 2, pp. 53-69 for a description of a publicly-run carve out of mental health and substance abuse services in Massachusetts, US.

  11. For example see R. B. Scotton, 'Managed Competition: issues for Australia', Australian Health Review, 1995, vol.18, no.1, pp. 82-104.

  12. This later led to claims of the Commonwealth 'hijacking' these ideas, see 'States accuse Lawrence of health hijack', The Sydney Morning Herald, 28 October, 1995, p. 3.

  13. Call for Expressions of Interest in Coordinated Care Trials, Dept of Health and Community Services, 1995.

  14. ibid.

  15. ibid.

  16. CHF Policy Briefing: Coordinated Care, Consumers Health Forum, 1998.

  17. Monica Pfeffer and David Anderson, Over-Managed Care: A Critique of the Commonwealth's Perspective on Systemic Reform, paper presented to Health Summit, 1996.

  18. Speech by the Hon. John Day, Minister for Health in Western Australia to the Australian College of Health Executives, 21 April 1998.

  19. Dr K. Woollard, 'Coordinated care - what will it do for patients', Australian Medicine, 15 January, 1996, p. 4.

  20. Kellie Bisset 'Coordinated care attracts GP support', Australian Doctor, 25 July, 1997.

  21. Dr M. Wooldridge, 'A Health Future for Health and Community Services', press release issued on 1 May 1996.

  22. J. Deeble, et. al., Expenditures on Health Services for Aboriginal and Torres Strait Islander People, AIHW, 1998, p.14.

  23. The National Evaluator is independent of the Trials.

  24. Speech by Dr M. Wooldridge to AIC Conferences Health Summit '98. Cited in HealthCover, June-July, 1998, p. 22.

  25. Some Trials argued that they should also get the overhead, or administrative costs associated with, for example, the MBS. This was considered to be to difficult to achieve in a time-limited intervention such as the Trials.

  26. Ernst and Young Associates. Managed Care Publications: Glossary of Terms [online]. http://www.ey.com/industry/health/managedcare/glossary.asp (10 December 1998).

  27. 'GPs Paid $120 an hour to support the elderly', The Australian, 18 November, 1998.
  28. According to evidence to the Senate Community Affairs Committee the Prime Minister has said to Senator Harradine 'I can confirm that in the next budget the government will provide funds in the order of $25 million to run additional coordinated care trials in capital cities and selected regional centres to address the health care needs of older people who are chronically ill or disadvantaged.' Senate Community Affairs Legislation Committee, Additional Estimates Hearings, 8 February, 1999, p. 68.

Go to Appendix A: 'Summary of Mainstream (Non-Indigenous) Coordinated Care Trials' (landscape table) Go to Appendix B: 'Summary of Indigenous Coordinated Care Trials' (landscape table)

 

Appendix C

'Measure and Share Reform Proposals' - Extract of the Australian Healthcare Agreement between New South Wales and the Commonwealth. [these provisions are common to all Agreements]

New South Wales will work with the Commonwealth in evaluating the outcomes from the Co-ordinated Care Trials to provide information to guide future directions for the reform of health service delivery.

The Commonwealth and New South Wales will consider proposals which move funding for specific services between Commonwealth and State funded programs on the basis that each proposal meets the following criteria:

  • the proposal must be consistent with accepted evidence based on best practice care models;
  • there should be a sound basis for believing that the reform will lead to improved patient outcomes and/or more cost effective care;
  • the impact of the proposal should be measurable in terms of change in services delivered and costs to the health system as a whole and to each party to this Agreement;
  • if the proposal is expected to lead to net savings, these should be shared equitably between the Commonwealth and New South Wales;
  • the proposal should have potential to be replicated, be on a scale such that extension can be realistically tested and be evaluated in terms of such extension; and
  • the proposal must preserve eligible persons' current access to Medicare Benefits Schedule services or their equivalent.
  • Reform proposals may result in the cashing out of State funded programs and/or Commonwealth funded programs, including the Medicare Benefits Schedule and the Pharmaceutical B

 

EXTRACT FROM A DESCRIPTION OF THE CARE PLANNING PROCESS OF THE HEALTHPLUS COORDINATED CARE TRIAL (South Australia)

  • "First of all, people who have agreed to take part in the SA HealthPlus trials will have a detailed talk with their usual GP.
  • "The GP may arrange a time for a person to see a specialist doctor, who has extensive experience with the particular health problem.
  • "In this way, information on the person's medical, social and emotional situation will be gathered. Details would include: what health and community care services have been used in the past, when, how often and why the person has needed to go to the GP, specialist or hospital. Also, important information on what medicines have been bought from chemists.
  • "The doctor will then put together a detailed, personal SA HealthPlus 'Care Plan' with that person.
  • "The Care Plan will set out the best way to aim for better co-ordinated care for that person, depending on their particular needs. It also involves things a person can do to improve or maintain their health.
  • In effect, all the possible ways that this particular person's total well-being can be helped.
  • The Care Plan will be a kind of chart. It will show, for a set period of time, which health care workers a person should see and how often. From the Care Plan, a network of links between all these care providers can be set up. Then they can all know about the total care a person is getting.
  • Each Care Plan will also help people and their families to get to know more about the health problem. It will alert them to detecting symptoms earlier. It will assist them in learning how they can help to manage the condition better themselves.

(taken from the HealthPlus web page at: http://www.health.sa.gov.au/health+)

 

 

 

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