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.

(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
|
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
- 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.
- Australian Institute of Health and Welfare, Health
Expenditure Bulletin, November 1998.
- '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.
- ibid., p.13.
- J. Paterson, National Healthcare Reform: The Last Picture
Show, Department of Human Services of Victoria, 1998, p. 13.
- ibid., p. 14.
- Michael Fine, Coordinating Health, Extended care and
Community Support Services: Issues for Policy Makers and Service
Providers in Australia, Social Policy Research Centre, 1997.
- J. Richardson, Funding and Future Options for the Reform of
Medicare, Centre for Health Program Evaluation, 1998, p. 3.
- 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.
- 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.
- For example see R. B. Scotton, 'Managed Competition: issues for
Australia', Australian Health Review, 1995, vol.18, no.1,
pp. 82-104.
- 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.
- Call for Expressions of Interest in Coordinated Care
Trials, Dept of Health and Community Services, 1995.
- ibid.
- ibid.
- CHF Policy Briefing: Coordinated Care, Consumers
Health Forum, 1998.
- Monica Pfeffer and David Anderson, Over-Managed Care: A
Critique of the Commonwealth's Perspective on Systemic Reform,
paper presented to Health Summit, 1996.
- Speech by the Hon. John Day, Minister for Health in Western
Australia to the Australian College of Health Executives, 21 April
1998.
- Dr K. Woollard, 'Coordinated care - what will it do for
patients', Australian Medicine, 15 January, 1996, p. 4.
- Kellie Bisset 'Coordinated care attracts GP support',
Australian Doctor, 25 July, 1997.
- Dr M. Wooldridge, 'A Health Future for Health and Community
Services', press release issued on 1 May 1996.
- J. Deeble, et. al., Expenditures on Health Services for
Aboriginal and Torres Strait Islander People, AIHW, 1998,
p.14.
- The National Evaluator is independent of the Trials.
- Speech by Dr M. Wooldridge to AIC Conferences Health Summit
'98. Cited in HealthCover, June-July, 1998, p. 22.
- 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.
- Ernst and Young Associates. Managed Care Publications:
Glossary of Terms [online]. http://www.ey.com/industry/health/managedcare/glossary.asp
(10 December 1998).
- 'GPs Paid $120 an hour to support the elderly', The
Australian, 18 November, 1998.
- 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
Appendix
D
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+)