Sorting Strategies by Evidence

The commercial market generates more claims about what works than almost any other part of health care, and the quality of support behind those claims varies enormously. This lesson sorts the main strategies by evidence strength, applying the standards the evaluation course established.

The tiers

Well supported. Population-based payment with quality incentives. The Alternative Quality Contract evaluation followed eight years, used comparison groups, was published in a peer-reviewed journal, and reported both an 11.7 percent relative saving on claims and quality that improved more than regional and national comparisons, with savings eventually exceeding incentive payments. That is a genuinely strong result.

Supported by price data, not by outcome studies. Site-of-service steering and reference-based approaches. The price differences are firmly documented: outpatient facility services at 279 percent of Medicare against 170 percent at ambulatory surgery centers. What is less established is how much of the theoretical saving employers actually realize after member response, appropriateness limits, and administrative cost.

Plausible mechanism, thin published evidence. Centers of excellence and direct contracting. The design logic is sound and the reported results come mostly from vendors, using the employer’s own prior spending as the comparison and ignoring selection into the program.

Contested. Traditional wellness programs and consumer-directed high-deductible designs, where the research literature has generally found smaller effects than proponents claimed, and where cost reductions often reflect deferred care rather than avoided waste.

What the pattern suggests

The strategies with the best evidence share a feature: they change how care is produced by giving a provider organization responsibility for a population and the resources to manage it. The strategies with weaker evidence mostly change where care is purchased or how much the member pays, leaving the production of care untouched.

That distinction runs through the whole curriculum. Payment change that reaches clinical operations has produced measurable results. Payment change that stops at the transaction has produced smaller ones.

Worth remembering: a claim’s evidence tier is not the same as its usefulness to a given employer. Population-based payment has the best evidence and requires a capable provider organization willing to take risk, which many markets do not have. Site-of-service steering has weaker outcome evidence and can be implemented next year by a mid-sized employer with a competent administrator. Choosing the best-evidenced intervention that cannot be executed locally is worse than executing a reasonable one well. Evidence tells you what is likely to work; feasibility tells you what you can actually do.

Key takeaways

• Population-based payment with quality incentives has the strongest published commercial evidence.
• Site-of-service strategies rest on well-documented price gaps but thinner realized-savings evidence.
• Centers of excellence and direct contracting have sound logic and weak independent evaluation.
• Strategies that change how care is produced outperform those that only change where it is bought.

Sources

• Song et al., Health Care Spending, Utilization, and Quality 8 Years into Global Payment, NEJM 2019 (opens in a new tab)
• Prices Paid to Hospitals by Private Health Plans: Findings from Round 5.1 of an Employer-Led Transparency Initiative (RAND) (opens in a new tab)