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Busting the Binaries of Paying for Health

By Jeff Cribbs | June 16, 2016 | 1 Comment

On Monday, United Healthcare announced that, starting in 2017, it will reimburse kidney donors up to $5000 for travel expenses incurred during the process of organ donation. By removing this common barrier to getting kidneys to patients who need them, UHC will get members off dialysis sooner and dramatically improve their lives. It is a sensible way to expand medical policy outside of reimbursement for “medical” services that will drive better clinical outcomes for patients, improve the experience of healthcare of members and their families, and cut unnecessary cost out of the system. Well done United Healthcare.

But think about about the flip side of this for a moment: does this mean that among the population who is not the 5 million fully insured members of UHC within the scope of this policy, we have a significant number of patients languishing in dialysis, deteriorating in health, and racking up hundreds of thousands of dollars (call it $250,000 / per patient / per year) in costs — because no one will pay a few thousand bucks for the donor’s trip? 

And doesn’t that make you wonder, what else are we missing here?

In establishing medical policy, we maintain a pretty thick line between “medical services” and “non-medical services” – we make it a binary, so to speak. UHC’s decision is an exception to the rule that, outside of a few wellness incentives and government sponsored programs, payers generally limit reimbursement to “medical” interventions. These are healthcare interventions that can be vetted in research literature, neatly represented in a claim, processed in a claims system, and screened for necessity, misuse and fraud.  When payers consider reimbursement for non-medical services (transportation, education, environmental improvement, consumer technology, etc), there is often fear of opening a Pandora’s box. So the business case has to be pretty overwhelming to the payer – as it was in this case to UHC – to expand the policy.

But that binary is a complete fabrication from the point of view of population health. If anything, recent research consistently shows that long term outcomes are determined more by factors outside of healthcare. So if we are truly shooting for the triple aim of population health, doesn’t our method for paying for healthcare need to erase this binary between medical and non-medical and just pay for what works?

The problem of binaries gets bigger, the more you think about it. There has been a lot in the news about the high costs of new specialty drugs. A new class of drugs that cures Hep C (Sovaldi, Harvoni, Viekira Pak, Zepatier) has been especially contentious. For payers it is the perfect actuarial storm – a highly effective, high cost drug, for a relatively high prevalence condition, where treatment can be timed to insurance eligibility (read – adverse selection). And the decision before the payer (outside of “tiering” and placing various procedural restrictions on coverage) is essentially binary – you accept the Hep C cure into the formulary (the list of drugs the payer will reimburse), or you don’t and you continue to pay to treat the symptoms. As much as the people involved want to “do the right thing for the member” (and in my experience, nearly everyone does), for an individual payer the economics are stacked against coverage. The cost of the cure will be to the tune of $40,000 – $100,000 per member. The cost of treating the symptoms for the 2 or 3 years, on average, the payer expects to retain the member, is likely to be dramatically less.

However, if you zoom out for a moment and consider the total impact of the decision to cure Hep C or treat the symptoms – the picture is totally different. The cost of continually treating symptoms will pile up over a lifetime — and someone will be paying for it. Without the cure, the patient will have a diminished quality of life. This will often have a non-trivial impact on their family members. Future employers may pay the direct medical costs (if they are self insured) and also the lost productivity. And there are complications. Hep C is thought to play a role in half of all cases of liver cancer, a deadly and very expensive disease to treat in its own right, and which is likely to occur later in life when the patient is eligible for medicare and — you guessed it — we all pay for it through our taxes.

So wouldn’t it make sense to replace this binary – a drug is covered in total by the current payer or not at all – with a system of financing healthcare that allows the stakeholders who are likely to benefit from the superior intervention to “chip in”? Hold that thought.

How about our most vulnerable populations – the chronically homeless, those with psychiatric disorders, addictions, childhood trauma? The conundrum is actually quite similar, in a sense, to the Hep C cure. With these populations we are often “treating the symptoms” for life – through the ER, law enforcement, correctional facilities, rehab facilities, all manner of  government agencies, and non-profit shelters. We pay to treat those symptoms with taxes at all levels of government, medicaid, and direct payments from patients and their families (who are often economically devastated as a result). But like Hep C, there is substantial evidence that there is a highly effective “cure” — get the individual into permanent housing first, and organize appropriate support services around that housing. This is an emerging approach to social service called  “housing first“. But ask yourself, what single organization that pays to treat the symptoms, would be able to justify paying for the cure (a home, in this case)?

The lead crisis in Flint Michigan (somber estimate of the long term impact of lead exposure here). The current political debate about how to fund our preparations for the Zika virus. Addressing the predictable healthcare needs of asylum seekers in the current refugee crisis (say, with tech-enabled translator sevices). Getting a “prescription” filled for fresh fruits and vegetables in our urban food deserts, like the heroic folks at Wholesome Wave are trying to do? On and on and on… Why do we find it so hard to efficiently pay for the things that will have the greatest impact on health?

Binaries. An intervention is “medical” or “non medical”. An intervention is covered or not covered. A person is eligible for a health plan or they are not. Payers pay for healthcare, non payers do not. The sectors that make up the healthcare experience are binaries too: payers, providers, life sciences, governments, NGOs, consumer tech. When you actually try to imagine a sensible way to pay for what will actually works in a given situation for a given individual, to pay with some precision that is, you run into a binary that prevents you from doing it.

The first hypothesis in my Gartner Maverick project is this (see the intro to the project is here):

  1. All current systems of financing healthcare on not equipped to match the pace of innovation in healthcare delivery, much less the broader demands of population health.

This problem of  binaries leads me to my first point in support of the hypothesis: Economics.  That is, in every current system of financing healthcare, there is fundamental economic misalignment between those who pay for actions taken to maintain and improve health, and the complex web of individuals, businesses, and governments who benefit from better population health. If we continue to accept this misalignment, we will continue to erratically deploy highly talented, mission-driven people and cutting edge scientific resources to perpetuate results that are often inhumane, economically unsustainable, and a fundamental hindrance to human potential.

Now of course, all of these binaries are there for a reason. When they were created, the binaries were ways to organize the functions, processes, and regulations we needed in healthcare so that our capacity to administer healthcare (often with pen and paper), would not be overwhelmed. But technology trends are fundamentally changing the way we think about our “capacity to administer”, and I submit to you that there is an opportunity to re-evaluate the utility of these binaries. What would a system look like, where interventions that improved health were paid for, medical or otherwise.  Where the payment came in incremental amounts, by various stakeholders, across many sectors and industries? Where eligibility wasn’t a 1 or a 0, but a coefficient?

But all that’s for future blogs.

Let’s close out on our subject today (this one was long, I appreciate those you have who have stuck with it!). While the problem of binaries confounds so many of our efforts in healthcare today, there is nothing inherent about them. Our physiology and well being knows nothing of this distinction medical and non-medical services, about industry sectors, or medical policy. The limitations imposed by binaries are a part of our legacy and our current reality — but is there any reason hope they don’t need to be a part of our future?

I’d like to find out.


[note: for those of you joining in middle of this project, welcome!  If you want to get some oriented, here a little GPS of the project for you]

Intro: A Grassroots, Digital Solution to Financing Global Population Health

In this research I will explore the following three hypotheses:

  1. All current systems of financing healthcare on not equipped to match the pace of innovation in healthcare delivery, much less the broader demands of population health.
    • Economics: Busting the Binaries of Paying for Healthcare [YOU ARE HERE]
    • Evidence:
    • Coordination:
    • Compute:
    • Ethics:
  2. Emerging capabilities in analytic modeling will, in the not-so-distant future, be better suited to making decisions about allocating scarce healthcare resources than all of the humans and institutions currently performing that role.
  3. An architecture is possible for a better system for financing health (working title: The Universal Health Intervention Hub #UHIH) using the emerging technologies of digital business, distributed ledger (“grassroots”), Internet of Things (IoT), and a common set of protocols between stakeholders.


The Gartner Blog Network provides an opportunity for Gartner analysts to test ideas and move research forward. Because the content posted by Gartner analysts on this site does not undergo our standard editorial review, all comments or opinions expressed hereunder are those of the individual contributors and do not represent the views of Gartner, Inc. or its management.

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1 Comment

  • jyoti says:

    An architecture is possible for a better system for financing health (working title: The Universal Health Intervention Hub #UHIH) using the emerging technologies of digital business.
    United Healthcareall the best thank you