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Strengthening Medicare From a Value-Based Health Care Lens

Updated: Sep 10, 2023

Leanne Wells, Angelene True, Paresh Dawda


Globally, health systems and their sustainability are under strain. It is common wisdom that strengthening primary health care is the path to both sustainability and better patient care. Across several OECD countries, major reviews have refreshed the clarion call for ambitious primary care reform, fuelled by the COVID-19 pandemic which highlighted the vital role primary care played at a time of health and economic crisis.

Megatrends identified in a landmark report by the CSIRO add to the need to strengthen, modernise and future-proof primary health care systems. Launching the report, the CSIRO Chief Executive said that Australia is at a pivotal point and that there is a tidal wave of disruption on the way.

Healthcare will not be immune to this wave of change. The escalating health imperative posed by an ageing population and growing burden of chronic disease, accelerated digital disruption and the impact of climate change on health prompt us to think about the future shape of primary health care, and the enablers that are going to get us there.

A new era for Medicare

Following decades of successive primary care reviews and taskforces, the Australian Government has responded to the primary care reform imperative with a suite Strengthening Medicare policies in the 2023 Federal Budget.

The Strengthening Medicare measures fall into six categories.

Support for workforces to work at the top of their scope of practice and reduce pressure on health systems will harness the role local community pharmacists can play in the delivery of primary care and will see a National Scope of Practice Review.

The expanding the nursing workforce initiative will support 500 previously registered nurses to return to the health workforce and increase primary care clinical placements for nurses.

After hours primary care access will be boosted filling service gaps in regional areas, for culturally and linguistically diverse Australians and people experiencing homelessness.

The ‘My Medicare’ and a new ‘wrap around’ care measure, for which practice preparation has commenced, will introduce voluntary patient registration to improve continuity of care, blended funding packages for primary health care teams, and new incentives for general practitioner attendances in residential aged care homes (RACHs).

Access to affordable multidisciplinary health care teams will be enabled through a strengthened role for PHNs to commission allied health and nursing services coupled with increased payments to practices under the Workforce Incentive Program (WIP).

Investments in digital health will see the continuation of the Australian Digital Health Agency and action to build on the My Health Record system to facilitate digital sharing of information across the entire health sector.

These measures are accompanied by a tripling of incentives for doctors to bulk bill families with young children, pensioners, and concession card holders for all face-to-face and telehealth general practice services.

A value-based healthcare lens

The Budget drew considerable commentary from the various professional, peak and consumer bodies in the interests of the constituencies they represent. Yet, as advice from the Department of Health and Ageing to inform and prepare general practices for these now imminent changes has started to flow, there has been surprisingly little commentary from a value-based health care (VBHC) perspective.

VBHC has its origins in the United States and is now being adopted progressively across the globe. Early definitions typically combined measures of effectiveness and efficiency with value defined as health outcomes per dollar spent. Since then, the definition of value has broadened to include personal value (appropriate care to achieve patients’ personal goals) and societal value (contribution of health care to social participation and connectedness).

VBHC has four domains: enabling context, policies and institutions; measuring outcomes and costs; integrated and patient-focused care; and outcome-based payment approaches. Prestantia Health and associates have previously critically considered value based primary healthcare and how far VBHC in Australian primary care has travelled.

At the time, we concluded that the primary care sector had made only small advances towards VBHC. We observed that Australia needs to use a VBHC framework to identify strengths and gaps, and then align policy towards VBHC, backed by a strong implementation plan to strengthen primary care and thereby support VBHC for the whole health system.

How well do the Strengthening Medicare measures address VBHC domains?

Integrated and patient-focused care

GPs, nurses, pharmacists, and allied health professionals working in multidisciplinary teams is a hallmark of VBHC. This involves interprofessional collaboration, care coordination and the use of technology and shared data to help providers better understand their patients and make informed, more personalised decisions about patient care, and to share information and insights with other members of the care team.

Impediments to integrated care at the primary care level include funding models and the availability of workforce – roadblocks that Strengthening Medicare may begin to overcome. The nursing workforce measures designed to attract and retain nurses in primary care and the blended payments accompanying ‘My Medicare’ and increased WIP funding will enable practices to continue to introduce a new level of value in care delivery, although many might say this is too little too late. If bolstered over continued investments into primary health care, these funding streams will unlock the flexibility to tailor care team roles, adjust and configure the composition of teams to better respond to the health needs of patients. A more patient-centric suite of services will assure a better patient experience of care – an outcome in itself.

The after-hours measure will meet patients requiring urgent care where they are at and, ideally, should cater for those who face barriers to accessing care after hours such as those who are housebound. It’s time to recognise that in today’s contemporary society, the demand for healthcare does not cease at 5 pm and that consumers prefer accessible and convenient after-hours care, including through virtual options.

Aspirations for My Health Record, if implemented with the right utility for both health professionals and consumers, should bolster integrated patient-centred care. Any steps to digitally share pathology and diagnostic imaging information between providers and across the system, values the patients’ time and resources and creates a more data rich platform should add efficiency and effectiveness into the system.

Outcome-based payment approaches

Strengthening Medicare does not introduce payments that explicitly reimburse providers based on improvements in a clinical health outcome/s or performance. We are still left with a system predominantly designed around reimbursing for services rather than value, although arguably the hospital avoidance incentive payment could be considered a form of outcome payment. Hospital avoidance is a system outcome and could be an indicator of people being better supported to manage their chronic condition/s at home and in community care settings. The Strengthening Medicare policies do, however, introduce or extend payments such as the Workforce Incentive Payment that take a form other than traditional fee-for-service (FFS) arrangements. These are a welcome foray, will help overcome the rigidity imposed by FFS, shift in the pendulum towards payment based on factors other than volume.

Equally, continued and increasing use of PHNs to commission nursing and allied health services locally is not a form of outcome-based payment. PHNs should be encouraged to adopt (or strengthen) performance and accountability measures in their commissioning practices to assure the delivery of certain outcomes and service characteristics. With their knowledge of local service architecture, and where gaps exist, PHNs are well placed to command that level of outcome-based approach.

The need to overcome the inequity in primary care access due to increasing out-of-pocket costs has been consistently advocated by consumer groups.

The increased bulk billing experienced by young families and pensioners from incentives is a positive outcome: improving access for those who are often in most need and have been avoiding care due to cost is a societal value, a dimension of VBHC.

Measuring outcomes and costs

Capability and capacity to measure outcomes and costs in primary care has not been well enabled by culture or systems despite the recognition that using data and analytics makes it possible to provide more personalised care, direct resources, and target interventions to areas of particular need and lift the performance of the whole health system. There is little in the Strengthening Medicare measures announced to date that advances this area.

Useful patient-reported experience and outcome measures – PREMs, PROMs collectively known as patient reported measures (PRMs)- are available for use in primary care. They are designed to help providers understand the patients’ perceptions of their health and wellbeing and are a contributor to VBHC: PRMs support clinical decision making and shared care planning and there is good evidence to demonstrate that patients who are more engaged in their healthcare tend to choose less costly interventions. Quality assured methods for gauging patient activation levels are also available and could be incentivised for more routine use in primary health care, as tools to assist with patient self-management, health literacy and more informed care and treatment decisions.

The adoption of PRMs is not being mandated by the government despite My Medicare being a logical reason for doing so. Some practices are using these tools already and, in some areas, PHNs are working with practices to support their introduction. Strengthening Medicare and My Medicare is an opportunity for PREMS and PROMs to be adopted on a more widespread basis.

Enabling context, policies, and institutions

As we wrote with colleagues in the MJA piece, for VBHC to be realised, it needs to be supported by aligned structures and processes and buy-in from policymakers, clinicians, and managers. Strengthening Medicare is taking our system in the right direction with the backing of National Cabinet. However, if we are to achieve a patient experience that is of one integrated health system, the Commonwealth, states, and territories need to show joint leadership. There are developments in this arena that spell further opportunity for primary care reform.

National Cabinet agreed to a dedicated meeting on health reform in the second half of 2023. The current review of the National Hospital Funding Agreement and any renewal of it and the National Health Reform Agreement, which has a schedule setting out six reform areas, is an opportunity to put in place strengthened local governance and formalised cooperative arrangements between PHNs and local hospital networks for joint planning and funding at a local level to improve the way health services are planned and delivered.

As ‘meso’ organisations serving regional communities and diverse geographies, PHNs are shaping up to be pivotal change agents in any VBHC primary care agenda. They already have a well-established service commissioning role and their role in system stewardship, collaborative commissioning and practice development and innovation are referred to in the Strengthening Medicare plans.

Digital enablement and innovation are instrumental to lasting primary health care reform. Continued investment in the Australian Digital Health Agency (ADHA) to deliver vital digital health functions is critical to our overall national health architecture as is the renewed intention to improve the utility of My Health Record.

Implementation enablers

The Strengthening Medicare measures are down payments. We are told to expect to see further measures announced and that implementation will be incremental, with each stage building readiness for the next.

Realising these reforms will enable the Australian system to shift the dial further towards VBHC – including harnessing and integrating burgeoning digitisation and virtual care. Implementation will require high performing organisations and leadership at all levels in the system.

For many practices and PHNs, harnessing the transformation now possible will require a new mindset, service redesign, newfound capabilities, and supportive infrastructure and organisational environment. The Strengthening Medicare Taskforce itself acknowledged that many of the measures represent a significant change in the way primary care is funded and delivered and will be complex to implement. It said that the primary care sector must be well supported to embrace organisational and cultural change, and to drive innovation.

This support must start with four priority actions.

We must equip:

  • Practice Managers with leadership and change management skills to support practices transition to new ways of working

  • GPs and other clinicians working in primary care with clinical leadership, knowledge, and skills to redesign primary care services and create or improve productive practice systems to optimise the benefits for patients. This includes practice and business development, learning and development in interprofessional collaborative practice, and Experience Based Co-design (EBCD)

  • Practices and PHNs to exhibit the key attributes of high performing person-centred healthcare organisations with training and development in effective ways to authentically empower, inform and involve consumers in service design and improvement

  • Practices and PHNs with knowledge and capability in quality improvement (QI) methodologies to transform and sustain their quality improvement activities through a national strategy for QI in primary health care.

Research shows that the quality of health leadership directly and indirectly affects the quality of patient care and is an important factor supporting practice.

The implementation enablers for Strengthening Medicare are as important as the measures themselves.

Prestantia Health specialises in clinical leadership, quality and safety in health care, value-based health care, high performing primary care, and digital health.

In the following months Prestantia Health will publish a series of Strengthening Medicare Implementation Insights and video podcasts on our website. Our next two blogs will discuss quality improvement in primary health care, and cross sectoral integration.

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