Journey to Value Based Care
Investment in healthcare services is rising. Consumers are yearning for convenience, simplicity, speed and immediate satisfaction. According to Accenture, funding for on-demand health services will quadruple by 2017, growing to nearly a billion dollars in annual investment 1. In Deloitte’s most recent Retail Capability Survey of health plans, consumer analytics applications were consistently at the top of the priority list for investment 2. A main driver of this change is the introduction of the Accountable Care Organization (ACO), which is responsible for ensuring population health management (PHM) and value-based care.
What Is Value-Based Care?
The previous health care system is designed to pay for volume – the number of medical services delivered – not the value of those services. One outcome of this payment based on volume model is huge variation in rates of procedures and tests. A critical component of understanding value is measurement is to know what works unless measured over time.
A focus of health reform has been to more closely track value measures such as complications, hospital-acquired infections, and readmissions. Hospitals now face ﬁnancial penalties if their rate of readmissions is too high.
What Is Population Health?
Population health has been deﬁned as: “the art and science of preventing disease, prolonging life, and promoting health through organized efforts and informed choices of society, organizations, public and private; communities and individuals.” 3
Reimbursement systems for providers move from fee-for-service to risk-based models that inﬂuence the health of a community- called “the social determinants of health”. The incentives will move to keeping deﬁned populations healthy as a way of controlling costs. This is mostly critical as the rates of chronic disease increase in the U.S. According to World Health Organization by 2020, it is estimated that 167 million Americans will have at least one chronic condition; 88 million will have multiple chronic conditions. Treatment of chronic disease currently accounts for 78 percent of all health care spending in the United States. 4
Value Based Care in Population Health Management
Value-based care is one of the key components in achieving large scale population health. It designed to shift the basis of reimbursement from volume to value by incorporating incentives to improve financial and clinical performance. That transformation will require a holistic approach on population health, new alliances between health care organizations, and investments in the tools and services needed to support innovative models of care.
Value-based care includes two components: measuring value and reforming payment so that payment reflects value.
Transition from Fee-for-service to Value-Based Payment
The federal government has been piloting demonstration to evaluate strategies because it recognizes that the Medicare program “has an important influence on the shape of the health care delivery system in the United States” and that it is “incumbent on the Medicare program to spend limited funds wisely by providing incentives for beneficiaries to seek, and providers to deliver, high-value services.
The Centers for Medicare & Medicaid Services (CMS) continues to explore a variety of options involving prospective payment, shared savings and bonus arrangements tied to specific performance criteria. Medicare are putting their money to recognize and reward work that’s been proven to improve the quality of care and help keep long-term cost down.
- Chronic Care Management (CCM). Medicare has presented payment for chronic care management happening outside of office visits to maintain population health. Reimbursements are scheduled monthly for non-face-to-face care management services lasting 20 minutes or more to patients with two or more chronic conditions, which accounts for 66% of all Medicare patients 7.
- Transitional Care Management (TCM). Monthly Medicare reimbursement for the work that occurs during the 30 days succeeding an inpatient discharge to ensure that a patient is able to recover well. Subject on the complexity of the condition and the care provided, payments can range from $171 to $239 per 30-day period — a significant upgrade over the $78 to $111 received for a non-TCM billed office visit. 8
- Patient-centered Medical Home Recognition. The medical home model requires an ongoing commitment to quality improvement in healthcare by encouraging comprehensive, accessible patient care that’s coordinated across a team of providers. 7
- Pay-for-performance (P4P) Programs. In pay-for-performance healthcare, providers are compensated by insurance payers for meeting certain pre-established measures for both quality and efficiency. Payments available from P4P programs can average 7% of a physician’s compensation, though they can be as high as 30%. 7 Recently CMS has released the final notice of benefit and payment parameters for coverage year 2017. The new provisions are designed to help consumers who have surprise out-of-pocket costs at in-network facilities. 26
- “Value index” based on quality and cost added to Medicare physician payment methodology; reduced Medicare payment rates for physicians not participating in Physician Quality Reporting Incentive program; and reduced Medicare payment rates for hospitals with high rates of hospital-acquired conditions.
Some of the difficulties the industry faces in developing new and effective care models. In particular, the evaluation found that:
- Specification of the model can be contentious. Adjustments needs to be taken into priority due to conflicting goals and interests. Recently, the Senate have expressed interest in making changes to physician self-referral rules governed under the Stark law following the passage of the Medicare Access and CHIP Reauthorization Act (MACRA). 9
- Lack of a coherent and unified program. FierceHealthcare reported as healthcare moves toward a value-based care model, providers have increasingly phased out an episode-by-episode approach to such patients in favor of population health management. Senate paper proposes strategies for complex, chronically ill Medicare patients. 10
- Grouping together for the purposes of distribution. The Centers for Medicare & Medicaid Services (CMS) and America’s Health Insurance Plans (AHIP) have finally begun to flesh out some of those details by unveiling the first sets of core measures for physicians. 11
- Identifying high-risk patients. Setting up multidisciplinary teams, including patients, to describe the key outcomes metrics that matter for those groups.
The transition from traditional, fee-for-service reimbursement to value-based alternative payment models is doable, CMS says. Efforts to implement specific tactics can be difficult and the benefits are uncertain. Recent efforts by CMS are reported to be unsuccessful.
- 75% of providers drop out of CMS bundled payments model. Only 25 percent showed interest and volunteered in the bundled payments program have actually moved forward once downside risk was introduced by CMS.
- Losses and financial difficulties within the federal and state health insurance exchanges. UnitedHealth Group, the insurance company Cigna is also finding that selling products through the health insurance exchanges could pose problems. 13
- CMS Rule addresses Medicare Fraud, Overpayment Compliance. OIG requests $419M to oversee federal health programs in 2017. The $334 million that would go toward controlling fraud, waste and abuse. 14
- Patients burdened with high-deductible debts cannot afford to pay more than they can afford for quality care. PwC’s Health Research Institute (HRI) reported at least 60 percent of employers either implemented or considered implementing high deductible health plans as their primary option. 15
- Overpayments have always been a sticky issue in the Medicare program. CMS stuck with $543M in not collectible overpayments. 16
- Risk-adjustment issues many financial troubles and shut down. CMS has not taken steps to fix theproblems with the risk adjustment program. The risk adjustment program, part of the ACA’s “three Rs,” essentially shifts funds from insurers with healthier members to help cover the costs of those who have sicker and more costly members. 17
- Struggles with Interoperability. EHR vendors have also expressed frustration with the lack of interoperability, made more glaring with the shift to electronic health records. According to one study, 70% of physicians are spending less time with patients because of the demands of electronic record entry. 18 Recently, Top IT industry giants pledge to ease interoperability. 25
The healthcare industry has embraced value based contracting with CMS leading the path. CMS has set out a goal of moving 30 percent of Medicare reimbursement into alternative payment models including bundled payments by the end of 2016 and 50 percent of Medicare reimbursement toward alternative payment by the end of 2018. 19
Fee-for-service will certainly not go away, but a growing share of provider revenue streams and payer contracts will be value-based arrangements in some form.
While the reimbursement future remains unclear, some trends stand out crystal clear: markets are supporting value-based health care; major advantages are focused on changing provider and patient behavior; and quality measures are taking hold as the path to success.
Population Health: The Flagship of Value-Based Care
Value-based payment is one component to a successful population health management. Implementation of strategies remains a problem that still need to solve. Effective population health management strategies through partnerships with more experienced organizations.
A national study released today by Numerof & Associates, a healthcare strategy consultancy, finds most healthcare providers continue to lag in implementing population health management despite broad agreement that it will be important for future market success. 54 percent rated population health as “critically important” to the future success of their organization; nearly all respondents (97 percent) said it was more than “somewhat important.” 21
With so many models in play, efforts by CMS and commercial health plans to develop and deploy value-based care strategies already suggest certain important issues:
- Collaboration is the key for Information-powered clinical decision-making
Care communities of payers, providers, and patients need the right foundation to effectively connect people, organizations, and systems. That foundation includes information sharing through a secure, comprehensive health informatics platform. One of the hallmarks of the PPACA is financial incentive to encourage the implementation of EHR systems, because EHR systems serve as the technological foundation for improved clinical data management. The right technology and data methodologies are intrinsic to their success.
Health care organizations to understand how to best leverage data analytics to improve care, lower costs, and operate more efficiently. At Johns Hopkins Medicine, big data and analytics are at the core of the organization’s goal to tailor medical treatments and procedures to individual patients. The goal of Hopkins inHealth is to discover new scientific measurements and models to predict the trajectory of diseases in current patients as well as how each patient’s unique genetic makeup is likely to respond to medical treatments and procedures. 22
This organization is taking on risk from health plans in blocks of tens of thousands of patients: first through gain-share, then risk-share, then full capitation. The desire to sustain longitudinal relationships with patients can’t be realized without significant investment in IT infrastructure, analytics, training, and workflow development.
- Patient engagement and community integration
Patient engagement is also key for producing better outcomes and cutting costs. Platforms aimed at changing lifestyle choices and improving healthy decision-making may reduce the likelihood of some chronic disease and ultimately lead to lower healthcare spending. CMS began a five-star ratings program in which patients can choose the hospitals with the highest patient satisfaction rates through Medicare’s Hospital Compare website. 23
- Understanding risks profile
Essential to enabling population health management is to have the capacity to understand the risk profile of population as a segment and on the individual level. Partnering with consulting partner can help facility set predictive models to better define members’ health risks conditions and create predictive model to calculate a member’s propensity to engage in and complete a change management program. Majority of health care providers fail to track either outcomes or costs by medical condition for individual patients.
- Large multi-practice physician organization
This organization is taking on risk from health plans in blocks of tens of thousands of patients: first through gain-share, then risk-share, then full capitation. The practice has a care management program in place, but it’s limited in scope. To mitigate growing risk, this physician organization needs services that accomplish more than coordinating healthcare resources and scheduling follow-up appointments. However, its desire to sustain longitudinal relationships with patients can’t be realized without significant investment in IT infrastructure, analytics, training, and workflow development.
- Support chronic care and disease management
The establishment of care-management or disease-management programs can be an expensive proposition, and the cost reductions obtained through these efforts frequently take years to grow. Once care management is implemented, it is essential to target patients with meaningful opportunities for cost reduction. On the contrary, substantial costly programs aimed at patients in the pre-terminal stages of chronic illness are rarely successful at reducing costs. Many of these patients would be better served by appropriate referral to hospice care.
The challenge of transitioning to an ACO requires leaders to shift to “network” strategies that address the entire continuum of care: identifying and targeting patient populations, achieving clinical integration across network and leveraging data no matter where it lives in the care community. To succeed, there is a need to actionable insight into financial performance and population’s health. Without clear visibility across network—and the ability to influence behavior at the point of care—revenue goals and care outcomes become impossible to achieve.
- Accenture. Healthcare For Here or To Go? Rising investment in on-demand health services reflects an appetite for change. 2016
- Deloitte. Consumer analytics Spinning straw into gold. 2016. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/life-sciences-health-care/us-lshc-consumer-transformation-health-plans-retail-health.pdf
- Dartmouth-Hitchcock. What Is Population Health?2016. http://www.dartmouth-hitchcock.org/about_dh/what_is_population_health.html
- World Health Organization. Preventing chronic diseases a vital investment. 2015. http://www.who.int/chp/chronic_disease_report/full_report.pdf
- Optum. Can Value-Based Reimbursement Models Transform Health Care?. 2015. https://www.optum.com/content/dam/optum/resources/whitePapers/can-value-base-reimburesment-models-transform.pdf
- Medicare Payment Advisory Commission, “Report to Congress: Medicare Payment Policy,” March 2012.
- Hppqualitymeasures. Value-Based Modifier Program and How Will It Affect Your Practice?. October 29, 2015. http://hppqualitymeasures.blogspot.com/2015/10/value-based-modifier-program-and-how.html
- AAFP.org. Frequently Asked Questions: Transitional Care Management. February 2013. http://www.aafp.org/dam/AAFP/documents/practice_management/payment/TCMFAQ.pdf
- Bloomberg BNA.Lawmakers Consider Changes to Physician Self-Referral Law http://www.bna.com/lawmakers-consider-changes-n57982066790/
- United States Senate Committee on Finance. Bipartisan Chronic Care Working Group
Policy Options Document. http://www.finance.senate.gov/imo/media/doc/CCWG%20Policy%20Options%20Paper1.pdf
- CMS. Core Quality Measures. 02/16/2016. https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/QualityMeasures/Core-Measures.html?utm_medium=nl&utm_source=internal&mkt_tok=3RkMMJWWfF9wsRokuq%2FAdO%2FhmjTEU5z16e8lUKC0hZt41El3fuXBP2XqjvpVQcZkML%2FORw8FHZNpywVWM8TILtkUt9hsLQziDW0%3D
- HealthPayerIntelligence. 75% of Providers Drop Out of CMS Bundled Payments Model. December 21, 2015.
- HealthPayerIntelligence. Payers Bear Monetary Losses in Health Insurance Exchanges. February 12, 2016. http://healthpayerintelligence.com/news/payers-bear-monetary-losses-in-health-insurance-exchanges
- Fiercehealthpayer. OIG requests $419M to oversee federal health programs in 2017. February 12, 2016. http://oig.hhs.gov/reports-and-publications/archives/budget/files/FY2017_HHSOIG_Congressional_Justification.pdf
- Revcycleintelligence. Are health insurance exchanges the way of the future? September 12, 2014. http://revcycleintelligence.com/news/are-health-insurance-exchanges-the-way-of-the-future
- Fiercehealthpayer. CMS stuck with $543M in ‘not collectible’ overpayments. July 3, 2013. http://www.fiercehealthcare.com/story/oig-cms-stuck-543m-not-collectible-overpayments/2013-07-03?utm_medium=nl&utm_source=internal&mkt_tok=3RkMMJWWfF9wsRonvqjKce%2FhmjTEU5z16e8lUKC0hZt41El3fuXBP2XqjvpVQcNqN7jMRw8FHZNpywVWM8TILtkUt9hsLQziDW0%3D
- Fiercehealthpayer. CO-OP exec: Risk-adjustment issues threaten core of health reform. February 11, 2016. http://www.fiercehealthpayer.com/story/co-op-exec-risk-adjustment-issues-threaten-core-health-reform/2016-02-11
- Medicalinteroperability. INTEROPERABILITY: WHY IS IT SO HARD?. February 11, 2016. http://medicalinteroperability.org/category/center-news/
- HHS.gov. Better, Smarter, Healthier: In historic announcement. January 26, 2015. http://www.hhs.gov/about/news/2015/01/26/better-smarter-healthier-in-historic-announcement-hhs-sets-clear-goals-and-timeline-for-shifting-medicare-reimbursements-from-volume-to-value.html
- UShealthpolicygateway. Pay-for-Performance. January 25, 2016. http://ushealthpolicygateway.com/payer-trade-groups/qualitysatisfaction/quality-improvement/general-approaches/pay-for-performance/
- Nai-consulting. National Survey by Numerof & Associates Finds Critical Gaps in Progress Toward Population Health and Value-Based Models of Care. February 2, 2016. http://nai-consulting.com/news/national-survey-by-numerof-associates-finds-critical-gaps-in-progress-toward-population-health-and-value-based-models-of-care/
- Thoughtsoncloud. Johns Hopkins uses big data to narrow care. February 4, 2016. http://www.thoughtsoncloud.com/2016/02/johns-hopkins-uses-big-data-to-narrow-care/
- KHN.org. Only 251 Hospitals Score Five Stars In Medicare’s New Ratings. April 16, 2015. http://khn.org/news/only-251-hospitals-score-five-stars-in-medicares-new-ratings/
- Revcycleintelligence.CMS Says Alternative Payment Models Still Have a Way to Go. February 08, 2016. http://revcycleintelligence.com/news/cms-says-alternative-payment-models-still-have-a-way-to-go
- ModernHealthcare. Healthcare industry giants pledge to ease interoperability, EHR use. February 29, 2016. http://www.modernhealthcare.com/article/20160229/NEWS/160229866?utm_source=modernhealthcare&utm_medium=email&utm_content=20160229-NEWS-160229866&utm_campaign=am
- CMS. CMS Proposes Improvements for the 2017 Marketplace. 2015-11-20. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2015-Press-releases-items/2015-11-20.html