Surviving and thriving under hybrid reimbursement models

Regardless of current political uncertainties and federal agency backtracking on implementation of bundled payments, no-one is in doubt that value-based care and reimbursement is the future of the healthcare system.

Ever-increasing costs are coupled with quality outcomes trailing other nations, and payers and patients are demanding better. With providers preparing for between 20%-50% of their income to come through value-based programs by 2019, the question remains as to how to stay afloat and succeed during the long transition period living with a discordant hybrid model.

By its very nature, value-based care and reimbursement is the antithesis of the old world of fee-for-service and payment for activity. Payers are incentivising, and indeed intervening, to disrupt the way healthcare has traditionally been delivered and paid for, firstly through rewards for achieving quality measures, and then through penalties for failing. Providers, particularly those with medical and quality backgrounds are relieved to finally be rewarded for doing the right thing by the patient and the system at large. The question is, how to know what the right thing is?

Roy Smythe, Chief Medical Officer, Health Informatics at Philips thinks, “Although providers want to be efficient and cut costs, the move from fee-for-service to value-based care has been slow. In part, this is down to resistance to change and the billions in sunk cost spent on infrastructure to suit an old model. We’d see more dramatic acceleration with more outcomes-based reimbursement models.” From the payer perspective, Jeb Dunkelberger, Director of Value-based Reimbursement, Strategy and Innovation at Highmark explains, “The value-based care challenge is one of the chicken and the egg. Do you want to see certain behaviors, and then pay for it, or offer incentives to drive the behavior in the first place? We are developing reimbursement models that allow providers to be rewarded for doing the right thing and paying to build out supporting infrastructure.”

As with all system change there are winners and losers. As in nature, hybrids are commonly less viable than their parent species. Providers have to deal with mixed incentives. According to David Dugdale, Medical Director, Care Management & Population Health at UW Medicine, “Savings in cost of care that may create a quality bonus equates to a reduction in revenue elsewhere, and providers hope to make this up with increased market share – but this can only go so far.”

Those surviving are operating in increasingly commoditized markets with high fixed costs in an environment of reduced reimbursement. Classic examples are diagnostic imaging and ambulatory surgical centers. Both have increasing capital equipment costs as they compete for referrals by improving patient experience and attracting top physicians with the latest equipment and devices. Many are having to find creative ways of delivering care whilst maintaining profitability and offsetting reduced margin by cutting back on operational costs to stay in business. However, without the infrastructure and technology capabilities in place the administrative burden becomes too heavy, driving many to sell up or move on.

The fittest are thriving. Tim Sielaff, CMO at Allina Health Group, believes value can be delivered under both fee-for-service and value-based models. “Value is a unifying term, though people may perceive it differently based on perspective. A key strategic objective at Allina is delivering value, and it allows us to serve our mission. As long as we keep that front and center we can deliver value under any model.”

Those already part of ACOs or operating in states with capitated models, are ready for the change, and indeed have been delivering to new models for years. Those with innovative, forward-thinking and well-resourced leadership have been investing ahead of the curve and are implementing a host of transformations to be successful in the new world. Some common characteristics include:

Rethinking care delivery
Care management and coordination are areas receiving significant attention. At the light touch end of the spectrum, this often involves additional staff whose job it is to bridge the gaps in information, communication and documentation between care settings. Those taking greater strides toward integrated care are working hard to identify priority areas for improvement and rethinking how they fund and deliver services across the care continuum according to evidence-based best practice in a way that is standardized, scalable and outcomes-focused.

Kaiser Permanente, Intermountain Healthcare and Allina Health care leading the way when it comes to coordinated care management.

Michael Kanter, Chief Quality Officer at the Permanente Federation describes Complete Care, their approach to delivering coordinated care, which includes the unique practice of “Proactive Office Encounters”. “We have been working on our Complete Care model for some years. Proactive Office Encounter aims to identify gaps in care from a patient-centered perspective, and using our robust EHR system, we can proactively identify and address care gaps in any care setting. Support staff use checklists to identify these gaps, which is much more effective than having a patient go home and then chasing them to come back in.” What’s interesting about his model is that it goes against the tide of pushing more and more care into the primary care setting, and instead identifies traditionally primary care work in a specialist setting. This is a much more holistic patient-centered approach. At the end of the day the patient doesn’t care which physician is responsible for what. By breaking down specialist silos, the needs of the patient as a whole can and should be addressed at any opportunity to avoid costly late interventions downstream.

Stan Huff, CMIO at Intermountain Healthcare describes how his organization are piloting Shared Accountability Organizations. “These are our way of driving accountable care. We involve physicians from within our group, but also partner with non-Intermountain owned clinics. We have implemented value-based payments to share the risk and cost of care for a population. We can track and measure individual physicians, including at independent clinics, and by sharing outcomes data we can identify and reward best practice.”

Tim Sielaff, CMO at Allina Health continues, “It’s almost never the case the individual is bad, rather the system is failing to serve the delivery of optimal care. We have developed Clinical Service Lines as our mechanism of driving coordinated care across the continuum, before and after hospital, from prevention and early detection through to survivorship and end-of-life care.” Starting with well-studied conditions with clearly defined treatment guidelines, such as breast health and cancer, Allina currently have 11 Clinical Service Lines running housed across all sites of care. By benchmarking process and outcome quality measures, and regionalizing resources around conditions, they have managed to significantly reduce unwarranted variation. For example, Allina’s median time from diagnostic mammogram to biopsy is currently zero days, from a range of 0 to 14 days before implementation.

Front line delivery of the right care, at the right place, at the right time is predicated on the underlying operational, financial and physical tools being set up to support desired new ways of working. Dennis Deruelle National Medical Director, BPCI Services at Team Health believes, “It’s a case of getting providers over the line, and aligned incentives will help with this as more and more is at stake. Those ahead of the curve are investing heavily, as they know that without all the magic pieces they will not be able to deliver to a value-based model.” Mergers, acquisitions and alliances are increasing to expand the reach of care and take the form of Integrated Delivery Networks, health system partnerships and payer-provider alliances; with the aim of extending control, aligning goals and sharing accountability across a longer stretch of the care continuum.

Population health management
Population depends on perspective. At a payer level, the population encompasses their health plan members. There is a natural incentive to keep as many members well for as long as possible, and so payers are leading the charge when it comes to preventative measures, be that reimbursement of annual wellness exams, incentivizing cancer screening, immunizations and drug therapy for chronic condition management. At a provider level, their population consists of the patients they see. On the ground PHM appears to focus on identifying and managing high cost high risk patients. It has been a hard lesson for some to even get to the point of defining and understanding their population.

In early 2017 Highmark launched True Performance, their value-based reimbursement program for primary care physicians. 1.4 million patients are covered under this program with 30% increase in payments linked to quality and cost metrics. According to Dunkelberger, later this year they will launch incentives to increase quality in post-acute settings, including Skilled Nursing Facilities, Long-term Acute Care Hospitals and home care. The aim is that by incentivizing value-based behaviour across the continuum they will catalyze the difficult conversations that have to be had between providers to drive integration.

Data and technology
Those thriving under value-based care programs have their hands around their data and know how to use it, be it identifying best practices, opportunities for cost reduction or ways of engaging with patients and physicians across care silos. As a senior physician executive accountable for quality, Maria Granzotti cares about “Meeting the patient where they are, through engagement, education and improved access,” and the expectation is that vendors will support providers in developing goals for value-based initiatives. Michelle Currie, clinical informaticist and Founder at SavantSolutions4IT says, “Through the use of clinical decision support, artificial intelligence and workflow automation, technology platforms are supporting payers and providers to move to value-based care.” By connecting data across systems, reducing operational and administrative burden and implementing new ways of working, clinicians are freed to do what they do best; supporting patients to make decisions safe in the knowledge they have all the information they need at the point of care, and they will have visibility and confidence in what happens next when they leave their office.

Even those well-resourced innovators making great strides towards delivering value-based have challenges. Care coordination programs may be little more than papering over the gaps with people and manual process, rather than a truly integrated system. New regulations are always just around the corner and decisions need to be made on which to focus on. In addition, it’s becoming increasingly clear many of the determinants of ill health and high cost intervention have root cause in social areas traditionally out-with the realms of the healthcare system – namely employment, transport, housing and finances.

It seems to be that patients, providers and payers are dealing with a myriad of hybrids. How healthcare is payed for is one such hybrid. The current separation of physical and behavioral health and medical and social wellbeing are others. All need to be addressed if we are to move towards person-centered long-lived and healthy lives.

Corrina Kane, Head of Strategic Marketing, Lumeon
@Corrina_Kane @Lumeon_

Corrina Kane, Ph.D. is Head of Strategic Marketing at digital health company Lumeon. She researches, writes and speaks on the topics of healthcare policy and regulation in the USA and UK, the global digital health industry and women in technology.

Corrina has held multiple operational management roles developing and marketing new products and entering new international markets in the healthcare technology and life science arena. Previously she served as a strategy consultant to European pharmaceutical and consumer health companies across R&D and commercial areas.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

Copyright © 2023 Becker's Healthcare. All Rights Reserved. Privacy Policy. Cookie Policy. Linking and Reprinting Policy.


Featured Whitepapers

Featured Webinars