Physicians, Hospitals in Washington State Pursue Value During a Time of Pandemic

Nov. 10, 2020
At the Pacific Northwest Virtual Healthcare Innovation Summit, leaders from a physician organization and a rural hospital collaborative, both in Washington state, parsed some of the challenges and opportunities ahead

On Thursday, October 29, and Friday, October 30, Healthcare Innovation sponsored its Pacific Northwest Virtual Healthcare Innovation Summit. On the morning of October 29, Healthcare Innovation Editor-in-Chief Mark Hagland moderated a panel entitled “Delivering on Value in the Era of COVID-19.” His panelists were Melanie Matthews, CEO, Physicians of Southwest Washington (Olympia), and Elya Prystowsky, Ph.D., executive director of the Washington Rural Health Collaborative (McCleary), to discuss a range of issues around the shift from volume to value, in the context of the COVID-19 pandemic—and beyond.

Below are excerpts from the panel discussion.

Mark Hagland: Melanie and Elya, why don’t you both share about your individual roles, and about your organizations?

Melanie Matthews: I serve as the CEO of Physicians of Southwest Washington, and essentially, we’re a population health company. We serve three main functions. We take fully delegated financial risk with payer partners. We’re essentially capitated as a percentage of premium, to manage and coordinate all of the care underneath, everything from claims processing, to credentialing, utilization management, care management, patient engagement, and membership engagement. The second line of business is focused on the federal payment model. We have a Next Generation ACO called Northwest Medicine Health Partners. Next year, that ACO will cover around 35,000 Medicare beneficiaries that are put into the Next Generation ACO. And the third line of business is really management service organization work to help, helping other organizations be successful in value-based care. We help them do delegated contracts with payers, quality reporting, population health technology platforms, and we operate in 18 states as a management service organization. In the state of Washington, we operate MultiCare Health System’s population health platform and contracts through MultiCare Connected Care Network, and other partners. In total, we have about 175,000 lives that we manage in our platform.

Elya Prystowsky, Ph.D.: I am the Executive Director of the Washington Rural Health Collective. Our offices are located in Olympia, Washington. We are a 501(c)3 non-profit organization that encompasses 18 rural public hospital districts or rural health systems across the state of Washington. We are very geographically spread, and we are a membership organization. We also do a lot of back-office supports for our members. We work to create efficiencies across the network. These are individual, unique, publicly governed hospital districts; so as a strategy for maintaining their independence, they have decided to find things that are interdependent among them. So they focused on shared services, preferred pricing, group purchasing, and joint contracting. So we have a business arm, and then we also have an innovation and value-based healthcare arm. And I know Melanie, because our members are entering into that Next Gen ACO that her organization is running. So we are about 17 years old, and moving forward. Rural healthcare couldn’t be more important, as we’re talking about this pandemic.

Hagland: Would each of you share a little bit about your value-based care journey. Could you share about where you were before COVID-19 hit, and how that’s impacted, you, and where you are now?

Matthews: PSW was formed about 25 years ago, by independent physicians who wanted to find a different way of interacting with payers, and who wanted more contracting power than they had had, as standalone, onesie-twosie primary care physician practices. And their survival has been predicated on the fact that primary care has been able to be paid at a higher rate, in a total-performance, total-dollar contract, when we’ve had shared savings that’s been distributed to the physicians; that’s really bolstered primary care. One of the interesting things about COVID is that when you take fully delegated, capitated risk arrangements, and care comes to a screeching halt, you’re not in a cashflow deficit, as you would be under a volume-based reimbursement methodology. So because of what we did, we were able to take claims, and we were able to organize our patient data in a way that allowed us to prioritize which patients we should reach out to for any COVID support in a time of isolation whether they’re at risk for having COVID, or they don’t have the social supports to maintain themselves at home, per med delivery, food delivery, that kind of thing. So that was really reimbursement from a risk perspective. I think that, in the context of COVID, it underscores that when volume doesn’t happen, we’ve had to provide funding to providers in this public health emergency, because they haven’t been able to keep their lights on without it. So as I look at the tea leaves coming out of Washington, D.C. and CMS [Centers for Medicare and Medicaid Services] and the Learning Action Network, that we’re seeing a bit of double-down on value-based activities, post-COVID, indicating that the reimbursement system under its current organization is just not sustainable, not just in terms of this time of COVID, but longer-term.

Hagland: The reality in short is that policy leaders at the federal level believe that the current trajectory is unsustainable, so it’s never going to be easier for providers. Elya, what are the journeys like now of your member organizations?

Prystowsky: I agree that the feds will double down on value-based; those are the tea leaves that we’re seeing, too. Each of our health systems have had individual experiences. Let me say that value-based care and readiness have been a topic at the collaborative across all of our members for seven or eight years. We had an experience with an ACO in 2017; we’re doing another ACO; we’ve had multiple shared-savings programs with our Medicaid managed care partners. So this is not new to us. I think it’s important to note that rural health systems are very different from large urban ones, because they just don’t have the volume. So the way they’re paid is very different.

For us, what COVID did was to shine the light on the disconnectedness between getting to value-based care, and how rural healthcare has been financed for the past 60 years. And that could not have been clearer after COVID hit. COVID did slow everything down. We had a lot of idle hands, and overhead with no patients coming in, and what our members did with that was to think about how they wanted to change workflows, or implement new strategies. And now, all the numbers are back up again, and COVID is hitting us in terms of patients with COVID.

What would both of you say some of the biggest learnings have been in all this, especially in terms of staffing, in being able to predict demand for care, to use analytics, and basically, the fluctuation in reimbursement? If we were much further along on the journey to value, wouldn’t the pandemic have been less destructive to providers? Learnings?

Matthews: I would say that in the capitation world, we work to present from an actuarial and medical economics perspective, the performance of a risk pool. And the entire purpose of putting together a new financial framework—in the Affordable Care Act, was embedded the concept of combining healthy and ill people into the same pool for predictability and to smooth out risk. When COVID happened and there was a sharp decline in elective procedures and the hesitancy of patients to utilize the healthcare system, we obviously had a sharp decline in immediate visits. And we’re still in this.

And the long-term impact from a system-use perspective, and the risk profile around this is yet to be determined. We certainly saw a pickup in volume of visits during the second half of summer, when normally, July and August are slow months. But in this case, we were making up for procedures that needed to occur. I think that the trending remains to be seen. I think that some of it will depend on the maintenance of waivers and health parity beyond the public health emergency. I don’t think we’ve seen the policy situation resolve yet.

Prystowsky: The elective procedures that happen in rural health systems really do subsidize many of the other programs that rural health systems offer, and that are in high demand and represent high need, in rural communities. And the way that rural health systems are paid, is legislated. And other states like Pennsylvania and Maryland, have enacted payment reform in this area. And when the elective procedures halted, there was panic for a few days; we don’t have that capitated model to buoy us, to maintain our ability to provide other services. Fortunately, the state and the federal government acted fast, with state-level and CARES Act funding.

And so we could buy temperature kiosks and retrofit our hospital rooms for negative pressure. You should see some of the ingenious ways our hospitals did that. And in terms of modeling, we saw the writing on the wall in terms of rural healthcare payment; so we went ahead and modeled what it actually costs to deliver care in three of our rural hospitals. And it varies greatly from hospital to hospital, and by service line. And that really does highlight the chess match, that you’re constantly having to take money from service line and use it to subsidize others. So we presented that to our Medicaid health authority and to several associations, and are saying, look, if we really want to shift from volume to value, this is what it costs; we penciled it out and said, if you really want to do this, it can’t be done for less.

Hagland: And so many Americans became unemployed and went onto Medicaid, so the burden became greater.

Prystowsky: That’s right.

Hagland: And so let’s talk about this whole issue of payment parity. And unfortunately, nobody knows anything. And whether there’s a change of administration of not, the question of what types of service will be paid and at what levels, is hanging in the air. If the federal health authorities remove payment parity for remote care and for telephonic care, things will fall apart; because all of the gains in telehealth were based on payment parity, as well as parity for site of origin, seeing people in their homes, as opposed to the previous requirements of patients having to go into a provider site. So what are both of you thinking now in terms of that set of issues around parity?

Matthews: The only thing that’s constant is change. And one of the things around site of service in healthcare is that it’s always changing. I talk about what it was like to give birth 100 years ago and what it’s like now; we used to think it was horrible to kick moms out of the hospital after a few days, and now we don’t. And we used to order things from a catalog, and it’s online now. And things change, and healthcare’s no different. So I think that the idea of providing care on demand, can be done in a variety of settings, including from the home and via technology platforms that help access to care. I do think there’s no substitute for primary care-based coordinated care, with a relationship with a provider, in a way that’s different from on-demand care, especially for patients with chronic illnesses. So I do think we need to be cautious about site of care in that regard; and we need to be looking at the social determinants of health and their relationship to care delivery. I want to see primary care thrive and grow, and more of the healthcare dollar going into smaller-panel-size, higher-coordinated, whole-person primary care, as a real driver of success at reducing medical loss ratio and improving quality.

I think the parity issue is around setting guardrails around an established relationship; there have got to be guardrails around how parity is set. From an ACO, value-based care perspective, we’ve tested out many of the payment models and waivers that CMS has implemented in the public health emergency. CMS has relied on a bunch of the rules that ACOs get to take a hall pass on, they used those in the public health emergency, with regard to waivers, so I think that those waivers will stay. And there have been bad actors that have been caught, and that may slow down payment parity. So I think there need to be guardrails and the reform of rules around site of service to meet patient needs, and we need to study and monitor, so that we don’t end up with a negative impact.

Prystowsky: I agree with your summary, Melanie, that there need to be guardrails. But I do want to talk about telemedicine in the rural setting. We went from talking about telemedicine and not doing it for years, to having one of our systems do 240 tele-appointments in one day. And that speaks to a trend where you can’t offer a benefit and then take it away. I think that that would be met with extreme resistance in the consumer market. But I do agree with Melanie about guardrails and monitoring in terms of parity. And we’ve polled some of our hospitals in terms of their patients’ preferences around this, and the results we got back were either 60/40 or 40/60, in terms of preferences. In-person care is not going anywhere; patients like their relationships with their care teams.

But we also have to take about equity: rural Washington does not have equity in terms of broadband access. I was just talking to one of my members; we are rolling out a telemedicine contract, and I asked her if she’d be interested in it, and she said they’re not expecting to have broadband until 2026. She’s the CEO of the hospital in Forks, in Clallam County. And in a state that houses Amazon and Microsoft and the Gates Foundation, to me, that is a travesty beyond all travesties. If we want telemedicine to be a key lynchpin in our healthcare system, the state has got to support broadband access. The structural inequities that have been around in rural healthcare, have been exacerbated by the pandemic.

Matthews: The pandemic really has brought out all the inequities, including racial inequities. And we need to do a better job on the policy level. And we also have to think about what providers want, in terms of the virtual environment. A lot of the providers really like it; but some say, this is not what I went into healthcare for. And we don’t have this tech thing down yet. And the reality is that this has an impact on patients and on communities, especially those without adequate access to broad, and with community members without the tools. So we have to be conscious of that.

Hagland: And so what are you both sensing from consumers, including in rural areas?

Prystowsky: Each hospital is independent, and they have a mandate, both philosophically and legislatively, to support he health of their communities. So they will provide virtual care, if it’s been in demand. And it’s been extremely popular. I will say in rural areas, that telehealth really helps because it’s really hard to get mental health workers and specialists, so having telehealth extend to care, particularly for patients with behavioral diagnoses, has been very helpful.

Matthews: It really ahs been very variable. We’ve been doing telephonic visits for people who are socially isolated. Some are unable to get out, and telephonic is the only way to reach them in this situation. So I have concern there. So I think that they’re sort of having to take what they can get, but people who wouldn’t normally do FaceTime, or similar technology, are doing it.

Prystowsky: And remember when we were all talking about the opioid epidemic back in February and early March? None of those problems went away; in fact, they were exacerbated by the pandemic. And virtual care has allowed—the Washington state legislature has opened up virtual care to care for people with substance abuse disorders. These underlying chemical dependency issues have always been there, and virtual care has done a lot to take care of those people.

Hagland: With regard to data analytics, the data analytics journey is another journey. And healthcare leaders realized early on in this pandemic that data analytics would be really important, in order to be able to predict everything, from variations in demand for care delivery and services, to revenues in the context of revenue cycle management. So what have your journeys been like in that area?

Prystowsky: It’s not a great story for rurals, you know? Data, data everywhere, but nobody knows what it means or what to do with it. But among our 18 members, only one hospital system has a full-time data analyst. It is an overhead cost that is not supported, and it is extremely difficult to rationalize the cost; it’s super-difficult. We are moving forward with a virtual-scribe program and an AI program. And it’s one of the major reasons that our membership is leaning into Melanie’s ACO, in order to get some training wheels on this, and we’re really looking to Physicians of Southwest Washington, to help us here. And investments in analytics programs are cost-prohibitive; and our members just don’t have the $3-5 million to invest in this.

Hagland: Ironically, your hospital members could really use it.

Prystowsky: Yes, we need it!

Matthews: It’s the chicken-or-egg problem, in that you have to be able to prove its value. And I really believe that you can more swiftly encourage community stakeholders and leaders to row together with you, if you can get the social determinants of health data, connected to the medical data. But I agree with Elya: it’s hard to layer those administrative costs in. The argument is that we can decrease overhead; but it never really decreases overhead. So the goal should be to reduce medical-loss costs. And the challenge is that the analytics tools accomplish something, each one, but increase administrative costs. So I’m very committed to policies around such phenomena as Blue Button and data exchange at the point of care, so that we can have more cost-effective data available for action, and we need policies to support that.

Hagland: And rural care could really use AI [artificial] for analytics, but AI is very expensive.

Prystowsky: COVID-19 has allowed some space for innovation and creativity so that organizations that are nimble and agile and using the most up-to-date technology, can really shine. And I’m optimistic that that will happen soon for our members.

Hagland: So what do the next two years look like? What are your top priorities going to be, for the next 18-24 months?

Matthews: I believe that with pop health and the movement towards value, you’re building a house, or maybe a cake. But you need the base layer of data and tools in order to have the information that you need, and then that information, plus the activities around managing and coordinating care, that’s the next layer, and then you go to the next layer. And one of the things I’m very committed to is, not trying to solve for the fanciest stuff, but to solve for the baseline activities: how do we risk-stratify for chronic illness, how do we transitional care, how do we ensure appointments for primary care after discharge, how do we coordinate care in the home? Nine percent of our costs, related to patients with chronic illnesses, we found, were attributed to 40 percent of the cost for the entire population. We could continue to refine which interventions are most effective, so that we’re good stewards of the healthcare dollar. So take what’s clearly good, and use it for the population with chronic illness, and continue to be open to always learning. It’s very much transformational work that takes time and management. And we need to scale things to partner with more and more payers. And in terms of being responsible for the health of populations, under capitation, for example, if it helps the patient to buy them an air conditioner, you buy them an air conditioner.

Prystowsky: The next 12-24 months for our collaborative—our priority will be to support whatever resources and services that are needed for these independent hospitals to get through the flu season and then defend them in terms of the huge budget deficit happening in the state of Washington, per the COVID pandemic; and also look at our defense and offense, to make sure that rural healthcare is not on the chopping block in the next legislative session. If our members do look 12-24 months in advance, they do it with several different scenarios around COVID, and around whether or not Congress will release further federal funding. It’s extremely challenging to know what will happen in that regard. And will the assistance be in the form of a loan or a grant? The money was not given with the usual due diligence that the federal government engages in, before it offers support.

And in terms of the longer-term strategic vision, I agree with everything Melanie said; we want to create better partnerships around Medicaid dollars; 60-80 percent of rural healthcare funding involves public dollars, Medicaid and Medicare. Who do we want to partner with around Medicaid, for a win-win? And in terms of clinical, we’re all doing quality improvement projects and workflow redesigns, we’ve got grants in place; and presumably, by doing all these care coordination investments, care management, training on quality improvement projects, workflow redesigns, and so presumably, all this training on evidence-based investments, training on coding, will help our members really feel confident in terms of engaging in value-based contracting with payers.

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