When it comes to aligning physician incentives and processes in order to master value-based contracting in healthcare, senior leaders at the 30-plus-hospital, Arlington-based Texas Health Resources (THR) have been working assiduously to put everything together, confirms R. Todd Richwine, D.O., chief medical informatics officer at the Texas Health Physicians Group, the umbrella physician group attached to the THR integrated health system.
Referring to the Next Generation accountable care organization (ACO) program sponsored by the federal Centers for Medicare and Medicaid Services (CMS), Dr. Richwine notes that, “As part of the Next Gen ACO, we have 85,000” Medicare beneficiaries being managed under that program. “And we’re in multiple other ACOs,” he adds, referring to the 29,000 Medicare beneficiaries covered under the North Texas Specialty Physicians Medicare Advantage contract the system services, the 21,000 Medicaid beneficiaries covered under the AmeriGroup ACO, and, in the commercial realm, the 112,000 United HealthCare, 69,000 Aetna, 48,000 Cigna, and 19,000 Humana health plan members that THR clinicians are caring for, for a total of more than 354,000 patients altogether.
As for Texas Health Resources’ journey into value-based care delivery and payment, “I would say it’s been slow and steady,” Dr. Richwine says. “We started into ACO work years ago with a group called Medical Edge, which became Texas Health Physicians Group. So we have a long history of working towards quality and being physician-led. We have a large number of very active physicians—anything around reimbursement or quality measures, is, led by physicians,” he adds.
Asked about the biggest challenges, Richwine offers, “I think the biggest challenge has been developing the support staff necessary to do well on the measures. The physicians are very motivated to do the right things for their patients. Unfortunately, some of what’s required falls outside of what physicians can accomplish themselves. It really requires an entire multidisciplinary team to achieve results, on behalf of sometimes-difficult populations. We make sure that we’re providing the care—everything from physicians to PAs and nurse practitioners, to social workers and case managers.”
Richwine and his colleagues at Texas Health Resources are far from alone in facing down the complexities of value-based healthcare. As early on in the collective journey as the U.S. healthcare system is, the leaders of organizations like THR are learning valuable lessons in how to prepare broadly to take on financial risk in contracts with the public and private purchasers and payers of healthcare, and how to engage and align physicians.
Early On in the Journey of a Thousand Miles
Certainly, the grand adventure in value-based healthcare is in its early stages. Asked to characterize how far along on the proverbial journey of a thousand miles U.S. providers are in that journey, Joe Damore, vice president at the Charlotte-based Premier Inc., says, “I think we are still in the childhood years, about to enter the teenage years, maybe, on this. We’ve got about 20 percent of both commercial and Medicare arrangements, that are two-sided—it’s actually 17 percent in Medicare that are on two-sided risk now, up from 13 percent,” he adds. “We’re moving more and more towards two-sided risk, but it’s a slow process. The delivery systems want to make sure they’re ready, and that they have the tools, knowledge, and information to manage two-sided risk. But one-sided risk has continued to grow, with over 500 Medicare ACOs across the country, and about the same number of commercial ACOs.”
What’s more, Damore says, “Our forecast that two-sided risk will pick up even more soon, as providers need some downside risk to really focus on this. And we’ll also see a growth in Medicare Advantage and Medicaid managed care, involving some downside risk to providers. Many health plans want to do this and shift risk to providers, too, but many don’t have the infrastructure in place to move towards a capitated arrangement for primary care plus shared savings for specialty care; very few have built the tools to do that. There’s a desire to do that. Blue Cross of Hawaii has implemented that model, where they’re capitating over 500 physicians in Hawaii for primary care, and providing shared savings for total cost of care.”
“To add to what Joe has said, in the past many years, I’ve been focusing on the bundled payment side, and one of the interesting things with bundled payment is that if you go back to the BPCI (Bundled Payments for Care Improvement) program under Medicare, announced in 2011, the thousand-plus participants have been dealing with two-sided risk across the life of that program,” says Mark Hiller, vice president of bundled payment services at Premier. What’s more, Hiller notes, “There’s two-sided risk in the total joint replacement program. We’re working with providers on CHF, pneumonia, COPD, and so forth, in addition to total joint, and with two-sided risk. So that’s growing, if more slowly, than the broad population health-related programs. But in the bundle area, it’s growing fast. I wouldn’t be surprised if the new program took off quickly, he says, referencing what’s called BPCI-Advanced—the Bundled Payments for Care Improvement Advanced program, sponsored by CMS.
A fundamental challenge, says their colleague, Shawn Griffin, M.D., Premier Inc.’s vice president, clinical performance improvement and applied analytics, is that, collectively, “We’re still standing on opposite sides of the gym, trying to figure out if anyone wants to dance, and nobody’s a good dancer yet.” “Living in both worlds—the world of fee-for-service incentives and of value-based payment—is very difficult,” Damore agrees. “We have an expression” at Premier, Damore says: “fee-for-service is the enemy of value-based payment. That is the number-one challenge, that the model of payment to providers has to be aligned on a value-based model.” With reference to discussions about capitated payment in primary care, he says, “If my incentive is to get patients into the office, that’s what I’m going to do; but if my incentive is to manage my patients on a capitated model, I’m going to grow my panel and have advanced practitioners see my patients more.”
“I think the provider market is moving forward at a measured pace,” says Laurie Sprung, Ph.D., vice president, consulting, at The Advisory Board Company, the consultative firm based in Washington, D.C. “But,” Sprung says, referencing the recent announcements around potentially disruptive market changes on the horizon—from the proposed CVS takeover of Aetna, to the announcement earlier this year that Amazon, Berkshire Hathaway, and JP Morgan Chase are planning to create an employer-based disruption in the healthcare delivery market—“we all recognize that the opportunity for disruption is there. And part of what I see in all those areas is a wide-open space that many of our progressive members are in, where they’re on a value path, but they’re also on a consumer-focused path. What good is a clinically integrated network, if I can’t access it easily?” she asks, referring to the acceleration taking place in the development of clinically integrated networks in many local and regional healthcare markets across the U.S. Simply building new organizations of organizations won’t move providers forward fast enough, she adds. “You have to be willing to disrupt how you do things. It’s incredibly disruptive for a physician practice to do some visits live and some by telehealth; it’s hard operationally. But we’ve got to think through what the package is, ours or somebody else’s, that gets the consumers what they want when they want it, and how they want it. There are already a lot of low-cost alternatives to seeing a physician,” she notes.
The View from the Health Plan Side
All those interviewed for this article agree that it’s very important for the leaders of hospitals, medical groups, and integrated health systems to understand where the leaders of commercial health plans are moving, within leaders of more innovative health plans are moving ahead as quickly as possible.
One health plan whose senior executives would like the market to move forward faster than it is, is the San Francisco-based Blue Shield of California, which serves more than 4 million members in California. There, notes Chris Jaeger, M.D., Blue Shield’s vice president of accountable care innovation and clinical transformation, the organization’s entire provider-facing strategy is based on the presumption of value-based healthcare as a core building block. “We start with a base commercial contract with the providers, and then we lay on top of that a multi-party accountable care/HMO agreement,” in every instance possible, Jaeger says. “That involves Blue Shield, a provider group, and two facilities. And we set a global budget for the population attributed to that contract, and if they perform well and there are savings, we all share the savings, and if we come in over the budget, we share in the costs as well. The global budget helps us keep the premium rise at a better level than the non-HMO market,” he adds.
What’s more, Jaeger notes, Blue Shield of California’s accountable care contracts also include “quality parameters around which providers can see extra compensation as well. Where I see us going is in extending that kind of agreement to other stakeholders, including skilled nursing facilities and other stakeholders important to the continuum of care,” he says. “Beyond that, we’re working on alternate payment models separate from ACO arrangements. Those include bundled payments, where we create the bundles for certain conditions, procedures, or diseases, with clear guiderails or boundaries. For example, if we’re looking at a bundled payment for an elective hip replacement, those guiderails help us innovate with providers, around things they’re working on, so it makes sense for them and for us. So for instance, on that hip replacement, would there be an opportunity to collaborate with the physical therapists, rehab facilities, and even startups in the space, to use more technology in the home, versus building more bricks and mortar facilities.”
Jaeger emphasizes that the opportunity to collaborate to improve patient outcomes is one that he believes provider leaders should find appealing, in that collaboration to improve outcomes is a banner under which everyone can march together. Still, he acknowledges, the leaders of many patient care organizations are finding the path forward challenging. Asked whether the provider organizations partnering with Blue Shield of California have been achieving improved clinical and financial outcomes, Jaeger says, “Of course, it varies by provider. What matters first and foremost is their willingness and their skill; those are critical success factors. Another relates to how many patients are involved, both at the group level and the individual-physician level. The more at-risk members, the greater the likelihood to improve outcomes. And another factor relates to how long they’ve been working with us. Those groups that have been doing this for a longer time also have the benefit of Blue Shield investing in efforts around complex care management, certain types of clinics, etc.”
From the Physician Side: Slow, Steady Acceptance and Progress Seen
Meanwhile, leaders of multidisciplinary physician groups are working hard to make progress, even as they face obstacles and challenges. Still, confusion remains among leaders and clinicians at many patient care organizations about how various alternative payment models work, even bundled payments. Premier's Hiller says, “There’s still a misunderstanding out there about how these models work. When I meet to talk with providers about bundles, especially when I talk to providers new to the concept, there’s a vast different between how the program actually works, and their understanding of it. There’s this notion that you’ll get a single payment and figure out how to distribute that, and many providers aren’t comfortable with that, because they think they’ll now have to act as a payer. But the vast majority of bundles today still involve a fee-for-service payment upfront, and it can actually be successful for them financially. To be successful with these bundles really requires managing quality of care: you don’t want multiple readmissions under a bundle. When you can reduce readmissions, and look across the continuum of care, which most providers aren’t used to doing, you can be quite successful, both financially and from a quality perspective,” he emphasizes.
In the end, a classic differentiator remains operational here, says Sohail, the CIO of the Dallas-based Premier Management Company, a firm that organizes and manages ACOs (and is unrelated to the Charlotte-based Premier Inc.). And that differentiator, says Sohail (he uses one name only), is the element of personal leadership. “Looking nationwide,” Sohail says, “it is clear to me that, among those organizations that have had tremendous success in value-based healthcare, personal leadership is, in my humble opinion, the primary trait. When leadership understands why it’s important to move into value-based care, that’s when things move faster. And there is a learning curve involved. It’s better to fail earlier. So in my opinion, personal leadership is core. Secondly,” he says, “with the bureaucracy of large organizations, any set of changes has to go through so many iterations—and that can only be addressed through strong leadership.”