Payers, Providers Agree: The Shift to Value Will Require Transformative Change

May 28, 2019
At the World Health Care Congress, healthcare thought leaders engaged in high-level discussions on moving toward value-based care, new Medicare payment models, and the massive shift that’s needed to succeed

At the 16th annual World Health Care Congress that took place in Washington, D.C., healthcare payer and provider executives held dynamic discussions on the move toward value-based care while emphasizing that transformation will be needed at all levels—clinically, operationally, and culturally.

Across two robust conference panel discussions on April 29, industry leaders offered their varying perspectives on the value-based care progress that has been made, while discussing next steps—such as new payment models that have recently been introduced—and the primary challenges that still do exist.

On one morning panel, Redonda Miller, M.D., president at Baltimore-based The Johns Hopkins Hospital, noted that one of the hospital’s core missions is to serve as the community hospital to East Baltimore, a very economically challenged area. As a community hospital, “we pride ourselves on playing a role in population health,” said Miller. She explained that because hospitals in Maryland operate under a unique payment model—in which all payers in the state set annual global budgets for hospitals to cover both inpatient and outpatient care—it has become easier to focus on wellness and population health. “It doesn’t matter if I, as a physician, take care of fewer or more patients; the revenue I receive is [pre-determined],” she said. “Why would the state do this?” Miller asked. “The idea is to keep people out of the hospital, and we embrace that. We’re focusing on improving post-acute care strategies and reducing emergency room visits.”

Last year, the Centers for Medicare & Medicaid Services (CMS) approved the state’s proposal to extend its all-payer model for another five years and expand the program beyond hospitals. Under this expansion, which started January 1, the all-payer model will also apply to some physician practices, skilled nursing facilities and other non-hospital organizations. In the first iteration of the waiver, over the first three years, Maryland saved Medicare $586 million compared with average national spending, according to Johns Hopkins officials.

Other providers spread out across the U.S. are making their own inroads into moving away from healthcare’s traditional fee-for-service business model and toward a system in which physicians will be motivated to reduce unnecessary spending and keep patients out of the hospital, when avoidable. Jason Mitchell, M.D., chief medical and clinical transformation officer at Presbyterian Healthcare Services in Albuquerque, N.M., detailed how his organization—which operates eight hospitals in seven New Mexico communities, as well as its own health plan—has been integrated in finance and care delivery for the past 30 years.

By looking at new clinical models and leveraging data analytics, Presbyterian has been able to identify high-risk members and provide access and interventions in their homes, including at-home palliative care services, Mitchell explained. Presbyterian also has an emergency department (ED) navigation program to screen patients who come into the ED to see if they truly need that emergency service. If they don’t, Presbyterian providers will take those non-emergent cases out of the ED and into urgent care clinics or primary care offices. And even if those patients are not members of the health system’s internal insurance plan, Presbyterian will write off that cost, Mitchell said. Through the program, thousands of patients are navigated away from the ED each year, resulting in millions of dollars in cost savings.

But despite the success that institutions such as Presbyterian and Johns Hopkins have had, most patient care organizations are not nearly as far along on their value-based care journeys—if they are at all. As such, a key conversation at the World Health Care Congress ensued about the transformative change that’s needed for new business models to truly thrive.

One health plan executive on the opening panel—Craig Samitt, M.D., president and CEO of Blue Cross and Blue Shield of Minnesota—said he would love to be able to convince his state to have a waiver that would require all health systems to take global payments, just as it would be great if Presbyterian could exist in Minnesota. But the problem, according to Samitt, is that “most systems are not like Presbyterian or Hopkins. We have been talking about our pace to transformative value for 25 years, and we are really good at admiring our problems, but not very good at making progress. We need value-based care to scale in every market and every state. I applaud the innovation; I want us to get on it and do it everywhere,” Samitt said.

Mitchell, speaking to Presbyterian’s ED navigation program, acknowledged that the initiative is “an example of cannibalizing our own [patient] volume, but we know that it’s the right thing to do. From a revenue standpoint, you are going to take [short-term] losses, but [care] has to be affordable for the community. And you need executive and board support, or you will never get there,” he attested.

Moving at different speeds

During a second morning discussion on value-based care transformation, panelists agreed that because of the traditional fee-for-service healthcare paradigm, progress has just been incremental to date. Valinda Rutledge, vice president of federal affairs at America’s Physician Groups, and vice president, public payer health strategy at Greenville Health System in South Carolina, said that from her experiences, stakeholders are shifting to value-based payment models “reluctantly.”

Rutledge has quite the resume on healthcare finance and quality. She was a health system CEO for 15 years, and was recruited to help set up the Center for Medicare & Medicaid Innovation (CMMI), where she led a team in the creation of the government’s first bundled payment model, the Bundled Payments for Care Improvement (BPCI) Initiative. “People have asked me that if they are successful in value-based care, what will that do to their [volume] of hospitalizations? That alone says we are not successfully [evolving],” Rutledge contended. She also noted that there has been lagging adoption from commercial payers, in comparison to how the government has pushed financial risk. “Physicians have asked for risk-based contracts; some commercial payers say yes, and some say no. They will do a bundled payment model or two, but they will not fully [embrace] population health,” she said.

Niyum Gandhi, executive vice president and chief population health officer at New York City-based Mount Sinai Health System, who was also on the panel with Rutledge, agreed that progress has been incremental, but at the same time, pointed out that “it took 100 years to build the sick care system we have today.” Gandhi continued, “To say that we are going to rebuild the $3.5 trillion healthcare system in seven years…well, no one really expects that. There is meaningful progress being made.” Speaking more to the progress, Gandhi said some of those institutions that have been successful have lowered their total cost of care by about 20 percent. “We are learning, and the next five to seven years will be very interesting. Will we continue incremental learnings or take what we have learned and turn that into more aggressive bets?” Gandhi pondered.

Even Presbyterian’s Mitchell and Johns Hopkins’ Miller stated that despite their respective organizations’ levels of success, business model misalignment is still prevalent. “Every provider will be at a different [maturity level], so you need to create different glidepaths to get there. You can’t just flip the switch on capitation,” Mitchell said. And Miller noted that even though Maryland hospitals are on a global budget for payments, physicians in the state are still largely in the fee-for-service model.

BCBS’ Samitt said that in some other instances, higher standards need to be set, referring specifically to accountable care organizations (ACOs) that might have “declared victory” since they might tie a little bit of payment to quality. “But in my book, you’re not an ACO unless you are in the top quintile of quality and in the lowest quintile of cost,” he said.

New care models pushing the envelope

The recent launch of a new set of voluntary value-based payment models for primary care physicians under the label “Primary Cares” already has the support and enthusiasm of stakeholders, many of whose reactions are summed up here. At the conference, healthcare thought leaders expressed even more fervor.

Rutledge said she’s excited about the introduction of the new models, and a big reason for that is that previous models from CMMI have not proven to generate many savings with the exception of just three or four. “I was thrilled with the launch of these [payment] models; they are very transformative, and not incremental,” she said.

The newly announced effort has two prongs, as Healthcare Innovation reported in April. The Primary Care First Initiative creates an opportunity for providers to leave behind fee-for-service and be paid for keeping their patients healthy and at home. The second is Direct Contracting, which allows sophisticated organizations to take full accountability for their patients at a local level. Both paths are voluntary and they emphasize a focus on complex, high-needs patients.

As explained by Rutledge, Primary Care First will allow primary care providers to get a population-based capitated monthly payment, which will be risk adjusted with a flat primary care fee. “It moves the primary care providers away from the E&M codes, to a [system] where they get a lump-sum payment to manage and coordinate care.”

Along with that change in payment structure, there is an upside potential of 50 percent and a downside [risk] of 10 percent to decrease hospitalizations, she said. As CMMI Director Adam Boehler said last month, “Doctors who earn $200,000 today could earn up to $300,000 if their patients stay healthy at home.” Rutledge noted that the government is estimating about 25 percent of primary care providers will look to enter this model. The second prong is Direct Contracting, which creates three payment options for providers to take on varying amounts of risks and earn rewards based on quality outcomes.

Unquestionably, the initial feedback is that the government means business with these new payment models, so much so that the transformative change that stakeholders believe is needed may have already begun.

Melanie Matthews, CEO, Physicians of Southwest Washington, who was part of the second panel discussion, called the launch of the models “cultural transformation.” Paul Grundy, M.D., founding president of the Patient-Centered Primary Care Collaborative, and who was also part of the second panel discussion, remarked, “There is only one way to herd a cat and that is to move the food. And the food has just been moved.”

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