The path from upside-only risk-sharing in value-based contracts to two-sided risk is a complex and very tricky one, and the complexities of that reality were shared in broad and specific terms by three leaders in the medical group world, during a pre-conference session on April 11 at the Manchester Grand Hyatt Hotel in San Diego, as the APG Annual Conference 2019, sponsored by the Los Angeles-based America’s Physician Groups (APG), which represents over 300 medical groups involved in value-based contracting, got underway.
In that session, entitled “How to Move from Upside-Only to Downside Risk,” Bart Wald, M.D., a consultant with APG, introduced three presenters—Adam Solomon, M.D., CMO of the Long Beach, California-based MemorialCare Medical Foundation; Mark Wager, president of the Lancaster, Calif.-based Heritage Medical Systems; and Narayana Murali, M.D., executive director and president of the Marshfield, Wisconsin-based Marshfield Clinic Health System, and also executive vice president and chief clinical strategy officer of MCHS, Inc. Each medical group leader shared with the audience his presentation, and then Wald led all three presenters in a panel discussion.
“Each contract will be different, and there will be different things to focus on to be successful,” Dr. Solomon said at the beginning of his presentation. That said, he went on to say that, “Outside of the contract, the most important element to consider is your network. Who will you include? The basis is your primary care physicians,” he emphasized. “If you don’t select primary care physicians who naturally manage patients well—who utilize properly and don’t refer excessively—you won’t be successful. Physicians won’t alter their care, so thinking about that is essential.” Meanwhile, he added, the specialty physicians who participate in your network need to “utilize appropriately, utilize the right locations for cost-effective care, and communicate well with primary care physicians and patients. And the last element, of course, is facilities. You may have your own facilities that are part of the structure. But also, what is the ability of those facilities to collaborate and coordinate with us?”
Solomon parsed some of the differences between and among attributed-patient models, some of which attribute patients to providers based on the most recent contact, others, based on the bulk of contacts.
Numerous challenges continue to plague ACO leaders around attribution, he noted, including patient engagement, population stability, and identification at the point of care.
“The better model,” he said, “is the designated model, or product model—where the health plan will work with your system to offer the product to a company’s employees. Most payers won’t work with providers under a designated model until they’ve first worked with them under an attributed model,” he added. But if you can create a designated model with a benefit design that encourages your patients to stay within your roster, that’s the best.”
What “newbies” need to know
Following that presentation, Mark Wagar spoke. Having worked in the hospital, health plan, and now physician group, sectors, Wagar noted that some local and regional markets have not moved forward into substantial proportions of two-sided risk-based contracts, simply because the current arrangements are still working both for health plans and providers. But the purchasers of healthcare, he noted, are becoming impatient, and pushing providers and plans forward.
Meanwhile, Wagar shared some important points for those just edging into two-sided risk. “If you’re in a market where there’s not a lot of this yet, what is it that you’re creating, that’s different?” he asked. There has to be a clearly set out strategic goal at the outset, he emphasized. In addition, he cited three organizational readiness factors: a common leadership view; roles and expectations for the troops; and the functions and structures needed to architect the path forward. Per expectations, he said, “Leadership has to create the culture” to support the foundations for two-sided risk.
Other factors Wagar cited: strong financial planning, and capacity-building; and “a culture of service, quality and urgency.”
Per capacity, one very fundamental issue is around the risk reserves required to fulfill risk assurance requirements which vary by state.
Meanwhile, what is it that is being created, and why? “This is my favorite question throughout my career, whether I was with hospitals, doctor groups, or payers,” he said: “would your mom cross the street to enroll with you? What are you doing to make yourself different in your market?” Market differentiation is very important, and can be created along any number of dimensions: patient access, trust, material presence, value to the consumer, payer, or one’s own provider organization, or any combination of all of those. “Find a hot spot,” he urged, around cost, access, and/or service.
Still, at a core level, Wagar seconded what Solomon had said: “What I learned in moving from Ohio to California to Texas to New York, is that the key differentiator” in network organizations “is physicians and providers.”
Marshfield Clinic’s remarkable rural profile
Marshfield Clinic Health System, executive director Narayana Murali, M.D. told attendees, is an unusual organization—a rurally based integrated health system that has been thriving on risk. With 50 clinical locations, including five hospitals, in 34 communities, across a service area that covers 40,000 square miles of north-central Wisconsin, the 10,500-employee organization, with $2.4 billion in annual revenues (expected to reach $2.9 billion by the end of this year), the Marshfield Clinic organization has been prospering while satisfying its patients, communities, and payers alike.
Indeed, when it comes to both quality and satisfaction, MCHS ranks very high on all measures. “In 2016, we were in the top 5 percent of all participants in the Medicare Shared Savings Program (MSSP), Dr. Murali reported. “And our quality score under MACRA in 2018 was 100 percent,” he said, referring to quality measurement under the Medicare Access and CHIP Reauthorization Act of 2015. What’s more, he said, “We’ve always been at a or higher in NCQA standings as a health plan.” And, he added, “We’re the first organization in Wisconsin that went public with their patient experience scores,” while “91 percent of our providers have patient satisfaction scores of 4.5 stars or higher out of 5 stars.”
Speaking of the organization’s position at the dawn of risk-based contracting, Murali said, “We were largely a provider-based institution with a health plan that was contracting with a hospital, and looking to lower cost of care. You can’t manage the total cost of care unless you have the acute care ambulatory care, and health plan—all three legs of the stool,” he emphasized. With all three elements combined, MCHS’s progress advanced rapidly, he told the audience.
So what are the absolutely critical success factors in advancing into full risk? Murali cited five:
Ø The need to have “congruent access to data—claims, EHR, and analytics (around baseline cost trends, risk corridors, and attribution, among other elements)
Ø Control of both ambulatory care and acute-care facilities in key markets
Ø Contracts involving business rules that work for all payers
Ø The development of care management programs that help to lower the total cost of care; among those, successful population risk stratification processes, the inclusion of the management of socioeconomic factors, control over the post-acute spend for attributed patients, and some control over pharmaceutical and procedure spending, especially on the commercial side
And, naturally and organically, an organization needs to move sequentially from elementary pay-for-performance contracting to shared savings, to bundled payments, to shared risk, and ultimately, to global capitation, at the end point. And getting a handle on the total cost of care (TCOC) is absolutely essential, Murali noted.
Murali showed a slide involving two circles, with the overlap of the circles in the middle of the slide. That overlap, he said, is the “sweet spot” for risk-based contracting. The two circles on either side of that overlap included elements of care delivery, and elements of the reimbursement contract.
The care delivery elements are:
Ø Clinical access
Ø Patient experience
Ø Provider experience
Ø Practice variation
Ø Quality measures and outcomes
Ø Condition/disease management
Ø HCC coding
Ø Aligned incentives
Ø Innovation
The reimbursement contract elements are:
Ø Patient attribution
Ø Contract rates
Ø Stop loss/reinsurance
Ø Percentage of premium/target setting
Ø Reporting
Ø Settlement process
And the elements involved in the overlap of the two sets are:
Ø Utilization
Ø Referral retention
Ø Care management
Ø Risk stratification, high-cost spend, high-risk cases
Those elements in that overlap of the other two sets of elements are ones that should be the “sweet spot” of focus for the leaders of organizations moving further into risk.
And, related to that, Murali emphasized that “Organization and execution are extremely important. Everyone has ideas, but it’s the execution that matters. And everybody needs to understand the direction you’re going.” He spoke at some length about the governance and management required to be successful, noting that, at the top level of governance, “You need a clinical council with a CMO from your organization and a CMO from the health plan, working together with your chief quality officer.” And he shared the details of the governance structure over risk contracting at the Marshfield Clinic organization.
What are the essential critical success factors?
Following the three presentations, Dr. Wald moderated a panel with the three presenters. One of the questions asked of them was, “What are the most important critical success factors in moving from upside-only, two two-sided risk?”
MemorialCare’s Solomon said that it comes down to the question, “What are the few key things I can do, to impact the infrastructure, and to reduce costs?”
“I think the most important thing,” Wagar said, “is to use the advancements we’ve come to today, to actionable data to providers, physicians, and patient members, so you can do something urgently. You’re helping people with quality, quality of life access, and cost.”
And Murali said, “The most important thing is to know what it is you’re trying to achieve. You need to know the outcomes you’re trying to achieve. For example, if you’re managing patients with Alzheimer’s, are you managing them in their home, a nursing home, or some other space. And analytics and informatics tied together,” he said, will be essential to analyzing one’s organization’s situation and achieving success over the long term.
