At the APG Conference, New Study Findings Confirm the Value of Value-Based Contracting

April 16, 2019
Executives from the Integrated Healthcare Association shared with APG Conference attendees their statistical findings on the value of value-based contracting, from the latest measurement program at IHA, called Atlas 3

For years now, the leaders of organizations involved in risk-based and value-based contracting in healthcare have been boasting about the strong results they’ve been achieving for the purchasers and payers of healthcare, around value. Now, at an unprecedented level of breadth and depth, those provider leaders have the data to back up the quality and cost of care results they’ve been talking about. The Oakland, California-based Integrated Healthcare Association (IHA), which represents providers across the state of California, has just published the third edition of its California Regional Health Care Cost & Quality Atlas, which encompasses a vast amount of data on cost and quality, taken from medical groups, hospital-based health systems, accountable care organizations, and other provider organizations across California. And the results of the new “Atlas 3” were the focus of a session held on Friday, April 12, during the APG Annual Conference, held at the Manchester Grand Hyatt in San Diego, and sponsored by America’s Physician Groups (APG), an association of medical groups and other patient care organizations involved in value-based contracting.

And the day before the session, entitled “Atlas 3–Integrated Care Continues To Shine,” the association had shared the topline results from the new Atlas in a press release published on Thursday, April 11, the day before the session at the APG Conference.

“The Integrated Healthcare Association (IHA) today released the third edition of its California Regional Health Care Cost & Quality Atlas, a key statewide source for comparative health care performance information,” the press release began. “In its third release, the Atlas now includes over two dozen standardized measures of clinical quality, utilization and total cost of care such as preventive screenings, care for chronic conditions, member cost sharing, and hospital readmissions. Purchasers, providers, health plans and policymakers can access the online, publicly-available tool to compare the quality and cost of care provided to nearly 30 million Californians, or 75 percent of the state.”

And it quoted Jeffrey Rideout, M.D., president and CEO of the IHA, as stating that “There has been much discussion regarding value-based care and shifting the payment model from 'volume to value.' However, until the Atlas 3 release, limited data existed on the prevalence of financial risk sharing among provider organizations and the association between risk sharing and value, Dr. Rideout said. "Atlas is a unique tool that provides a valuable roadmap to reduce unwarranted cost and quality variation in health care services, ultimately advancing high-quality, affordable, patient-centered care for all Californians."

The results released in the 2019 report show that when providers share in the risk through a capitation payment model, better value and health outcomes are achieved than with a fee-for-service model.

Among the topline findings in Atlas 3, for providers across the state of California:

Ø Capitation associated with better quality performance: Clinical quality was higher on average in 2017 for commercially insured members cared for by providers sharing financial risk (paid capitation), as compared to providers not sharing financial risk (paid fee-for-service).

o  Preventive screening rates for providers with full financial risk was 11 percentage points higher than providers not sharing risk.

o   If all patients in California were cared for by providers sharing risk, 60,000 more women would have been screened for breast cancer and hundreds of cases might have been found earlier when cancer is more treatable.

o   1500 fewer patients would have received a dangerous combination of drugs opioids and benzodiazepines – when cared for by providers sharing risk.

Ø  Capitation associated with lower costs to the health care system and patients: Financial risk sharing was associated with up to 3.5% lower total cost of care, a trend that also held true for pharmacy costs and patient cost sharing.

o   Pharmacy costs were up to 13% lower for providers sharing risk.

o   On average, patients cared for by risk-sharing providers paid $268 per year out of pocket for medical services as compared to $672 per year for those who were not. This difference was even higher for patients with chronic conditions.

Ø  Geographic variation across the state: The prevalence of financial risk sharing varies across the state, with much more risk sharing in Southern California.

o   45% of the commercially insured population in Southern California were cared for by providers sharing risk, compared to only 18% in Central California and 24% in Northern California.

Looking at the topline results, which strongly affirm the value of value-based care contracting, Stacey Hrountas, Chief Executive Officer, Sharp Rees-Stealy Medical Centers, said in a statement included in the press release, that “"The Atlas validates Sharp Rees-Stealy Medical Group's approach to comprehensive, coordinated care for the whole patient. We've been pursuing full risk contracts with health plans for decades, because we know that providing care coordination, population health and focusing on prevention results in healthier patients who avoid using expensive health resources such as hospitalizations. The Atlas provides the evidence for health plans, employers and legislators to support the growth of HMO and MA plans for the best value and a healthier population.”

Session examines nuances behind the data

The APG Annual Conference session was presented as a panel presentation and discussion, led by the IHA’s Dr. Rideout and Dolores Yanagihara, the association’s vice president of analytics and performance information.

Yanagihara noted that “Atlas 3 does not measure [individual] providers; it looks at geographic variation.” This time around, the program looked at “over two dozen standardized measures of clinical quality, total cost of care, patient cost-sharing, and utilization,” she noted, with the data encompassing the care of “nearly 30 million Californians, or 70 percent of the population.” Among other areas, Atlas 3 results, she said, include “2017 commercial [health plan] results; a deeper dive into financial risk-sharing, ACO performance, chronic conditions, and more; more self-insured members; and new members, including around opioids, a national total cost of care measure; and clinically risk-adjusted hospital utilization measures.”

One concrete example of the kinds of variations in care management that the Atlas 3 program has been able to highlight is around care management for diabetes, Yanagihara noted. While the statewide average for the percentage of diabetics with controlled blood sugar (hemoglobin a1c) was found to be 53.4 percent, the average among integrated care providers was 58.9 percent; the highest regional average was 61.1 percent; and the best integrated care average was 72.5 percent, representing a 19-percent difference over the statewide performance average.

That set of results, and a number of others, Yanagihara and Rideout noted, speaks to several core realities that the Atlas 3 research uncovered, as follows:

Ø  Better clinical quality for commercially insured members cared for by providers sharing financial risk (capitation) versus not sharing financial risk (fee-for-service)

Ø  Lower total cost of care (TCOC) and member cost-sharing, on average in California, when providers share financial risk

Ø  Risk-sharing appears to offer better value than fee-for-service, considering both clinical quality and clinically risk-adjusted TCOC

Ø  Commercial ACOs appear to offer high quality and lower costs and further demonstrate the value of risk-sharing

Sharing the above bullet points from their slide presentation, Rideout said, “All the metrics seem to point in a favorable direction for integrated care.” What’s more, he said, “Risk-sharing appears to offer better value than fee-for-service, considering both clinical quality and clinically risk-adjusted total cost of care.” And, he added, “A relatively new finding is that commercial ACOs appear to offer higher quality and lower costs and further demonstrate the value of risk-sharing. Last cycle, it wasn’t clear that ACOs were all clearly superior in quality”—but this time around, the data absolutely supported that idea.

“Integrated care that takes financial risk does better than care that doesn’t take financial risk, Rideout said, and highlighted a slide of particular interest. With regard to clinical quality, as examined across 8 measures, Atlas 3 determined that care provided by providers taking no risk saw an average level of 58 percent; meanwhile, providers involved in professional risk only, saw an average level of 66 percent, while those with full risk saw an average level of 67 percent.

Continuing on, Rideout cited figures around financial risk-sharing and total cost of care. California providers in no-risk contracts averaged $4,589 in total cost of care, while those involved with professional risk only saw an average of $4,501, and those involved in full risk saw an average of $4,428.

In toto, across the state of California, speaking of integrated care providers, Rideout noted that “We’re saving a few billion dollars to the system, across California, just through tighter management and control over pharmacy risk, and the spreading of risk around pharmacy. That’s huge. That’s a huge message that someone should hear in Sacramento.” And he added still another comparison, among the no-risk, professional risk-only, and full-risk groups: inpatient days among the three groups averaged 134 per year, 141 per year, and 115 per year. As to why those providers involved in professional risk might actually have a slightly higher average number of inpatient days compared to those in no-risk contracts, Rideout said, “If you’re managing effectively and you’re capped, the unit pricing doesn’t come into focus here, but on the professional side, where the hospital costs are not being capitated, this is a reflection, we think, of higher unit pricing. Some of this goes into the debate on consolidation. We need to make sure we understand the relationship of clinical integration to consolidation, because they’re very different things. And we need to understand the relationship of capitation to consolidation. And it’s complicated It’s not easy to say that capitation equals clinical integration, and that has some structured relationship to consolidation.”

Meanwhile, during the question-and-answer portion of the session at the end, in response to the question, “Do ACOs improve value?” from an audience member, Yanagihara said, “We found that financial risk-sharing is associated with higher value. And the relationship between financial risk-sharing and clinical integration needs to be better defined. How is financial risk-sharing related to clinical integration? We’re seeing that commercial ACOs look like they’re showing promise to deliver higher-value care.”

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