At a time when many patient care organizations are leaping full-bore into alternative payment models (APMs) such as accountable care organizations (ACOs) and other arrangements, the path forward into provider-sponsored health plans is turning out to be rocky for many. That’s the bottom line in terms of findings from a nationwide survey of patient care organization leaders conducted by the Charlotte-based Premier Inc.
Among the key findings of the survey, whose results were released earlier this month, are the following:
> Interest in provider-owned health plans: 68 percent of C-suite leaders surveyed are interested in starting their own health plan or working with an already-established provider-owned health plan rather than continuing to wait for commercial payers to develop and implement value-based arrangements.
> Providers taking on all risk, payers reaping the rewards: Only 28 percent of healthcare C-suite leaders reported their health systems participate in shared savings contracts with commercial payers, despite the fact that providers are 100-percent accountable for moving the needle on improving quality and reducing costs in order to receive maximum reimbursement through Medicare pay-for-performance plans.
> Limited investment from insurers: Only 13 percent of respondents report shared investment in electronic health record (EHR) infrastructure, even though expanding these systems could help integrate and improve care across the continuum, as well as enhance preventive and chronic care management programs.
> The survey found limited collaboration with commercial payers in terms of regular updates on efficiency and quality performance to increase transparency (30 percent); sharing claims data to better manage the cost, quality and coordination of care (22 percent); and joint goals and measures of success (30 percent) to align the payers and delivery systems.
Shortly after the survey’s findings were released, Healthcare Informatics Editor-in-Chief Mark Hagland spoke with Joe Damore, vice president of population health management at Premier, who is based in the organization’s Washington, D.C. office. Below are excerpts from their interview.
When you look at the main results from the survey, what does the landscape around this look like for you?
This area is really important to health systems for a number of reasons. The first one is that, because of MACRA [the Medicare Access and CHIP Reauthorization Act of 2015]. The MACRA requirements around being able to participate in alternative payment models shift over time. In order to qualify for the 5-percent bonus, 25 percent of revenues have to come from APMs; that shifts in 2021 so that 25 percent of your FFS revenues have to come through APMs. So health systems are trying to plan ahead around what they’re doing on the commercial side as well. The second reason this is important is around spreading out your costs, such as IT implementation and care management, and patient-centered medical homes. All of your costs have to be spread across a larger volume of population, not just Medicare. The third reason is that as you implement value-based payment, what we find the tipping point to be is at 25 percent of your revenues coming from value-based payments, that’s when physicians really change their behaviors.
The fourth reason is that if you don’t shift forward in your commercial contracts, you could be in trouble. If I set up a Medicare ACO and a Medicaid ACO, I’ll end up setting up care management for all my patients, and if I don’t have a value-based contract with my commercial payers, they end up getting 100 percent of the savings, and I end up with zero. So providers are frustrated with commercial payers. Some commercial payers are moving too slowly, which is why providers are developing their own plans. Some are moving faster: Aetna is moving faster than nationally; some Blue Cross plans, as in Massachusetts, are moving forward. But in other markets, where you have a dominant player with 70 percent or more of the market, they’re proving very slow to change. Alabama Blue Cross, which has 80 percent of the commercial market in that state, has been very slow to change. So I’ve found that the dominant players in health insurance markets have been the slowest to implement value-based payment arrangements.
So providers that don’t already have their own health plans are becoming interested, then?
Well, the large health systems are starting their own plans, for two reasons. One, they’re seeing very slow movement from some of the commercial payers. Two, if you own your own health plan, you’re going to get 100 percent of your shared savings, not 50 percent.
So how has the landscape changed around the provider-sponsored plan proposition recently?
Number one, I think we have better information systems than we had in 1995. And two, the single largest payer in the United States, Medicare, is moving pretty aggressively towards value-based payment across the country. In contrast to in the 1990s, where if there was not a movement towards managed care in your market, you could pretty much avoid this. But you can’t now; Medicare is the single largest payer in U.S. healthcare, with 55 million people; and this is not going to go away. We believe that, regardless of the outcome of the election, we are going to stay on the path of value-based payment, because there is no other choice to build predictability and control the flow of healthcare delivery, for the federal government, other than this. Putting people into population health care management and care management, works. That’s not being debated. So this model of value-based care is moving forward. The train has left the station, and is not going back to the station. And the speed of change is accelerating. And with the MACRA vote, 92 to 8, both political parties clearly believe …..
Physicians are realizing, in contrast to the 1990s, that the landscape is changing, correct?
Yes, absolutely. And why are physician attitudes changing? Because Medicare is changing. And physicians can either drop Medicare or retire. And also, over 50 percent of the physicians today are employed by somebody. And they don’t want to deal with the bureaucracy and all these Medicare rules, so that they can let someone else deal with all this. Also, the culture of physicians under the age of 35—they really look at being a physician as being much more of a nine-to-five job rather than something else. So all those factors have really contributed to a change in general in the physician culture.
And also, what has changed in terms of working with the data, from 15 years ago?
I ran a provider-sponsored health plan 15 years ago—and I would say that the data systems today are much more advanced than 15 years ago, especially in terms of claims analytics. Now, is it perfect? No. But it’s pretty darned good compared to 15 years ago. Taking claims data and being able to identify who your high-risk patients, you couldn’t really do that 15 years ago, and now you can, and that’s really helped us.
Now, the next step of course is taking that claims data and being able to drill down and provide physicians, in real time, with data to show how they’re doing in comparison with their peers and in comparison with best practices in terms of managing their patients. That’s the next generation—that’s what everyone’s hoping to get to. And we’ll get there. We can identify the 5 percent of people in any population of people that usually account for 50 percent of the costs—I call that the 5/50 rule. And we can keep those people out of the hospital, out of skilled nursing, and care for them in their homes.
What about rising-risk people in any population? Is that the next frontier in terms of leveraging predictive analytics?
Yes, I agree that that’s the next frontier. And the level of accuracy in identifying those people right now is that the more advanced providers are able to forecast maybe two-thirds or three-quarters of those people, and while among the weaker health systems, maybe half. And when I travel around the country, I ask those very questions of the organizations we work with. How satisfied are you with the analytics tools? How well are you predicting those people? I think we’re better than we were, but we’re not anywhere near where we need to be.
What do CIOs and CMIOs need to do right now, in this context?
Number one, they do need to have a data analytics tool that will allow them to help that manage and to identify who are the high-risk patients, and then to put into place an approach to care management, to manage that 5 percent. We know there’s a return on investment for that 5 percent. We know that if we manage the population and manage them—whether it’s a diabetic or congestive heart failure patient—we know we’ll lower the use rate of the most expensive venues for care, and lower per capita costs. So they’ve got to do that. And number two, they’ve got to try to get that information back to practicing physicians, and to share with them how they compare with others. What was their average cost last year to care for a diabetic, and how did that compare with others’? Because if I’m keeping my diabetics’ hemoglobin a1c low enough, I’ll save a lot of money.
What percentage of provider-sponsored plans are doing well, in your view?
I think the newer ones are doing well, particularly those that are making a major commitment to managing populations. In the past, there was a vacillation over whether we were in the health system business or the insurance business. And if you lower utilization, it will hurt the revenue of your health system; but in today’s world, the organizations doing this really believe that they’re population health management organizations, and that their hospitals are really cost centers; that’s the mindshift.
Are you optimistic overall, about this journey into risk?
I am. I’ve been in healthcare for over 40 years; I was a CEO for 20 years of health plans. I think we’re on the right track in this country, for several reasons. We’re more and more becoming convinced that really, really good primary care and the patient-centered medical home are the basis of a good healthcare system. We haven’t been focused enough on that until recently, but we’re learning that now. And we’re learning that you really have to coordinate care across the continuum; no one got paid to do that until recently, and now they are. This is not an easy transition to make; it’s difficult, and is going to take a couple of decades, but I think we’re really on track.
Overall, what’s your guess as to what percentage of health systems will set up their own health plans?
When you look at the large ones, the multi-billion-dollar entities, I think it will be a healthy percentage, at least a third of them. But I don’t think the smaller ones have the scale to do that well. The organizations like Inova, like Texas health Resources, like Presbyterian health System in Albuquerque, have the resources to be successful.
