Accountable care and risk sharing present opportunities for lowering costs and improving quality; however, managing risk-bearing contracts requires proficiency in population health management that few healthcare organizations possess. Sharp HealthCare is an exception, according to Ann Pumpian, CPA, Sharp's senior vice president and CFO. "We have been taking capitated risk, or population-management-type risk, with commercial insurance companies since 1985," Pumpian recently told hfm. Pumpian notes that Sharp's decision to participate in CMS's Pioneer Accountable Care Organization Model program was prompted, in part, by the desire to share its broad knowledge and experience in this area with the industry. "Our participation in this program positions us to be a leader in the reform movement," she says. Here, Pumpian shares Sharp's risk-sharing strategy and the role of finance.
hfm: Sharp HealthCare is participating in the Centers for Medicare & Medicaid Services (CMS) Pioneer ACO Model program. Why did your organization decide to participate in this program? What are your key objectives?
Pumpian: We thought we could offer the knowledge and experience we have gained from managing care for patient populations for more than 25 years to the CMS Center for Medicare & Medicaid Innovation. We would rather participate in developing models of care than be pushed to implement someone else's model. Our key objectives are the same as the objectives of the CMS-that is, the three-part aim: to better care for individuals, to improve the health for populations-in this case, it's the population in San Diego County-and to reduce the cost of health care.
hfm: How is your organization's participation in this program positioning it to deal with the impact of healthcare payment reform?
Pumpian: Our participation in this program positions us to be a leader in the reform movement-not only our participation in the Pioneer ACO, through which CMS will be driving new payment models, but also our participation in caring for commercial populations of patients through the population risk agreements that we have with commercial insurance companies. We see many commercial ACOs that we are actively participating in.
hfm: What steps did your organization take to gain physician buy-in for the Pioneer ACO model?
Pumpian: We have worked with our two affiliated medical groups in a population health model for more than 20 years. We have been taking financial risk with our independent practice association, Sharp Community Medical Group, for more than 23 years, and with our multispecialty medical group model, Sharp Rees-Stealy Medical Group, for more than 27 years. So getting buy-in from the individuals participating in those medical groups was not an issue.
hfm: How do you expect to control costs under this model?
Pumpian: Our model is to connect patients to a primary care provider or medical home, and in doing so, to have the engagement with the patient and the physician work toward reducing the overall cost of the delivery of care by accessing appropriate levels of care at the most effective time possible. That means accessing primary care providers instead of emergency departments when that makes more sense, utilizing skilled nursing facilities instead of acute care facilities when that makes the most sense, and accessing our hospices for patients who are utilizing end-of-life options. All of those options will generate opportunities to control cost.
hfm: Tell us about Sharp's risk-sharing program. How do you work productively with commercial payers on risk-based contracting?
Pumpian: We have been taking capitated risk, or population-management-type risk, with commercial insurance companies since 1985. We do that by having open and honest communications between our physician providers and our hospital institutional providers, and by negotiating agreements undertaking this managed care risk as a team. So the hospitals and the medical groups negotiate together with a commercial payer.
We also have sought to identify who in the division of financial responsibility that is included in any risk-based contracting has the greatest ability to manage costs for those services. For instance, it makes sense that a hospital can control the cost of inpatient acute care perhaps more effectively than physicians can. By the same token, physicians can control the costs of office visits more easily than hospitals can.
Where it gets a little tricky is on kinds of services that may or may not exist in either the hospital side or the medical group side, such as ambulance services, skilled nursing facility services, or home health. Does home health provide a means to reduce length of stay in a hospital, making it hospital risk? Or is home health an opportunity to provide a level of care that keeps the patient from having to go to the physician's office on a regular basis to receive care? It's in those discussions of identifying who can control the cost most effectively if the service is required that allows us to negotiate effectively with a payer.
We identify the actual costs to provide those services. We work through our own actuarial analyses of such services, specifically looking at the population by age, sex, and benefit plans that will allow us to share the risk most effectively.
hfm: What steps is your organization taking to manage risk-based savings under the ACO model?
Pumpian: We are applying the same risk-based savings that we have used, as I said, for the past 25 years or more in a population-management arrangement. That includes some engagement of patients by ensuring that they have primary care providers who they are seeing on a regular basis, ensuring that they have received the correct services, whether it be flu vaccines or childhood vaccinations, and making certain that they have had the proper and age-appropriate tests that will help guide us to provide them with the best and most effective care management, whether it is various mammography exams or colonoscopies.
We also have implemented some rather new, if not novel, programs, one being our Nurse Connection, which is a 24-hour phone service that our risk-based patients can access. If they are concerned about their health, not knowing whether they should run to an emergency department or whether they can afford to wait to see their physician, or maybe just questioning what they should be doing with a particular prescription that they received, they can call our Nurse Connection call line and get guidance and advice. Sometimes, the nurse may suggest that the patient immediately go to an emergency department. More often than not, the nurse is able to provide guidance and advice to the patient and communicate that guidance back to that patient's primary care provider, allowing the patient to interact with his or her primary care provider efficiently and effectively in a timeframe that makes the most sense.
We also have implemented various high-risk patient-care-management models for our patients who have congestive obstructive pulmonary disease, or COPD, and those who have various cardiac diseases, where care managers are connecting with the patients and ensuring that they have the most appropriate care delivery available.
Additionally, we have implemented programs to help us manage risk-based savings. For instance, with our out-of-network program, case managers visit the institutions around our community that are not a part of our organization, Sharp HealthCare. They look for our population patients who may have ended up in an out-of-network facility as a result of an ambulance ride or a trauma case. The case managers connect with those patients and their families in those facilities to make sure they have confidence in the quality of care they are receiving, to let them know we are keeping an eye out to ensure that they are receiving the best possible care, and to encourage them to repatriate themselves to one of the Sharp facilities, if it's clear that's where they will receive the best quality of care. Of course, it's best for patients to be with the physicians with whom they are familiar, using their own medical records. So we often try to move patients from out-of-network facilities to a Sharp facility, where the physicians who know the patients and have access to their long-term records are able to provide exceptional care.
Finally, we have been able to manage risk-based savings through the use of hospitalists. Our primary care providers can rely on contracted physicians who are seeing their patients within the hospital so that they can take care of the population at their offices and know that the care delivery in the hospital will be effective and of high quality. We are also implementing a similar model of physician care delivery in various skilled nursing facilities. We call them SNFists, much like hospitalists.
hfm: What role does finance play in the risk- sharing strategy?
Pumpian: Finance plays a huge role. Finance is involved in the analysis of costs associated with the population. Finance is responsible for obtaining and performing its own actuarial analyses. Finance is responsible for contracting not only with the various payers, but also with the out-of-network providers who may be providing services to our patient population. Finance is responsible for developing reserve models for the fact that we may not know all the claims that exist. So we have to create what we call an incurred-but-not-reported reserve model against the capitated payment or risk-based payment that we have received.
Finance is responsible for ensuring that authorizations to deliver care and provide services are obtained and that they are obtaining those authorizations in the facility that will provide the services most effectively. Also, finance is responsible for identifying various capital needs that a population may need, rather than contracting outside of our system for such services. And then, as with any patient who accesses care within a healthcare organization, we must make certain that patients are eligible for the services they are receiving, identify what sort of copayment or coinsurance is required, and collect and bill for such services.
About Sharp HealthCare
Sharp HealthCare is a not-for-profit integrated delivery system based in San Diego. Sharp includes four acute-care hospitals, three specialty hospitals, two affiliated medical groups-Sharp Rees-Stealy and Sharp Community Medical Group-and a full spectrum of other facilities and services. Sharp has 2,600 physicians, including more than 1,000 physicians in the two affiliated medical groups, and more than 15,000 employees. Sharp's net revenue in FY11 totaled $2.5 billion.
At the forefront of Sharp's commitment to excellence is The Sharp Experience, a sweeping performance improvement initiative launched in 2001. This initiative has resulted in numerous advances in clinical outcomes, patient-safety enhancements, and organizational and service improvements.
Publication Date: Thursday, November 01, 2012