Contracting for Chronic Disease Management

October 11, 2016 9:33 pm

Illinois Gastroenterology Group reduced hospital admissions and emergency room visits by 50 percent for patients with Crohn’s disease, and the cost of their care fell by 10 percent.

When Lawrence Kosinski, MD, MBA, served as chair of the practice management and economic committee of the American Gastroenterological Association, he vowed to search for a solution to a looming problem. On average, gastroenterology practices generate 54 percent of their revenue from a single procedure—colonoscopies—making them vulnerable to the rapid changes in the healthcare industry.

“Many specialty practices like gastroenterology that have benefited from fee-for-service procedural income have to pivot and start thinking differently,” Kosinski says. “As any mature service line or product line would go, you are going to have compressed margins from decreasing payments and increasing costs. And you are subject to technological advances that can affect you.”

In 2011, he started searching for a way that gastroenterologists could improve the value of care they deliver. Just three years later, his practice, Illinois Gastroenterology Group (IGG), entered into the nation’s first specialty intensive medical home contract for Crohn’s disease, a chronic and high-cost illness that affects a relatively small subset of patients.

Since then, about 20 gastroenterology practices around the country have adopted IGG’s care model and are seeking to negotiate similar contracts with payers in their own markets. Kosinski’s group has expanded its medical home contract to include ulcerative colitis and it expects to add two other conditions—irritable bowel syndrome and end-stage liver disease—in the foreseeable future.

Identifying the Opportunity to Improve Value

IGG, with 45 gastroenterologists in the greater Chicago area, has a large database, so Kosinski dug in to understand the practice’s revenue in detail. That revealed that 25 percent of revenue came from the management and treatment of inflammatory bowel disease (IBD), which includes two chronic conditions: Crohn’s disease and ulcerative colitis.

Chronic disease management often presents opportunities to improve patient outcomes, which may lower costs, so Kosinski was intrigued. But the practice database did not provide all the information he needed. “The data that we had in our practice was not telling me what hospital costs were or what pharmaceutical costs were, and I needed more,” he says.

Insurers hold that data, so Kosinski approached Blue Cross Blue Shield of Illinois (BCBSIL), the major private health plan in his market. After a series of meetings, the BCBSIL agreed to work with Kosinski.

Partnering with a health plan. In early 2012, BCBSIL provided claims data for every patient with Crohn’s Disease claims in 2010. The data dump was so large that IGG had to create a structured query language (SQL) database and devote three months to data analysis, but the work was worth it. Kosinski discovered the following factors.

  • BCBSIL spent about $250 million on patients with Crohn’s disease in 2011.
  • On average, a patient with Crohn’s disease cost the health plan $11,000 per year.
  • More than half of those costs were for complications—bowel obstructions, abscesses, fistulas, surgeries, colostomies, and ileostomies—that required inpatient care.
  • A tiny fraction of the health plan’s outlay for Crohn’s patients went to gastroenterologists. “Even though that was 25 percent of our revenue, we were only receiving 3 ½ cents of every dollar that Blue Cross was spending,” Kosinski says.
  • Less than one-third of the patients who were hospitalized for Crohn’s complications had seen their gastroenterologist in the 30 days before the admission.

Kosinski and his colleagues knew that better outpatient management could prevent some of those hospitalizations and the patient misery that accompanied them. “That data opened our eyes to see that we could make a difference,” he says. “We could actually make more money for ourselves but save money for the entire healthcare system.”

Honing In on Value

Improving value for patients with Crohn’s disease meant engaging with them in new ways. If their patients are doing well, specialists who treat chronic diseases generally take what Kosinski calls a passive approach to their care.

“You will say ‘You are doing OK, Mrs. Jones.  I will see you in six months. Call me if anything changes,” he says. “And patients get so used to feeling sick they do not realize when they are really sick. So the patient deteriorates and they don’t call you.”

Kosinski believed that, by checking patients’ health status once a month, he could identify emerging problems and prevent them from escalating. In 2013, he tested that theory by monitoring the experience of 50 patients with Crohn’s disease in his own practice. Each month, his staff contacted those patients via a patient portal to seek their responses to five questions on the Crohn’s Disease Activity Index (CDAI). Patients who scored above a certain threshold were asked to contact the physician’s office. Kosinski embedded a clinical decision support tool in the electronic health record system and used that to guide his treatment decision-making.

“What we found in 2013 is we could very significantly decrease the hospitalization rate of our patients,” he says. “We did not know how we affected their costs, but on the basis of decrease in hospitalization rates, we were pretty sure we lowered their costs.”

Negotiating the Contract

Kosinski presented the results of his self-styled pilot to BCBSIL in 2014, and, shortly thereafter, the insurer announced its first-ever specialty intensive medical home contract.

BCBSIL identified 200 of IGG’s high-cost Crohn’s patients, and the practice had three months to enroll them in the program. BCBSIL pays the practice a per-member per-month payment to support its active management of their symptoms, and IGG shares in the savings that it generates on the insurer’s overall cost for treating those patients.

In a press release announcing the contract, Walter Hollinger, MD, BCBSIL’s medical director of strategic operations, called the intensive medical home a “first step” for providers that want to be part of a value-based care model but are not able to participate in an accountable care organization. “This Specialty IMH arrangement with IGG represents a continuing shift in the evolving nature of how we pay for medical services, and it moves reimbursement away from fee-for-service payments to those that are payments for value,” he said. “In addition, the arrangement enables the IGG providers to utilize clinical data and best practices to help drive medical decision-making and improve quality of care—all supporting the goals of better health and improved outcomes for our BCBSIL members.”

To date, the arrangement appears to be delivering on its promise. An analysis of claims data for 152 Crohn’s patients over a 10-month period found that hospital admissions and emergency room visits declined by 50 percent for those patients and the overall cost of their care fell by 10 percent, compared to IGG’s performance in an earlier period.

Most significantly, the mostly young patients who suffer from Crohn’s disease were spared the complications—bowel obstructions, abscesses, fistulas, colostomies—associated with poorly managed disease. “These are bad things to happen to young people that we certainly love to avoid,” Kosinski says. “We not only saved costs, we improved the lives of these patients.”

Getting Started

As the value movement takes hold, many medical specialties will have opportunities to develop value-based contracts that reward providers for good patient outcomes and lower costs. But the opportunities may not be obvious—and payers may not proactively initiate them.

The first step to a novel pay arrangement is identifying what Kosinski calls a “high-beta” illness—a medical condition that fluctuates significantly depending on how it is managed and how the patient is being engaged. In gastroenterology, several conditions—Crohn’s, ulcerative colitis, inflammatory bowel diseases and end-stage liver disease—meet his definition for a high-beta illness. Kosinski focused first on Crohn’s disease because patients are generally young and often have no comorbidities; that made it easier to test the efficacy of interventions and negotiate a payer contract.

Next steps include the following actions.

Obtain and analyze payer claims data. The data should identify the total cost of providing care for patients who have specific high-beta illnesses. This means not only the amount paid to physicians but to all other providers of inpatient and outpatient care for patients with that diagnosis. This requires a new way of thinking for most physicians.

For example, gastroenterologists generally assume that the biggest cost for treating digestive disease is colonoscopies because that’s where their revenue comes from, not considering the emergency department and inpatient charges that patients incur when their disease is not controlled. “We only see the tail on the elephant, and an elephant has a very small tail,” he says. “If you have a disease that is highly variable, reducing the variability will result in very significant improvement in the overall cost of care for a population of people.”

Adopt clinical protocols and patient-engagement strategies to reduce the variability in patient outcomes. In the Crohn’s case, IGG used cell phone alerts as a patient-engagement tool to proactively contact patients each month to complete a decision support tool embedded into the practice’s electronic health record system. The tool is based on the American Gastroenterology Group’s Crohn’s Disease Care Pathway.

Test the program. Conduct a small pilot that tests the feasibility and results of the interventions.

Choose a payment model. The model should support the implementation of the patient-engagement and care-management protocols. In Kosinki’s case, that was a per-member per-month fee for Crohn’s patients plus shared savings at the end of each performance period.

Present the results of the pilot to the payer, showing how the value of care can be provided and what that means financially for the payer, as well as the benefits to patient health.

Delivering the Value

To succeed in a specialty intensive medical home contract, IGG made significant changes to the way it cares for Crohn’s patients, including improving patient engagement, extended office hours and more convenient treatment options, and raising physician engagement by rewarding them for patient participation.

By making those improvements and then developing a payment contract with a primary insurer that rewarded improved outcomes, IGG made a major step in moving toward value-based care, using healthcare dollars more wisely, and improving patient care.

Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article: Lawrence Kosinski, MD, MBA, is a managing partner at Illinois Gastroenterology Group, Elgin, Ill. ([email protected]).

Discussion Starters:

Forum members: What do you think? Please share your thoughts in the comments section below.

• Are negotiations with commercial payers to treat certain chronic diseases a realistic way to promote better outcomes and reduce costs?
• What successful strategies have you implemented with payers to move toward value-based care?


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