Payment Models

How Minnesota Safety Net Providers Found Success in a Medicaid Alternative Payment Model

April 7, 2016 8:54 am

A combination of preparation, using data to risk stratify patients, and integrating primary care, behavioral health and social services is helping Minnesota safety net providers succeed in a Medicaid accountable care initiative.

Alternative payment methodologies have not been easy for Medicaid-reliant safety net organizations to adopt. But providers participating in Minnesota’s Integrated Health Partnerships (IHPs) Medicaid demonstration project may be bucking this trend, as evidenced by $61.5 million in savings they generated in their second year of operation.

Typical payment and contract management problems that safety-net providers face were outlined in a Blue Cross Blue Shield Foundation of Massachusetts Foundation (BCBSMF) March 2015 report. Challenges included wide differences in readiness for alternative payment and global payment arrangements, little consistency in contract design—especially related to which quality measures are tracked—and a lack of integration between primary care and behavioral health providers.

Shifting to a non-fee-for-service environment, according to the BCBSMF report, requires technical support. But the Massachusetts providers BCBSMF interviewed said they did not receive the support they needed regarding financial models, capturing quality measures, and utilizing clinical and cost outcome data.

Organizations participating in the Minnesota IHPs, however, reported receiving helpful guidance and feedback from the state’s Department of Human Services (DHS). In addition, they reported receiving timely data that has helped identify which patients require the most attention and where potential gaps in care exist.

The six Minnesota providers that participated in IHPs in 2013 saved $14.8 million while caring for 100,000 Medicaid enrollees. The project grew to include nine organizations in 2014, and $61.5 million was saved while caring for 165,000 enrollees. There are now 19 organizations providing care for 340,000 people and the goal is to cover 500,000 by the end of 2018, according to a DHS news release. An early goal was to save more than $111 million over three years—from 2013 through 2015—and to build a foundation for future savings. Results for 2015 are expected later this year and will have to equal $34.7 million to meet the $111 million goal.

The effort is being financed in part by a $45 million State Innovation Model grant from the Center for Medicare and Medicaid Innovation.

Care Coordination Tiering Model

Children’s Hospitals and Clinics of Minnesota, based in Minneapolis, has been with the effort since the beginning. Preparation for the IHP included hiring a data analyst specifically dedicated to working with state reports, managing health IT resources more effectively, and limiting alternative payment and contract risk. These actions have helped drive success, said Becky Woitalewicz, interim CFO.

“There was a strong effort to develop a care coordination tiering tool and much thought went into choosing which of the attributed population we should aggressively care manage, using the resources that we had available,” Woitalewicz said. “We have limited upside and downside risk corridors, so we are able to control the impact of this demonstration financially more so than assuming total capitated risk.”

Or, in simpler terms, “We wouldn’t totally lose our shirts,” Woitalewicz said.

Pamala VanHazinga, Children’s senior director of clinical services care coordination-case management, said the tiering tool has three levels: Complex/high risk, at risk, and low risk/healthy. Levels are assigned based on medical history and healthcare utilization, access to care, and psychosocial factors. The levels determine assignment into categories and levels of support from the ambulatory care coordination team.

Initial tiering efforts incorporated the Johns Hopkins Adjusted Clinical Groups (ACG) case-mix system, but the ACG is being replaced with the Clinical Risk Groupings (CRG) tool that is likely to be more valuable in assigning risk within the pediatric population, says VanHazinga.

“Both the access to care and psychosocial categories include elements that reflect financial and/or social needs. These can exist in all of the levels but have the greatest impact in the high-risk and at-risk levels,” VanHazinga said. “These factors are often identified by the families as critical and need to be dealt with before they can fully prioritize addressing more than any immediate medical concerns.”

She added that these needs are often significant for the immigrant population for whom language is a barrier.

Quality Reporting Experience

Previous experience with quality measure reporting was helpful, Woitalewicz said, as was a review of other alternative payment models offered by local HMOs.

Children’s also has benefited from its IHP participation because it now receives from the state previously unavailable data on when and where their attributed patients receive care outside of their system. “It shows where there might be a hole in our continuum of care,” Woitalewicz said. “That’s very powerful data.”

From its research, Children’s learned that only about 2 percent of any given organization’s patient population is responsible for a large share of costs in alternative payment arrangements, Woitalewicz said. It also learned that economic and social needs are important factors in developing risk stratification and prioritizing care coordination resources.

“This person may not have complex medical needs, but they have huge social needs and they could use the help more compared to kids who may have more medical needs but had more social support,” Woitalewicz said.

Data Tools

Tom Zachary, former director of revenue development at Hennepin County Medical Center (HCMC) in Minneapolis, agreed that using data tools for risk stratification and including social determinants of health (e.g., housing instability) in that stratification was key to the early success of the program.

Zachary noted that he was not a fan of contracts using retrospective models. “With financial models that are prospective, you know the population and they know you—so you can be more impactful,” Zachary said. “You can have higher engagement and plan around a known population. ”They are stronger performing models because they provide a better understanding of the revenues that follow a population, he said. This allows for development of strategies that bring populations the outcomes and quality they need. Models built on baselines result in competing “against yourself and prior costs of care,” Zachary said.

“Our outcomes have been strong,” Zachary said, pointing to significant reductions in ambulance and emergency department (ED) use, and hospital admissions among Medicaid enrollees.

Reasons for their success include care coordination, medication management, and connections to county social service navigation. For example, care coordination staff are placed in EDs to help connect patients who present with dental pain get appropriate resources where they can be treated. In addition, HCMC is currently piloting a model where community paramedics are stationed at a large homeless shelter on weekend evenings in an attempt to address residents’ health issues right away and reduce unnecessary trips to the ED.

Co-locating primary care and behavioral health provides immediate access to patients which results in better-managed care, Zachary said, adding that it also results in lower costs as it reduces the potential for patients to see mental healthcare in the ED.

Those care coordination and social service strategies are also part of Hennepin Health, an accountable care model the medical center operates in partnership with the health and human service division of Hennepin County. “Government programs deal with other parts of patients’ lives and so partnering with them is a key strategy and factor for impactful change,” Zachary said.

Previous Experience

Past experience also has helped HCMC.

“We’ve been national leaders in care coordination for HIV/AIDS patients and we’ve learned a lot from that,” Zachary said. “As a safety net provider, it’s inherent in our DNA to connect our population with community resources.”

Zachary said that the HIV/AIDS program HCMC started in the 1980s used many of the concepts now used in the patient-centered medical home practice model. He added that the per-member per-month enrollment fee often incorporated into medical home reimbursement is a good vehicle to test changes and new initiatives because it allows for financial calibration as an organization builds care teams and care coordination.

HCMC joined the IHP initiative in its second year, as did Southern Prairie Community Care, a new “accountable community for health” caring for 18,000 patients and consisting of 27 provider organizations in 12 Southwest Minnesota counties.

Mary Fischer, executive director of the network, said co-locating primary care and behavioral health from the start was beneficial. Pharmacists helped by providing one-on-one counseling because behavioral health patients often have multiple chronic health conditions and may be taking from 10 to 15 different prescription medications.

The network shares real-time patient information on hospital admissions, discharges, and transfers. Fischer added that social determinants of health also are used in its predictive modeling tools.

Upside Start

Southern Prairie Community Care’s early success was spurred, in part, by operating under a no-risk shared-savings contract in its first years. But that will change soon.

“In 2017, we’ll have to cross that bridge,” Fischer said. “It’s been a real nice motivator for our network to have only upside risk.”

The focus of the network is on the Medicaid population, but Fischer said the intent is to eventually expand to include all of Southwest Minnesota.

Southern Prairie generated more than $4 million in savings in 2014, of which its member network kept $1.55 million, according to a Nov. 6 presentation to the state’s Health Care Financing Task Force. A business plan covering 2017 to 2020 is under development. A key issue being discussed is how to distribute shared savings going forward, Fischer said.

All three leaders believe the program could expand beyond Medicaid and that other states could replicate the success Minnesota safety net providers have had.

“If it expands to other payers, we have the infrastructure ready to go,” Woitalewicz said. “And, definitely, it’s a great model that can be reproduced.”

Zachary warned against being too slow to adopt value-based reimbursement.

“Reimbursement is going to be dependent on performance–that’s what you to be prepared for as fee for service goes into decline,” Zachary said. “Some people put a toe in the water. I put both feet in when it comes to value-based care.”

See related tool: How Minnesota Safety Net Providers Found Success in a Medicaid Alternative Payment Model

Andis Robeznieks is a freelance healthcare writer based in Chicago.

Interviewed for this article: 

Mary Fischer is executive director of Southern Prairie Community Care, Marshall, Minn.

Pamala VanHazinga is senior director of clinical services care coordination-case management, Children’s Hospitals and Clinics, Minneapolis.

Becky Woitalewicz is the interim Chief Financial Officer for Children’s Hospitals and Clinics, Minneapolis.

Thomas Zachary is the former director of revenue development at Hennepin County Medical Center, Minneapolis, Minn. Thomas.

Discussion Starters

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

  • Has your organization found a source of support for developing financial models, capturing quality measures, and utilizing clinical and cost outcome data?
  • Has your organization found any obstacles to success in successfully reporting on quality measures in other alternative payment models?


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