In the Healthcare Challenge Roundtable, a healthcare finance leader, clinical leader, and health plan executive discuss ways to collaborate on solutions to some of the industry’s biggest issues. This month’s topic: alternative payment models.
Alternative payment models (APMs) are being touted as a way to help the industry shift away from fee for service and toward value-based care—and, in turn, to improve the quality of health care while reducing costs. The passage of the Medicare Access & CHIP Reauthorization Act (MACRA) is incentivizing physicians and medical groups to join APMs. Although federal policy related to these models for hospitals and health systems is uncertain after the recent election, they are expected to continue in some form and to retain a significant place in commercial insurance contracts.
In this edition of the Healthcare Challenge Roundtable, senior provider and payer leaders discuss how various stakeholders can optimize APM implementation and ensure these programs have their intended effect. Participating are Paul Bolin, FHFMA, CPA, the CFO at Williamson Medical Center, Franklin, Tenn.; Ingrid Gerbino, MD, FACP, chief of primary care, Virginia Mason Medical Center, Seattle; and Dan Rosenthal, president, UnitedHealthcare Networks.
There are many variations of alternative payment models. In your experience, which types seem to be the most productive?
Dan Rosenthal: Value-based care can take many forms, and each one serves a purpose. At their core, these arrangements tie a portion of annual payment to quality and cost measures. In my experience, the different options break down into three main categories.
In the first, bonuses are paid out based on the provider achieving a predetermined benchmark. For example, UnitedHealthcare has a Medicare Advantage program with primary care physicians in which we’ve paid just under $150 million in bonuses to participants for hitting predetermined quality metrics.
Another category would be bundled payments, which revolve around managing the care of a specific condition or service line, such as joint replacement. Finally, accountable care organizations (ACOs) are another type of program where financial payments are tied not only to performance measures but to clinical-coordination activities as well.
UnitedHealthcare has about 15 million members across the country who access care from a physician who has some kind of value-based relationship with us. It’s a big footprint, and it’s growing.
Ingrid Gerbino: At Virginia Mason Medical Center, we have partnered with several payers to implement bundled payments for certain elective services and costly procedures that tend to have high variability in clinical appropriateness. Bundled payments for total joint replacement would be one example. We can participate in these arrangements because our organization only performs surgery if it is clinically appropriate—if the patient meets readiness criteria, such as weight, smoking status, and diabetes control, which can influence surgical outcomes. We are then able to warranty the care, and if there are any complications requiring readmission or another surgical procedure, we assume that cost.
Paul Bolin: Williamson Medical Center is just starting to get involved in these types of models, and I think that’s in part because organizations in the South are somewhat slower with adoption than other areas of the country are. This is perhaps because there is a lot of vertical integration here as opposed to horizontal. Even though there is talk about how fee for service is going away, the fact is that’s still my bread and butter. That said, we have started incorporating pay-for-performance mechanisms into a few of our commercial contracts.
One aspect of these new value-driving models that I appreciate is that they foster an attention to detail that didn’t exist before. It used to be that physicians weren’t all that concerned about whether they correctly coded or documented a complication or other situation. Now, there’s usually a piece of reimbursement tied to it—most often the annual increase—so providers are paying more attention to documentation than they used to.
Which incentives seem to work best in APMs?
Rosenthal: When providers have “skin in the game,” that’s when these programs take off—some type of shared risk is essential for activation. The more engaged the providers, the more improvement there is in terms of quality and efficiency. So it’s less about the specific payment model and more about the degree of integration and collaboration between the care-provider organization and the payer.
Gerbino: Tying incentives to quality measures is key. That said, provider teams should have compensational alignment with the overall program incentives to ensure payers and providers are on the same page, pursuing the same goals.
Bolin: It’s also beneficial to have clear and complete communication about the incentives. Sometimes physicians don’t exactly know what their incentives are and how they can achieve them. They don’t know what they’re working toward, and consequently they may underperform simply out of a lack of awareness. Organizations that address this disconnect have a better chance of success.
Rosenthal: One thing that energizes these arrangements is when the provider organization internally shares performance information that shows individuals or subgroups of physicians how they compare with their colleagues—both inside the group and with others in the market. Not only does this turn provider attention to best practices, it also promotes the principles of value-based care delivery in a more productive way than any kind of negative approach does.
When negotiating value-based contracts, what are the key issues or concerns that should be addressed?
Gerbino: For every payment model, there are basic structural elements that need to be in place. First and foremost, you have to be able to access timely and accurate data and reliable analytics. As a healthcare delivery system, we require access to data about the care our patients receive, and that can be difficult to get. For instance, if we’re trying to control healthcare costs for a patient population for which we have assumed risk, and one of our patients goes to a hospital that’s not part of our system, and we don’t have access to the data from that visit, there’s no way for us to reach out to the patient and help with care transitions. That puts us at risk.
If you multiply that across several hundreds of patients, you start to see the importance of timely and complete data. It gets especially complicated when a payer is hesitant to share information because of concerns regarding intellectual property. That can pose roadblocks to an already-challenging situation. As such, payers and providers must be willing to share data and work together to overcome existing hurdles.
Rosenthal: The need to share actionable data definitely comes up during contract negotiations. Actionable data is the engine that makes these programs go, and thus it is often a top focus for our provider partners. We can share data in a variety of ways based on how a care provider is set up and wants to receive the information. We try to work with each of our physician partners to get them the information they need when they need it.
Gerbino: It’s also critical to have proactive and defined patient attribution. It seems like it would be simple to know which patients are attributed to which primary care providers, but it’s not—obtaining this information can be quite difficult. When providers are going to be assessed on their ability to achieve certain quality metrics, and they look at their list of patients and realize that they don’t know all of them—and perhaps didn’t even know they were patients—it can be frustrating. If you don’t know who’s attributed to you until the end of a performance period, it’s difficult to manage that population and that patient.
Bolin: Having transparency around attribution is absolutely crucial. Without that, it can be hard to gain physician buy-in for a program because they don’t know who they’re being assessed on. Fundamentally, organizations have to educate their providers on the performance metrics, make sure they are clear about attribution, and then tie incentives to quality—and this will get everyone pointing in the same direction.
Gerbino: If an organization participates in an APM as part of a provider network, there also must be strong integration across the network so the entire group can share information and understand how they deliver on quality-improvement goals. In these cases, you need systems that talk to each other. If each provider office is using a different electronic tool, that adds a layer of complexity when trying to gather outcome metrics. You also should have an established method of collaboration among the various organizations and a venue for doing that, such as shared meetings. Since every organization is a little different in how it approaches care processes and seeks quality improvement, having standardized protocols that govern the delivery of certain types of care is also valuable.
Bolin: Aligning measure definitions is also important to ensure both providers and payers are measuring the same things in the same ways. If that doesn’t happen, then it can be hard to positively affect an outcome. We recently had a situation in which different payers had varying definitions of how much blood loss constitutes a hemorrhage. This led to some confusion and an uneven playing field among physicians. Working with payers at the time of contracting to clearly define metrics and expectations allows organizations to effectively shape performance improvement around the metrics.
Rosenthal: Aligning measure definitions can be challenging. Many of our provider partners want flexibility to customize metrics or select particular metrics. This lets them standardize the measures they’re monitoring across all their health plan arrangements and patient populations. Striving for this level of consistency is certainly understandable. What we try to do on our end is offer a broad set of metrics. We have about 40 quality measures that we look at. Hopefully, out of those 40, we can find between eight and 12 that match up with what the care provider wants to capture.
Another issue we see is that care providers are often looking for plans designed to facilitate a strong connection between patients and the primary care provider—as opposed to more open-access attribution models. In response, we have started to introduce more plan designs with primary care selection and features. By participating in these plans, providers can engage faster with members, which is good.
Once the contract is in place, how can the provider and health plan work together to ensure the best possible outcomes for all parties, including patients? What are some early hurdles that may need to be overcome?
Gerbino: To keep these programs moving forward there has to be transparent data sharing. As a provider, we need rich data on the patients who are sitting in front of us, and that means claims data, risk data, clinical care data, and so on. We also need to have data on the patients whom we have not seen within our organization but who yet are attributed to us. Currently, some of the data that gets shared has about a six-month lag. It goes through various channels and gets managed and processed, resulting in significant delays. To sustain APMs long-term, providers and payers are going to have to work together to find new and more-efficient methods for sharing claims and other data in a timely fashion.
There are also opportunities to boost coordination between case managers. Many payers have case managers, and provider organizations do as well. Oftentimes, these staff members are focused on the same things—managing high-risk patients and those who are living with chronic diseases. There are tremendous opportunities to learn about who’s doing what and avoid role duplication. By partnering closely with payers, provider organizations can streamline care coordination and eliminate waste.
There is also room for growth within the pre-authorization process—there is a good deal of waste in this area. I think providers and payers could work together more closely to understand how to either eliminate the need for pre-authorizations or at the very least make the process more efficient.
Rosenthal: It’s easy to sign a contract, but that’s not where the magic is. If all of this were about signing contracts, it would not be worth it. Fundamentally, engaging in these programs is about creating value that allows us to collectively achieve the Triple Aim.
During and after contract negotiations, we continuously try to get everybody on the same side of the table and act as a collaborative partner as opposed to taking a more traditional negotiating posture. This is a journey, but something we are committed to doing.
For example, to help providers in our ACOs, we built ACO activation teams. These are multidisciplinary groups from UnitedHealthcare that work shoulder-to-shoulder with the physicians and clinical staff from the ACOs to review data and share best practices. A consistent team works on a routine, regular basis with each of our ACOs to develop relationships and create synergies between the different participating organizations. We have defined goals and objectives around rapid engagement, and we launch these teams right away—sometimes even before the contract is signed. The teams keep working together throughout the life of the program, and it’s exciting to watch partnerships unfold.
We also created the role of strategic account manager. This person is focused on making sure that we’re building closer relationships with care providers and that these providers are leveraging the full resources of UnitedHealth Group. Basically, this person serves as a relationship sponsor. We have deployed strategic account managers at many of the largest health systems across the country.
What factors may be preventing more widespread adoption of APMs, especially in certain markets? How can these be overcome?
Bolin: All the factors we’ve discussed so far—challenges with data transparency, attribution, measure alignment, and so on—present hurdles that organizations must overcome to make participation in these models worthwhile. That said, I think as providers and payers start to work together, these programs will become more widespread.
Rosenthal: As a payer, we should be flexible and offer a wide range of models that can be adapted to the specific needs of the provider community with which we’re working. If you have a model that makes sense for a market where providers have been taking on full population risk for a long time, and you try to apply that program to a market where providers haven’t been assuming risk, it’s not going to work—and adoption will slow and possibly stop.
We can also help providers look at quality across their entire practice—not just with our members. If we can assist providers in applying the collaboration and data-sharing concepts we’ve talked about across their entire populations—and not be payer-specific—we can work together to break down some of the historical barriers.
Fundamentally, providers and payers must commit to building stronger relationships. We need to be more transparent with each other and cultivate trust. After pursuing these goals, both parties will be more receptive to the partnership.
Value-based care is pushing payers and providers in this direction. We’re moving away from the historically transactional fee-for-service approach and into a more collaborative value-based mindset.
Are APMs for everybody? What about a smaller hospital or medical group that might not have the resources of a larger health system?
Bolin: From a financial standpoint, I don’t think fee-for-service is a viable methodology for anyone in the future, and I think we’re going to see a lot of consolidation of smaller hospitals as a result. These small organizations won’t be able to play well in the sandbox, and I think that’s going to drive them into merging with larger entities.
Rosenthal: I firmly believe that some form of value-based care is important for every organization. That doesn’t mean that providers should think full capitation is the only option. The concept of putting incentives in place to improve quality is something everybody should be able to commit to and support. This doesn’t necessarily require taking on full risk; however, it does require transitioning away from the transactional mindset and toward a more outcomes-based philosophy.
As you get larger populations of people participating in these programs and as organizations become more sophisticated and have the capital to take on increasing levels of risk, then it makes sense for them to move across the spectrum of models. In the end, there’s always a place for a value-based arrangement to complement—if not replace—fee for service.
Kathleen Vega is an HFMA contributing writer and editor.
Interviewed for this article:
Paul Bolin, FHFMA, CPA, the CFO at Williamson Medical Center, Franklin, Tenn.
Ingrid Gerbino, MD, FACP, chief of primary care, Virginia Mason Medical Center, Seattle.
Dan Rosenthal, president, UnitedHealthcare Networks, Minnetonka, Minn.
UnitedHealthcare has issued a report on how value-based care programs are affecting care quality and population health.