Staying Viable While Moving From Volume to Value

SPONSORED BY NUANCE

Executive Roundtable

As the healthcare industry continues to transition from volume- to value-based care, providers need to balance the demands of the two disparate payment systems. The traditional fee-for-service model rewards the completion of discrete interventions while quality-driven models look at patient health more holistically, rewarding those organizations that are able to consistently deliver high quality for lower cost. In some cases, the underlying goals of each model can pit one against the other, presenting challenges when balancing the two. With this in mind, this HFMA Executive Roundtable, sponsored by Nuance, focuses on how organizations are straddling fee-for-service and value-based payment models and what healthcare leaders can do to sustain their organizations' financial stability.

How are you working with physicians to align quality and financial goals as we transition into value-based payment models? What have you learned thus far?

James Gilbert: Three years ago, a group of local California physicians formed the Monterey Bay Independent Physician Association (IPA), and today, it includes about 650 providers. We have a broad mix of specialists and primary care physicians, as well as ancillary providers, such as psychologists, counselors, physical therapists, and acupuncturists.

One of the reasons we formed the IPA was to participate in Community Hospital of the Monterey Peninsula's Medicare Advantage plan, known as the Aspire Health Plan. It became the IPA's first at-risk contract.

This year, we also became the provider panel for Community Hospital's employee and dependent plans, as well as the provider panel for another major hospital in our area. So far, we have intentionally tried to make the provider incentives for these programs attainable. We are learning that it is important to have an early win. We want to deliver providers a check that they never expected and make these contracts real rather than theoretical.

Matthew Morgan: When Community Hospital of Monterey Peninsula moved its employee group health plan network under the Monterey Bay IPA, we assigned incentive compensation based on protocol development, rounding, antibiotic stewardship, and depression/anxiety management. As Dr. Gilbert mentioned, we purposely started slowly. There are probably 20 different indicators that would have been more challenging than the ones we selected. However, our intention was to pick metrics that would not be too difficult to achieve but would still make a difference. We want physicians to receive the incentive compensation, so they can see that hospitals and physician practices can successfully work together.

The IPA and Community Hospital also have built a close alignment through our Medicare Advantage plan. We are trying to determine how to leverage that relationship on both sides to grow our books of business.

For many years, we had a network in our community that a few hospitals started and multiple group health plans across the county used. A few years ago, Community Hospital acquired this network and brought it in house. During the past 12 months, we have moved the administration of that network underneath the IPA. This does two things: It protects physicians' payment, and it encourages other providers to move to the IPA to protect their commercial revenue stream.

Ultimately, with more physicians in the IPA, we hope to create physician incentives that can have a positive effect on group health expenses within our organization.

David McGrew: San Mateo Medical Center is a county-owned and -operated safety net hospital that also runs several clinics and a long-term care facility. Our primary care physicians are employees, and we must follow state restrictions that limit what we can do from a compensation perspective. Specifically, we do not offer our primary care providers any types of bonuses or incentive structures that are tied to quality or financial results.

Although we cannot provide individual physician incentives, we are starting to look at how we might be able to incentivize their practices or clinic operations. For example, we might be able to increase their budgets for full-time equivalents to support a pilot project.

Because we are a relatively small health system, most of our specialty providers are contracted. Through these arrangements, we have some flexibility to create incentives for quality and utilization. For example, we are considering providing financial incentives to surgeons to help prevent and reduce surgical-site infection rates.

To date, our main takeaway is that we need timely, accurate data when talking with providers about their performance. We do not have an integrated electronic health record (EHR) that connects hospital and physician operations, so there are some roadblocks to overcome before we can consistently provide meaningful data. Integrating our systems to pull information into a data warehouse is one of our main goals for the future.

David Goldberg: As a private practice physician, I focus on value by being cognizant of and knowledgeable about the resources I use in the hospital. For example, many physicians in private practice are teaming up with hospital administrators and purchasing agents on standardization initiatives to reduce practice variation and decrease costs. Through the surgical services workgroup at Community Hospital, we communicate with purchasers on which supplies, such as suture materials, are most effective and then work with purchasing agents to choose one vendor.

Anthony Oliva: To help providers make the transition to value-based payment models, we've been working with them to improve documentation accuracy, which, in turn, enhances performance and revenue. For example, outcomes—which are central to creating meaningful incentives in value-based models—should be severity adjusted. If you don't capture severity appropriately, you will fall behind others even when you do a good job managing patients. That is why accurate documentation is very important as providers work toward aligning their quality and financial goals.

What type of success have you experienced with bundled or value-based payment arrangements? What opportunities does your organization have to continue this success?

McGrew: At San Mateo Medical Center, we are pursuing a variety of initiatives. For instance, we are just getting started with the Centers for Medicare & Medicaid Services (CMS's) Comprehensive Care for Joint Replacement (CJR) model, which is mandatory in our geographic area. We also are looking at value-based opportunities through California's latest Medi-Cal waiver program, known as the Medi-Cal 2020 Demonstration. One opportunity is the Public Hospital Redesign and Incentives in Medi-Cal (PRIME) program, which offers incentives for meeting certain performance measures for quality and efficacy. From a strategic, contracting, and financial perspective, we are trying to align around the PRIME metrics.

We also are participating in Medi-Cal's Global Payment Program (GPP), which is designed to incentivize public hospitals to provide care to the uninsured in more appropriate settings, as well as Medi-Cal's Dental Transformation Initiative, which offers incentives to provide dental services to uninsured and underinsured children.

In addition, we plan to participate in the Whole Person Care (WPC) Pilots. This Medi-Cal program provides incentives to public hospitals to better coordinate health and social services for high-utilizing Medicaid recipients.

We see about 250,000 unique patients per year, and about one-third of them are covered by the GPP or PRIME program. To manage these populations, we are creating patient-centered medical homes that integrate specialty care and behavioral health.

Morgan: Although Community Hospital has not ventured as far down the value-based-care path, we recently signed a co-management agreement with orthopedic physicians, so we can pilot some quality-focused programs. We had planned to enroll in CMS's Bundled Payments for Care Improvement initiative, but it took longer than expected to gain agreement from surgeons on how we would participate together.

Has there been any significant structural change to the physician compensation models as a result of your organization's entrance into at-risk payment arrangements?

Morgan: We haven't made changes to compensation for providers in our Aspire Health Plan yet. We expect to move into a capitated arrangement with the IPA beginning Jan. 1, 2017.

Most of the physicians in our community have not taken capitation in 20 years. We are meeting with them to help them understand what their capitated payments will be based on in terms of their patient panels and utilization.

Gilbert: As Matt suggested, our IPA still exists largely on a fee-for-service basis, although we do offer some upside rewards. The next step will likely be a "hold back" of some percentage for physicians who remain in fee-for-service. Physicians can earn that money back based on their attainment of various performance goals and satisfaction scores.

Of course, one of the big questions around incentive rewards is how to distribute them. Although there will be some rewards given to individuals for their performance, for the most part, we want to share rewards based on everyone's success, including that of the hospitals we work with. For example, the two main hospitals in our community have agreed that if we save money in the Medicare Advantage hospital pool of money, our physicians will receive half of the savings. This recognizes the physicians' role in eliminating or lessening admissions and in-patient expenses. The potential "bonus" represents a very nice motivator for physicians.

What do you see as the greatest challenge to your organization in the transition from fee-for-service to value-based purchasing? Is this unique to your organization or consistent with other providers?

Oliva: For our clients, the greatest challenge is living in both payment worlds and not having enough revenue from value-based payment models to cover the reduction in revenue from fee-for-service.

As providers see less income from fee-for-service, which is primarily directed toward inpatient care, they must find additional revenue to fund the infrastructure for ambulatory care, which is critical to meet the goals of value-based payment models.

I have often said that we need a reverse Hill-Burton Act. Our country invested significantly in the 1950s to put a hospital in nearly every county. Now, we have to go the other way and fund the ambulatory side.

McGrew: It's tough because we are taking on faith that the transformation from fee-for-service to fee-for-value will have a return on investment. Today, fee-for-service still generates half of the revenue at our public hospital. We're having conversations with our county board of supervisors about moving toward more value-based models and the decisions we must make to expedite that. Data plays an important role in driving these decisions. If we start tracking costs and managing quality now, the expectation is that the results will follow, but we don't know for sure.

Morgan: Building on what Dave said, I think the greatest difficulty for providers is the need for excellent data, and that is certainly not unique to our organization. Frankly, I don't feel like we have good data yet, and I'm not sure even what good data looks like. Specifically, what the industry requires is a single source of truth. We cannot have multiple parties holding the data and providing different stories around the information.

We are somewhat uniquely positioned because we own a third-party administrator (TPA), so we have all of the core claims data. Even so, we cannot always provide access to that data. Right now, a major challenge is determining how we integrate and report information from multiple different systems across the care continuum.

Size is another issue. Value-based purchasing, and capitation-based contracts in particular, can be challenging for us because we do not cover a large geographic area. However, with good population health management, I think we can address that.

Gilbert: From the IPA perspective, the biggest struggle is developing the right incentives and rewards. For example, how do we incentivize the folks who are really doing the hard work, such as the primary care physicians, without disenfranchising and upsetting the specialists? This is a hurdle for everybody, not just our IPA.

We also have wrestled with different philosophical questions in discussions with our two local hospitals. For example, one hospital may be willing to offer rewards based on certain metrics, whereas the other may be more interested in rewards based on shared savings. To be effective, we need to align our objectives.

In addition, doctors must begin to conceptualize value-based care. Physicians have experienced the ratcheting back of Preferred Provider Organization (PPO) reimbursement, and when they hear terms like cost containment, they believe it means that insurance companies will pay them less. In our IPA, we are discussing ways to manage the total cost of care without cutting per-unit provider reimbursement. That said, physicians recognize that the opportunities for shared savings diminish as they become more successful. If we are able to reduce the total cost of care one year, our baseline for the next year shifts, and the next year gets tougher. We have to understand this as we design long-term strategies with our hospital and health plan collaborators.

Goldberg: For physicians in private practice, the biggest challenge is in population health management when healthcare providers try to get patients to change their unhealthy behaviors on a large scale. It's clear physicians cannot do this alone. However, we have created new team-based care models, such as the patient-centered medical home, to address issues like weight management, diet modification, alcohol consumption, exercise, smoking cessation, and mental health support. To improve the health of the national population, there needs to be a partnership and shared accountability between providers, patients, and payers.

Is your organization implementing any defensive or offensive strategies this year to maintain long-term financial stability?

Gilbert: First and foremost, we are trying to get the various institutions in our community aligned. Our IPA has partnered with Community Hospital and Salinas Valley Memorial Hospital to coordinate population health initiatives through a not-for-profit entity called the Monterey Salinas Healthcare Collaborative. It makes a powerful statement to employers and other community healthcare stakeholders, including our managed Medi-Cal plan, when they see hospitals and physicians working together to achieve the same goals—especially when they see that these goals are designed for the benefit of the community and patients, not for our financial gain.

Morgan: The integrated population-management capabilities through Community Health Innovation (CHI), an affiliate of Community Hospital, have allowed us to secure key payer contracts in our community. Another strategy we are pursuing is to diversify and capture the premium dollar through the creation of our own health plan. Running a health plan is incredibly hard work, and we have to kick up our size to move toward the right level of profitability. If we had banked the money we spent on the health plan so far, our balance sheet would be stronger, but our competitive position would be weaker.

Hospitals do not make money by improving the overall health of their population, but health plans definitely do. So, we want to take our population health management capabilities and apply them to a membership where we are at-risk, but where we also can get rewarded for a healthier population.

McGrew: At San Mateo Medical Center, we have a financial stewardship initiative that zeroes in on improving revenue and containing costs. On the cost side, we continue to monitor productivity and overtime, as well as manage our supply costs. On the revenue side, we are trying to optimize our revenue cycle to capture the 2 to 3 percent of our revenue that we are leaving on the table. We are looking at areas such as scheduling, registration, treatment authorization, coding accuracy, and timeliness. We're transitioning to a new patient financial system that pushes more work to the front end of the revenue cycle so there is less clean-up on the back end. This year, we also will be implementing a clinical documentation improvement (CDI) program.

Oliva: CDI programs are strategies that can improve performance in both the fee-for-service and value-based worlds. In fee-for-service, when providers improve their documentation, they are optimizing the revenue that they should be getting for taking care of a population. At the same time, good documentation allows organizations to appropriately risk-set their populations for value-based initiatives. However, many organizations still do not see CDI as a strategic requirement that is managed operationally at a high level—essentially, it needs to be a C-suite priority.

At the same time, organizations have to step up their analytics capabilities to better understand their clinical and financial performance. If you wait for organizations like CMS to give you data, you are at least a year late. Having access to more real-time information helps you to be more nimble and responsive to emerging opportunities.

Participants in the Executive Roundtable

James N. Gilbert, MD, MHCM, is president and chairman, Monterey Bay Independent Physician Association, Monterey, Calif.

David S. Goldberg, MD, is a plastic and reconstructive surgeon in private practice and a member of the Monterey Bay Independent Physician Association, Monterey, Calif.

Matthew Morgan, MBA, FHFMA, is chief accounting officer, Community Hospital of the Monterey Peninsula, and CFO, Aspire Health Plan, Monterey, Calif.

David S. McGrew, CPA, CHFP, is CFO, San Mateo Medical Center, San Mateo, Calif.

Anthony F. Oliva, DO, MMM, FACPE, is vice president and CMO, Nuance, Burlington, Mass.

About Nuance

Nuance clients consistently outperform their peers on overall quality indicators, all while achieving 4 to 8 percent Case Mix Index correction. Nuance has helped over 500 healthcare systems successfully establish clinical documentation improvement practices across the entire continuum of care to accurately measure patient care, impact quality, and receive appropriate reimbursement. With more than 20 years of clinical documentation expertise, we can help you mitigate risk while maximizing your potential. To learn how Nuance Clintegrity CDI Solutions can help you, go to the website or call 1-877-805-5902.