Tag Archives: Population Health Management

Payer, provider trends to watch in 2019

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https://www.healthcaredive.com/news/payer-provider-trends-to-watch-in-2019/545612/

Ripple effects from 2018 will continue well into the new year as players deal with some massive policy and business shifts.

The coming year for healthcare will see the industry reckon with some of the massive changes set in motion last year, such as megamergers like CVS-Aetna and Cigna-Express Scripts and a judge’s declaration that the Affordable Care Act is no longer constitutional.

On the policy front, newly-installed Democrats in Congress (and the party’s 2020 presidential candidates) will be pushing for more comprehensive health coverage plans while the GOP considers tougher Medicaid restrictions at the state, and potentially federal, level.

Meanwhile, some familiar storylines are likely to continue. Effusive digital health funding and increases in mobile and telehealth services show no signs of abating, and neither does general M&A activity.

Here’s a snapshot of a few big trends for the payer and provider crowds to watch for in 2019.

Providers: Behavioral care goes primary, investment in digital

1. Narrowing gaps in population, behavioral healthcare

Historically, behavioral health services have been mostly disparate, but increased spending in digital health and a focus on lowering out-of-pocket costs will help spur greater connectivity, Sandra Kuhn, national lead for behavioral health consulting at Mercer, told Healthcare Dive. She predicted “more partnerships between traditional medical and behavioral health carriers on smaller, targeted point solutions” as the industry already began to see last year.

The trend more broadly fits into the push to recognize and act on social determinants of health.

One partnership is the Utah Alliance for the Determinants of Health, a coalition of providers, community organizations and government agencies banding together to reduce the impacts of SDOH. Their plan seeks to address socioeconomic stressors like housing instability, food insecurity and transportation — circumstances with a direct effect on mental and physical health — before patients show up in the ER lobby. Intermountain Healthcare, a primary stakeholder, invested $12 million in the initiative.

Early efforts include experimental EHR technologies, value-based payments for even more population health management programs and wraparound services. Health Affairs highlighted two separate initiatives, each making inroads on social determinants by carrying out existing population health programs in tandem with trusted community partners.

Overall, Kuhn said, more organizations will step up with tactical solutions to what has otherwise been an intractable problem. That includes payers like state Medicaid programs, many of which have begun value-based payments for behavioral health services.

Progress on behavioral and population health is happening in tandem with — or perhaps existing symbiotically alongside —  the growth of telemedicine. At Riverside Health System, a rural health network in Newport News, Virginia, a long-term telebehavioral health initiative has improved coordinated care among psychiatrists and clinical social workers, as well as replaced a chunk of services offered at the system’s nursing homes.

Riverside isn’t the first to find success with telebehavioral health, but the system’s wider experimentation with programming, a happy accident triggered by a psychiatrist shortage, has certainly shown there’s a market for it — one that Quartet, Lyra and Teladoc have been quick to capitalize on. This year will see a swath of players from across the industry tackle behavioral health gaps by complementing primary care with telemedicine.

2. Doubling down on digital

While larger health systems tend to have the means to be early adopters of new and robust healthcare technologies, physicians are beginning to integrate such services into their practices.

Use of telehealth among the commercially insured has been gradually rising since the mid-2000s, having grown 52% annually from 2005 to 2014 before spiking 261% between 2015 and 2017, according to JAMA.

Revenue cycle management firm SYNERGEN Health estimates digital health tech for remote use will grow by 30% this year, allowing patients to better manage their own healthcare, giving clinicians an opportunity to spend more time with more patients and, of course, generating new revenue streams.

As more payers hop aboard the telemedicine train and more services are covered, hospitals will continue see costs fall. A 2017 report from the Rural Broadband Association found that telehealth services were associated with an annual cost savings of $20,841 per U.S. hospital on average. The caveat here for hospitals is the very real possibility that large facilities will become increasingly more obsolete and overhead costs will become too costly as patients find yet another reason to stay away from their doors.

3. Price transparency still a question mark

Many are hoping the days of the $629 hospital bill for a wet towel and a Band-Aid are coming to an end, but it’s not likely to happen in 2019.

Still, legislators and consumers alike are making price transparency an issue in hopes of curbing skyrocketing healthcare costs.

CMS took some action last year by finalizing a new rule mandating hospitals post chargemaster rates online in a machine-readable format. But the rule is effectively toothless. Hospitals were already required to make those prices available, and chargemaster rates only apply to the uninsured and balance billing. And despite the fact that the rule went into effect on the first day of the year,  CMS admitted recently that it has no way of enforcing the mandate and would not comment on how many hospitals are currently in compliance with the rule.

“It is [our] expectation that all of them will comply,” CMS Administrator Seema Verma said on a call with reporters.

The rule doesn’t specify where hospitals need to post their charges. The only requirement is that they’re made available online, which has allowed health systems like mega-operator Ascension to bury their charges behind a tangled maze of clicks.

The company has previously defended itself in a statement to Healthcare Dive by arguing the costs can be confusing for patients, as they don’t take financial assistance and charity care into consideration. Chargemaster information, as some critics have pointed out, isn’t a very useful measure of pricing for consumers. It can actually be counterproductive.

Thomas Lee, chief medical officer at Press Ganey, speaking at the U.S. News Healthcare of Tomorrow conference, said economists don’t believe price transparency has a noteworthy impact on cost and efficiency.

“I’m predicting not much will happen and people won’t pay attention to it because the charges aren’t actually relevant to the vast majority of people,” Lee said. “If people are uninsured, I doubt they’re looking at these things either.”

If the ACA taught economists and legislators anything about American consumers, it’s that they want healthcare, but don’t want to take the time to shop around for it. In a recent Health Affairs survey, just 13% of respondents responsible for cost-sharing in their last healthcare encounter sought cost information before receiving care. Only 3% compared prices of different providers.

History seems to be repeating itself, as CMS hopes its “first step toward price transparency” will be picked up by market forces. By mandating the information be made available in a different file format, CMS believes it has “set the stage” for that data to be used by private third parties that can develop tools for consumers to use.

“There’s nothing in the rule that prevents hospitals from going further with this,” Verma said. “Hospitals can do that today.”

But they aren’t. In fact, the percentage of hospitals unable provide patients with price information jumped from 14% to 44% between 2012 and 2016, according to a JAMA study.

In short, the CMS rule is much more of a light nudge than a forceful shove into price transparency, and without regulation and the means of enforcing it, hospitals have little to no incentive to change. But expect the wheels of the price transparency conversation to continue turning in 2019, regardless.

Payers: Contract fights, a focus on value and more managed care

1. Contentious negotiations and contract disputes

As insurers have bulked up in scale after blockbuster mergers last year, Fitch Ratings expects relationships between providers and payers to be even more contentious during contract negotiations even in a value-based payment setting.

Some recent headline-grabbing squabbles include UnitedHealthcare’s contract impasse with Envision Healthcare, an ER staffing firm. Tenet and Cigna’s contract negotiations stalled and finally reached a multi-year deal this year.

Hospitals can also expect low rate increases from commercial insurers, according to Moody’s.

In markets where there is a dominant insurer and multiple hospitals, “Each hospital will need to demonstrate why it is indispensable to the insurer … and why it should be included in a network,” Moody’s reports.

However, there are potential glimmers of hope. As more states have expanded Medicaid, it puts pressure on other states to do so, which would provide a means of payment for hospitals that have gone without payment caring for the uninsured.

2. Value-based momentum

Payers and providers will continue to enter into value-based contracts in 2019 at varying degrees, according to Moody’s.

Many hospitals are engaging in contracts that offer incentives or alternative payment models for reaching certain quality measures, but very few are taking on full risk, or both the upside and downside risks within a contract, according to Moody’s.

That will continue into 2019: few are likely to take on downside risk, or the possibility of losing money, Moody’s reports.

However, while the popularity and use of these payment models continues, its cost-savings benefits have yet to be realized, according to a recent report.

Meanwhile, CMMI continues to test for ways to drive change in the healthcare by paying for quality as opposed to quantity. For instance, CMMI is testing whether it can reduce utilization and ultimately costs by addressing social-needs such as housing for Medicare and Medicaid beneficiaries. CMMI’s director Adam Boehler said he won’t force organizations to take on risk, but will help them take on a level of riskthey’re comfortable with.

But in an about-face, the Trump administration seems to be signaling that it may institute mandatory payment models that could put providers at risk of losing money.

3. Medicare Advantage still lucrative, popular

Medicare Advantage will continue to be a profit center for insurers, which typically enjoy a 5% margin, according to 2016 data from the Medicare Payment Advisory Commission.

As the population ages, it presents a growth opportunity for payers. Enrollment in MA plans grew by 8% from 2016 to 2017, according to a recent MedPAC report, as many more seniors are choosing to enroll in plans run by traditional insurers. About 34% of beneficiaries choose MA, a significant increase from a decade ago when just 10% enrolled in such plans.

Beginning this year, MA plans have greater flexibility to offer non-traditional benefits such as adult daycare, meals or in-home care to improve the overall health of patients, particularly those will high needs. CMS Administrator Seema Verma previously said 270 MA plans will offer these new benefits in 2019.

These new benefits also pose an opportunity for nontraditional healthcare companies such as Lyft and Uber, which are looking for ways to shuttle seniors to appointments and pharmacies.

Payers including Cigna touted the future growth opportunity it sees for MA.  “We are well positioned today and going forward for existing and new markets,” Cigna CEO David Cordani said of MA, according to Forbes. 

4. Medicaid managed care growth

As states weigh expanding Medicaid, it’s another potential opportunity for managed care plans to contract with states. As more states expand the program, it puts pressure on the remaining holdouts.

Last year, some red states took the issue to the ballot box and got approval for expansion, potentially providing a roadmap for stakeholders to replicate in other states where the legislatures balk at expansion. California Gov. Gavin Newsom is backing an idea that would expand Medicaid eligibility in his state to undocumented young adults, providing another opportunity for Medicaid managed care firms.

Likely potential winners are Centene and Molina. Centene is the nation’s largest Medicaid managed care firm with operations in 21 states covering more than 8 million people. Molina serves more than 3 million in 13 states and Puerto Rico.

Just recently, Molina CEO Joseph Zubretsky said even without expansion ushered in by the Affordable Care Act, $1 billion of new revenue opportunity exists in Molina’s existing footprint because of states like Illinois that are expanding Medicaid managed care statewide.

 

 

 

Hospital Operating Income Falls for Two-Thirds of Health Systems

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Hospital operating income and health systems

Hospital expenses are rising faster than revenue growth for health systems, resulting in declining operating income.

Health system operating income is deteriorating as hospital expenses continue to grow, according to a recent Navigant analysis.

In the three-year analysis of the financial disclosures for 104 prominent health systems that operate almost one-half of US hospitals, the healthcare consulting firm found that two-thirds of the organization saw operating income fall from FY 2015 to FY 2017. Twenty-two of these health systems had three-year operating income reductions of over $100 million each.

Furthermore, 27 percent of the health systems analyzes lost revenue on operations in at least one of the three years analyzed and 11 percent reported negative margins all three years.

In total, health systems facing operating earnings reductions lost $6.8 billion during the period, representing a 44 percent reduction.

Rapidly growing hospital expenses as the primary driver of declining operating margins, Navigant reported. Hospital expenses increased three percentage points faster hospital revenue from 2015 to 2017. Top-line operating revenue growth decreased from seven percent in 2015 to 5.5 percent by 2017.

Hospital revenue growth slowed during the period because demand went down for key hospital services, like surgery and inpatient admissions, Navigant explained.

Many of the revenue-generating services hospitals rely on are under the microscope. Policymakers and healthcare leaders are particularly looking to decrease the number of hospital admissions and safely shift inpatient surgeries to less expensive outpatient settings.

In exchange, Medicare and other leading payers are reimbursing hospitals for decreasing admissions or readmissions and their performance on other value-based metrics.

The shift to value-based reimbursement, however, is slow and steady, with just over one-third of healthcare payments currently linked to an alternative payment model. Hospitals and health systems are still learning to navigate the new payment landscape while keeping their revenue growing.

Value-based contracts also failed to deliver sufficient patient volume to counteract the discounts given to payers, Navigant added.

According to the firm, other factors contributing to a slowdown in hospital revenue growth included a decline in collection rates for private accounts and reductions in Medicare reimbursement updates because of the Affordable Care Act and the 2012 federal budget sequester.

“Because of reductions in Medicare updates from ACA and the sequester, hospital losses in treating Medicare patients rose from $20.1 billion in 2010 to $48.8 billion in 2016, according to American Hospital Association analyses,” the report stated. “The sharp $7.2 billion deterioration in Medicare margins that occurred from 2015 to 2016 surely contributed to the reduction in hospital operating margins in the same year of this analysis.”

While hospital revenue growth slowed, hospital expenses sharply rose as healthcare organizations invested in new technologies. Value-based reimbursement, federal requirements, and other components of the Affordable Care Act prompted hospitals to make strategic investments in EHRs, physicians, and population health management, causing expenses to increase, Navigant stated.

Key strategic investments made by hospitals and health systems included:

  • Compliance with the 2009 Health Information Technology for Economic and Clinical Health (HITECH) Act, which requires certified EHR implementation in hospitals and affiliated physician practices
  • Compliance with Medicare payment reform initiatives, such as accountable care organizations (ACOs) or pay-for-performance programs
  • Participation in new value-based contracts with payers
  • Establishment of employed physician groups or clinically integrated networks to develop the capabilities needed for compliance with performance- or value-based initiatives

“In addition to these strategic investments, other factors drove up routine patient care expenses, including a nursing shortage that increased nursing wages and agency expenses; specialty drug costs, particularly for chemotherapeutic agents; and, for some systems, recalibration of retirement fund costs,” the report stated.

The shift to value-based reimbursement and all of its accompanying policies will be the “new normal,” and hospitals should expect the low rate of revenue growth to persist, Navigant stated.

But hospitals and health systems can withstand the economic downturn by achieving strategic discipline and operational excellence, the firm advised.

“Systems must be disciplined to invest their growth capital in areas of actual reachable demand; that is, matched to the growth potential in the specific local markets the system serves,” the report stated. For example, creating a Kaiser-like closed panel capitated health offering in markets where there is no employer or health plan interest in buying such a product is a waste of scarce capital and management bandwidth.”

In line with strategic discipline, organizations will need to “prune” their owned assets portfolio by improving the utilization of their clinical capacity and growing patient throughput. Health systems can achieve this by focusing on scheduling and staffing, ensuring adherence to clinical pathways, streamlining discharges and care transitions, and adjusting physical capacity to actual demand.

The tools used to succeed in value-based contracts should also be applied to Medicare lines of business to reduce Medicare operating losses.

Additionally, vertical alignment will be key to weathering falling operating earnings, Navigant explained.

“Revenue growth is more likely to occur around the edges of the hospital’s core services — inpatient care, surgery, and imaging — rather than from those services themselves,” the report stated. “Creatively repackaging services like care management that is presently imbedded in every aspect of clinical operations, and finding retail demand for services presently bundled as part of the hospital’s traditional service offerings, represent such edge opportunities.”

Reducing patient leakage in multi-specialty groups and systems through improved referral patterns, scheduling, or care coordination will help to grow revenue and keep it within the system.

“To achieve better performance, health system management and boards must take a fresh look at their strategy considering local market realities. They need to look closely at the markets they serve, and size and target their offerings to actual market demand,” the report concluded. “They must re-examine and rationalize their portfolio of assets and demand marked improvements in efficiency and effectiveness, and measurable value creation for those who pay for care, particularly their patients. Since much of this should have been done five years ago, time is of the essence.”

Hospitals look to value-based contracting in healthcare supply chain

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Almost three-quarters of C-suite and supply chain leaders say their health systems prioritize value-based contracting, although barriers remain.

Most hospital and health system leaders are interested in value-based contracting when it comes to their supply chains, but a new Premier survey shows a lack of opportunities to lock down contracts with suppliers.

Among 200 C-suite executives and supply chain leaders, 73 percent said their health systems prioritize value-based contracting when looking to improve their return on investment.

IMPACT

In perhaps another sign of the inevitability of value-based care, 81 percent of respondents said they would be interested in more suppliers offering value-based contracting options.

Despite that, only 38 percent said they had participated in value-added or risk-based contracting with suppliers or pharmaceutical companies.

There are some barriers. When asked if they had considered participating in value-based contracts with suppliers with both up- and downside risk/reward, 55 percent said they didn’t know enough about shared risk contracts. Another 20 percent said they’re actively considering such contracts; 16 percent are already participating in them.

As for why many providers haven’t yet taken part in value-based or risk-based contracting with suppliers, 67 percent said it’s due to not having been engaged by a supplier. About 11 percent said it doesn’t align with the organization’s strategy.

WHAT ELSE YOU SHOULD KNOW

Respondents provided some examples of value-based contracts they had implemented, and at the top of the list was surgical services at 13 percent.

Following that was purchased services (11 percent); cardiovascular (11 percent); pharmacy and materials management (9 percent); nursing (8 percent), imaging and lab (6 percent); and facilities (5 percent).

Data was the most common challenge, cited by 22 percent of respondents. That was followed by internal communications (14 percent); coordination with suppliers (12 percent); infrastructure support (11 percent); and physician buy-in (10 percent).

THE TREND

Research this year from Sage Growth Partners highlighted the challenges providers face in succeeding under value-based contracting. Slightly more than two-thirds of the survey’s 100 respondents said value-based care has provided them with a return on investment, but many have had to supplement their electronic health records with third-party population health management solutions to get the most bang for their buck.

10 thoughts on the state of healthcare from Scott Becker

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https://www.beckershospitalreview.com/hospital-management-administration/10-thoughts-on-the-state-of-healthcare-from-scott-becker.html

1. Healthcare, given that we have 325 million-plus people in the U.S. with an aging and growing population that is living longer, is a very complex problem.

2. When I hear any executive, technology person or sales person look at an audience and say, “If everyone would just use this type of coaching app for diabetes or behavioral health, we would cut billions of dollars in costs,” I cringe, scoff, laugh and tend to get angry. I recently heard this in a speech I listened to.

3. Healthcare at its core is really taking care of individual patients. I see the theories behind population health and preventive health but I’m skeptical that it’s a fix-all.

4. When people say there should be no fee for service, I tend to think they’re representing some constituency. I assume at some level someone will still need to get paid to do something.

5. Hospitals and physicians and many providers will struggle as they become more reliant on governmental pay and as commercial patients are siphoned off. Government reimbursements will soften.

6. I’m not so dumb as to not see the irony in the campaign signs that said “get the government’s hands off my Medicare.”

7. Notwithstanding No. 6, whenever the government does place fingers on the scale, they are often wrong, and it often has massive unintended consequences.

8. The system costs with 325 million-plus people in the U.S. are crazy and insurance costs per family are insane.

9. Both parties are tone deaf as to the needs of the American people. Simply stated people that are poor need healthcare, and people that aren’t poor need affordable healthcare. These people are both Republicans and Democrats.

10. Given the quasi-monopolies of insurance companies in certain areas and the lack of insurance options, it’s likely we will need some sort of public option at some point.

 

Hospitals are investing in housing — Here’s why

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https://www.beckershospitalreview.com/finance/hospitals-are-investing-in-housing-here-s-why.html

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Several factors, including changes in reimbursement, have motivated some hospitals to invest in community housing projects, according to NPR.

In the 1990s, 50 percent of the children in Southern Orchards — near Columbus, Ohio-based Nationwide Children’s Hospital — lived in poverty. Through a partnership called the Healthy Neighborhoods Healthy Families initiative, Columbus, community groups like United Way, and Nationwide Children’s began to invest in the neighborhood’s homes. In 2008, the organizations started renovating vacant homes for resale, building affordable housing and funding renovations for homeowners.

With a $6.6 million infusion from Nationwide Children’s, the $22 million project led to the construction of 58 affordable housing units, 71 renovated homes and 15 new homes. The organizations also gave out 149 home improvement grants from 2008 to 2018, according to the report, which cites Pediatrics.

Kelly Kelleher, MD, director of the Center for Innovation in Pediatric Practice at Nationwide Children’s, writes in Pediatrics that Nationwide Children’s is treating “the neighborhood as a patient.” The hospital is attempting to mend harmful socio-economic and physical environments in the hope it will lower the prevalence of health issues caused by those conditions. The investment could pay for itself if the number of hospital visits from Southern Orchards neighborhood falls, said Dr. Kelleher.

Hospitals across the country are taking similar approaches, though not as direct as owning and operating housing in a certain neighborhood, according to Megan Sandel, MD, who helps direct Boston Medical Center’s housing initiative. Dr. Sandel said Boston Medical Center’s projects are owned and operated by other community organizations. Similar projects are off the ground in Seattle, Boston, Atlanta and New York, among other places.

A potential motivator for these projects is a shift from fee-for-service medicine to reimbursement based on improving quality of care, according to the report. Some states are even starting to give healthcare organizations funding to manage populations.

 

What’s Driving Health Care Costs?

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https://www.healthaffairs.org/do/10.1377/hblog20180625.872430/full/?utm_term=Read%20More%20%2526gt%3B%2526gt%3B&utm_campaign=Health%20Affairs%20Sunday%20Update&utm_content=email&utm_source=2018-06-24&utm_medium=email&cm_mmc=Act-On%20Software-_-email-_-ACA%20Round-Up%3B%20Health%20Care%20Costs%3B%20Medicaid%20Expansion%3B%20Prescription%20Drug%20Monitoring%20Programs-_-Read%20More%20%2526gt%3B%2526gt%3B

Value-based payment (VBP) models are an effort to rein in the growth of health care costs and improve quality. However, it’s unclear what overall impact VBP models are having on health care costs. Even though health care is provided at the local level, most evaluations examine health care spending at the national level. To address this disconnect, we conducted quantitative and qualitative market-level assessments. Our goals were to examine the impact of population-based, value-based care within a market; identify what measurable factors were associated with differing costs; and understand how business leaders are thinking about value-based care and cost reduction.

Leavitt Partners, the Healthcare Financial Management Association (HFMA), and McManis Consulting, with participation from Mark McClellan at Duke University, conducted three mixed-methods studies:

  1. “Growth of Population-Based Payments Is Not Associated with a Decrease in Market-Level Cost Growth, Yet” examined the impact of population-based VBP on per-beneficiary-per-year (PBPY) health care spending and quality of care. The study used growth curve modeling and fixed-effects regression analyses of Medicare and commercial claims data.
  2. “Market Factors Associated with Medicare Costs and Cost Growth” examined which market factors are correlated with PBPY health care costs and cost growth within a market using growth curve modeling. The study used and aggregated multiple data sets from public and private sources.
  3. “What Is Driving Total Cost of Care? An Analysis of Factors Influencing Total Cost of Care in U.S. Health Care Markets” combined qualitative interviews conducted during site visits of nine markets and the quantitative findings from the studies above to understand factors that may be influencing total cost of care in US health care markets.

Key findings from the studies include:

  • Based on data from 2015, there was no association between an increase in population-based VBP and slowing of health care costs in a given market. Our study did not include episode-based payments.
  • Health care leaders across markets believe further changes to payment and delivery models are coming. Less clear is what, or who, will be the catalyst to push further change.
  • Some stakeholders expressed stronger support for other types of VBP models, including episode-based models and models that address the needs of specific patient groups.
  • The question of “what type of competition” in a market may be more important than “how much” competition. Lower-cost markets featured competition among a few health systems with well-aligned physician practices and geographic coverage across their market.
  • Lower-cost markets appear to benefit from organized mechanisms, including state-sponsored or endorsed reporting agencies, for more transparent sharing of information on provider quality and costs.Based on quantitative and qualitative evidence, the studies contribute to our understanding of the dynamics of competition, integration, and transparency on health care costs in a market. Below, we summarize findings from the three mixed-method studies and provide some policy implications.

Population-Based VBP Models Are Not Lowering Market-Level Health Care Costs … Yet

VBP dates back to 2005 with the Physician Group Practice Demonstration. The Affordable Care Act (ACA) significantly accelerated the proliferation of VBP models with the creation of the Medicare Shared Savings Program(MSSP) and the Center for Medicare and Medicaid Innovation, which was tasked with developing and testing innovative new models. Commercial VBP arrangements have also taken hold in the years since the ACA’s passage.

Given the growth of VBP, we wanted to examine whether, in the first few years following the ACA, these models were influencing the total cost of care. We used Medicare data from 2012 to 2015 and commercial data from 2012 to 2014 to assess the early impact of these models. We restricted our study to population-based VBPs, which included models with upside risk only (shared savings), both upside and downside risk, and global budgets, but excluded episode-based (bundled) payments.

We did not find a statistical relationship between the level of penetration of population-based VBPs in a market and a decline in health care costs for Medicare or commercial payers. Nor did we find an improvement in quality. When we limited our analysis to just those markets with higher levels of population-based VBP penetration (at least 30 percent), our results suggested a very modest, not statistically significant, market-level decrease in cost growth. Despite this null finding, our results provide an important baseline for future research.

Possible Explanations

There are several potential explanations for the null findings. For one, our study period (2012–15) may simply have been too early to see signs of population-based VBP lowering health care costs. Although today 561 MSSP accountable care organizations (ACOs) (the largest of Medicare’s ACO programs) cover 10.5 million beneficiaries, at the beginning of our study period in 2012 and 2013, only 220 MSSP ACOs covered 3.2 million beneficiaries. Many interviewees told us not enough lives were covered under VBP. Indeed, in some markets, less than 1 percent of lives were part of a VBP arrangement.

Second, although participation in population-based VBP models is growing, few models involve the provider taking on downside risk. As of 2018, the majority (82 percent) of MSSP ACOs were in the non-risk-bearing Track 1, which means they share in savings if they spend less money than their assigned benchmark, but they will not incur financial losses if they spend more than the benchmark. Our site visits found that although different markets had varying levels of population-based VBP activity, no market had significant numbers of providers participating in downside risk. Several interviewees stressed the need to take incremental steps to more risk.

Fee-for-service payment remains quite profitable for many providers and health systems. Even for those that have begun to take on risk-based contracts, fee-for-service payment represents the majority of total revenue. As long as the status quo remains lucrative, it’s difficult to make the business case for why a provider should undertake the effort to switch to a value-based focus that may lead to a reduction in use and total revenue.

Still, several interviewees said they believed the move toward paying for value would continue, even if there’s some uncertainty over whether Medicare or private payers will lead the movement. It’s possible that when VBP models outweigh fee-for-service payments in a market, we’ll reach a “tipping point” and health care cost growth will decline. Many interviewees expressed enthusiasm for other VBP models, such as those based on episodes of care (bundled payments) and those designed for specific populations (for example, the frail elderly). These models may make more sense for specialty providers who perform a certain type of procedure or care for a certain type of patient.

Other Market Factors

If these initial population-based VBPs results don’t show a relationship to health care cost growth, then which market-level factors do correlate? For our second quantitative analysis, we used a variety of public and private data sources to examine the relationship among several market-level factors beyond value-based payment and Medicare costs and cost growth between 2007 and 2015. All the factors together explained 82 percent of variation in baseline Medicare costs (Exhibit 1). 

The prevalence of chronic diseases was the most influential predictor of market costs, accounting for 41.5 percent of the variance. Hospital quality metrics, market socioeconomic status, and the concentration of hospitals and insurers also helped explain market-level costs.

Using these same factors to predict Medicare cost growth was less fruitful, explaining only 27 percent of the variation in Medicare cost growth—substantially less than the 82 percent of baseline costs. As Exhibit 2 shows, a much weaker association exists between chronic disease prevalence and Medicare cost growth. Significant additional research should be done to identify factors that predict cost growth.

These findings matter for several reasons. First, they reinforce efforts currently underway to contain costs, including strategies to prevent and better manage chronic conditions, reduce hospital readmissions, and reduce the number of individuals without insurance. Second, although we know less about what drives health care cost growth in a market, meaningfully reducing spending in a market relies on developing strategies that target cost growth, instead of baseline costs. More research that focuses on what’s driving cost growth is needed.

The Role Of Competition And Transparency On Costs

The interviews we conducted add insights into these market-level findings. We identified two distinguishing characteristics of higher- and lower-cost markets: type of competition in the market and degree of transparency in the market. We recognize that while there are some common lessons, health care markets differ significantly and their approaches to care, costs, and VBP models will vary.

Competition

We know competition can help drive down costs and increase quality in health care markets. However, how much competition, and what type, seems to make a difference. For example, we found that the lower-cost markets in our nine site visits had at least one integrated delivery system. Consolidation in these markets had resulted in two to four health systems with geographic coverage across the market. In these markets, physicians were generally employed by the health system or worked in close alignment with it. Health plan competition matters as well, particularly with respect to innovation in new payment and care delivery models. Portland, Oregon, and Minneapolis-St. Paul, Minnesota, two of the lowest-cost markets, both had competitive health plan landscapes.

Conversely, the markets we visited with less integration and seemingly more provider competition actually had higher costs. These included Los Angeles, California (which had higher Medicare costs only), Baton Rouge, Louisiana, and Oklahoma City, Oklahoma. One reason for this may be that there is less focus on addressing unnecessary use in these markets.

Transparency

Transparency is often cited as a strategy that will help contain costs. Similar to competition, the type of transparency effort matters. We found that some lower-cost markets seemed to benefit from organized transparency mechanisms, including state-sponsored or endorsed reporting agencies and employer coalitions that made information on provider quality and costs publicly available. For example, in 2005, the Minnesota Medical Association and health plans in the state together formed MN Community Measure, a nonprofit organization tasked with the collection and dissemination of data on the quality and cost of providers across the state. Today, providers are required to submit data to the organization. Our interviewees expressed optimism but acknowledged more work is needed to optimize consumer-oriented transparency tools, which research has so far shown to have had only minimal use.

Policy Recommendations

Our research led us to three primary policy recommendations to help improve health care quality and lower costs (for additional ones, see the fullstudies).

  1. Continue movement toward payment models that increase financial incentives to manage total cost of care and closely monitor the impact of doing so because our findings show that the majority of payments in a market continue to flow through fee-for-service, instead of value-based arrangements. Experiments should continue with population-based VBP models but should not be confined exclusively to these models. Episode-based payment models, for example, may be better suited to certain types of providers who perform a certain procedure (for example, a knee replacement) instead of care for a general population of patients.
  2. Balance the benefits of competition with the benefits of integration. The lower-cost markets we studied had competition among two and four systems with well-organized provider networks that had been developed through vertical integration or strong alignment of physician practices. Most of the lower-cost markets also had an integrated delivery system—with vertically integrated health plan, hospital, and physician capabilities—as a competitor in the market.
  3. Support more transparent sharing of information on health care cost and quality within markets. Lower-cost markets in the qualitative study had organized mechanisms for the sharing of information on health care cost and quality, whether through employer coalitions, statewide reporting agencies, or both.

Although differences exist among each health care market, all markets can act to improve quality and reduce costs. Our studies suggest several actions different stakeholders in each market can take to improve care for their populations.

 

 

Two key areas hospitals are planning major tech investments in the immediate future

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Providers are ramping up to focus on urgent care centers and population health initiatives.

Hospitals are gearing up to spend more on population health and urgent care centers in the coming years, according to new research from two different firms.

The market for population health technologies is expected to reach $69 billion by 2025 while the urgent care center space is forecasted to grow by roughly $8 billion in 2018 to $25.93 billion by 2023.

The global population health management market was worth $118.5 million in 2016 and is slated to grow at a CAGR of roughly 16 percent from 2017 to 2025, with the rise in demand for innovative technologies and adoption of healthcare IT tools fueling the growth, Transparency Market Research said in a new report.

In terms of end-users, it’s the healthcare provider segment of the market that is expected to account for the largest share of the global market thanks to rising use of PHM tools. Insurers, pharma and “others” follow in terms of segments.

The benefits of PHM tools like data integration, data analysis, care coordination, and lowering care costs have driven an increase in their adoption, especially in the case of chronic diseases like diabetes and cardiovascular diseases which require identifying high-risk patients and disease management measures.

“This is one of the factors projected to drive the global population health management market during the forecast period,” the report authors wrote. “Developed healthcare IT infrastructure and increase in healthcare IT spending are the other factors anticipated to propel the global market during the forecast period.”

Geographically, North America and Europe are expected to dominate the market thanks to the Affordable Care Act and a rise in healthcare IT spending, owing largely to providers.

“Well-established healthcare infrastructure and strong support from public and private sectors in terms of reimbursement are attributed to the largest market share of North America,” the firm said. “A rise in awareness about population health and government initiatives such as the Affordable Care Act are anticipated to drive the market during the forecast period.”

Urgent Care Centers, meanwhile, will represent a $26 billion market by 2023, and in this year will reach just over $20 billion, ReportsnReports projected. Health systems and corporations with a stake in the healthcare industry know the model is flourishing thanks to affordable pricing, shorter wait times, an increasing elderly population, and the market is seeing more investment activity as well as strategic development partnerships between urgent care providers and hospitals. Corporate-owned urgent care centers, however, are expected to occupy the largest share of this market in 2018.

Concentra, MedExpress, American Family Care, NextCare Holdings, and FastMed Urgent Care are already major market players with CareNow Urgent Care, GoHealth Urgent Care starting to gain more of a presence as well in the United States.

Health systems looking to diversify their portfolios might do well to look at both urgent care centers and population health programs when considering how to expand their footprints. With a reputation for faster service and better pricing, both things that the rising millennial population smile at, they could be a beacon for both primary and specialty care for younger consumers as opposed to traditional practices. Additionally, with the high-deductible health plans, reasonably priced care will be especially attractive to patients who will bear a greater portion of the financial responsibility related to their care.

As these facilities grow in popularity, including them could boost not only your reputation but also your bottom line.

 

Enabling Sustainable Investment in Social Interventions: A Review of Medicaid Managed Care Rate-Setting Tools

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http://www.commonwealthfund.org/publications/fund-reports/2018/jan/social-inteventions-medicaid-managed-care-rate-setting#/utm_source=social-inteventions-medicaid-managed-care-rate-setting&utm_medium=Facebook&utm_campaign=Delivery%20System%20Reform

Abstract

  • Issue: It is widely recognized that social factors, such as unstable housing and lack of healthy food, have a substantial impact on health outcomes and spending, particularly with respect to lower-income populations. For Medicaid, now dominated by managed care, this raises the question of how states can establish managed care rates to sustain investments in social supports.
  • Goal: To explore practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues.
  • Methods: Literature review, interviews with stakeholders, and analysis of federal regulations.
  • Findings and Conclusions: We identify the following options: 1) classify certain social services as covered benefits under the state’s Medicaid plan; 2) explore the additional flexibility afforded states through Section 1115 waivers; 3) use value-based payments to support provider investment in social interventions; 4) use incentives and withholds to encourage plan investment in social interventions; 5) integrate efforts to address social issues into quality improvement activities; and 6) reward plans through higher rates for effective investments in social interventions. More needs to be done, however, to assist interested states in using these options and identifying pathways to braid Medicaid dollars with other social services funding.

Introduction

Exhibit 1

State Options and Considerations

1. Classify certain social services as covered benefits under the state’s Medicaid plan

2. Explore the additional flexibility afforded states through Section 1115 waivers

3. Use value-based payment to support investment in social interventions

4. Use incentives and withholds to encourage plan investment in social interventions

5. Integrate efforts to address social issues into quality improvement activities

6. Reward plans with effective investments in social interventions with higher rates

It is now widely recognized that social factors, such as unstable housing, lack of healthy food, unsafe neighborhoods, and unemployment, have a substantial impact on health care outcomes and spending, particularly with respect to lower-income populations.1 Moreover, there is an emerging body of research on which interventions are most likely to result in better outcomes and reductions in spending.2 As the nation’s largest payer for health care services for low-income populations, many of whom have substantial social service needs, Medicaid is front and center when it comes to these issues. State Medicaid agencies are increasingly focusing on how the program can cover and reimburse for nonclinical interventions, particularly in managed care, now the dominant service delivery model in Medicaid.

This report identifies practical strategies that states can deploy to support Medicaid managed care plans and their network providers in addressing social issues. Based on a literature review and on interviews with state officials, health plan leaders, actuarial experts, and other stakeholders, we identify options for states to consider if they are interested in incorporating the cost of social interventions into Medicaid managed care rates (Exhibit 1). While the strategies do not represent a comprehensive solution to the issue of Medicaid’s role in addressing social issues, they are an essential building block.

Background

States face several questions about what role they want Medicaid to play in addressing social issues that directly affect the health of Medicaid beneficiaries and the cost of serving them. Do they want to move their Medicaid programs beyond paying for medical services to tackling affordable housing, economic insecurity, unsafe neighborhoods, and access to adequate and healthy food? In some states, the priority is finding more effective ways to deliver traditional medical care. Other states, particularly those that have implemented an expansion of coverage to low-income adults or are adopting a population health approach to their Medicaid programs, look to their managed care plans and providers to address such issues (Exhibit 2). In all cases, states must evaluate the extent to which federal Medicaid rules permit coverage and payment for discrete nonclinical services.

Exhibit 2

Medicaid Expansion: Implications for the Importance of Addressing Social Determinants of Health

In the states that expanded their Medicaid programs to all adults with incomes below 138 percent of the federal poverty level (31, plus the District of Columbia), newly eligible adults often have extensive social needs. According to research from the Medicaid and Children’s Health Insurance Program Payment and Access Commission, 70 percent are below the federal poverty level, but, even so, only about half receive benefits from the Supplemental Nutrition Assistance Program.a In our interviews with Medicaid directors in expansion states, they reported that gaining these new enrollees has reinforced the importance of Medicaid addressing social issues: first, because of the relatively high prevalence of mental illness and substance abuse among the population,b and second, because of Medicaid’s increasingly important role in the coverage and care of low-income families. Finally, interviewees noted that, as Medicaid coverage became more stable and states and managed care plans began to implement value-based payment policies, plans and providers were better positioned to address the social needs of their enrollees and patients.

Rate-Setting Tools in Context

A Medicaid managed care financing and payment strategy is an essential element, but far from the only required element, of any approach to use Medicaid as a vehicle for addressing social determinants of health. During our interviews, we consistently heard that while there is strong interest in innovative rate-setting options, states have many other challenges they need to tackle for Medicaid to play a role in addressing social issues. These other challenges include the need for more staff with different skills, such as social service experience or actuarial proficiency; a data infrastructure to identify and address social factors; and sufficient time and resources for plans and providers to prepare to address social issues (see Appendix D). While these are important issues, they are not the focus of this report, which addresses options available to states for creating a payment and managed care contracting strategy that supports investments in social interventions.

Medicaid Managed Care Rate-Setting: Rules, Policies, and Procedures

The question at the center of this analysis is how states can support plan investment in social services that improve health outcomes and are cost-effective. In states with Medicaid managed care, this translates into a question of how to set Medicaid managed care capitation rates in such a way that plans are incentivized or required — and, even more importantly, have the resources — to address social issues that directly affect the health outcomes of their members.

The starting point for answering this question is the federal Medicaid managed care rules that require states to ensure that capitation rates are actuarially sound. This means that rates must be sufficient to cover the costs that plans incur to provide covered benefits to their enrollees, as well as related administrative and operational expenses. Notably, capitation rates must be based only on services covered under the state plan and services necessary to achieve mental health parity requirements.3 In other words, states cannot directly build the cost of social support services not covered under the state plan into their capitation rates (Exhibit 3).4

 

Top seven healthcare leadership problems

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Humana CMO: “As we improve the quality of healthcare, costs decrease”

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Humana CMO: “As we improve the quality of healthcare, costs decrease”

Dr. Roy Beveridge has served as CMO of Louisville, Kentucky-based Humana since 2013. Two years into his tenure, he opened the MedCity ENGAGE conference with a discussion calling for the democratization of healthcare.

In a recent phone interview, Beveridge discussed everything from value-based care to social determinants of health.

This exchange has been lightly edited.

What has been Humana’s biggest accomplishment in 2017?

From a physician and patient standpoint, we’re really moving quickly into value-based arrangements with MACRA and MIPS. There’s been a mind shift around physicians recognizing that in order to accomplish their goals of population health and value-based reimbursement, the whole discussion has changed around the need for analysis of data and a very different type of communication between the payer and the provider. Without that data, they can’t close gaps or improve the quality metrics that are becoming the norm.

A few years ago, I mistakenly thought value-based care was something that was going to be focused on the primary care physician and would not impact the specialist as much. But what you’re seeing is specialists recognize this value-based payment system is something they have to participate in.

From our standpoint, what that has resulted in is this continuous focus around community relationships. If payers like Humana are going to be successful, we need to be engaging our physicians’ patients. Services are needed for patients in the home. That’s the shift we have thought about and been successful at as we continue to recognize that an increasing amount of care will be in the home.

Why is it important to incorporate social determinants of health, and what work is Humana doing in this space?

When I was early in my practice and would see someone with diabetes, I remember having this belief that my role was to recognize what the patient’s diagnosis was and give a prescription for insulin. And then I thought I’d done a good job.

That was the mindset up until recently. Simply giving someone a prescription is the easy part. The more complicated part is explaining what their disease is and helping them take their medicine. We used to think that was a social worker’s problem. But if giving someone a prescription that they can’t fill doesn’t really help them.

As we look into the social determinants of health, transportation is big. Social isolation is a big one, and food insecurity goes hand in hand with diabetes and everything else.

I don’t think five years ago you’d be asking a question about social determinants of health. But at this point, the recognition of social determinant health issues is fundamentally linked to population health.

If you’re looking at a fee-for-service model, writing the prescription is all I need to do. If we shift the model to health outcomes, then you’re aligning everyone’s incentives to make sure people are thinking about these social determinants of health.

The other thing we have learned in the last year or two is that care really is local. We as a society have to recognize that what happens in South Florida is different than what happens in Texas or Minnesota or Massachusetts. There’s not one size that fits everything.

Humana recently released its inaugural value-based care report, which outlines numerous topics, including how Humana Medicare Advantage members affiliated with physicians in value-based models typically have healthier outcomes. Which finding from the report most surprised or shocked you?

I don’t think anything shocked me. There were parts of this that I think a couple years ago would have shocked people.

Five or 10 years ago, I would have said to you that in order to improve quality, you have to make an investment globally and that investment is going to cost the system more.

What’s pretty clear in the report is quality metrics do all the right things, yet at the same time, they lower the global cost of care. I don’t think that’s shocking, but it’s something that’s still hard for people to recognize and internalize. Fundamentally, as we improve the quality of healthcare, costs decrease.

News recently surfaced that Humana will acquire a 40 percent stake in Kindred Healthcare’s home care business for approximately $800 million. What does this mean for Humana?

We’ve only made the proposal. We haven’t gotten government approval for anything.

We’re thinking about, “How can we always get closer to the patient? How do we help improve someone’s health by being where someone is more of the time?” [Patients are] not in the hospital most of the time — they’re at home most of the time. We recognize we need to get closer to where people are if we’re going to help them in their destination of improving health.

What is your number one prediction for healthcare in 2018?

My number one prediction in healthcare is the pace of change within the system is going to continue to be fast.

CMS is pushing — and appropriately so — down a health orientation that moves from fee-for-service to quality-based outcomes.

My prediction for ’18 is that we’re going to hit an inflection point where the light bulb goes off because of the number of patients in the system who have moved from fee-for-service into this health outcomes model. Once it hits a certain amount of engagement within your hospital, then it becomes something everyone is aligned around.