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How to Successfully Transition to Value-Based Care


Implementing a value-based model requires much more than simply changing the payment methodology.

Group of doctors
Norman Chenven, MD

Norman Chenven, MD

The expectation that healthcare organizations can make the transition from a predominantly fee-for-service model to value-based care in a year or two is overly optimistic. Successful transformation will be a long journey for any system. But, based on measurable results so far, we are seeing progress and can expect continued advancement into the future.

With all the continued controversy over the ACA during the last two years, it’s easy to lose sight of the strides that have been made and why this forward movement is so important. Value-based care models and incentive programs are the first steps in systematically reducing the fragmentation and misaligned incentives of the current American healthcare system, a system which is overall more expensive and less effective in keeping us healthy than other developed nations. According to the Commonwealth Fund, the United States ranks last of 11 nations in healthcare efficiency, equity, and outcomes. 

Effectively implementing a value-based model requires much more than simply changing the payment methodology. Successful transformation requires re-alignment of providers in order to design and deliver proactive care and prevention. When clinicians are provided with technological access to all of the pertinent information of the patient’s history and care, when care team members are organized to enhance efficient collaboration, and when patients have fast, easy access to healthcare resources for preventive and acute care, performance inevitably improves and costs inevitably go down.

Accountable care today

Today there are more than 500 ACOs participating in Medicare “shared savings” ACO programs. Each year, their ability to reach their savings targets relative to their baseline is increasing, demonstrating that accountable care can lower the cost trend in Medicare. The latest report by the National Association of ACOs reports that Medicare saved more than $665 million between 2013 and 2016 after factoring in cost and quality bonuses paid to the ACOs.

Other sources document more positive results:

  • Statistical analysis of care and quality results for patients enrolled in Medicare ACOs when compared with those in traditional/fee-for-service Medicare show that the ACOs are demonstrating improved efficiency, lower costs, and improved outcomes as documented by a variety of quality metrics.

  • Physician-driven ACOs generally perform better than ACOs sponsored by institutions that have weak or non-existent physician commitment and engagement.

  • Results reported for California ACOs indicate that ACOs provide as good or better care when compared with other models for care delivery. In fact, based on HEDIS quality measures, ACOs score higher on patient experience measures, and early results show a remarkable level of savings, $20 million. For example, Blue Shield, Dignity Health, and Hill Physicians groups in Sacramento all turned in superb performances for the CALPERS (California Public Employees’ Retirement System) benefit program.

  • The ACO structure has helped providers to focus on managing chronic conditions such as diabetes and hypertension through population health management methodologies that use combined EMR and claims data to identify those patients most in need of extra assistance in order to improve their conditions.

  • The movement for transparency generates more data to be analyzed in the context of documenting value.  

But early experience with ACOs also shows that there is much more work to be done.  

For example, bundled payments that have provided significant benefits for specific surgical procedures such as knee and hip reconstruction have not proved as promising for the management of chronic diseases. These conditions which are ongoing by definition require broad connectivity and coordination of the entire healthcare system and are simply too hard to package.

Related: The Missing Link in Value-Based Care

Another continuing challenge is that the attribution models for determining which patients should be considered members of a given ACO network are hardly exact. Patients don’t often know or consider themselves to be ‘members’ and that can be a point of concern, creating confusion and inefficiencies. ACO’s that contract with multiple payers have limited ability to audit the attribution (assignment) of patients. And, the ACO can be burdened with having to deal with different attribution algorithms utilized by different payers.

Likewise, health plans, Medicare, and Medicaid are often not very efficient in providing the necessary claims data in either a timely or accurate manner. Having accurate and timely data is critical to permit the delivery system to identify and customize its interactions with patients to assure that preventive care occurs and at-risk patients receive additional resource.  

Lastly, the effectiveness of an ACO over time is proportional to length of the relationship of the providers with the patients (members). In other words, if patients come and go from the ACO over short time frames, there is lesser benefit and a real challenge to measure effectiveness or efficiency.

What now?

The next major hurdle in the ACO world is moving into downside risk arrangements. Most ACOs are currently in the upside “reward” programs in which they receive additional reimbursement for achieving performance financial and quality goals.

CMS has made it clear that it expects ACOs to step up and commit to the downside risk. However, taking risk on a portion of their payment is of concern for many providers-and it should be given the concerns articulated above. For entities that do not have a long history in managing care or dealing with capitated reimbursement models, there is a need to invest heavily in the infrastructure required to assure success. It is one thing to participate in a program with the opportunity to receive additional payment, but a wholly different situation when you could be asked to pay a penalty.

Questions abound: What are the performance requirements? How do we know they measure true quality of care? Will physicians be able to continue to make decisions in the best interest of the patient? Will capitation or risk sharing mechanisms create yet more administrative burden for providers?

To improve their confidence level, providers would like CMS to provide prospective rather than retrospective data on patients in their practice, to receive real-time claims data, to obtain the mandate that patients pay higher copayments when they seek care outside the ACO network, and to ensure that patients know they are in an ACO and have bought into its goals. This all represents culture change for providers, payers and patients. And culture is hard to change.

Related article: Why Engaging Providers in Value-Based Care Will Be Even More Critical in 2019

Perhaps the biggest barrier to providers confidently assuming financial risk is the history of the fragmented fee-for-service delivery model, which by its nature divides members of the care team and works against collaborative information sharing and proactive, preventive medical care. To close these gaps and move the value-based agenda forward, the Council of Accountable Physician Practices, a coalition of integrated medical groups and health systems consisting of more than 30 organizations representing tens of thousands of physicians, developed this set of recommendations:

  • Increase interoperability of electronic medical records. True care coordination can only occur when all providers have easy access to the patient’s complete medical record.  

  • Develop standardized quality measures to help patients to choose high-value providers. Often each payer has its own unique set of quality measures-determined by its unique algorithm-thus creating administrative challenges for the provider ACO.

  • Investigate more coordinated bundled payment programs for one-and-done procedures, bringing together stakeholders to agree on a limited set of high-priority bundles and drive agreement on specifications. Bundles, when properly designed, can drive improved quality and reduced cost. Poorly designed programs do not add value in the long run.

  • Ensure that knowledgeable and committed physicians are in leadership roles as we continue down this path.

CMS has voiced its support of the movement to value-based care; now is the time for providers and payers to step up to take an active role in shaping the future of healthcare in a world where better, coordinated care is the norm.

Norman Chenven, MD, serves as vice chairman for the Council of Accountable Physician Practices (CAPP), a coalition of American multispecialty medical groups, and health systems. He is also the founding CEO of Austin Regional Clinic, a 350-physician multispecialty medical group that serves the greater Austin, Texas, metropolitan area with 25 clinic locations. Additionally, he is the president and CEO of Covenant Management Systems (CMS), an Austin-based management services organization (MSO) providing hospitals, health plans, employers and medical groups with care management and third-party administration (TPA) services.

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