Alternative payment models have been en vogue in American healthcare for some time now. Payers and providers are increasingly being asked to take on greater financial risk instead of shared savings alone.
The latest data out this week shows that 34% of total U.S. healthcare payments were tied to APMs in 2017, up 12% from two years ago as value-based care marches onward.
But the road to new payment models is rife with many hurdles, experts say.
Though many groups feel ready to join the movement, some aren't comfortable taking on more financial downside. Evolent Health CEO Frank Williams reiterated earlier this year that switching to alternative payment models can be tricky due to risk alone.
"You can lose a lot of money quickly, so in larger risk arrangements or full health plans, you could lose $20 to $30 million a year," he told Healthcare Dive. "For an organization that's been relatively stable, those are pretty daunting numbers and they're scary for health systems' boards and physician groups that don't have a lot of capital."
CMS is thinking about forcing the healthcare industry's hand. In August, the agency proposed an overhaul of the Medicare Shared Savings Program (MSSP) that would require participating accountable care organizations to take on financial risk more quickly.
But the 82% of Medicare ACOs currently in the upside-only MSSP track (shared savings alone) — or any other organizations stressed about assuming risk — can make it work, a group of high-level experts said this week.
A panel this week at the Health Care Payment Learning and Action Network (LAN) 2018 Summit focused on provider strategies for thriving in risk-sharing payment models. Here are five takeaways from Monday's event to stack the odds that providers stay in the black while taking a gamble with downside risk.
1. Invest in data and technology.
Heritage Provider Network is one of the largest physician-led value-based care organizations in the country. It has grown largely due to its founder and CEO Richard Merkin, who has helped expand the integrated delivery system to more than 50 related healthcare companies over four decades.
One important facet of the group's sustained success, according to Merkin, is that Heritage has invested in leveraging technology such as data analytics that connects physicians with each other and with the patient.
Along with a traditional slew of enterprise-level products, HPN uses EZ-CAP, a HIPAA-approved, scalable management system with an accessible web portal for participating medical practices and NextGen Health Information Systems, a comprehensive and open EHR that includes electronic prescribing.
HPM also uses the q Suite of products, seven systems that help doctors profile and stratify patients to provide preventive care, allocate resources and individualize care plans, according to its website.
The group is particularly bullish on such algorithms.
In 2013, Merkin and the HPN shelled out $3 million to the winners of the Heritage Health Prize, a worldwide predictive modeling contest. Entrants were challenged to create an algorithm that could predict how many days a patient would spend in a hospital with the goal of cutting down on unnecessary hospitalizations.
The company now employs close to 50 computer scientists and software engineers seeking to eliminate a lot of the common administrative burdens faced by provider networks.
"Make it as simple as possible," Merkin said, and share the computer systems. HPM sometimes licenses (and sometimes gives away) its technology to new groups taking on full risk to help them shoulder the load.
2. Don't rely on the status quo.
As CMS has proved in recent weeks, provider groups can't trust that regulations and laws will stay the same.
"Over time, regulations change," Merkin said at the panel, noting administrative burden as one example. "You have to adjust. If you embrace the status quo, you're dead."
Richard Snyder, senior VP and chief medical officer of Independence Blue Cross, agreed. Snyder focuses on speeding the switch to patient-centered care through patient-centered medical homes, the Comprehensive Primary Care Plus program and a facilitated health network approach to value-based care delivery in Pennsylvania.
The state used to be risk-averse because "they lived through the 80s," Snyder said, where "some systems went bankrupt or virtually bankrupt."
Although healthcare organizations in Pennsylvania may be recalcitrant, Snyder believes in starting them off with low downside risk and increasing it year by year.
'There's a tremendous amount of inertia in the system and you've got to convince people that change is the new norm," Snyder said.
3. Recruit the best people you can — especially at the top.
Along with a strong data infrastructure, it's important that a network relying on an APM have a culture that's not afraid of change. That starts with its people.
"There is no substitute" for this strategy, according to Merkin, who has grown HPM to about 5,000 team members over 40 years.
This is most important at the top of the food chain, Snyder added. "Culture needs to start from the top down" as someone needs to be accountable for making the decision to move forward with APM adoption, he said.
"Certainly you have to have leadership at the top" that's bullish on value-based care, agreed David Buchanan, a primary care physician and executive medical director for Oak Street Health. The primary care collaborative has 42 centers across five states, managing the health of about 50,000 Medicare patients.
4. Solidify your vision and support it with value-based infrastructure.
But what to do if your company wasn't founded with that clear purpose in mind?
Oak Street supplies free transportation to and from visits to help low-income seniors. They have behavioral health specialists on site, nurse practitioners who do house calls, employees who go to hospitals to assist site-of-care transitions, longer visits and scribes sitting in on appointments so doctors can focus all their attention on the patient.
Oak Street's financial model has caught up with its invested care model and it's sustainable, Buchanan said.
Organizations can't be afraid of hard work, cautioned Merkin, who brought up the example of working on the weekends. Those two days are 29% of the week so "if you work hard on the weekends, you can lower your costs by 29%."
Assuming risk forces people to think systematically about care delivery, said Snyder, who ended up in the Blues system after it bought his HMO. For about a decade it had an upside risk only program for hospitals, which meant no one was worrying about cost.
Now, Independence Blue Cross contracts with a number of providers by bringing their unit cost down and giving them an opportunity to earn those dollars back if they take on downside risk, Snyder said.
He believes it's successful by engaging with the providers to look at their costs over time and set reasonable targets, sharing the payer's actionable data with participating health systems and receiving patient data in return and collaborating across the board.
5. Community engagement is key.
The last suggestion is bringing the community into care to foster good relations with patients.
HPN will sometimes vertically integrate in communities if it doesn't have a surgery center, urgent care facilities or hospice, for example. But if it does, Northridge, California-based HPN always outsources to local businesses, Merkin said.
Chicago-based Oak Street Health has community rooms in its centers open to anyone, not just members. Occasionally, it hosts bingo games, which are "probably the most popular thing" that happens at Oak Street, Buchanan said.
The community rooms and the events there build a greater sense of trust in the care team and the staff, along with a sense of community and purpose for sick patients. They're a "positive spiral that connects all these pieces together," Buchanan said.
And they boast results. Although it's hard to separate what Buchanan called the "bingo effect" from the rest of Oak Street's services, the primary care group has reduced hospitalizations by roughly 45% for all of its patients compared to the average for risk-adjusted Medicare recipients.
Taking on more risk is daunting, but it's not a death knell. It can be a business opportunity, especially for primary care practices that are on the bottom of the food chain.
"If you're starting from where you are now, what do you have to lose?" Buchanan said, noting that Oak Street doesn't usually put the PCPs themselves under the yoke of downside risk and if there are problems it will work with them to find solutions.
HPN's model is paid for by comprehensive prospective payment, wherein health plans share the risk with their provider network. "We don't believe that you can put a PCP at risk," Merkin said. Each group is accountable for what it can manage.