(Note: This is an unedited transcript. For direct quotes, please see video.)
SARAH DASH: Good afternoon, everybody. Thank you so much for joining us today for this briefing on Navigating Next Steps on Payment Reform. My name is Sarah Dash, I am President and CEO of the Alliance for Health Policy. For those of you who may not be familiar with us, we are a non-partisan organization dedicated to advancing knowledge and understanding of critical health policy issues for those in the federal health police making community. Including those up here on Capitol Hill and the media and the broader community. So, we are really thrilled that you are here. We are really fortunate today to have the support of the Jayne Koskinas and Ted Giovanis Foundation in supporting this briefing. And so, before I introduce a little bit more about the topic and our speakers, I would like to introduce Ted Giovanis, who is President and Founder of the JKTG Foundation, who will give a couple of brief words before we get going. Thanks.
TED GIOVANIS: Thanks very much for coming. Emphasis on “brief”, I know. Our foundation, which you can find out a lot of what we do, is at the JKTG Foundation.org. Everything we do is free to the taking. We open on the policy side, where we perform, and have performed studies across a broad spectrum of policy issues to include tax exemption issues, how do you do payment reform, and the like. And then in ’14, we went heavier into the health side of our perspective, which took the form of funding cancer research for innovative techniques that can be clinicalized over time. As a matter of fact, we just had a big collaborative meeting on the 25th of October with NCI and a whole spectrum of researchers on the clinical side, and in the biology research side, and a lot of them got put together. They didn’t know things were going on. So, that’s the kind of effort that we undertake, so we are happy to be participating in this, and go to JKTGFoundation.org to find out more what we do and the work that we are involved in right now. Thank you. Now back to Sarah.
SARAH DASH: Thanks so much, Ted, and thank you all for being here. So, with a little bit of brief background on the topic, and then I will introduce our fantastic panel of speakers. Many of you have been following this issue, know that for decades, healthcare policy makers and those in the private sector have attempted to really get incentives right in the healthcare system, when it comes to containing health system cost, containing healthcare costs, while also improving quality. A lot of this is kind of known under the broad rubric of payment and delivery system reform. The Affordable Care Act, as well as the more recent macro legislation, have authorized many major changes, particularly within Medicare and Medicaid, but there are also obviously a number of private section initiatives underway as well. And a lot of this has been done with the aim of fundamentally moving the healthcare system in the United States to one that encourages and rewards coordinated efficient care, that is high quality, and a way from this sort of so-called more volume based fee-for-service system. So, we are here today to really examine where things stand with payment and delivery system, and provide you all with a clearer sense for the roles of both the public and the private sectors in advancing payment reform, to understand the current challenges and roadblocks, as well as potential solutions, and perhaps reasons for optimism.
So, without further ado, I’m going to introduce our speakers. Joining us today, we have Rob Saunders, who is Research Director for Payment and Delivery System Reform at the Duke-Margolis Center for Health Policy Research, where he manages the Center’s portfolio for payment and delivery system reform initiatives, including bringing together faculty across the university for developing the strategic vision in this area.
Next, Emily Roesing, who is Director of Business Development at Catalyst for Payment Reform, where she works with CPRs employer audience, as they strive to become high valued healthcare purchasers.
After Emily, we will hear from Mai Pham, who is Vice President for Provider Alignment Solutions at Anthem, where she is responsible for developing and refining Anthem’s provider payment models that reduce the cost of care, while rewarding improvements in quality and access. As she may tell you, she is also an alum of the Center for Medicare/Medicaid Innovation, which you can read more about in your packets.
Finally, I’m pleased to introduce Allison Stark. Allison is Vice President and Chief Medical Officer at Montefiore Care Management, where she provides physician leadership in the development, implementation, and supervision of their population heath, care management, and utilization of management programs.
I’m going to turn it over to Rob, and before I do, sorry, one quick technical note I promised to make. If you want to get on Wi-Fi, you can do so by going to Senate_guest, and the password is resolution. You can also follow us on Twitter at #Allhealthlive. With that, I will turn it over to Rob. Thanks.
ROB SAUNDERS: Great. I’m Rob Saunders, I’m with Margolis Center for Health Policy at Duke University, and my job today is to give you a bit of a landscape of where things are with payment reform, both in what we are seeing across the country, but also what the evidence looks like for how these are working, and whether they are having the effects we would like to see.
I sort of like to start this conversation by stepping back a second and saying, “Well, why are we doing this in the first place?” Why are we undertaking all of these complicated payment reforms? What is the problem we are trying to solve? The challenges are that healthcare in the U.S. isn’t quite up to the quality or value we would like to see, and one of the reasons given for that, is the traditional way we paid for healthcare, is a fee-for-service basis, where for every new service, every new treatment, every new diagnostic test, you get another fee. So, over time, that can lead to doing more tests that don’t necessarily improve outcomes for patients or, really help make better care. The idea of these alternate payment models is to incentivize healthcare. It is actually improving health, it coordinates care across different silos, and hopefully leads to more affordable care over time. With that said, what is the state of these sort of alternative payment models? How much are they being done? In a recent survey by the Healthcare Learning and Action Network, found that somewhere around 30% of all healthcare dollars in this country went through one of these alternative payment models in 2016, and the goal is that you are going to see more of these alternative payment models over time. And they come in different flavors. So, there are accountable care organizations, or ACO, which are where hospitals and clinician groups and other healthcare organizations, come together are accountable for a group of patients, and if they are able to reduce cost while maintaining quality set by specific quality measures, then they are able to share in that savings. There is also bundle payments that we see out there. For a bundled payment, that means that a hospital is given a bundle of money to handle a particular procedure. Let’s say a hip replacement or a knee replacement. That hospital then is not only responsible for the surgery, but the cost of the hip or knee implant, and the rehabilitation. And if they are able to save money on that bundled amount, they get to keep that savings. If they cost more than that bundled amount, then they have to be on the hook for that amount. And then there is a variety of other types of payment reforms out there, which may be more population based, where there is a set sum of money that is given to a primary care group, or a healthcare system that is intended to help take care of that patient for the entire year. Or at least take care of most of the care of that patient for the entire year. And so, there is various flavors of these that are being done by Medicare. They are being done by states and they are being done by the private sector. And so, we’ve got activity happening across the country. And if we pick one of those flavors, let’s say ACOs, we can see that growth has happened dramatically. So, this is from something that we published earlier this year. And with that chart on the top left, it shows you a graph of ACO gross and ACO contracts from about 2011 to the first quarter of 2017, and you can see that we started at almost nothing back in 2011 and then today, we have around 1400 or so ACO contracts, to around 900 and some ACOs. Some ACOs have more than one contract with different types of insurers. That means that about 30 million some patients — Medicare patients, Medicaid patients, privately insured patients, are covered by an ACO as of the first quarter of this year.
So, we’ve got a lot of activity of what’s happening here. That’s one piece. Then next question you might ask is, so what’s the evidence behind all of that? We see there is a lot of activity, but what do we know? And he evidences in general is a bit mixed as of this stage. So, for those ACOs, we have examples of organizations that have been able to reduce costs dramatically, and able to do so while providing very high-quality care. But you have other organizations that have really struggled. Usually they are able to achieve high quality care, they are meeting their quality benchmarks, but they struggle in reducing savings. We are seeing two sorts of factors about this. One is, the longer these programs are in existence and the longer that ACOs are in these programs, they are more likely to be able to reduce costs. It just takes time to do a lot of this work. Another thing that we’ve found though, is that one of the fears for these types of accountable care organizations, is they might lead to further consolidation among the healthcare industry, because you are asking these groups to work together, and there is a fear that the only way to do that successfully is if you consolidate. If hospital systems buy up other hospitals, or buy up local clinician practices. What we found, is that small ACOs actually can do quite well, and in fact, do do quite well in several of these types of programs where they are able to reduce cost. Similarly, we are seeing some good evidence among bundled payments where we are seeing reductions in cost, in some cases. One of the big challenges here is that most of the evidence that we have comes from Medicare, and that is largely for legislative reasons. That whenever Medicare does a demonstration project, or the CMS Innovation Center does a new payment model, they are required to do a formal evaluation and look things through. In contrast, we have a lot less evidence about what’s happening in the private sector. As my colleagues on the panel will note later, that is a big challenge we have out there, because we know there is a lot of activity happening in private sector, and we would like to see what’s working there. We probably expect that things will look a little bit differently, and different types of models will be more or less successful in those cases.
I wanted to show a quick example of one of the sort of types of evaluation evidence we have. This is a chart that we put together last year and we’ve got an updated version that hopefully will be published any day now. It’s plotting cost, which is the Y axis, above the X axis is showing savings, below the line is showing losses against quality. So, from left to right. Each of those little blue dots is an ACO. What you see is that there is a big scatter out there. Some folks are in the top right, where you’ve got high quality, and they are doing so at reduced cost. But you have a lot of folks who are in other parts of that graph, and we would like to see everybody move over. So, this goes back to the theme that it’s taking time to migrate and to get folks to be able to succeed under these new payment models.
To wrap up, I sort of want to point out three basic points to remember. One is that we still need to build an evidence base. We’ve got a little bit of one that is growing, especially among some of the federal programs, but there are opportunities to know a lot more about what’s happening among private payers, and the like. A second big point to remember, is that savings take time. It gets back to the point of these alternative payment models. The point of these alternative payment models isn’t just to do them to do them. It’s to do them because we want to see healthcare be redesigned. But that takes a lot of time, and so a healthcare organization who enters into an ACO contract, then needs to go through all of their workflows and say, alright, well how are we delivering primary care? What relationship do we have with our skilled nursing facilities in the area? Or with our rehab facilities in the area? What type of relationship do we have? How do we make sure that care is seamless when patients move from the hospital out to the community? That’s all good work, but it all just takes time. And then the third point, which is related, is that it’s also not enough to just offer these new alternative payment models. There is a certain amount of support that has to come with it in terms of technical assistance. In terms of education to providers, to help providers make sense of MIPs and ACOs and CJR, and dot, dot, dot, dot. Your favorite acronym. There’s just a lot of effort to be done. And so, to be successful in these, we need to make sure that we are supporting our providers, we are giving them the tools they need, and making sure they have the operational guidance they have.
With that, I would like to turn things over to Emily to talk a little bit about how employers fit into alternative payment models.
EMILY ROESING: Thank you, Rob. I am here to represent Catalyst for Payment Reform, and as Rob and Sarah introduced, the employer perspective and their role in the payment reform movement. Catalyst for Payment Reform is a national independent non-profit who works on behalf of employers and other healthcare purchasers to catalyze strategies to help those entities get better value for their healthcare dollar. As our name implies, we started out on a mission to catalyze payment reform, but as we attempted to do that, we also realized that you can’t just focus on provider payment in a vacuum. So, much of our work also incorporates benefit design and price and quality transparency and other things employers can do.
As you can see from the slide behind me, our constituency includes both Fortune 500 companies, and many public purchasers, including Medicaid agencies. So, we have a diverse perspective.
I will pick up where Rob left off, and bring in a little bit more focus on the commercial sector, when we are considering just how much payment reform is there today. When our organization started measuring the amount of payment reform back in 2010, we heard informally from national health plans, that one to three percent of payments in total flowed through a method that was linked at all to quality, which is like, nothing. Today, in 2017, we would estimate that 50% of payments flow through some type of payment reform program; and Rob gave a great introduction to some of those payment reform programs, including pay for performance, or shared savings, shared risk, or bundled payment. That’s a huge change, and what I want to talk about today and the rest of my presentation, is three things related to that number. The first is, what is the role of employers in continuing this advancement, and what does the 50% mean for them? What conclusions can we draw from the results that we’ve seen from the employer perspective? And then lastly, talk about the need that Rob touched on, which is the fact that there is simply not enough evaluation in the commercial market to draw conclusions, and so hopefully we will all meet again in a few years once that is not the case.
By and large, what we are hearing through our employer audience, is that payment reform will continue. Innovation and payment reform in the commercial sector is likely to continue, whether or not the federal government or CMMI pursues a direction that supports, though we will all hear today about how important it is that they do. But health plans, and the ones that we work with, have expressed interest in continuing down this path, because it’s imperative to their business for them to get better value from their healthcare dollar, and looking at the way we pay providers is important in that. Also, they are starting to hear from increasing numbers of employers who buy healthcare from them, that this is important to them.
Before we dive into that, I want to comment broadly around why employers are so important to healthcare innovation. It’s not always intuitive, especially when we focus on a policy angle. Employers buy healthcare on behalf of millions of Americans, and if they are a self-insured employer, that means that they pay for all the healthcare received by their employee population directly out of their bottom line. As costs have continued to increase, that means that they’re spending more money every year, and often getting less when it comes to the quality of care that they are receiving, and that’s a huge problem for employers not only because it impacts cost, but also because it impacts how healthy their employee population is. We all know, certainly, at the panel level, that influencing provider payment is one strategy that can be looked at for getting better value in healthcare. We would like to see more employers who realize that, and who decide that they are going to take a focus on provider payment, in addition to benefit design, which is the more common lever that they will focus on. At CPR, we work with some of the most progressive purchasers who either direct contract for an ACO, or they’ll direct contract for the Centers of Excellence, among other things. But we would like to see more purchasers and more employers who understand that this really impacts their business.
Is payment reform working, and returning back to that 50% number, I want to comment on three realities that we think about often at Catalyst for Payment Reform, before we attempt to answer that question. The first is that by and large, the majority of payment reforms, continues to sit on top of a fee-for-service model. So, even though we are all here, because we are seeking methods to shift away from incentivizing volume, and attempting to incentivize value, we still live in a fee-for-service world. We’ve added bells and whistles on top, whether that comes in the form of a pay for performance bonus, but providers largely still face pressure to deliver more services. So, I think it’s important to acknowledge that reality. The second thing to consider is that there is no one size fits all solution, so you are probably not going to hear from any of us that there is one program that is a silver bullet. For providers, it will very much depend on their readiness, and the infrastructure they have to support these types of programs. It also will depend on the region that these providers and employers buy healthcare in. Because the market dynamics can influence what will work. The third piece that I will touch on, is that once again we are not going to be able to answer many of these questions when it comes to employers in the commercial sector, until we have more standard and rigorous evaluation of these payment reform programs.
I do want to comment on — if you ask an employer today that we work with; where would they like to see the market go? I can guess that they would answer that they want to see more providers taking on financial risk. And if you put yourself in the position of a self-insured employer who pays for healthcare out of their pockets, that makes sense, because they feel that they take on risk every day that they buy healthcare on behalf of their employee population. So, they are looking for models that would encourage providers to take on risk. And one of those forms, as we’ve touched on, is the accountable care organization model. Especially, as many of these ACOs move from just taking on upside risk, to also taking on downside risk — and I will let someone else explain what all of that means. But employers really don’t know yet. Even though ACOs are so common, employers really don’t know yet what types of results there are for these commercial models. And even how to compare across health plans. So, we have a lot of work to do on evaluation there.
The second model that gets talked about a lot — there is a lot of excitement about bundled payment, because there have been results that show that cost can go down, and quality can go up when you implement a bundled payment model, which Rob introduced earlier. And we have seen some employers benefit tangibly from these types of programs. But there are more conferences about bundled payments, then there are bundled payments in the market today. They only make up fewer than three percent of payments. And so, despite the fact that they are promising, we need a broader scale adoption of these programs to really draw conclusions.
Since I’m basically at time, and almost nailed it, I will end with my bottom lines, which are — first point being that sitting here and representing the employer perspective, I am lucky to work with many progressive, advanced employers who are willing to innovate and take risks around payment reform, but we need a much broader pool of employers to work with, and we need employers in the market to know what to ask for, and to align their asks, because that means it’s more likely that the market will respond. Secondly, we need them to, in tandem, push for evaluation of those programs, so that we can start sharing results about what is working and what is not working. With that, I will happily turn it over to Mai from Anthem, to discuss more.
MAI PHAM: What Sarah alluded to earlier, was that I was employee number seven at the Innovation Center. I have the body scars to prove that. I left at the end of last year, having also had a hand in the execution of the first regulation for MACRA. So, I have sort of seen and lived the narrative arc of where we’ve been for the past five, six years as a nation. And now I’m at a commercial payer that has over 44 million lives. So, it rivals traditional Medicare and one that has invested quite heavily in these value-based payment arena; close to 50% of healthcare spending that flows through Anthem, actually flows through alternative payment models, which is higher than industry average, and one that we are very proud of.
All that said, I think we feel that we are at a very tender moment in this journey. Not just Anthem, but the country as a whole. I will explain why. For the past five, six years, a lot of work has been done by policy makers, by both public and private payers, by providers, to build a lot of momentum in the marketplace. To engage the marketplace in these conversations, and in the hard work of not just designing these programs and offering them up, but then entering them and executing on them, which requires tremendous amount of capital investment, and political investment from many, many different actors. I think that was a real achievement to generate so much momentum. We are at a point now where I think some actors in the marketplace are starting to question that momentum, and question the commitment of public and private payers to continue down this journey. The reason that that’s important and something to guard against the loss of that momentum, is that as both Rob and Emily alluded to, providers are not a monolithic block. They are a diverse lot. They have quite the range of both capabilities and appetite for taking on more accountability, and different degrees of skepticism about whether there is a sustainable business case in doing this from their perspective. With that lens, you can imagine that there are certain market leaders who have gone out farthest on the limb, invested the most in terms of actual capital and political capital, and are now dangling out there, waiting to see if this journey is actually going to continue, or if they are going to look like to their peers, that they made the wrong choice in going out on that limb. So, the risk is that while we are certainly committed at Anthem to continuing on this journey as I believe are many other commercial payers and employers, it would be a lot easier if government came along and continued to apply that pressure to push the market in this direction. That’s because government continues to be the largest payer in the land. It commands attention, and it commands attention not just on behalf of Medicare and Medicaid beneficiaries, but also on behalf of commercial healthcare plan members who collectively make up a smaller part of the book of business for a given provider. So, we were actually very supportive of recent MedPac recommendations, for example, to continue to apply pressure on providers for participation, to simplify the program, and to push providers farther and farther along in this value-based payment path. We would be very supportive of continued signaling from CMS, that they not only are philosophically committed to this, but that they can actually produce the concrete opportunities for providers to participate, and that they are thinking about the next step, and the next phase of what payment reform looks like. All of that set of individual signals adds up to a perception in the marketplace that we think is really critical to making this work effective.
That said, I do want to talk about what that future might look like. And there again is an opportunity to talk about evolution, that we have spent some time now, and resources, investing in the known constructs around accountable care organizations, around bundled payments, around patient-centered medical homes. These are all buzz words that we have lived with for a number of years now. There is definitely more refinement and experimentation to do with those constructs, but we at Anthem also believe that it’s time to push the envelope on additional payment constructs, because in this second stage of evolution, we all may need to be much more aggressive, and direct, about what it is we are trying to achieve.
I want to lay out for you, three couplings of concepts to walk away with. The first is that in the early phase of the work, there was a skittishness about engaging patients too directly. There was sort of almost a philosophy of, gee, how much can we do of this payment reform stuff without bothering the patient? As a clinician, this is not something that ever had much face validity to me. If I want to improve my patient’s outcomes, I actually need to engage my patient, acknowledge that there is a care relationship, get them involved in their care decisions, and educate them about what the options are. So, moving from that old space, to the second phase where it’s really smart benefit design, coupled with payment reform, but you don’t just want to do benefit design that feels coercive, and that doesn’t seem to offer anything directly to the patient. So, what you want to marry it with, in the other half of this coupling, is an enhanced patient experience. And we would like to think that’s not just at a very vague level of patient satisfaction, but rather, concrete things that patients actually want and feel on a day-to-day basis. Can they get online scheduling? Can they have access to a patient navigator that will help them through this morass of rules and processes? So, benefit design coupled with enhanced member experience. Patient experience.
The second coupling has to do with this concept of a really differentiated provider marketplace. Well, if providers are not monolithic and we know there is not going to be one single silver bullet solution, let’s not pretend that. Let’s be deliberate about how we differentiate among providers. We’ve had time with them now. We understand that some are better performers and proven, and some are lesser performers, or unproven. Let’s signal that we see that in our methodologies, and also find a way — couple that with a sustainable business case for them. I would proffer that no payer to date has found a truly sustainable business case for providers to continue in the long term. So far, we have just asked them to generate savings upon savings, upon savings, which is a race to the bottom, if you extrapolate that.
The third coupling — I’m running out of time — is to acknowledge a very large elephant in the room. Emily has mentioned that all alternative payment models to date, even in MA, are sitting on top of a fee-for-service chasey right now. And that chasey is broken. It has not just distorted prices in it, meaning we pay too much for some things. It has distorted relative prices in it. So, we pay disproportionately more for some things, then providers see lots of profit and want to do more of. And we pay disproportionately less for other things that then they want to do less of. So, more procedures, and less of a sitting and talking to my patient, diagnosing them correctly, getting them the care decisions they need. We think it’s very important that we address those underlying problems in the fee schedule, and in prices more generally. But you couple that difficult political conversation and technical conversation with upside opportunities for specialists and ancillary providers to say, you know what, you are not just a bad guy. Some things you do, we would like you to do less of, but there are other things we would love you to do more of. Can we find a way through the payment structure to acknowledge these other aspects of what you do? You don’t just do procedures. You in fact do consults. Sometimes you co-manage a patient. Sometimes you actually coordinate their care. So, let’s recognize all of that, put it in something wholistic that feels good to you, and looks like a future vision of care deliver that you would want to buy into, and go at it that way.
Just in summary, we believe that it’s important to pay attention to market momentum and do all that all of us can do to bolster that, and send a consistent message in the right direction. Also, to start thinking about what that next more aggressive phase of payment and delivery system reform can look like. Learning from what we’ve done so far. Thanks.
SARAH DASH: Thank you so much.
ALLISON STARK: Thank you so much for the opportunity to be here and as a part of this great panel. I’m here to provide a little bit on the provider side of this conversation, and tell you a little bit more about Montefiore and the work that we’ve been doing in accountable care. Montefiore Health System has grown from a single hospital founded over 130 years ago, into a premier academic integrated delivery system, comprised of over 3200 beds in 11 hospitals, which include a children’s hospital and a rehabilitation, in-patient rehabilitation hospital. We also have a skill nursing facility, home health agency, a state-of-the-art surgical and specialty center campus, and an ambulatory network that includes over 200 sites. And in these, include 16 mental health and substance abuse clinics, 10 dental clinics, New York’s first free standing emergency room, and the oldest and largest school health program in the country. We are also the university hospital for the Albert Einstein College of Medicine, which has one of the largest graduate medical education programs in the country. Our regional integrated delivery system serves the 3.1 million people living in four countries, including the Bronx, Westchester, and to the north of Westchester, the Hudson Valley Counties of Rockland and Orange. This represents a combination of urban, suburban, and rural communities. In addition to being the nation’s poorest urban county, the Bronx also unfortunately suffers from the most disease burden, and it’s the most disease burdened county in New York State. It ranked last among the 62 counties in New York on both health factors and health outcomes. In our legacy Bronx facilities, over 75% of our patients are enrolled in Medicare, Medicaid or both programs, or they are uninsured. So, Montefiore is truly a safety net provider, and we do rely on government safety net payments like Medicaid DSH, Medicare DSH, and the 340B drug discount program. We’ve been a leader in value-based contracting for over two decades. Our journey in accountable care started in the mid-1990s when Montefiore recognized the need for transformational change in the healthcare delivery system, in the face of unsustainable increases in medical costs, the aging of the population, and the increasing prevalence of chronic disease, especially as an entity that serves a predominance of low income government program beneficiaries. Monte’s response was to form the Montefiore Independent Practice Association, and a year later, the Montefiore Care Management Organization, and these two entities facilitate contracting with health plans for value-based population focused arrangements that are aimed at improving quality and lower cost. Our subsequent decade was focused on increasing our care management infrastructure and growing and stabilizing our PCP and specialist network and access. More than a year before there was the passage of the Patient Protection and Affordable Care Act, Montefiore’s president and CEO, Dr. Steven Safyer, a long outspoken advocate for accountable care, established a high-level planning group within our organization in anticipation of federal, state, and private payer opportunities focused on population health management. We eagerly applied to become a pioneer ACO in 2011, when the initiative was announced by CMS, and we are selected as one of the original 32 pioneer ACOs, and the only one that was chosen in New York State. Montefiore remained in the pioneer ACO over the five-year life of the model, and during that time, we also implemented a series of other population health initiatives that are important to government sponsors, including New York State’s Medicaid Health Home, for adults and children, a Medicaid managed long-term care plan, a health and recovery plan for adults with significant integrated behavioral health needs. A delivery system reform incentive payment or district plan, where we are a lead performing provider system for the Hudson Valley and a major participant in the Bronx performing provider system. Most recently, we have applied to the New York State Value Based Innovator Program, which is a voluntary program intended to support experienced value-based contractors who are prepared to participate in full risk contracts by making the contractors eligible for an increased premium pass-through, in exchange for taking on further management and administrative functions.
Montefiore’s success in government programs prompted a number of commercial Medicare Advantage and Medicare Managed Care Health Plans to engage Montefiore in value-based arrangements. We now have 11 value-based contracts including risk-based models with both upside and downside risk, and shared savings arrangements worth approximately 2.8 billion a year. These arrangements cover more than 371,000 members of health plans across Medicare/Medicaid, and commercial insurance, including 47,000 next generation ACO beneficiaries, and over 179,000 Medicaid members. And our organization’s goal is to reach a million lives in value-based arrangements, so we are definitely trying to march forward.
How to be successful as an ACO? We’ve learned a lot of lessons along the way. We think that having an overarching vision of population health management and a business model designed to manage patients under value-based contracts, has been essential. A strong governing structure and an on-going work effort to enable and support our provider community through practice transformation and centralized resources, has also been key. We spend a lot of time evaluating and defining and understanding our patient population, and our data and experience has shown us that a small portion of our patient population drives our cost of care, but 100% of our population is involved in our quality of care We’ve learned that to be continually successful, an ACO has to constantly evolve and build its arsenal of interventions and incentives that promote patient engagement and provider engagement. To achieve scale, an ACO really needs to leverage technology and have an IT strategy that addresses the full array of population health and care coordination needs. Successful ACOs also need to efficiently use scarce financial resources to enable infrastructure build, and to maintain stability required to meet reserve requirements.
Montefiore’s care management model involves multiple steps, and requires quick transitions from analytics to action, and integrated work flows across the organizational and clinical spectrum. We have a staff of more than 1100 supervisory physicians, registered nurses, licensed social workers, health educators, and pharmacists that are engaged in care management. Our model really begins with patient identification and prioritization. Over the years, we have developed some sophisticated algorithms to figure out who within our population really needs the most intensive case management, and who we can address with other interventions. We formed close relationships with our physician community as well, to encourage referrals to our care coordination and care management, and integrative behavioral health programs. Our goal is to identify three groups of patients and offer them appropriate and effective interventions. These groups include the frail, ill, and high utilizers, who are offered intensive case management that’s based on their identified medical behavioral, health and social determinants of health needs. The functional chronically ill who are offered targeted health education and interventions designed to promote self-efficacy and empowerment, and the well and worried well.
How have we done as a pioneer ACO? We were actually the most financially successful pioneer ACO in the first two years of the program, and over the five-year life of the model, which ended in December of 2016, we are proud to say that we did achieve savings in every year of the model with a total of 74 million in savings for the Medicare program. We also had a 32% increase in our quality scores over that time. We are now participating in the next generation ACO program, where with 47,000 beneficiaries, and we are optimistic that we will continue to achieve savings for Medicare and we will reinvest our share of those savings in our delivery system, and share it with our dedicated providers.
What can regulators do to make health systems like ours more successful under value-based payment models? Under the current environment, provider based care coordination models such as ACOs, are hampered in truly providing patient-centered care to drive quality and efficiency, due to regulatory hurdles, and the shortcomings of existing value-based payment opportunities. These include fragmentation for the dually eligible patients who receive both Medicare and Medicaid, who may have multiple care managers that are attempting to work with them. The limited ACO opportunities in regions where there is a high penetration of Medicare Advantage beneficiaries, and there are opaque, and sometimes changing cost of care benchmarking methodologies, which make it very hard for us to gauge performance and predict success. These challenges limit the gains of accountable care models, and mean that healthcare dollars are unnecessarily spent on administrative requirements rather than patient services. Some proposed improvements to address these challenges include allowing ACOs with a proven track record to become accountable for a regional population of Medicaid, Medicare and dually eligible beneficiaries under a single seamless model with one regulatory standard. Permit qualified ACOs to voluntarily assume additional risk for any dually eligible beneficiaries, Medicaid benefit. Let Medicare partner with state governments to leverage local innovation and increase opportunities for participation in advanced alternative payment models, allow and encourage Medicare Advantage plans, commercial payers and self-insured employer groups to participate in risk-based arrangements with ACOs. Finally, we think that models should have transparent and easily replicable methodologies which are stable over the course of a program, or at least have predictable changes in them. And we believe that some of these improvements could unlock the potential of provider based care management models resulting in a healthier population and more judicious spending.
SARAH DASH: Thank you so much. This has been a really enlightening set of presentations, and soon we are going to give all of you a chance to ask questions. You do have green cards on your tables, if you would prefer to write a question. We will also be able to ask a question at either a mic in either of the aisles — but while folks are getting their thoughts together, let me kind of pick up on a couple of Allison’s slides on what you thought made you successful, and Rob at the very beginning put up a slide showing the four quadrants of the higher quality, higher savings. I’m wondering if you can comment, and if the other panelist can comment on what does make for success. Then perhaps, how do you know about evaluation?
ROB SAUNDERS: And so, to start on that question, well, first I need to say we don’t know all the answers yet about how to determine what it’s necessarily going to mean that an organization is successful. What we have seen is that there’s a wide range of organizations that do well. So, for instance, we see examples of small ACOs doing really well and we have examples of larger ones that are doing very well. When similarly rural ACOs that are far surpassing their performance and urban ones, as well. So there’s folks all over the map and to really understand those organizations, oftentimes you need to go into that organization, understand the things that maybe can’t be so quantitatively measured, and I think Allison did it well by saying a lot of that has to do with the internal commitment of that organization to care redesign, to trying to make it a new process for their entire patient population, and that’s much more difficult to measure but is incredibly important. Otherwise, I think we’ve gotten different models that work for different types of organizations, so there’s probably no one size fits all model that everyone is going to succeed under and probably nor should there be.
MAI PHAM: I think the saying is: culture eats process for lunch, and so it’s commitment on multiple levels. It’s what leadership projects in that organization. It’s how they compensate their clinicians, it’s, you know, the kind of recognition they give people who do right in this world. It’s how honest they are with themselves or what the data shows, so you can be very committed publicly, but if you’re always looking for just the bright side of the numbers you’re not likely to find the real underlying problems and solve them.
ALLISON STARK: I think it’s a couple of things, from our perspective, things that I’ve already touched on. A lot of it, I think, does have to do with our level of engagement with both our provider network as well as our engagement with our population of patients. On the provider engagement side, we’ve really focused on helping providers transform their practices. We’ve also utilized different networks of providers including, for instance, we have a SNF collaborative, so working directly with the SNFs that are most embedded in our community and that are trying to improve those care transitions with the different SNF partners. On the patient side, I think through our care management infrastructure and through the work that we do with those frail high utilizers and others that we identify, we’ve really been able to move the needle.
EMILY ROESING: And I’ll just chime in at the end and say, to Rob’s point in his presentation, results can take a very long time, and so from the employer perspective they don’t expect to roll out a payment reform program and see success, and I think the question was about what does success look like. But there are ways to gauge whether or not these programs are headed in the right direction or having the intended consequences and one of those ways is just looking at the right quality measures and seeing if there’s movement there. That’s one thing in addition to cost savings, but there’s always a risk with having immediate cost savings overnight because that’s probably coming with unintended consequences down the road.
The one example I wanted to share about almost immediate cost savings is an example of the large employer we work with who rolled out a bundled payment program and, in structuring that program so that every patient who is sent to that provider had a thorough evaluation of whether or not that surgery was needed, you know, two out of three patients, for example, might have been sent home. And so one of the things that we’ve seen in terms of success is just improving the appropriateness of care delivered and building in some checks and balances around that.
SARAH DASH: Well, speaking of results and quality, we have a question on a card here noting that accurate quality measurement is essential for equitable payment reform, and the question was directed to Dr. Stark, but I’ll open it up to anybody to answer, and the question was whether Medicare’s current set of hospital quality measures adequately adjusts for additional intensity of services, greater needs of low income population served by institutions like Montefiore, and whether there’s any change needed. And so I’d ask you to perhaps comment on that and then open up to the panel to comment on that specific question or kind of the question of are we capturing the right quality measures. Do you want to start?
ALLISON STARK: Sure. This is a tough question. I don’t know that I have the right answer. I think that from our perspective, we have certainly invested a lot organizationally to try to address the quality domains and the quality measures that have been asked of us. I think there’s probably some variability in terms of the utility and effectiveness of those measures. I think that, from the perspective of are we setting the right targets based on our population, I think that maybe there might be an opportunity to risk adjust some of the quality measures. I don’t know that there has been that element put into place because we may want to reward groups that are working with tougher or more disease-burdened populations when they do achieve certain quality targets, so that’s one idea.
ROB SAUNDERS: And I feel like, in health policy, sometimes the most simple questions can often be the most controversial, and one of the challenges that we’ve seen in our research is really trying to get to that question of how do you adjust quality measures, say for patient populations that have different socio-demographic factors? And, on the one side, you say from an interest of fairness, that organizations that are taking care of folks who have more challenges in life, who are more vulnerable, should be recognized and, therefore, they should – those measures should be adjusted in a certain way. We’ve also seen, when we have talked about this with several patient advocacy groups, that folks can get very heated and say, but that’s just saying then that folks who are low socioeconomic classes get less good care, and there can be quite dramatic fights between those two perspectives. So I think this is one of those challenges where there isn’t one analytical answer here, and so what we’ve seen is that there’s been a lot of work on adjusting the measures for clinical characteristics. That whole question of how do you adjust measures for socioeconomic factors is still one that has not yet been resolved.
SARAH DASH: And just a follow up to that. There was also a question on a card here about health disparities and opportunities to perhaps influence outcomes and help disparities through payment delivery system reform and, Allison, you mentioned social determinants of health in particular. What are some of the opportunities to change the statistics on health disparities through payment delivery system reform and do we need to go outside sort of the four walls of the clinical setting to do that?
MAI PHAM: So, I’ll try to bridge the two questions a little bit. I think Rob outlined the risk adjustment issues very well. I’ll also note that there are multiple ways to skin that cat, so yes, you can ask the question adjust for social economics or not. You can also ask well, how do you reward performance? Do you reward just an absolute value of performance, or do you also want to consider rewarding improvement, and how do you weight those two things?
And so I think there’s room in there to play with different approaches that better mitigate against the unintended consequence of throwing providers who, by virtue of their geography and/or their commitment, are treating populations that have high needs. They have low revenues to start with, and you’re putting them in a value-based payment program that may guarantee they continue to have lower revenues, and then less able to care for their patients. So I think you can work both sides of both the analytic side and how you structure the rewards to mitigate against that.
In terms of social determinants, this is something I think everybody on the panel feels pretty passionate about. They are for real. They are not a fluff issue because if you are a clinician, and I trained only in urban war zones, and there are different kinds of needy, right? Poor, rural populations have their own needs as well. Elderly populations have different social factors that play into health outcomes in other populations. Those factors are very real and they affect clinical outcomes to a much greater degree than anything that healthcare service providers can do with their clinical training. So the challenge is how do you offer the opportunities through incentive design, but also address some of the structural issues around financing streams and legal flexibilities to allow clinicians to partner with social service providers to address those social factors.
So, I’ll turn it to Allison, but, you know, there’s lots of evidence about it not being a fluff issue, and I’m not projecting that anybody in the room thinks that, but it sounds soft. It doesn’t sound as concrete as whether you should get an MRI or not. But the reality is, if an elderly person feels socially isolated their mortality goes up. The reality is, if an elderly person’s light bulb doesn’t work in the stairwell, her falls risk goes up, and all of those have very real dollar implications.
ALLISON STARK: I think it’s important for hospitals, for health systems like ours to be able to continue to get safety net payments because those do help address a lot of the social determinants of health. And I think that some of these issues are being addressed at the state level through Medicaid programs like the Medicaid Health Home, but the opportunity to partner at the federal level with some of those efforts would also be very valuable.
EMILY ROESING: And I’ll chime in and say employers don’t always face the same challenges when it comes to social determinants of health, but certainly the Medicaid agencies we work with do, and it’s important to remember that primary care physicians and providers are the first line of defense in many cases when it comes to combating some of the things that impact those populations the most—mental health issues and substance abuse issues—and back to Mai’s point around how the fee schedule can impact the mix of services that we see and also providers that we see in the market, we underpay primary care providers drastically and overpay specialists, and that is a generalization, but it’s an important one to consider, especially coming back to the question at hand here.
SARAH DASH: Thank you. We have several questions pertaining to some current policy issues at hand, and so what I’m going to try to do, without giving short shrift to any of the questions, is to kind of outline what they are, and then ask the panel to comment as they see appropriate.
The first question has to do with CMS’s decision to move away from mandatory bundled pilot project, or bundling pilot projects, and the question is sort of how will this address action on alternative payment models? And so, as part of that answer, if you can kind of maybe go into a little bit of background on the move away from mandatory and what that means.
Another question has to do with MIPS, I’m going to mess up the acronym on the spot, but it has to do with the alternative physician payment or under the MACRA rule where CMS recently confirmed its plans to expand exemptions for smaller physician practices subject to MIPS, allow doctors to band together, participate in the Medicare Quality Payment program as a group, and not require physicians to use certified electronic health records. And so the question is: What impact will that have on value-based payment?
And then the next question has to do with the recent request for information from CMMI, Centers for Medicare Medicaid Innovation, which I believe has comments due in just a week from today on November 20th: What is at stake with that RFI, what kind of information are they asking for, and is there a backing away from value-based models, or is this just, again, a new direction, a different approach? And, again, what does that mean for the next steps in value-based payment?
A lot of questions. Feel free to sort of take them all as a whole or kind of start with any one of them discretely.
ROB SAUNDERS: I’ll start and then I guess we’ll move down the line.
Alright, so I guess I’ll start actually with the MIPS. So the Merit-based Incentive Payment System under MACRA which was one of the arms of MACRA that took the hated former physician payment system from Medicare and, you know, transitioned that. And the most recent rule that was put out, there were a number of exemptions put out so that far fewer physicians had to be part of this MIPS, well, part of MIPS, and one of the challenges with that is MIPS was considered the alternative to the alternate payment model. So you could go on two tracks. You could either go on the MIPS track, or you could investigate one of these alternative payment models. And if many more physicians are exempt from MIPS, that sort of removes one of the incentives that you might have to investigate one of these alternative payment models. So there is a question here of momentum in that it’s not, in and of itself, there are a lot of good reasons why some of these decisions are being made, but as a whole, when you add them all up, that does play a role in the momentum that we’re seeing toward alternative payment models.
One of the other challenges I think that bring up here is when we’re talking about some of the bundles, so for those of you who are less familiar, when the first Comprehensive Joint Replacement, or CJR, program was rolled out, some of this was put out so that it was mandatory and given geographic areas. So, for instance, in Durham, North Carolina it was mandatory that all hospitals in that area participate in this bundled payment for a Joint Replacement. One of the challenges in moving that from a mandatory to a voluntary system is that this also makes it a lot more difficult to get good evidence, because if everybody is participating in one area then you can be sure that you’ve got a good group to figure out who’s doing well and who’s going to struggle; whereas, if these are voluntary programs, you’ve a bit of a struggle figuring out what’s working because presumably the people who are playing in these models, who are going into them, are the folks who think they’re going to do well. So this doesn’t necessarily tell you everything that you’d like to know about whether this should be a program that we roll over the entire U.S. It tells you for set groups of hospitals that wanted to do this, that they could succeed under these types of programs.
So I’ll stop there on those two questions and roll down the line for the others.
EMILY ROESING: And I will conveniently stay away from the first two as they’re more policy-based and we’re more focused on the marketplace, but I can say, on the third question, you know, what’s at stake with the direction that CMMI takes is that we know that whatever direction the federal government takes that will impact where provider attention goes because they are the biggest payer in the market and that also impacts the options available to the commercial market as well. And so one opportunity that CMMI has today is to invite the commercial perspective to the table, whether that’s having an articulate health plan representative, like my colleague here, invited to the discussion or, in looking at some of the quality measures that are used to shape some of these programs, if you can create alignment between what the private sector’s doing and the public sector is doing we would probably see momentum move in tandem a lot faster.
MAI PHAM: I won’t repeat a lot of the points because I wholeheartedly agree with both Rob and Emily. I would just say, on the mandatory models that, you know, in and of itself, given individual decision on one program in isolation may not have tremendous impact, it’s the summation of all the signals that the agency and the department send that affects market momentum. So evaluation was the driving concern in the design of the mandatory model, but if you decide, as a policy maker, that that’s not what you want to invest then that’s fine, but what are you going to replace it with? So, initially, there was quite a great deal of very vocal relief in the marketplace about the removal of those mandatory models but now, as I read the Trade Press, I see more and more certain wistfulness among hospital CEOs that it has gone away because, oh, gee, suddenly it’s a lot harder for them to engage their orthopedic surgeons than it had been before. So there’s a lot of ambivalence in the marketplace, and where there’s ambivalence and forks in the road, as policy makers, we would urge you to, you know, gently guide people down that right fork. So I just wanted to make that point.
And, on the RFI, I think that the agency threw out quite a breadth of, quite a range of ideas and I think what the marketplace is looking for is certainty around what they’re going to be committed to actually executing on. It doesn’t need to be that range. It can be a narrow range of priorities, but people just want some certainty and predictability. A lot of the chatter that we hear, as a private payer now, as we talk with providers, are of two flavors. One is please, can you hurry and just get to the promised land, because the more you hang out in this in between space the more torture it is for us who are trying to do the right thing. We’ve got one foot in fee for service and one foot in value-based payment and that just does not work.
But the other sentiment, you know, that we hear is we don’t know where CMS is going to go in the next 5, 10 years, so we need to do even deeper business with you because we’ve made all these investments in value-based payment. Where are we going to go after Next Gen ACO? Where are we going to go after, you know, the Bundled Payment for Care Initiative or after CJR in its current guise. They want certainty. They really need that so that they not only can plan but they can have those very challenging conversations with their boards of directors, right, and their CFOs who are looking at fee for service revenue and then this very iffy business case for the other thing. So please help them with that.
ALLISON STARK: Thank, you Mai. That’s right, I think, where Montefiore stands. I would say, just on the RFI piece, we’re certainly looking at it as an opportunity for the new direction and as an opportunity for us, again, back to your point around the couplings, for us to have a voice at the table and to show ourselves as a differentiated and proven provider and allow this RFI to give us a forum to present different opportunities around the business case to continue with value-based contracts.
SARAH DASH: Thank you. Okay, we have a number of really good questions up here and about 20 minutes left in the briefing to try to get to as many of them as possible, so if you think of more questions, now is the time. Don’t be shy. Raise your hand and someone will come around and get your question. If you do, we know it’s a busy Monday, if you do have to go, please don’t forget to fill out your blue evaluation form before you go, but we are going to try to get to as many of these because there’s some really good ones in here.
Let me just ask one kind of follow up question to what’s being discussed here, which, you know, Rob, you mentioned it takes a long time to get to savings, it takes a long time to get to outcomes, you know, is there kind of a general sense of how long it takes, how many years does it take for value-based models to provide substantial evidence of performance on cost and quality, to compare it to an existing fee-for-service model? You know, are there kind of benchmarks or milestones, or is there some low-hanging fruit? So can you maybe kind of talk about the timeline, because one of the things that really strikes me in looking at Rob and Emily’s slides and what Mai and Allison have also both said is just the rapid growth in some of these models, and 2010 wasn’t that long ago, if you look at like just ACOs, so how long are we looking at here?
ROB SAUNDERS: I could just start. So, let me take one example here and talk about the Medicare Insured Savings program which is, you know, one of the flagship Medicare ACO programs, and I wish I had – we just did an analysis of the 2016 results, which were released just a couple weeks ago, and I wish we’d had that published by now, but what we’ve seen is that in 2016 you’re starting to see the Medicare Short Savings Program approach a breakeven point where the amount that folks are saving is about even with the amount that they’re paying out in insurance savings and bonuses, and that has improved dramatically over the four years of the program that it’s been in existence. So the struggle here is that there’s not one time frame that I wish we could point to and say well, for every program it’s three years or four years. It will take a little while. I think we are at a point, though, where we’re starting to see those savings and starting to see things come through, it’s just not always in year 1 or year 2. It may take year 3, year 4, year 5 until you start to see things come through as well.
MAI PHAM: I think a lot of that is driven by the fact that providers come to the work from different starting points, and Allison will speak to this eloquently, but there’s sort of a natural life cycle to the evolution of our provider.
In the beginning there is data, and your first year, if you are brand new to this work, is just figuring out the data piece of it. What do the numbers mean, what are the patterns, where are my opportunities for improvement, how do I talk to my docs about this, who do I hire? It’s all about ramp up and understanding the numbers. And then people tend to go for what they think are the low-hanging fruit, and there’s some variation in that, but generally people, especially physician-based organizations that don’t have inpatient facilities will immediately think about reducing inpatient utilization, or they think about what is within their four walls. You know, oh, can I redo specialist referrals? Or, can I, you know, amplify evaluation and management so that I can do better care coordination? Or, can I reduce imaging referrals? Sort of the low-hanging fruit.
And then you come into another phase where they start to take a step back, so like, okay, deep breath. Okay, what’s the next hardest thing to get where there might be high yield, and that’s where the conversation around post-acute care tends to come in, and around other advanced procedures and things like that. And then, there’s the really hard stuff beyond that, about how do I change my internal compensation structure? How do I reduce capital spending, right, if I’m a health system? You might have seen Cleveland Clinic announced earlier this week that, or last week, that they’re going to be looking for $300 million of savings in capital spend through some combination of staffing and facilities. That’s a world class institution deciding that they’re actually going to take, literally take dollars out of the system so that you and I have to pay less. That’s a rather extreme response, but that’s kind of where we’d like to see providers head start to go. So there’s this sort of Maslow’s hierarchy of easier to harder stuff.
ALLISON STARK: From the Montefiore experience, I think, in terms of our early success in the pioneer model, I think it was really built on our prior – a lot of the prior work that we had done, so we were able to show some of those savings in the early years of the – or a more significant savings in the earlier years in the program. It has gotten harder, I think, also the benchmarking is a very key part of it in making sure that we’re not sort of competing against ourselves on a year to year basis. But I think that you do continue to, as an organization, need to look for that next level of opportunity whether it’s, you know, our skilled nursing facility network, opportunities around palliative care, and integrating that more into what we’re doing with our patients. Focusing on particular pockets of our population that have significant needs like our ESRD population, and also trying to keep patients, you know, to keep them as much in our ACO network as possible, and having that be an important piece of it as well as we work with our providers around making appropriate care choices for patients.
SARAH DASH: Okay. That’s the follow up question, because there are a couple of questions here about, maybe I’ve put them in the category of provider engagement, and kind of pointing out this question of, you know, are physicians and providers, you know, do they resist being held accountable or responsible for patient’s outcomes? How do you talk to them about that? How do you help them with that? And, you know, another questioner points out that physicians determine both the supply of healthcare in the sense of the number of qualified providers as well as kind of the demand for healthcare. So what are some of the factors? Where have you found that leading edge to be in engaging the provider community in care improvement and doing kind of what they went to school to do?
ALLISON STARK: So I can speak to that from the Montefiore perspectives in the era of MACRA MIPS, actually. So we’re exempt from MIPS, but we have launched an effort, through our quality team at the Montefiore Care Management Organization to engage 26 different specialists across our organization, so bringing in the chairs of the various departments, going through with them a whole curriculum around quality, quality improvement, what’s important, and now we’re generating from them what their important quality indicators are for their area of specialization. And now we’re working with our EHR, which is Epic, to try to build out all of the workflows and the necessary components to try to capture data for them, and there’s varying levels of interest. I think it depends on the specialty. Some of them are chomping at the bit, they’re really competitive, they want to do really well, and others are a little bit slower to the table. But I think we are working to look at that next level of provider engagement, and we’ve been doing that all along with our primary care providers, both our employed network as well as our community-based network, and now we’re really trying to bring in the specialists, as well.
MAI PHAM: Allison is definitely the expert, but I’ll just offer a few themes. My type, we are a competitive, over achieving lot and that’s a pathology that you should definitely make the most of and try to leverage. I think it’s also fair to say that we currently ask physicians to do a lot of things that are of very little value. All the administrative burden, you know, prior author approvals with appeals processes that lead down rabbit holes, so we understand, certainly, as a payer, that we have a lot of work to do to try to relieve some of that burden so that we can free up their time and their energy to focus on the things that are really important. That’s super critical to the relationship in building any trust for them to engage in this kind of work. And then, the last thing is data. You know, they find data to be very compelling. Once you get them over the hump of believing that they are special and all their patients are special and different from everybody else’s patients, the data will actually show them the way.
EMILY ROESING: I would use this opportunity to draw attention back to one of the questions that we focus on, which is market dynamics, and so when we’re talking about engaging providers in payment reform, you’re certainly going to have a different experience approaching one hospital who dominates a region and who has all the leverage than you are entering a market and approaching one hospital of many who is looking for opportunities to innovate and may be more flexible or willing to take on risk arrangement in exchange for volume. And so I think that one thing to consider, just as a framing for this, is what are the market dynamics like for that given provider and how can you design a program that appeals to them.
SARAH DASH: I’m going to actually, since Rob might want to jump in on this next question, too, Emily, you’ve been doing a great job anticipating the questions on here. I don’t know if you have like ESP, but we had a few questions about market consolidation, so I’ll take the opportunity to go into them now. One questioner says that many providers claim that they need to consolidate in order to achieve the size and scale necessary to participate in value-based delivery and payment models, however, empirical evidence, as Rob pointed out, suggest that many small providers have been successful participating in value-based models and the competition among providers rather than consolidation can lead to lower prices and higher quality and innovation for healthcare services, and so there’s a couple of, I guess, questions around this. One is: Does the panel have any experiences or observations regarding whether dominant providers and high concentrated markets can actually resist efforts to transition toward value-based models as opposed to, I guess, drive the train forward, if you will; and then: Are there instances in which providers should be allowed to consolidate and gain market power so they can participate in value-based payment models? So if you can kind of talk about some of those dynamics around smaller, larger, consolidated, not consolidated, and kind of what some of the tradeoffs are. And I’ll open it up to anybody.
ROB SAUNDERS: Sure. I’ll start. And so, I think this is one of the hot policy issues that all healthcare policy types are facing with right now which is will this type of payment reform encourage more consolidation, which does have some unintended consequences that comes with it. And there’s a couple different pieces to this.
So one question is: Do you actually need to be consolidated? Do you actually need that type of scale in order to succeed? And some of the evidence that we’ve generated and some of the evidence that we’ve seen from others suggest that you really don’t have to be. That there’s quite good examples from small organizations because those small organizations often can be more flexible. They’ve got smaller bureaucracies. They can redesign things more quickly. There’s a lot of advantages to being a small organization. The struggle, though, is they don’t necessarily have the infrastructure that some of these larger organizations have or can afford to have, and that kind of gets to the third point that I tried to raise in my remarks which is then, in order to make sure that even those small organizations can succeed, you need to make sure you’re coupling all these alternative payment models with some level of support that explains here is the type of data you would need to collect. Here is the type of education that’s worked best. Or, here’s some operational guidance of how you might talk to your physicians about palliative care or about serious illness or folks at the end of life, in order to make sure that they have the ability to succeed even under those types of arrangements.
So that’s one of, I think, the big questions here, that the data shows that you don’t have to be big to succeed, but if you want to make sure that you’re allowing all types of organizations to succeed, you need to make sure that you’re giving them the support they need. I’ll turn it to Emily maybe to talk about the market consolidation question from the employer perspective.
EMILY ROESING: Sure. The healthcare marketplace is very complex, but it is a marketplace and so, coming from the employer perspective as the buyers, and if we’re self insured, you’re paying for these costs out of hand and often you’re looking to design programs directly with a hospital or a local hospital, you don’t want just one option, and what we’ve seen when that happens is that prices go up. And, as consolidation has increased over the last few years for potentially some of the misconceptions that Rob addressed, we’ve seen costs go up uniformly almost – it’s the elephant in the room – whereas quality, there’s no evidence that that’s improved. And I think that that is a very important thing to consider and provider consolidation is a real risk moving forward.
MAI PHAM: I would add to that that it’s not just the size of the organization, it’s also the composition of that organization, so we are more comfortable, as a health plan, working with growing size among independent physician groups, for example, than among health systems. That said, the power of market leverage is what you decide to give it. So the power of market leverage to raise prices or walk out of a network is only as powerful as the determination of a purchaser or a population of members to forego that marquee provider if they are not behaving in a way that comports with our values. And so that’s a game of chicken that happens annually, about now, for all health plans across the country, and so you see full page newspaper ads going up in various markets with name calling, etcetera, but that is the game of chicken, and I think that’s where, frankly, you know, the bet is called for both policy makers and purchasers is, are you willing to stand behind health plans if we try to hold the line?
ALLISON STARK: From our perspective, we have been trying to grow regionally and grow our network of providers smartly, bringing in providers that we feel do have the elements in terms of infrastructure and quality that we would want to see, and we feel that that growth is important to help us be able to take on additional risk and manage larger populations of patients who do have these multiple different payer sources and to do that in a regional manner.
SARAH DASH: And I want to acknowledge there is someone standing at the mic who’s been very patient, but just to kind of quickly follow up on this question as much as possible, Allison, earlier you had mentioned Medicare Advantage and the questioner asks: What incentives do you recommend for MA plans and other plans to participate in risk-based arrangements with ACOs, and maybe you could expand on that. Is it incentives or is it regulatory changes? What would that entail? And anyone can feel free to comment on it.
ALLISON STARK: I think it’s just being able to, you know, increase the number of patients that are in a similar risk-based arrangement and so trying to achieve those economies of scale around how we do our population health management and not having to do it in different models with different populations of patients.
SARAH DASH: Alright. Go ahead, sir.
AUDIENCE MEMBER: Thanks. Thanks for calling on me. I have what might be kind of a tangential question. It might take us off a little bit on a tangent, but it seems appropriate now that we’re talking about size and scale. There are a couple health systems that are part of the federal government. I’m thinking particularly of Department of Defense and Veterans Affairs, that are very large in scale, anywhere between 15 million and 30 million-ish covered lives depending on how you count them, and also spend a significant amount of care with private providers out in the community. You know, VA last year spending about $13 billion out of an $80 billion Veterans Health Administration budget, but that have been very reluctant to engage in these sorts of reforms. So are these sorts of reforms appropriate in those systems, and if so, why do you think there’s the reluctance?
MAI PHAM: I think they are wholly appropriate and I think hold tremendous potential for trying to improve cost and quality outcomes for those populations. My understanding of the historical resistance has been just a skittishness about how members would actually respond to, you know, it could be anything from – and this is a little bit of a boogey man scenario that people will equate ACOs with HMOs and pull restrictions on choice of provider, etcetera, which, of course, is not the experience in PPO or traditional Medicare ACO contexts, but I think that that’s where a lot of the historical resistance has come from. And so, I think acculturating people to the notion that there are a range of strategies you can bring on value-based payment, and then, you know, opening up those systems to participation from commercial plans, from, you know, other providers who may help advise those systems, and trying to bring a little more deliberateness to the design. I think these are wholly appropriate models.
AUDIENCE MEMBER: Thanks.
EMILY ROESING: I’ll just add, too. We work with many state-based purchasing entities as well as the Medicaid agencies and other public purchasers, and so we would – I don’t know the historical significance of it, but I would imagine that they would face many of the same challenges as our other purchasers and probably some of the same benefits of participating in some of these programs.
ROB SAUNDERS: And I’ll jump in as well to say we’ve done some work with some of the military health service as it’s done its transition and I think there are examples in the military health service where they’re even thinking about innovation, for instance, in patient-centered medical homes and creating dashboards for their inpatient care and outpatient care, and so I think there are pockets of innovation happening there, as well, and to Emily’s point, there’s pockets of innovation happening in different state governments, even state employee health benefit plans are doing interesting work with bundles in Tennessee, or with ACOs in Washington State and Oregon State. So I think there’s the ability to do these type of payment reforms in all of those different types of programs and, indeed, a lot of those programs are taking steps to do so.
SARAH DASH: So we have only a few minutes left and in closing I just want to ask each of our panelists to comment on kind of a closing question which is: If you could wave your magic wand and kind of ask for one next step when it comes to payment delivery system reform, what would that be?
ROB SAUNDERS: So being an academic, I will not be surprising. I will say that I wish there was more evidence, especially in understanding how these types of payment reforms are working in the private sector, because that will make a big difference in how successful we are as an overall market consisting of public and private payers.
EMILY ROESING: Rob, what will my answer be now? [Laughter] Well, I would echo what Rob said, which is we would really like comparable results, especially across health plans so that employers, as they’re making their decisions, can compare, you know, one ACO to another ACO and let’s make it as easy for them as possible to do that. And also, as easy as possible for them to share their results in some kind of anonymous fashion so that we can move things ahead. There is resistance to do that, but I think we overcame that barrier we would learn a lot and we would learn a lot more quickly.
MAI PHAM: That was pointed at me, and so I will say that Rob knows I am committed to helping to generate that evidence. It’s merely a matter of time and resources. If I had one wish, I would ask that we tackle what I think one really key root cause, which is distortions in the fee schedule. I don’t think we need to do it wholesale, I don’t think it needs to be dramatic and Draconian, but I think that there are a series of incremental steps that can be taken that would help us get down the path.
ALLISON STARK: We would like to test a model that allows us to become accountable for a combined population of Medicare, Medicaid, and dually-eligible beneficiaries under a seamless model.
SARAH DASH: Well thank you. Thank you all for your really enlightening comments. I want to thank you all for sticking with us today, for today’s discussion. I’d like to just invite you to join us for a couple of briefings we’ll be holding on somewhat related topics. On December 1st we’ll be digging into MACRA and physician payment more, at noon, and then, also, again, on December 8th we’ll be having a discussion on delivery system reform, but more specifically what it means for the healthcare workforce and vice versa. So I hope you’ll watch our announcements for those upcoming events. I want to again thank Ted Giovanis and the JKTG Foundation for supporting today’s briefing. Please don’t forget to fill out your blue evaluation forms. And join me in thanking the panel. Thanks.