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State of Connecticut’s New ‘Episodes-of-Care Health Plan’ Could Be Key to Scaling Value-Based Care

By JESSICA DaMASSA, WTF HEALTH

Signify Health (NYSE: SGFY) has called their approach “Value-Based Care 2.0” and, today, they’ve received an important designation from CMS that could set an exciting precedent for scaling up episodes-of-care, value-based models for the under 65 commercial health insurance market. The plan to receive this important approval as an Advanced Alternative Payment Model (AAPM) is the State of Connecticut’s health plan – a massive plan that covers the State’s 220,000 employees and retirees. To talk about what this first-of-its-kind approval signals for the future of value-based payment models are the State of Connecticut’s Comptroller Kevin Lembo and Signify Health’s CEO Kyle Armbrester.

What’s so important here is the combination of episodes-of-care (which is like value-based care-lite) and the under-65 market (which is not as rich with value-based care case studies as the over-65 Medicare market). That a State government with a massive population of covered lives AND a vested interest in helping keep local hospitals and health systems vibrant economic engines in the community is leading the way on this novel payment model design is significant. And, Comptroller Lembo gives us the details about how he’s viewing it as a win-win – after quite a few battles along the way. To win in health innovation, you’ve got to follow the dollar! Tune into this chat to see where it’s headed as episodes-of-care models get a huge boost from CMS.

Value-based care – no progress since 1997?

By MATTHEW HOLT

Humana is out with a report saying that its Medicare Advantage members who are covered by value-based care (VBC) arrangements do better and cost less than either their Medicare Advantage members who aren’t or people in regular Medicare FFS. To us wonks this is motherhood, apple pie, etc, particularly as proportionately Humana is the insurer that relies the most on Medicare Advantage for its business and has one of the larger publicity machines behind its innovation group. Not to mention Humana has decent slugs of ownership of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.

Humana has 4m Medicare advantage members with ~2/3rds of those in value-based care arrangements. The report has lots of data about how Humana makes everything better for those Medicare Advantage members and how VBC shows slightly better outcomes at a lower cost. But that wasn’t really what caught my eye. What did was their chart about how they pay their physicians/medical group

What it says on the surface is that of their Medicare Advantage members, 67% are in VBC arrangements. But that covers a wide range of different payment schemes. The 67% VBC schemes include:

  • Global capitation for everything 19%
  • Global cap for everything but not drugs 5%
  • FFS + care coordination payment + some shared savings 7%
  • FFS + some share savings 36%
  • FFS + some bonus 19%
  • FFS only 14%

What Humana doesn’t say is how much risk the middle group is at. Those are the 7% of PCP groups being paid “FFS + care coordination payment + some shared savings” and the 36% getting “FFS + some share savings.” My guess is not much. So they could have been put in the non-VBC group. But the interesting thing is the results.

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Obstacles to Value-Based Care Can Be Overcome

By KEN TERRY

(This is the seventh in a series of excerpts from Terry’s new book, Physician-Led Healthcare Reform: a New Approach to Medicare for All, published by the American Association for Physician Leadership.)

Even in a healthcare system dedicated to value-based care, there would be a few major barriers to the kinds of waste reduction described in this book. First, there’s the ethical challenge: Physicians might be tempted to skimp on care when they have financial incentives to cut costs. Second, there’s a practical obstacle: Clinical guidelines are not infallible, and large parts of medicine have never been subjected to rigorous trials. Third, because of the many gaps in clinical knowledge, it can be difficult for physicians to distinguish between beneficial and non-beneficial care before they provide it.

Regarding the ethical dimension, insurance companies often are criticized when they deny coverage for what doctors and patients view as financial reasons. Physicians encounter this every day when they request prior authorization for a test, a drug, or a procedure that they believe could benefit their patient. But in groups that take financial risk, physicians themselves have incentives to limit the amount and types of care to what they think is necessary. In other words, they must balance their duty to the patient against their role as stewards of scarce healthcare resources.

On the other hand, fee-for-service payment motivates physicians to do more for patients, regardless of whether it’s necessary or not. In some cases, doctors may order tests or do procedures of questionable value to protect themselves against malpractice suits; but studies of defensive medicine have shown that it actually raises health costs by a fairly small percentage. More often, physicians overtreat patients because of individual practice patterns or because they practice in areas where that’s the standard of care. As long as doctors believe there’s a chance that the patient will benefit from low-value care, they can justify their decision to provide that care.

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Primary Care Is at the Center of a Health Revolution

By KEVIN WANG, MD

If our urgent-care-as-healthcare culture isn’t killing us, it’s certainly wasting our time and resources. 

Consider these facts highlighted by Advanced Medical Reviews, based on various studies: 

  • U.S. physicians report that more than 20 percent of overall medical care is not needed.
  • The Congressional Budget Office recently estimated that up to 30 percent of the costs of medical care delivered in the U.S. pay for tests, procedures, doctor visits, hospital stays, and other services that may not actually improve patient health.
  • Unnecessary medical treatment impacts the healthcare industry through decreased physician productivity, increased cost of medical care, and additional work for front office staff and other healthcare professionals.

Most of today’s primary care is, in retail terms, a loss leader — a well-oiled doorway to the wildly expensive sick care system. For decades, practitioners have been forced into production factories, seeing as many patients, ordering as many tests, and sending as many referrals as possible to specialists. Patients, likewise, have avoided going in for regular visits for fear of the price tag attached, often waiting until they’re in such bad shape that urgent (and much more expensive) care is necessary.

The system as it stands isn’t delivering primary care in a way that serves patients, providers, employers, or insurers as well as it could. To improve health at individual and population levels, the system needs to be disrupted. Primary care needs to play a much larger role in healthcare, and it needs to be delivered in a way that doesn’t make patients feel isolated, neglected, or dismissed. 

Luckily, primary care is making a comeback — the kind that doesn’t just treat symptoms, but sees trust, engagement, and behavior change as a path to health.  

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What’s Hitting “Escape Velocity” in Health Innovation & Technology? | Todd Park, Devoted Health

By JESSICA DaMASSA, WTF HEALTH

Todd Park is known for being excited, but THIS TIME the co-Founder and Executive Chairman of Devoted Health is excited that it’s the 10th Anniversary of Health Datapalooza, a gathering and initiative he had a hand in creating when he served Barack Obama as the Chief Technology Officer of the United States. What else is energizing Todd? How about value-based payment finally taking hold and the opportunities that’s opening up for payment model innovation and that will allow the disruption of healthcare to achieve ‘escape velocity.’

Filmed at Health Datapalooza in Washington DC, March 2019.

Jessica DaMassa is the host of the WTF Health show & stars in Health in 2 Point 00 with Matthew Holt.

Get a glimpse of the future of healthcare by meeting the people who are going to change it. Find more WTF Health interviews here or check out www.wtf.health

Providers Don’t Take Enough Risk to Bend the Cost Curve

By KEN TERRY

Back in 2015, 20 major health systems and payers pledged to convert 75% of their business to value-based arrangements by 2020. Today, more than two-thirds of payments from U.S. commercial health insurers are tied to some kind of value-based model. By 2021, the health plans expect three-quarters of their payments will be value-based.

However, a recent analysis of Change Healthcare data by Modern Healthcare found that the percentage of value-based revenue tied up in upside/downside risk contracts was in the single digits. Among the types of two-sided risk contracts that provider organizations had were capitation or global payment (7.3%), pay for performance (6.5%), prospective bundled payment (5%), population-based payment (5.8%), and retrospective bundled payment (4.1%).

An AMGA survey picked up signs of a recession in risk contracting in 2016. A year earlier, survey respondents—mostly large groups–had predicted their organizations would get 9 percent of revenue from capitated products. In 2016, the actual figure was 5 percent, according to a Health Affairs post by the AMGA’s Chet Speed and the late Donald Fisher.

The authors cited a number of obstacles to the spread of risk contracting, including “limited commercial value-based or risk-based products in their local markets; the inability to access administrative claims data from all payers; the massive administrative burden of submitting data in different formats to different payers; lack of access to investment capital; and inadequate infrastructure.”

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How a Value Focus Could Change Health Care

By BRIAN KLEPPER, PhD

How will the drive to health care value affect health care’s structure? We tend to assume that the health care structure we’re become accustomed to is the one we’ll always have, but that’s probably far from the truth. If we pull levers that incentivize the right care at the right time, it’s likely that many of the problems we think we’re stuck with, like overtreatment and a lack of accountability, will disappear.

A large part of getting the right results is making sure that health care vendors have the right incentives. All forms of reimbursement carry incentives, so it’s important to align them, to choose payment structures that work for patients and purchasers as well as providers. Fee-for-service sends exactly the wrong message, because it encourages unnecessary utilization, paying for each component service independent of whether its necessary and independent of the outcomes. Compare US treatment patterns to those in other industrialized nations and you’ll find ours are generally bloated with procedures that have become part of practice not because they’re clinically necessary but simply because they’re billable.

By contrast, value-based arrangements are really about purchasers demanding that health care vendors deliver better health outcomes and/or lower cost than what they’ve experienced under fee-for-service reimbursement, and the payment structure often asks the vendor to put his money where his mouth is, at least where performance claims are concerned. In a market that’s still overwhelmingly dominated by fee-for-service arrangements, one way for a vendor to get noticed is to financially guarantee performance. Integrated Musculoskeletal Care, a musculoskeletal management firm based in Florida, guarantees a 25% reduction in musculoskeletal spend on the patients they touch. This typically translates to a 4%-5% reduction in total health plan spend, just by contracting with this vendor, a compelling offer in an environment that makes it hard for upstarts to get market traction.

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Medicine is Not Like Math

By HANS DUVEFELT MD 

We do a lot of things in our head in this business. Once a patient reports a symptom, we mentally run down lists of related followup questions, possible diagnoses, similar cases we have seen. All this happens faster than we could ever describe in words (let alone type).

And, just like in math class, we are constantly reminded that it doesn’t matter if we have the right answer if we can’t describe how we got there.

So the ninth doctor who observes a little girl with deteriorating neurologic functioning and after less than ten minutes says “your child has Rett Syndrome” could theoretically get paid less than the previous eight doctors whose explorations meandered for over an hour before they admitted they didn’t know what was going on.

Does anybody care how Mozart or Beethoven created their music? Or do we mostly care about how it makes us feel when we listen to it?

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HIPAA RFI Comments: Patient Privacy Rights

Deborah C. Peel
Adrian Gropper

By ADRIAN GROPPER and DEBORAH C. PEEL

Among other rich nations, US healthcare stands out as both exceptionally privatized and exceptionally expensive. And taken overall, we have the worst health outcomes among the Western Democracies.

On one hand, regulators are reluctant to limit private corporate action lest we reduce innovation and patient choice and promote moral hazards. On the other hand, a privatized marketplace for services requires transparency of costs and quality and a minimum of economic externalities that privatize profit and socialize costs.

For over two decades, the HIPAA law and regulations have dominated the way personal health data is used and abused to manipulate physician practice and increase costs. During these decades, digital technology has brought marvels of innovation and competition to markets as diverse as travel and publishing while healthcare technology is burning out physicians and driving patients to bankruptcy.

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New Study: Medicare’s Readmission Penalties May Be Killing Patients

By KIP SULLIVAN JD 

On the morning of December 21, I opened my copy of the New York Times to find an op-ed that said almost exactly what I had said in a two-part article The Health Care Blog posted two weeks earlier. The op-ed criticized the Hospital Readmissions Reduction Program (HRRP), one of dozens of “value-based payment” programs imposed on the Medicare fee-for-service program by the Affordable Care Act. The HRRP punishes hospitals if their rate of readmissions within 30 days following discharge exceeds the national average. The subtitle of the op-ed was, “A well-intentioned program created by the Affordable Care Act may have led to patient deaths.”

The first half of the op-ed made three points: (1) The HRRP appears to have reduced readmissions by raising the rate of observation stays and visits to emergency rooms;  (2) the penalties imposed by the Centers for Medicare and Medicaid Services (CMS) for “excessive readmissions” have fallen disproportionately on “safety net hospitals with limited resources”; and (3) “there is growing evidence that … death rates may be rising.”

That’s exactly what I said in articles published here on December 6 and December 7. In Part I, I described the cavalier manner in which the Medicare Payment Advisory Committee (MedPAC) endorsed the HRRP in its June 2007 report to Congress. In Part II, I criticized the methodology MedPAC used to defend the HRRP in its June 2018 report to Congress, and I compared that report to an excellent study of the HRRP published in JAMA Cardiology by Ankur Gupta et al. which suggested the HRRP is raising mortality rates. In its June 2018 report, MedPAC had claimed the HRRP has reduced the rate at which patients targeted by the HRRP were readmitted within 30 days after discharge without increasing mortality. Gupta et al., on the other hand, found that for one group of targeted patients – those with congestive heart failure (CHF) – mortality went up as 30-day readmissions went down.

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