The enactment of the Affordable Care Act (ACA) brought about sweeping legislation intended to reduce the numbers of uninsured and make health care accessible to all Americans. It also ushered in an era in which changing reimbursement and care delivery models are driving providers from the current fragmented system focused on volume-based services to an outcomes orientation. As a result, the health care system now taking shape is one in which value-based payment models financially reward patient-centered, coordinated, accountable care.
Against this backdrop, providers' increasing use of evidence-based medicine and growing capabilities in managing volumes of clinical evidence through sophisticated health IT systems will mean that treatments can be tailored for the individual and interventions can be made earlier to keep patients well. Furthermore, patient engagement is fast becoming a critical component in the care process, particularly in the area of population health management (PHM).
Health care providers' interest in improving population health appears to be increasing because of the sudden ubiquity of the phrase, because many are participating in accountable care organizations (ACOs), and because even hospitals not participating in an ACO increasingly have incentives to reduce their number of potentially unavoidable admissions, readmissions, and emergency department visits (Casalino, Erb, Joshi, & Shortell, 2015).
In this chapter we'll not only seek a common understanding of PHM but also explore how the advent of shared accountability financial arrangements between providers and purchasers of care has created significant focus on PHM. We'll also review the core processes associated with accountable care and examine the strategic IT investments and data management capabilities required to support population health management and enable a successful transition from volume-based to value-based care.
PHM: Key to Success Although the ACO model is still new and evolving, approximately 750 ACOs are in operation today, covering some 23.5 million lives under Medicare, Medicaid, and private insurers. Although not all ACOs have demonstrated success in delivering better health outcomes at a lower cost, many have achieved promising results (Houston & McGinnis, 2016). As such, significant ACO growth is expected. In fact, it is predicted that upward of 105 million people will be covered by an ACO by 2020 (Leavitt Partners, 2015).
Similarly, although the industry's move to value-based payment is also in its early stages, value-based contracts are expected to substantially increase throughout the next decade. CMS has a stated goal that 50 percent of Medicare payments will be tied to alternative payment models by the end of 2018 (US DHHS, 2015). In fact, the projected impact of MACRA, which we discussed in Chapter One, on the adoption of value-based payment models is expected to rival the impact of Meaningful Use on adoption of EHRs. In addition, the substantial payment reform activity at the federal level is paralleled by private insurers' efforts to support value-based payment and new models of care. For example, Aetna expects that 75 percent of its contracts will be value-based by 2020 (Jaspen, 2015).
These trends will accelerate the demand for services and technology that enable health systems and other organizations (health plans, Medicaid, community-based organizations, employers, and so forth) to jointly manage the health and care of populations—either as an ACO or in an ACO-like fashion. Although diverse, these organizations will all have a common need to improve operational efficiency, drive better patient outcomes while reducing the overall cost of care, and effectively engage consumers in managing their health and care.
Although the new reimbursement system is still taking shape, it's clear that population health management will become a required core competency for provider organizations in a post fee-for-service payment environment (Institute for Health Technology Transformation, 2012). Understanding Population Health Management Population health as a concept first appeared in 2003 when David Kindig and Greg Stoddart (2003) defined it as “the health outcomes of a group of individuals, including the distribution of such outcomes within the group” (p. 380).
It is important to note that medical care is only one of many factors that affect those outcomes. Other factors include public health interventions; aspects of the social environment (income, education, employment, social support, and culture); the physical environment (urban design, clean air and water); genetics; and individual behavior (Institute for Health Technology Transformation, 2012). “Improving the health of populations” was later identified as one element in the Institute for Healthcare Improvement's triple aim for improving the US health care system, along with improving the individual experience of care and reducing the per capita cost of care (Berwick, Nolan & Whittington, 2008, p. 759).
Today, population health management comprises the proactive application of strategies and interventions to defined groups of individuals (e.g., diabetics, cancer patients with tumor regrowth, the elderly with multiple comorbidities) to improve the health of individuals within the group at the lowest cost. PHM interventions are designed to maintain and improve people's health across the full continuum of care—from low-risk, healthy individuals to high-risk individuals with one or more chronic conditions (Felt-Lisk & Higgins, 2011). PHM also seeks to minimize the need for expensive encounters with the health care system, such as emergency department visits, hospitalizations, imaging tests, and procedures. This not only lowers costs but also redefines health care as an activity that encompasses far more than sick care, because it systematically addresses the preventative and chronic care needs of every patient—not just high-risk patients who generate the majority of health care costs (Institute for Health Technology Transformation, 2012).
Although population health can also mean the health of the entire population in a geographic area, the population health efforts most health systems and ACOs are undertaking are aimed at providing better preventive and medical care for the “population” of patients “attributed” to their organizations by Medicare, Medicaid, or private health insurers (Casalino et al., 2015). New Care Delivery and Payment Models: The Link to PHM
As we know, historically, there has been a lack of accountability for the total care of patients, the outcomes of their treatment, and the efficiency with which health resources are used. The fact that health care services are paid primarily on a fee-for-service basis has contributed to the fragmentation and lack of accountability. Fee-for-service emphasizes the provision of health services by individual hospitals or providers rather than care that is coordinated across providers to address the patient's needs. Providers are rewarded for volume and for conducting procedures that are often more complex, when simpler, lower-cost, better methods may be more appropriate (Guterman & Drake, 2010).
Value-based care is emerging as a solution to address rising health care costs, clinical inefficiency and duplication of services, and to make it easier for people to get the appropriate care they need. As the federal government continues to test and implement several new payment models designed to achieve optimal health outcomes at a sustainable cost, commercial insurers are also partnering with health care providers in various arrangements that similarly seek to reward value rather than volume of services.
As discussed in Chapter One, two popular models of delivery system reform are the patient-centered medical home (PCMH) and the ACO. The PCMH emphasizes the central role of primary care and care coordination, with the vision that every person should have the opportunity to easily access high-quality primary care in a place that is familiar and knowledgeable about his or her health care needs and choices. The ACO emphasizes the urgent need to think beyond patients to populations, providing a vision for increased accountability for performance and spending across the health care system (Patient-Centered Primary Care Collaborative, 2011). Both models rely on health care organizations and physicians providing coordinated and integrated care in an evidence-based, cost-effective way. This, of course, has significant implications for an organization's ability to manage information effectively.
In conjunction with new models of care are new or modified forms of payment for health care services, which are being piloted in various communities around the nation. These include bundled payments, pay for performance, shared savings programs, capitation or global payment, and episode-of-care payments.
Bundled payments may take different forms such as making a single payment for hospital and physician services instead of separate payments, bundling payments for inpatient and post-acute care, or paying based on diagnosis instead of treatment. Bundled payments are often applied to surgical procedures such as hip replacements. Pay-for-performance (P4P) programs reward hospitals, physician practices, and other providers with financial and nonfinancial incentives based on performance on select measures. These performance measures can cover various aspects of health care delivery: clinical quality and safety, efficiency, patient experience, and health information technology adoption. Most P4P programs, however, are still a bonus to a fee-for-service model (Miller, 2011). An integral part of the ACA, shared savings programs are intended to reward providers by paying them a bonus that is explicitly connected to the amount by which they reduce the total cost of care compared to expected levels.
Capitation or global payment places full risk with the provider organization; the provider is responsible for the costs of all care that a patient receives. An episode-of-care payment system would pay the provider organization a single payment for all of the services associated with a hospitalization or other episode of acute care, such as a heart attack, including inpatient and post-acute care (Miller, 2011).
The revised payments associated with these programs signal the federal government's most all-encompassing effort thus far to distribute risk and hold providers financially accountable for the quality of care they deliver. Although an in-depth discussion of these and other proposed payment reform systems is beyond the scope of this book, the following resources can provide a wealth of detailed information on health care payment reform initiatives: Centers for Medicaid & Medicare Services (www.CMS.gov) Healthcare Financial Management Association (www.hfma.org) American College of Healthcare Executives (www.ache.org) Progress to Date: PCMHs Growing support for the PCMH has arisen across the vast majority of the US health care delivery system to include commercial insurance plans, multiple employers, state Medicaid programs, numerous federal agencies, the Department of Defense, hundreds of safety net clinics, and thousands of small and large clinical practices nationwide (Grundy, Hacker, Langner, Nielsen, & Zema, 2012). Private and public payer initiatives together have grown from eighteen states in 2009 to forty-four states in 2013, and they now cover almost twenty-one million patients. These heterogeneous initiatives overall are becoming larger, paying higher fees, and engaging in more risk sharing with practices (NCQA, 2015).
Because the patient-centered medical home is foundational to ACOs—with ACOs often described as the “medical neighborhood”—the PCMH is likely to gain even greater prominence as ACOs continue to develop in the marketplace (Grundy et al., 2012). Moreover, a growing body of scientific evidence shows that PCMHs are saving money by reducing hospital and emergency department visits, mitigating health disparities, and improving patient outcomes. Examples of specific outcomes achieved by various PCMHs include the following:
Lower Medicare spending More effective care management and optimized use of health care services Improved care management and preventative screenings for cardiovascular and diabetes patients Reduced socioeconomic disparities in cancer screening (NCQA, 2015) Additionally, more than nine thousand primary care practices and forty-three thousand clinicians (doctors and nurse practitioners) across the country have earned the PCMH designation from the National Committee for Quality Assurance (NCQA), the nation's largest credentialing organization. The designation is earned by demonstrating achievement of goals related to accessible, coordinated, and patient-centered care (Olivero, 2015).
Progress to Date: ACOs
In the value-based care world, ACOs are expected to play a leadership role in improving population health—whether participating in contracts with Medicare, Medicaid, or managed care organizations (MCOs) or health plans. These arrangements are often complex and may differ widely, including elements such as governance requirements, payment structures, quality metrics, reporting requirements, and data sharing (Houston & McGinnis, 2016).
Several different ACO models, including the Pioneer ACO program and the Medicare Shared Savings Program (MSSP), are testing and evaluating various risk-sharing agreements. In December 2011, CMS signed agreements with thirty-two organizations to participate in the Pioneer ACO model, designed to show how particular ACO payment arrangements can best improve care and generate savings for Medicare. As of May 1, 2016, there are nine Pioneer ACOs participating in the model for a fifth and final performance year (CY2016). The MSSP is a key component of the Medicare delivery system reform initiatives included in the Affordable Care Act and is designed to facilitate coordination and cooperation among providers to improve the quality of care for Medicare fee-for-service (FFS) beneficiaries and reduce unnecessary costs. Eligible providers, hospitals, and suppliers may participate in the MSSP by creating or participating in an ACO.
Although there has been considerable debate among policymakers as to the success of the ACO model, some of these ACOs are already reporting positive results for improving patient outcomes and controlling costs, as shown in Table 4.1 (Houston & McGinnis, 2016). Table 4.1 Key attributes and broad results of current ACO models
Source: R. Houston and T. McGinnis. January 2016. “Accountable Care Organizations: Looking Back and Moving Forward.” Center for Health Care Strategies. Used with permission.
Medicare Attribute MSSP Pioneer ACO Commercial ACOs Medicaid ACOs ACO prevalence 333 ACOs in 47 states 18 ACOs in 8 states 528 commercial contracts 66 ACOs in 9 active state-based programs Key model features Shared savings payment methodology 33 quality metrics Designed for large hospital systems Shared savings system with higher risk and reward potential than MSSP Same 33 quality metrics as MSSP Often independent contracts between ACOs and MCOs Many feature narrow provider networks. Various approaches to payment including shared savings and capitation Various approaches to quality measurement Results to date CMS has reported results for different cohorts of MSSP ACOs based on start date, which have shown significant savings, but it is difficult to aggregate these results, though only 26% of ACOs received shared savings payments ACOs consistently improved on 27 of 33 quality metrics. Increases in patient satisfaction relative to patients not enrolled in ACOs $304 million in savings over three years ACOS consistently improved on 28 of 33 quality metrics.
Increases in patient satisfaction relative to patients not enrolled in ACOs Began with 32 participants; 14 have left program Not many publicly reported results available across programs due to proprietary information and difficulty comparing results CO, MN, and VT have collectively reported $129.9 million in savings. ED visits in OR decreased by 22%. ACO Challenges Now with years of observation and learnings to draw from, several key challenges facing ACOs have been identified, including difficulties working across organizational boundaries, building the requisite infrastructure for effective data sharing, and truly engaging patients in the care process. One of the more notable challenges currently being worked on is the alignment and consolidation of myriad quality measures being used in public and private programs.
Effective quality measures are imperative to accountability in organized systems of care, especially when performance affects the ability of the provider to share in savings or determines whether a provider avoids penalties or receives bonus payments (Bipartisan Policy Center, 2015). However, the notion of “measurement fatigue” and the increasing administrative burden it places on providers is a legitimate concern (Buelt, Nichols, Nielsen, & Patel, 2016). Another challenge with quality metrics is that although they tend to capture performance on specific outcomes, such as lower avoidable readmissions, or processes, such as screening for depression, they may not accurately measure the overall health of the patient, making it difficult to assess the true impact and efficacy of ACO arrangements (Houston & McGinnis, 2016). Implications for Health Care Leaders Through the combination of changing health care business models and payment mechanisms, we are witnessing transformational change in the nature of health care delivery. It is evolving from one of reactive care with fragmented accountability and a dependence on full beds to a model of health management, care that extends over time and place and rewards for efficiency and quality. This transformation poses potent challenges for providers and has enormous implications for today's health care leaders, particularly by placing greater emphasis on these issues:
Keeping patients well and managing and preventing disease Establishing more efficient organization and utilization of care teams and venues of care Creating a care culture that is comfortable with change and ongoing automation Engaging patients in managing their care and overall health Ensuring the most cost-effective care is provided and that clinical processes are streamlined and follow the best evidence More specifically, accountable care and the move to population health management will require industry perspectives and health care delivery practices to shift from
Care providers working independently to collaborative teams of providers Treating individuals when they get sick to keeping groups of people healthy Emphasizing volumes to emphasizing outcomes Maximizing the use of resources and assets to applying appropriate levels of care at the right place
Offering care at centralized facilities to providing care at sites convenient to patients Treating all patients the same to customizing health care for each patient Avoiding the sickest chronically ill patients to providing special chronic care services Being responsible for those who seek services to being responsible for the needs of the community Putting forth best efforts to becoming high-reliability organizations (Glaser, 2012b) Additionally, accountability will bring new performance and utilization risks to providers as the focus shifts from optimizing business unit performance to optimizing network performance. At the same time, instead of maximizing the profitability of care, organizations will increase the volume of desired bundled episodes while controlling costs. At an operational level, organizations must change their structure as well as workflows to implement PHM and adopt new types of automation tools and reporting. This will require setting clear goals, the active participation of leadership—including physician leaders, an assessment of technology requirements, and an effective rollout strategy (Institute for Health Technology Transformation, 2012).
Health IT clearly plays a vital role in the success of new models of care and payment reform and should be an integral part of the organization's planning process. Whether participating in an ACO or not, all health care organizations should be thinking about building a population health management strategy and addressing related gaps in their information technology (IT) capabilities. Minima
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