Accountable Care and Payment Innovations

Experience

Creating Accountability and Building PHO Revenues with Clinical Integration

Client Profile: PHO associated with a tertiary care teaching hospital Project Type: Payment Innovation, Clinical Integration Challenge: To help a successful PHO adjust to changes in regulations and market conditions by adopting clinical integration and expanding pay-for-performance. DGA Solutions and Results: DGA led strategic planning processes developing new strategies to replace the original contracting focus of the organization. The new strategies included an extensive clinical integration effort and significantly expanded pay-for-performance based on evidence-based clinical protocols and other quality initiatives. DGA also assisted the PHO to enhance its disease management program and develop an electronic medical record strategy. An information technology platform ties these efforts together, reducing fragmentation and increasing efficiency. The new strategies provide value to large payers in addition to the smaller payers that had previously been served by the PHO. This new client base significantly increased PHO revenue based on the true value of the services it was in a unique position to provide. The implementation of evidence-based protocols and pay for performance provided the foundation for this PHO to become an accountable care organization (ACO).

Creating a Payer-Provider Collaborative as a New Competitive Platform

Client Profile: Regional health plan in a competitive Mid-Atlantic market Project Type: Strategic Planning; Financial Feasibility and Modeling Challenge: To develop a strategy for the health plan to engage providers in joint accountability for cost and quality DGA Solution and Results: DGA helped the health plan to identify both the "who" and the "what" of a plan for collaboration with providers. We started by developing an understanding of the relationship between the plan and each of the hospital providers, and between the hospitals and their physicians. We inventoried the hospitals/systems to determine which ones had a strong network of employed physicians, which had a PHO and which had strong relationships with physician groups. We identified the providers that the health plan should target for collaborative opportunities, and "reality tested" these recommendations with a client working group. Once desirable strategic provider partners were identified, we developed recommended programs for collaboration. The objective was to find models that improve care and lower utilization and costs while providing bottom-line benefits to both providers and insurers. Building on existing DGA familiarity with payment innovations and clinical integration, we did extensive research on which program models would have the greatest financial impact for the insurer. Selected programs included:

Select Network Product: Creation of a tiered benefit product for a more narrowly targeted hospital network
Patient Centered Medical Home: Extend best practices to additional primary care providers to transform primary care
Transitions of Care: Enhance quality and reduce complications by smoothing transfers upon discharge
ER Follow-Up Care: Provide health plan care managers with rapid access to patients who may need better care coordination

We projected the cost and utilization impact of the four identified programs at each of the proposed collaborative partners, as well as the timing of both costs and impacts. Based on this we estimated savings to the insurer and benefits to the providers. We quantified the additional volume and incentive payments providers could expect, and estimated the financial impact these programs might have on the providers to ensure that the proposed opportunity was appealing from their perspective. DGA is now assisting the health plan and its providers to implement the recommended initiatives. DGA is facilitating two collaborative work groups to define organizational structure and plan the programs to be launched next quarter.

Building Upon Core Values to Pursue an Accountable Care Strategy

Client Profile: PHO in mid-west affiliated with a 300-bed health system Project Type: Healthcare Strategic Planning; Accountable Care and Payment Innovation Challenge: To develop a strategic plan that delivers value to the multiple constituents of the 750-physician member PHO. The plan needed to balance initiatives to address immediate contracting efforts and finances, while concurrently positioning the organization with the resources to implement innovative contracting strategies in the future. DGA Solution and Results: DGA developed a strategic assessment of the PHO, based on data analyses and a series of interviews with key hospital, physician, and PHO leadership. This assessment was reviewed at an initial retreat facilitated by DGA. We provided education and context on the local market, trends affecting PHOs and the opportunities related to health reform, including ACOs. We collaboratively identified a vision for the PHO as a local physician-driven model of care, with a single consistent approach to how care is provided, negotiating with payers to be rewarded for the value it creates. Retreat participants agreed that an ACO opportunity fit with this vision and might be a viable strategy to pursue. In a subsequent retreat, DGA presented a full assessment of the ACO opportunity, including:

The potential size and savings of the ACO
The PHO’s capabilities to operate the ACO
An estimate of additional and ongoing staffing costs
A schedule of expected investment and return
A strategic vision that combined ongoing contracting efforts with ACO development.

Participants agreed that an ACO strategy should be pursued. Physician leadership is excited about this opportunity and is leading an effort to educate peers. The PHO is continuing with detailed planning and is taking the required steps to position itself for ACO contracting.

Review of Proposed Payer Contracts for Major Health System

Client Profile: Major metropolitan health system with three hospitals Project Type: Payment Innovation Challenge: To evaluate the neutrality of a proposed sweeping change to the current outpatient payment methodology by a major local third-party payer. Instead of being paid on a percentage of charges, the health system was to be paid on the basis of a fixed-fee schedule. The proposed fee schedule was intended to be "neutral" with respect to the previous charge-based payment, and DGA was engaged to test that neutrality. The proposed payment methodology for Emergency Department (ED) and Ambulatory Surgery Center (ASC) services provided a single "episode of care" payment for all services to the patient. For these services, the system would be paid the lower of the fee schedule amount or the actual charges for the service. DGA Solution and Results: DGA obtained payer worksheets provided showing the data and the neutrality calculations, and hospital data showing charges and volume by service code. For ASC and ED, we obtained clinical data that allowed us to determine the "severity" of the case (which established the proper payment) and to group together all related services into each "episode". For each system hospital and department, we computed payment under the current and proposed systems. We discovered that the payer had not properly implemented the "lower of charges or fee amount" rule for the ED. Some low-severity cases would actually be paid at a lower amount than computed by the payer, so that the resulted fee multiplier was below "neutral". When the health system informed the payer of the problems, the payer dropped the rule. The work protected the system from incurring a significant loss of revenue in its Emergency Department and Ambulatory Surgery Center.

Evaluating a Pay-for-Performance Option for a Health System

Client Profile: A five-hospital health system, struggling with the financial burden of a large base of Medicaid and indigent care patients Project Type: Payment Innovation Challenge: Create the tools and methodology to allow the client to choose whether to participate in a quality-based pay-for-performance program, and to provide the data to support them in participating if they chose to do so. DGA Solution and Results: We created a detailed simulation model that let the health system assess the potential impact of the proposed agreement. Based on this assessment, the client decided to move ahead with pay-for-performance, and was able to negotiate for performance metrics and goals that worked to their benefit in determining whether they had achieved quality goals. This client now has the tools and skills to manage the on-going modeling and performance analysis it needs to manage this essential payer contract. The health system has reported highly successful financial and operational performance with this payer agreement. The pay-for-performance program has also boosted morale and public image for some of the hospitals by creating a healthy competition to achieve quality goals.