Payer Partnerships and Population Health

He said that the accountable care model represents a massive cultural change for organizations that are moving from managing a short-term episode of care for a short term to managing a population over the long term. He noted that ACOs must work with payer-partners that are willing to be transparent and are willing to share both historical and real-time claims data. “If you are going to manage a population, you must know who the really sick patients are and those who have chronic diseases,” he said.

Underestimating the scope of cultural change is among the most common mistakes of organizations trying to develop an ACO model. Others include contract terms with unrealistic performance expectations, under-investment in operating activities, underestimating the effort to change physician behavior and practice patterns, and poorly designed incentives for providers, and lack of broad buy-in from operational managers.

Joseph F. Damore

Despite the challenges, Damore says the ACO concept is gaining momentum as a way reducing costs and improving quality and improving health. Critical success factors include upfront financial due diligence; the ability to receive and share analyze data on a timely basis; clearly delineated responsibilities of the partners; and a move integrated activities to support population management.

Fairview: Participating in a Range of Risk Models

R. Andrew McCoy is vice president of revenue management for Fairview Health Services, a seven-hospital system with 1,426 staffed beds, and headquartered in Minneapolis. He says that Fairview has been on this journey for several years now. It’s first agreement, about 10 years ago, was with a local Medicare Advantage product, in which it had shared risk with that care.

In 2009, Fairview and Medica, the second largest plan in the Twin Cities market, entered into an ACO contract with shared savings. From there, Fairview began negotiating similar agreements with other payers in that market; and Medica has negotiated similar arrangements with other provider systems, he said. He added that in the Twin Cities market, most of the provider systems have shared savings arrangements with the local health plans.

Fairview participates in a variety of other reimbursement and risk-sharing models. It owns 50 percent of the PreferredOne Health Plan, which has 300,000 enrollees, and it has been taking risk through that plan for many years, McCoy said. It became a Pioneer ACO member in the Medicare Shared Savings Program in 2012, and it has begun setting up new arrangements with health plans, in which it has limited network products with enrolled memberships and is sharing in the premium costs that are generated from the members. It has a contract with the state of Minnesota for about 5,000 state employees, and is sharing risk directly with the state. In addition, the health system provides patient-centered medical home services for which it receives payment from the state Medicaid program.

Because most of Fairview’s effort has been around the total cost of care of the member and not around specific episodes, the health system has had only limited involvement with bundled payments,. Nonetheless it has done bundled payments around tertiary care type services, like transplant services at the University of Minnesota Hospital, McCoy said.

McCoy made several observations about Fairview’s experience. One is that the various payers that the health system has been working with have different levels of capability. Those payers have invested different amounts of their resources into creating analytic capabilities to help Fairview determine which members are at risk and identify variations in cost, so that it can identify potential areas for improvement.

He said that Fairview is starting build penalties for non-performance into its contracts. “We want to make sure that the reporting that we get from the payers is timely and has enough detail that is actionable for us,” he said.

McCoy said that Fairview is working out overlapping duties around care management—a traditional role of health plans that the health system is now taking on as well. He added that the health system is also coordinating reporting requirements, which payers need to maintain their National Committee for Quality Assurance (NCQA) certification.

McCoy noted that the Twin Cities market is largely open-access, so that when a patient signs up with a health plan he or she is free to go to any provider for care. That makes it difficult for a provider system to manage its patient population with regard to risk. “The methodology that we use with the health plans is a retrospective attribution methodology, where the patient is assigned to a system, based on the previous 12 months of activity and where they sought care, but that makes it more difficult for us to identify patients up front, who may need care,” he said. One possible work-around is limited network products that restrict members’ access, giving Fairview greater ability for Fairview to proactively manage the patient’s health because it knows that the patient is in its risk pool, he said.

McCoy noted that Fairview is trying to determine where to cap risk, i.e., figure out how much cost the provider system can take on as medical risk versus insurance risk, and where to set the threshold for the provider system for a stop-loss on per member per year cost.