Cardoza:  We’re not done yet. This isn’t theory. What You Need to Know About Shared Savings Financial Targets. Hill Physicians is an IPA and that is an important and deliberate distinction to make as it relates to the transferability of our experience to ACOs. It was automatic to think, each in our own way, about our version of Dr. Donald Berwick’s “triple aim” in healthcare: better community health through better preventive care; better patient care so everyone gets the right care at the right time in the right setting; ultimately lower cost through improvements. You may opt-out by, Storytelling and expertise from marketers, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation with Forbes Insights. Siemens Canada Limited. So, we decided on what the premium should be and worked backwards from there. What prompted the discussion? We agreed with Blue Shield that we were facing an affordability crisis. A shared risk, shared gain model can go a long way to span the gap between a vision for change and its delivery. We estimate that the project is resulting in savings of about $20 million. I’d add that the physician delivery system is necessarily the engine for the ACO. Assisted Living Shared Risk Agreement. When we explored launching this virtual ACO-like project, we really doubled down. This concept creates crucial upfront alignment among the stakeholders and a true sense of ownership in everyone for the successful delivery of change — whether it is a new product, new technology, a cultural change, or any other transformation. A shared risk, shared gain model can go a long way to span the gap between a vision for change and its delivery. Boynton: CalPERS had some 207,000 members in the Sacramento area in 2009, about 90 percent of whom were enrolled in an HMO. Under the integrated health organization, all patient care would be part of the shared risk model. Keeping patients within our system improved our ability to coordinate care, but it also helped Dignity Health make it work financially and maintain market share. One evolving phenomenon is risk-sharing agreements between providers and healthcare companies, including pharmaceutical, medical device and equipment makers. The $5 million over our $15 million target is being shared among all three players based on our pre-negotiated agreement. EXECUTIVE SUMMARY. Providers in risk sharing arrangements in California also scored 9.2 percentage points higher on average clinical quality performance rates compared to providers taking on no risk via fee-for-service, the … Cardoza:  In a virtually integrated delivery system or ACO, it is inevitable that hospitals are going to experience the greatest stress, especially financially. We were able reach agreement with Hill Physicians Medical Group and Dignity Health so that the project was seamlessly overlaid onto the provider network those members were already utilizing. According to a recent Leavitt Partners analysis conducted April 2016, shared risk and shared savings agreements between providers and private payers covered 17.2 million lives. At the core of the model are the 5 P’s: P1–Professional Pain Management Delivery System, P2–Patient Advocacy & Education Support, P3-Paperwork, P4–Precautions, and P5–Physical Therapy & Integrated Techniques. Siemens Healthineers. What is a capitated risk-sharing model of care? But it does require investment. Darryl Cardoza was recently appointed Chief Executive Officer of Hill Physicians Medical Group, having been serving in the role of Chief Operating Officer. Getting providers hospitals, physicians and plans together, with patients at the center, can be done, and produces results at several levels. It requires a competitive provider community with discreet delivery systems – or at least discreet allegiances if organized delivery systems are not present – and a willingness by the health plan and employer to choose between them. What You Need to Know About Shared Savings Financial Targets. We started to look at our healthcare premiums by doing price-based costing. The HIE facilitated automatic exchange of clinical and discharge summaries, and other information. A Brief History of Risk-Based Contracting Risk based contracting, also known as Value-Based Reimbursement, or VBR, has existed … Boehler said CMS arrived at its participation estimates after stakeholder discussions and based on the model's incentives. Melnick: What was the thinking within your hospital system that led you to become a key partner in this new model? Overall, our goals were to find a way to contain rising costs in a way that is sustainable and to improve integration of care for our members so they don’t have to worry about that aspect of their healthcare. We weren’t successful because we’re here in California or because our medical group is a delegated model. When an organization is hesitant to invest in an expensive, new medical … On the front end, physician communication with the hospital in advance of a patient arriving gave everyone time to prepare. This experience also shows that physicians are excited at the opportunity to shed some of the roles they’ve had to play in recent years and to be reimbursed for designing effective new care strategies. Melnick:  What are some additional challenges that had to be overcome, or ‘take away’ messages that were garnered from the virtually integrated care system project? Becker's Healthcare Websites ... "One-sided" shared savings ... this model strongly incentivizes providers to reduce costs due to the downside risk. Individual, relationship, and environmental factors can increase or decrease the likelihood of violence. We didn’t think we could hit that. Not necessarily an intended consequence, but one we have pleasantly found to be true. In addition, reduced utilization leads to reduced costs, which lowers our cost base. A: In this model of care, payment is not dependent on the number or intensity of the services provided, but rather risk is shared between provider, patient, and ins urance. Medtronic, J&J, St. Jude Pursuing Risk-Sharing Agreements With Hospitals. We looked together at industry trends: California HMO rates were increasing an average of 11 percent per year. Ecolab Healthcare has been exploring risk sharing models with a number of healthcare systems and hospitals. If those savings were not achieved, we all would share the risk to honor the zero premium increase commitment to CalPERS. Recent evidence suggests waning interest, although no information exists that is specific to Medicaid. Siemens Healthineers. Since there is no “typical” hospital and many variables exist (e.g., hospital size, case mix, level of IT adoption) there can be no guarantee that other customers will achieve the same results. November 30, 2015. Some of the partnerships that grew out of the Medicare Shared Savings Program (MSSP) exemplify how risk-sharing agreements can fail if participants overestimate their readiness to take on … This interview was supported by funding from the California HealthCare Foundation. Even if we each work well in our respective silos, we’ll go down the tubes. An analysis of the clinical course and major events of the inpatient stay, integration of labs, identification of discharge clinical diagnoses, and review of medication errors and interactions all were conducted. Lois Green, President/Principal of The Performance Alliance in Woodland Hills, CA, co-authored the Q and A. Ann Boynton serves as the Deputy Executive Officer, Benefit Programs Policy and Planning for CalPERS. Potential upside gains for the provider are often greater than if shared … For the most part, the demonstration project was transparent to our members, except to the degree that some saw a higher level of care coordination or outreach regarding chronic care conditions. Some companies also offer so-called "multi-vendor" MES, meaning a product not manufactured by that vendor can be provided within the service agreement, which enables wider clinical choice to hospitals across many technology suppliers. April 25, 2013. We achieved a 13 percent decrease in bariatric surgery, while helping members shed about 1,500 pounds through our Lose to Win program in three CalPERS sites. Wray: Given hospital costs and the critical role of care transitions, it is important all parties are at the table, working together, sharing information, developing trust, and realigning incentives so they produce the best result for all, most importantly the patient. Bundled payments represent a shared risk between the payer and provider (s) and are considered to be the middle ground between FFS (in which the payer assumes the risk) and capitation (in which the provider assumes the risk). Risk-sharing agreements . Finally, in a highly competitive marketplace such as ours, opportunities to grow or preserve market share were definitely a consideration. If we had to have a “head in a bed,” we wanted it to be our bed. “Early Lessons From A Shared Risk, Integrated Care Organization Serving A Commercial Population, Targeting Health Care's "Triple Aim": Leaders Equipped with Tech and Business Expertise. We were shocked to get the kind of results we got and in a market with some of the lowest utilization and higher prices. Med tech companies find MES agreements provide more stable revenues and enhance customer relationships to be more strategic than transactional. Shared Risk Model Description Comparable design to shared savings, except for potential provider liability if spending exceeds budget target. Growth in the government payer mix and an increased cost burden to the commercial population, decreases in the private payer population, and programs like the Medicare Shared Services Program, have caused joint ventures, partnerships, and co-branding efforts, better known as at-risk … The California HealthCare Foundation has funded a full evaluation of this demonstration, which should be completed in 2013. They might also have a shared risk arrangement for hospital expenses, sharing with the health plan in any differences between actual and budgeted hospital expenses. These cost benefits are due to optimized maintenance models, insurance, training and inventory management, Remain up-to-date (i.e. Melnick:  Why was CalPERS willing to take a chance on this new and unproven approach? In 2010 alone, we saw a 22 percent reduction in patient re-admissions compared with 2009; a half-day reduction in inpatient length of stay; a nearly 14 percent drop in total inpatient days per thousand; and a 50 percent reduction in the number of inpatient stays per thousand of 20 or more days. The partners were all big players in this competitive market, with strong market penetration. The Sacramento integrated delivery system project also gave us a great way to focus on what it takes to develop virtual clinical integration so our members can concentrate on taking care of themselves and their families. At the time, our projections showed that premiums would double within 10 years. If we exceeded the target, we’d share in that success. Risk shared care delivery is the new model of healthcare Dr. Gopal Chopra, CEO, PingMD - Wednesday, April 1st, 2015 Print | Email The model of health care is changing dramatically. We also developed a comprehensive dashboard of leading and lagging measurements so everyone could see our progress. Improved affordability requires engagement with the most vulnerable and high cost patient population. I think we were successful in that. You can’t do everything at once or your people will explode. We set a global three-way budget, but did not change the existing payment mechanisms or contracts. This project also shows that the care delivery system can be profitable and beneficial at the same time. Davila:  In terms of project implementation, we learned three important lessons. Risk-Sharing Contracts Benefit Organizations These contracts can benefit healthcare providers in two key ways: 1. Project HOPE has published Health Affairs since 1981. While risk-sharing is most common for Medicare Advantage members, other lines of business are starting to become more prevalent in risk … Davila:  Without question, the most important element was that all the organizations had to have “skin in the game.” We agreed that everyone needed to have an incentive to drive out costs. It aims to understand their perceptions of the benefits and risks arising from this change. Davila:  The Sacramento experience offer hope for the future of ACOs as an important strategy to improve affordability and improve quality. From a market standpoint, Blue Shield and its partners gained more than 1,500 members in the Sacramento market, which we attribute to the success of the integrated model. It requires committed partners bound together through a shared business model that aligns incentives among them. Payers can establish risk pools which offer incentives for each provider to act in the overall best interest of the patient. Cooperation and coordination with payers makes financial sense over the long term. In other words, they look at the pieces, what it costs for hospitals, for physicians, and so forth, add up all the pieces, and then figure out what needs to be charged to cover all the costs. A: In this model of care, payment is not dependent on the number or intensity of the services provided, but rather risk is shared between provider, patient, and ins urance… We’re an IPA, which demonstrates to the rest of the nation that this can work within the framework of how most medical care is provided in this country. And if multiple facilities were involved, we identified a point person at each and a designated manager over all the facilities who could handle exceptions. Located in the competitive Sacramento market of northern California, the program has been receiving national attention as an example of an innovative shared savings model involving a large insurer—Blue Shield of California; a purchaser—the California Public Employees Retirement System (CalPERS); a physician group—Hill Physicians Medical Group; and a hospital system—Dignity Health (formerly Catholic Healthcare West). He also shared research that shows physician groups have become the most active experimenters in risk-bearing arrangements. We shared the belief that in order to avoid a sustainability crisis, we must also improve the quality of health and healthcare. The Nation's Only Master Class for Healthcare Providers: Beginner to Advanced. But it gets tougher to keep getting more and more savings. At the start of this project, Hill had 3,500 physicians system-wide, mostly in one or two-person practices. Not all financial risk structures are created equal. MES customers benefit from a combination of asset management services customized to fit their needs. We looked at the cost drivers, who is driving those costs and for what. June 15, 2015. This new business model offers a customized solution to increase efficiency and contain costs as part of the Turkish government’s program to restructure the country’s healthcare system. Fee-for-Service: New Report Compares Quality and Cost Differences. Hill was capitated and financially integrated within Hill, and we still had our own silos. This program is an example of how it can work and build trust among providers and everyone benefits in the end. For hospitals, it’s a new profit paradigm if it is not about filling beds, so aligning incentives and sharing risk across all parties is fundamental to making the accountable care concept work. Now in its sixth year, the MSSP has grown from 220 ACOs t… Cardoza:  Our target was affordability. Davila: Having the will and good intention is necessary, but doing the upfront work was essential. This resulted in an increase of our ambulatory surgery volume, for example. Do you have any additional thoughts about how this commercial model can be related to the Medicare market nationwide? The hospital was still paid fee-for-service and the physician group was paid capitation. So we had a pretty strong financial motivation to produce efficiencies. Background:  The Centers for Medicare and Medicaid Services’ designation of 32 accountable care organizations (ACOs) across the U.S. to enroll Medicare fee-for-service patients beginning in 2012 makes ACOs an important feature of the national healthcare landscape–at least for publicly insured patients.However in 2007, Blue Shield of California, along with provider and employer partner organizations, began exploring development of one of the first ACO-like programs in the country to serve commercial patients. The hospitals followed evidence-based protocols, such as for sepsis, and we kept looking for more, like pneumonia, knee/hip total joint. If the address matches an existing account you will receive an email with instructions to reset your password. Among the key levers that made a dent in costs were pre-admission discharge planning, and transparent sharing of data. Davila:  Absolutely, and that’s why each partner got a share of the savings proportionate to their share of the premium dollar. But, in the accountable care model, patient and provider (and patients and communities) agree to operate in a shared-risk model. Shared-savings models are often considered a good first step towards value-based care, as they appear to be the less-risky option for providers: There’s a chance to win without risk … Understanding the overlapping causes of violence and the factors that can protect people and communities can help us better prevent violence in all its forms. Before, one party had the incentive to shift costs to another. The global model has 100% shared risk. Melnick:  How can the Sacramento experience inform ACO development? Glenn Melnick: As I understand it, the story of this innovative ACO-like project began with Blue Shield of California in 2007, well before ACOs had become a feature of the U.S. health care system under health reform. What is a capitated risk-sharing model of care? Cardoza:  Even at the start of the project, Sacramento already had among the lowest medical utilization in the country. Our strategy development was very data-driven. All Rights Reserved, This is a BETA experience. We estimated that it would require about $15 million in savings to keep 2010 premiums at 2009 levels. It is real life and real people. The U.S. shift to value-based care is transforming relationships. For example, we analyzed chronically ill members and found that the top 5,000 members accounted for 75 percent of the total pilot population spending. We are pleased with what we’ve accomplished, but there is still much to be sorted out and improved. Melnick:  So you set a very ambitious goal and essentially had to reverse engineer to accomplish it. But, as is typical, only the physician component is paid on a risk basis, with hospital care paid on a fee-for-service basis. Long term initiatives can run concurrently. Melnick: What I’m hearing you all say is: it’s difficult, but it is do-able. Most care is not delivered in a staff model. Melnick:  Would you describe some of the specific initiatives in a bit more detail? How did you go about moving from idea to implementation? Under the integrated health organization, all patient care would be part of the shared risk model. We are very pleased with the results thus far. It is virtual among the three of us--Dignity Health, Hill Physicians and Blue Shield—but it is also virtual because Hill is an IPA, not a staff model. The population served by the virtually integrated health organization includes approximately 42,000 CalPERS employees and their families covered by Blue Shield. Population health requires data and analytics to identify at-risk patients and target services that reduce their use of expensive and low-quality care. Glenn Melnick ([email protected]) is a professor and BlueCross of California Chair in Health Care Finance, and Director of the Center for Health Financing, Policy and Management at the Sol Price School of Public Policy, University of Southern California in Los Angeles. The health plan and providers assumed any down-side risk; they also had the upside potential to share excess savings commensurate with the premium share and cost levers each controlled. Though we may have worked together for 15 years, we really didn’t work together. A discharge planner initiated this process on day one or 48 hours after admission to coordinate services needed on discharge. John Wray is the former Senior Vice President of Managed Care at Dignity Health (previously Catholic Healthcare West). It’s also important to continue to experiment and test new things. We achieved these and hope to see continued benefits from this demonstration over time, even as we begin to replicate in other markets. It’s one thing to talk about doing that; it’s another to actually do it. But interpersonal communication was still essential. April 26, 2019 - Financial risk sharing in healthcare led to total costs of care being 3.5 percent lower in 2017, reveals the third edition of the California Regional Health Care Cost & Quality Atlas. We've developed best-practices and … When California providers share in the risk through a capitation payment model, better value and health outcomes are achieved than with a fee-for-service model, according to a new report from the Integrated Healthcare … While this pilot was being designed, Dignity Health was at the table so we had an opportunity to shape and buy into the project at all levels. That would be equivalent to nearly 50 percent of the median income of a Californian in 2010. Not all financial risk structures are created equal. One distinctive feature of such contracts is that they typically include performance improvement programs like workflow redesign, utilization management, and fleet optimization. Connectivity and access to the same data was much harder than we expected it to be. Companies that provide MES contracts offer to manage all equipment concerns such as clinical selection, procurement, installation, user training, on-site expertise, maintenance, and ongoing technology refreshes. But all of our organizations also are non-profit, with deep ties to the community. Full-risk capitation arrangements involve shared financial risk among all participants and place providers at risk not only for their own financial performance, but also for the performance of other providers in the network. One of the biggest changes has been how we do business with one another. Enter your email address below and we will send you the reset instructions. Every market is different. The healthcare market is unique as you cannot buy, sell, or trade health. Shared savings ACO model definition: ACOs in the Track 1 model can share savings with the government if they meet certain quality standards and other targets.However, similar to providers in traditional fee-for-service outside alternative payment models, they are not at risk for increased Medicare spending for patient care, though increased spending means they are ineligible for shared … Boynton:  These results show what happens when everyone works in a coordinated way. The project provided a way to test the promise of major redesign of system incentives. Shared risk means distributing the cost of health care services across large numbers of participants - including people of various ages and health conditions. Innovation in health care requires a complete re-thinking of the health care business model. The long-term nature of these contracts allow MES providers to bring in experts to work with hospital staff to improve clinical, financial, and operational aspects and implement programs using effective tools like data enabled benchmarking and performance dashboards. We worked with nurses in the discharge process to do teach-back so that when patients went home, they were fully informed about their care and could be active participants in their recovery. Each alternative payment model has its own Our goal is to have 20 such projects across the state by the end of 2015. Several major med tech and medical device companies, for example, have moved to negotiate deals[1] that share the risks of technology obsolescence and enable them to work closely with the healthcare providers to improve outcomes through better workflows and appropriate technology. For Dignity Health, it was a natural. This is integration is across all partners. Blue Shield has more than 3.4 million members in California, so imagine the potential. Juan Davila Senior Vice President, Network Management, Blue Shield of California:  As part of our strategic planning we forecast health care costs. Develop CalPERS-specific utilization management through a coordinated operational infrastructure. Fee-for-Service: New Report Compares Quality and Cost Differences. Under a population health model, providers manage care—from preventive and maintenance care to acute care and long-term care–for a defined population. The multiple sclerosis agreement in the UK is a role model example for a perfect fit of a risk-sharing deal. Abstract Purpose - The purpose of this paper is to explore the experiences of staff in a large, public health service involved in transitioning support services to a shared services model. (2016). 3. Let’s make necessity the mother of invention. 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