What Are Bundled Payments and Are They Here to Stay?

Key Takeaways

  • Current vendor solutions are limited and generally require additional advisory services.
  • Few available solutions offer workflow integration, especially across post-acute care settings, to assist in the execution of bundled episodes.
  • Larger HCOs will weather the shift to bundled payments more easily than their smaller counterparts, especially as bundled payments begin to scale across multiple service lines.

Bundled payments have been looming on the horizon for healthcare organizations (HCOs) at varying degrees of intensity for at least the last thirty years. As healthcare costs have continued to rise, payers and providers are increasingly viewing bundled payments as a viable alternative to fee for service (FFS) payment structures.

Recognizing that this trend is here to stay, we authored the upcoming report, Bundled Payments: Current Tools and Strategies, to help HCOs understand the impetus behind bundled payments as well as provide a detailed perspective on how healthcare information technology (HIT) vendors are prepared to support this payment modality transition.

The Drive for Bundled Payments

Bundled payments are positioned to serve as a transition between FFS and capitation. By definition, a bundled payment links multiple provider payments into one care management and payment system during a specific episode of patient care during a defined period of time. There are two types of bundles: prospective and retrospective.

A retrospective bundle incorporates a reconciled budget with the payer or “convener” as a financial integrator of the fees paid out instead of putting the responsibility upon one provider. This arrangement is built upon a FFS system and is retrospective because providers first receive their usual FFS payments, and then they receive an additional payment after their total costs are assessed and if cost savings were generated. However, cost assessments can take a year or more to complete after services are initially provided.

A prospective bundle pays a fixed price for a set of services covered in the bundle before all of the services are rendered. An average cost per episode of care is determined based on historical data and/or regional costs and payment is delivered to providers when an episode is initiated, rather than waiting until the entire episode has been completed. Adjustments to payments are made after the fact to account for outliers, excluded episodes, and other factors.

Retrospective payment bundles are the most widespread bundled payment system primarily due to the abundance of participation in the Bundled Payments for Care Improvement (BCPI) Initiative and the Comprehensive Care for Joint Replacement (CJR) model. Retrospective payments for bundles are also easier to understand, administer, and execute, which is why they comprise the majority of bundled payment financing arrangements to date.

A CMS-led Initiative

CMS is still navigating how to implement this payment structure while not alienating providers, and BPCI was an attempt to find a middle ground that is palatable to providers while capitalizing on the cost savings bundled payments offer payers.

Unfortunately, determining this middle ground has led to CMS sending conflicting messages to the industry. In late 2017, CMS rescinded rule changes that required mandatory bundled payments for providers to test the effect bundled payments would have on cardiac and orthopedic care. CMS noted that responses from providers to the mandatory bundled payments cited concerns over both the process by which costs for episodes were determined as well as the ability for smaller HCOs to comply with the process.

Despite these setbacks, CMS is not withdrawing support from bundled payments as a whole and has instead created the BPCI-Advanced, a voluntary iteration of BPCI with the same goal of aligning incentives among health care providers. Early adoption of the BCPI-Advanced program has been robust although it remains to be seen how many of these providers might exit early next year. Additionally, HHS Secretary Azar indicated last month that mandatory bundles are coming in the near future for radiation oncology and possibly other providers as alternative payment models.

Commercial payers have shown interest in bundled payments, but have been slow to introduce the practice. Although we have seen increased adoption from some payers, the general consensus is that these organizations will wait until the concept is proven before devoting resources to the change. We might have to wait until bundled payments are once again mandated by CMS before commercial payers adopt the model.

Provider Reservations

While the attitude of providers towards bundled payments could be best described as “wary,” there is still opportunity for healthcare providers to lower their costs while improving the standard of care. Yet, success with bundled payments requires close coordination between multiple providers over a varying timespan, something that many providers struggle with.

In order for bundled payments to work for both patient and provider, an HCO needs to have the ability to identify who is eligible for bundled payments early in the treatment cycle through monitoring and tracking. They also need to have a network and processes in place to engage affiliated and community providers that are necessary to the bundled payment process. Not surprisingly, many HCOs are hesitant to invest the organizational resources necessary to establish this level of collaboration.

Specialty physician groups that are only focused on engaging in one or two retrospective bundles will be able to change more rapidly but over the longer term, it will be harder for smaller HCOs to effectively scale bundled payments across multiple services lines within their organization. Another advantage larger systems have is systems and processes for dealing with post-acute care needs that are critical for succeeding in bundled payments.

In general, large HCOs with wide networks and established reporting and monitoring processes are better equipped to handle the transition to bundled payments and effectively scale these program although several specific factors (e.g., episode type, target price, exclusion criteria, risk adjustment) will affect how a provider performs.

The Tools for Bundled Payments

Our report focuses primarily on identifying the IT environment that supports, and will support, bundled payment plans. We were able to identify a number of key issues that software solutions must address, including patient tracking, care process redesign, and physician engagement. As of the writing of this report, no vendor offers a comprehensive solution to the myriad reporting and management challenges that bundled payments present.

We did identify commercially available solutions to deal with cost and quality reporting requirements inherent in the bundled payment process. Unfortunately, HCOs are going to have to develop piecemeal processes that incorporate multiple systems until vendors are able to provide a robust comprehensive solution. We expect that as bundled payments garner more support and interest, HIT vendors will recognize the market opportunity and develop systems to specifically address these issues.

Conclusion

The question is not whether bundled payments are going to see greater utilization, but rather to what extent will bundled payments affect healthcare payers and providers? Providers especially will need to have a plan and processes in place to reduce risk to their revenue streams as bundled payments become more ubiquitous.

Our report, Bundled Payments: Current Tools and Strategies, outlines how providers can navigate these changes and identifies IT solutions that may assist them. It provides detailed insight into what bundled payments are, how to execute them, and the challenges associated with their orchestration. Furthermore, it contains comprehensive vendor profiles and evaluations of the solutions they offer, which we hope will assist providers as they prepare for this transition.

Sign up today for updates about when the report is available for purchase, as well as admittance to a webinar that will supplement our findings.

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Did You Know?

How will Proposed Changes to CMS Telehealth Reimbursement Affect Adoption?

Key Takeaways

  • CMS-proposed rule changes extend Medicare Advantage and Part D plan coverage for telehealth services starting in 2020
  • Proposal includes enhancements to the Star Ratings methodology, which include updating the cut-point determination methodology as well as adjustments for Star Ratings in times of uncertainty, such as hurricanes.
  • Under the proposed changes, starting in 2019 in Medicare FFS, CMS will reimburse for virtual check-ins, evaluation of patient submitted photos, and prolonged preventive services regardless of patient location and care facility.

What the Rule Changes Mean

doctor cares for medicare patient via telehealthOn Friday, October 26, the Centers for Medicare and Medicaid Services (CMS) announced several rule changes that affect how telehealth services will be covered under Medicare Advantage (MA) and the Medicare prescription drug program (Part D). These changes are in direct response to the Bipartisan Budget Act of 2018, which eliminated historical restrictions on telehealth reimbursement, and are intended to “improve quality of care and provide more plan choices for MA and Part D enrollees.”

Also included in the proposed rule changes are adjustments to methodologies and processes that should improve access to care, as well as recover funds from payments improperly applied to insurance companies. We view this as a positive development, especially as it relates to current and projected physician shortages. Greater reimbursement should allow for providing some basic services through telehealth applications, it is going to equip providers with the ability to “do more with less.”

Our recent report, Telehealth Beyond the Hospital, provides a detailed analysis of the telehealth market as a whole, but we felt it prudent to prepare a supplemental post to give a brief examination of how these rule changes could potentially impact the provision of healthcare services.

Easing Reimbursement via Classification

Telehealth services have previously seen limited implementation by MA plans because they have been traditionally classified as services covered by “supplementary medical insurance.” These new rule changes shift the classification of telehealth services to the “basic benefits” category. We have witnessed lagging adoption rates of telehealth technologies over the last several years, and view the inclusion of these services into the basic benefits category as a necessary step to increase their rate of use.

CMS expects that the inclusion of telehealth services in the basic benefits category will spur more MA plans to offer these benefits beginning in 2020, and increase their support of these services in subsequent years. This isn’t happening in a vacuum, and is in line with the broader push to promote telehealth services as viable alternatives and supplements to traditional care options. The move towards parity between physical visits and telehealth services has shown to increase reliance on telehealth services before: Michigan has seen a “77.5% increase in Telemedicine encounters after supporting service parity in telemedicine.”

This isn’t happening in a vacuum and is in line with the broader push to promote telehealth services as viable alternatives and supplements to traditional care options.

Driving Near-Term Adoption: Patient Satisfaction and Ease of Access

Recent surveys have shown that patients are growing more and more amenable to remote care options, especially if it reduces their out-of-pocket costs. The opportunity cost of non-reimbursed care is one of the primary barriers to provider adoption of telehealth services, and by removing this barrier we will hopefully see further alignment between providers and patients on this issue.

We see this alignment as a part of the greater industry shift towards value-based care (VBC). As we noted in our Patient Relationship Management (PRM) Market Scan Report, engagement was one of the areas where adoption of these new technologies for VBC was exceeding expectations. Increased reimbursement for telehealth should continue this positive trend and hopefully allow for the realization of some PRM benefits.

We predict that the CMS rule changes will encourage diversified managed care organizations (MCOs) to expand their current commercial telehealth contracts to their MA business and also potentially drive the adoption of telehealth offerings among that trend.

Impact on Providers and Vendors

These new rule changes have a large potential upside for all players in the telehealth market, but it is important to note that telehealth adoption has been incremental over the last several years and there is no reason to predict a stark diversion from that trend.

We predict that the CMS rule changes will encourage diversified managed care organizations (MCOs) to expand their current commercial telehealth contracts to their MA business and also potentially drive the adoption of telehealth offerings among that trend.

Vendors looking to capitalize on this incremental market growth are going to have to navigate the differing needs of commercial and Medicare providers. For commercial providers, telehealth is seen primarily as a cost-savings and efficiency tool. For Medicare providers, they are looking most closely at telehealth as a way to promote post-acute care management and patient engagement. To effectively sell to Medicare providers, vendors are going to have to tailor their tools and pitches to hit on the appropriate pain points.

Conclusion

As the costs of chronic condition management skyrocket, looking for innovative telehealth solutions is of paramount importance.  Reclassification as basic services and simplification of the reimbursement process will certainly help vendors supplying these solutions overcome potential buyer uncertainty on the ROI of their products.

The most important takeaway from these rule changes from an HCO perspective is that the future of value-based care is arriving quickly. HCOs need to prepare for this future by refreshing their care delivery strategies, especially as it relates to primary care. The primary care environment is changing, and HCOs need to closely examine what they need to provide in terms of physical locations, providers, and services for their patient populations. They then need to craft strategies to meet these evolving requirements.

How to Succeed with a Provider-Sponsored Medicare Advantage Plan

By Matt Cox (Chief Marketing Officer, Lumeris) and Nigel Ohrenstein (Senior Vice President and head of Market, Lumeris)

doctor consults with Medicare Advantage patient

Health system and health plan leaders across the country are asking the same question: how will our organizations survive and thrive in a value-based world? As the shift to lower-cost settings accelerates and the population becomes older and sicker, organizations are seeking new ways to manage costs, generate income and control quality.

For many organizations, launching a Medicare Advantage (MA) plan paves the way for value-based care models that reward delivering better care at lower costs by combining clinical and financial expertise. As enrollment in MA continues to outpace traditional Medicare enrollment – with national MA penetration growing from 30 to 50 percent in the next 10 years – organizations must have a strategy that enables success in the future.

Benefits of a Medicare Advantage plan

MA is increasingly viewed as a potential growth area for organizations. While launching a plan certainly carries risk, it also offers significant upside for providers and payers to successfully manage the health care needs of members.

With an average annual premium of $10,000 per member according to a Lumeris study, MA enables provider-sponsored plans to manage the risk of a population. Access to comprehensive claims data can be used to identify high-risk patients and areas of high utilization, supporting an organization’s population health efforts and steering patients in-network. With aligned incentives, organizations can innovate and invest in care delivery with tools and workflows that support high-value, appropriate care.

Further, MA’s sophisticated risk adjustment methodology supports premium payments that reflect the expected cost of providing medical care to each member, including those with complex conditions. Proper risk adjustment requires providers to capture diagnoses accurately and completely to support reimbursement.

Finally, with Star ratings, well-managed MA plans that earn 4- to 5-Star ratings can attract more members and revenue through enhanced benefits. Highly-rated plans receive performance bonuses that bring in an extra five percent a year, which are used to provide additional benefits to members.

Consider creating a plan built around a collaborative model: one that aligns incentives, bolsters the provider-payer-member relationship and enables delivery of high-quality, cost-effective care.

Building blocks for a provider-sponsored plan

Establishing a provider-sponsored MA plan is a significant undertaking. Given the large investment of time and money, organizations considering launching a plan must ensure they have several foundational elements in place. Consider creating a plan built around a collaborative model: one that aligns incentives, bolsters the provider-payer-member relationship and enables delivery of high-quality, cost-effective care.

Organizational and market strategy

Before launching a plan, organizations must evaluate their tolerance for risk and ability to capitalize said health plan. A strong brand reputation in the market is obviously crucial, but additive resources and significant infrastructure are also required. Organizations should also consider market dynamics, population growth and reactions from key players – competing systems, provider groups and other payers – and how these factors impact their strategy as a differentiated plan offering in the market.

Operational experience

Considerable infrastructure is required for claims processing, actuarial analysis and utilization management, among other payer functions, which can be leveraged from working with a collaborative payer or operating partner. In MA, expertise in Star ratings, risk adjustment, sales and marketing, compliance and plan design add further complication to successful operations. To build the right foundation, provider-sponsored plans must focus on enabling the provider-payer-member relationship, often requiring innovative processes on everything from data transparency and aligned incentives, to coordinated care management programs and shared governance.

Engaged network

Core to a collaborative model is ensuring organizations are aligned. Managing a health plan requires organizations to focus on improving patient outcomes and monitoring the entire population, not just the patient in front of them. Fostering the right network and governance, aligning incentives to create mindshare, sharing best practices and information, and supporting new workflows and behaviors are all critical to success in value-based care delivery.

Partnering for success

Before launching a collaborative MA plan, organizations must assess capabilities to identify gaps in knowledge, expertise and operations. For most organizations, working with an operating partner is more effective than building internal MA competencies from the ground up. Finding a partner with skill and experience in launching a collaborative plan can enable organizations to gain a competitive advantage more quickly. It can improve the likelihood of success while limiting risk and enable providers to focus on their core strength of delivering high-quality, high-value outcomes.

One example of bringing these necessary capabilities together is the newly announced collaboration between Cerner, a global leader in healthcare technology, and Lumeris, an award-winning health plan and value-based care managed services operator. Under the relationship, the companies will provide a suite of offerings under the name Maestro Advantage™, designed to enable health systems and health plans to drive success in value-based arrangements through population health service organizations or provider-sponsored plans. The offerings combine Cerner technology and Lumeris operational services aiming to streamline redundant processes that burden members, payers and providers, including lengthy claims processing and reimbursement cycles, and obstacles to sharing data and records across any electronic health record in the network.

This post originally appeared on September 19, 2018, as the second in a series of sponsored guest blog posts on our Convergence conference blog. 

Future Winners in Accelerating Shift to Value

Last week, CMS released its proposed rule (beware – in good government fashion it’s a whooping 607 pages) for the Medicare Shared Savings Program (MSSP) Accountable Care Organization (ACO) program. CMS is taking a big leap forward with this rule on the path to value-based care. The big leap? Moving existing MSSP ACOs from all upside contracts (no risk), to taking on an ever-increasing portion of risk (downside, e.g. reimburse CMS if targets not met). This is a real wake-up call for providers, especially hospital-led ACOs, who have by and large failed to meet targets in current MSSP ACO contracts.

What Got Us Here

The advent of ACOs is a byproduct of the Affordable Care Act (ACA), wherein the Obama administration was seeking new payment models to shift Medicare spending from fee-for-service to value-based care (VBC). To get providers comfortable with the concept, various ACO models were deployed with MSSP the most popular – currently 86% of all Medicare ACOs.

Within the MSSP ACO a provider organization could choose one of three tracks, but only Track 1 carried no downside risk. Logically, nearly all providers chose Track 1 initially and today 82% of MSSP ACOs are still in this track. Unfortunately, in 2016 this track was a money-losing proposition for CMS, as hospital-led MSSP ACOs racked up losses for CMS that were higher than the savings from physician-led ACOs.

Provider readiness to take on true risk has always been the rub…With these proposed rules, CMS is going beyond meeting providerswhere they are but pushing them forward on the path to value.

Fast Forward

At the recent Leavitt Partners conference, attendees were briefed on the political climate in Washington. Despite all the political rhetoric, there are three core healthcare principles that are non-partisan:

  • Fee for service (FFS) is the problem.
  • Integrated care is better than disparate care.
  • There is a strong need for valid measures to score value.

This event also emphasized that the federal government must take the lead in pushing the industry to VBC, again for a couple of simple reasons:

  • CMS is the largest payer in the country, representing over half of all healthcare spending. Money talks.
  • Unlike employers, CMS has beneficiaries in every region of the country, encouraging and enforcing nationwide measures of value.

The MSSP ACO proposed rules are just another step, of what will likely be many, which CMS will have to take in its attempt to bend the cost curve. Rather than wait for providers to voluntarily accept and migrate to true risk – something we saw little of in the former MSSP ACO rules – the proposed rules foist that risk upon providers. Granted, providers are given one to two years in a “glide path to risk” in the new rules, but risk is definitely in their future; by contract year five, an MSSP ACO will take on enough downside risk to qualify as an Advanced Alternative Payment Model (APM) under MACRA.

In summary, CMS proposes ending the current Tracks 1 and 2 replacing them with a new 5-level BASIC track. The first two levels of the BASIC track begin with no risk to providers but annual auto-advancement to higher risk-reward layers will advance providers into risk sharing. Former Track 3 will become the ENHANCED track. The current 3-year agreement period changes to 5-years minimum and national inflation metrics will be replaced with regional metrics.

Somewhat depressingly, the total calculated projected 10-year savings for the new MSSP rules is a paltry $2.2B.

Winners and Losers Aplenty

The proposed rules are likely causing a lot of angst in the executive offices of many a hospital, but these rules will have winners as well.

 

Table 1: Winners and Losers in Proposed MSSP ACO Rules*

From our vantage point, provider readiness to take on true risk has always been the rub. The recent NAACOS survey found that 71 percent of Track 1 MSSP ACOs scheduled for renewal this year were unlikely to do so if they had to assume risk. This is likely an inflated number – when push comes to shove, far more will renew – but this is a barometer of provider sentiment and overall readiness even among those with some experience with the program.

Across the country, healthcare is anything but consistent. As Gary Loveman, former executive vice president of Aetna, pointed out at our Convergence conference last year, one has to meet providers where they are. With these proposed rules, CMS is going beyond meeting providers – but pushing them forward on the path to value. For most providers who take this path, it will be challenging, and trusted partners with previous experience in risk-bearing ACO enablement will be essential.

Without a doubt, something has to be done to bend the cost curve – and, to its credit, CMS is taking action. However, will the action that CMS is taking here with the MSSP ACO program be enough to fend off its critics, especially if projected savings are so minuscule? We’re really unsure, but one thing we are certain of is that CMS is the only entity in this market that has the ability to do something on a nationwide scale. If not CMS, then who?

 

* Reducing the Risk – Vendors Enabling the ACO, Chilmark Research Market Scan Report, March 2017

The Growing Role of Social Determinants Data in Healthcare

By Paul Nardone, 2018 Research Intern

Key Takeaways:

  • Healthcare stakeholders recognize a social determinant of health when they see it, but organizations differ on which measures are important. Agreement about a core set of SDoH would help implementers better utilize this data type.
  • SDoH and patient health are correlated, but determining causality remains challenging. Lack of knowledge about causality hampers providers’ ability to translate SDoH data into effective interventions.
  • Leading public health stakeholders are using SDoH to fund organizations not traditionally involved in healthcare delivery to improve social drivers of cost.
  • Data brokers are selling SDoH data. Widespread usage by payers and providers, coupled with interest from social media giants, could trigger increased market and regulatory scrutiny.

Marshalling aggregated EHR and claims data for use in applications is an ongoing challenge for most healthcare enterprises. Social determinants of health (SDoH) are a relatively new and amorphous data type that show great promise for contributing to a range of applications.

As healthcare shifts from volume to value, SDoH present opportunities at both population and individual levels. Patient cohort discovery in PHM programs could become more precise and accurate using relevant SDoH. SDoH offers the potential to “better predict potential healthcare outcomes across disparate populations.”

Implementers will need more experience with [SDoH] data before it becomes a routine inclusion in HIT applications. Otherwise, SDoH risk becoming just another unruly data source.

Providers and payers hope to achieve a better understanding of risk, better patient engagement, and more effective use of existing treatment resources. Questions remain about what qualifies as a SDoH, where to source such data, and how to use it. More experience will be needed before SDoH delivers broad-based benefits at both a patient and population level.

What is a Social Determinant of Health?

The CDC defined SDoH as “conditions in the environments in which people are born, live, learn, work, play, worship, and age that affect a wide range of health, functioning, and quality-of-life outcomes and risks.” While most organizations generally agree with this definition, different organizations report drastically different measures as important to health status.

A quick look at existing lists of SDoH confirms that there is no consistent, widespread acceptance for a single set of factors. For instance, the Kaiser Family Foundation reports 48 social determinants related to individual health, ranging from years of schooling to access to a full-service grocery store. Meanwhile, LexisNexis offers 442 measures that relate to patient health.

No governmental or commercial authority has established a definitive list with strong industry support. The CDC, Canadian government, and WHO have all produced reports outlining their take on which SDoH should be tracked, accompanied simply by policy and practice recommendations. For now, providers and payers are bombarded with different views of the sources, uses, and value of SDoH. Agreement on which SDoH are important would help implementers understand how and where to use this relatively new data type.

How Do SDoH Relate to Patient Health?

Despite uncertainty about which SDoH are relevant, many stakeholders believe that SDoH can help improve population and patient health. However, while most people accept that there is a correlation between SDoH and health outcomes, determining causality between specific kinds of SDoH and specific health outcomes remains challenging.

The correlation between an individual’s years of schooling completed and their probability of smoking provides a perfect example. While more years of education correlate to a lower probability of smoking, more education does not cause anyone to smoke less, and smoking does not cause anyone to drop out of school. Research shows that the differences in smoking behavior at age 24 are accounted for by differences in smoking behavior at age 17, implying that some third factor drives both the probability of smoking and the years of completed education. As a result, interventions intended to decrease the probability of smoking by increasing the years of education an individual completes would be ineffective.

While providers accept that SDoH are often correlated to health outcomes, lack of knowledge about causality hampers efforts to translate those correlations into effective interventions. In addition, SDoH data is not guaranteed to contribute in all contexts. A 2017 study showed that using SDoH does not enhance predictions about a patient’s need for social services beyond what EHR and claims data already provide. Implementers could use guidance on whether certain kinds of SDoH enhance an application.

SDoH Contributions to Public Health

SDoH is connecting healthcare stakeholders with organizations not previously thought of as directly involved in healthcare delivery. For example, after determining that better access to fresh produce, stable housing, and preventive screenings improves patients’ health, UnitedHealthcare awarded $1.95 million to organizations that could help. One recipient, Feeding Wisconsin, used the funds to expand support for local food banks.

Both the U.S. and Canadian governments have initiatives that mirror what UnitedHealthcare has done, but on a national level. Canada’s budget document, Growing The Middle Class, “detailed an unprecedented investment of $8.4 billion over five years in housing, education and child welfare for Indigenous peoples, and $2 billion to end longstanding boil-water advisories on reserves,” specifically citing SDoH as a reason for the investment. The U.S. initiative, Healthy People 2020, seeks to address SDoH by promoting economic stability, education, social and community context, health access and education, and built environment through funding provided by the Office of Disease Prevention and Health Promotion. These large initiatives fund smaller groups and programs that already have traction in addressing SDoH.

Accessing Relevant Social Determinants Data

Sourcing relevant SDoH data requires payers and providers to engage in a different process from the collection of traditional health data. In recent years, data brokers such as LexisNexis, Experian, and Axciom have been controversially selling SDoH data derived from a variety of consumer data sources. These companies collect vast amounts of data and create patient “health scores” similar to credit scores. Using these health scores, payers and providers can identify at-risk populations and prescribe personalized treatment options for individual patients.

Consumer understanding of the existence of this data remains low. SDoH data has not historically been considered directly pertinent to healthcare and is not subject to HIPAA. The recent usage could trigger more market or regulatory scrutiny of SDoH.

The number and variety of organizations offering social determinant data is increasing. The social media giants have an interest in further monetizing the data they have collected. Absent evidence that such data helps providers to make more informed decisions about patient health, market acceptance is not assured.

 

Ultimately, the interest level and desire to leverage SDoH in health IT is increasing rapidly. HIT vendors are responding slowly by including this data type in different products, but still in narrowly defined ways. Wider availability of a variety of SDoH is also fueling interest and experimentation. Incorporating SDoH into existing stores of EHR and claims data at the patient or cohort level introduces another layer of complexity for developers. Implementers will need more experience with this data before it becomes a routine inclusion in HIT applications. Otherwise, SDoH risk becoming just another unruly data source.

Key Takeaway

  • PHM products are maturing in spite of uncertainty about payment system.

The Chilmark Research 2018 Population Health Management Market Trends Report, long in development, will be released immediately before HIMSS in March. This report profiles 25 vendors and describes the technology landscape for enabling a population health management (PHM) strategy.

Why a PHM Market Trends Report Now?
We hesitated to release a report on this emerging market for several years. Until recently, most available solutions were not able to fully address the range of provider requirements for PHM. The earliest solutions focused on the needs of Healthcare Organizations (HCOs) caring for Medicare Shared Savings Program (MSSP) patient panels. Over time, vendors added functionality to support bundles and private payer requirements requiring a good understanding of quality, costs, and utilization.

Another reason we held off with this report had to do with provider readiness. Healthcare delivery organizations needed time to incorporate these capabilities into their processes and workflows. The earliest HCO adopters of PHM relied on a variety of manual processes to conduct their PHM programs. Most HCOs lacked extensive experience with one or more of the constituent functional domains of PHM to fully utilize and benefit from the technology.

By early 2018 vendors had amassed significant experience building, managing, and supporting PHM enabling technology for providers and payers. Virtually all HCOs realize that PHM will be an increasingly important part of their operations and influence a significant percentage of their future revenue streams.

Virtually all HCOs realize that PHM will be an increasingly important part of their operations and influence a significant percentage of their future revenue streams.

Uncertainty About Value-Based Healthcare Makes Providers Pause
PHM’s close association with value-based care and payments cements its reputation as both a key strategy and technology enabler for transforming the U.S. healthcare system to achieve the goals of the Triple Aim. The PHM market’s growth closely mirrors the growth in value-based reimbursement (VBR). The pace of transformation to the payment system has not been smooth, and the Centers for Medicare and Medicaid Services (CMS) has sent mixed signals about its future in 2017. The business mandate for providers to embrace PHM slowed in the last 12-18 months. Provider concerns about revenue or market share losses have dampened enthusiasm for changing the fee-for-service (FFS) status quo. But the overall trend is moving in one direction: Away from FFS.

While uncertainty about the fate of value-based payments restrained provider’s embrace of PHM, the number of accountable care organizations (ACO), clinically integrated networks (CIN), and other risk-bearing programs continues to grow. Providers of all sizes have come to terms with the inevitable move to value-based contracting. ACOs will serve 10.5 million Medicare patients this year, a 17% increase over 2017. Delivering care to this expanding panel of patients requires providers, and in particular primary care providers, to organize themselves to make their PHM efforts successful. A variety of community based organizations, such as regional or state-level health information exchange organizations and to some extent payers, are also beginning to see the need to build and run PHM programs for, or in concert with, their provider partners.

Evolving Perception of PHM and the Four Technology Domains
PHM means different things to different people in 2018. Vendors built on products for pay-for-performance (P4P) programs to support CMS’ original set of ACO programs. Vendors, as a result of both organic development and acquisitions, now offer more PHM related functionality then they did a few years ago. While it is too early to say that PHM requires an established and fixed set of capabilities, the general outlines of the technology to enable a PHM strategy are broadly understood to fall into four technology domains:

  • Analytics
  • Care management
  • Patient engagement
  • Data aggregation

Most of the vendors in this report have special expertise with one or a few of these domains.

As recently as a few years ago, analytics products provided the key enabling function for most PHM programs. While this functionality has an indispensable role in PHM programs, its core functionality – cost and utilization analytics and clinical quality monitoring – is arguably the most mature aspect of existing PHM solutions. Attention has shifted somewhat to care management. The value proposition for care management stems from a perception that these workflows are the “tip of the spear” for PHM generally. Care management products are often the central tool for organizing and running PHM programs on a day-to-day basis. Payer-oriented solutions with case, utilization, and/or disease management legacy have transferable skills for clinically oriented PHM. These vendors are beginning to make inroads into provider markets. Care management capabilities are less mature than analytics but are undergoing the most rapid pace of change by vendors.

The least mature aspect of PHM from a functional standpoint is patient engagement. In most of the solutions described in this report, the care management product supports some level of interaction between patients and a care team, mostly relying on a patient portal or app. Telephonic interaction with patients still seems to be the dominant method for most providers.

Data aggregation and data source management are core competencies for PHM. They form the foundation for all of the other domains of PHM. Managing diverse data sources is complex in all PHM sub-markets and for every organization developing PHM programs. Transactions, messages, documents, and files flow in from different organizations. These sources need to be reconciled, deduped, monitored for quality, and have all of their various records matched to patients, providers, organizations, health plans, and contracts. Organizations express this data using a multitude of formats and vocabularies. Vendors must constantly monitor these transfers and streams for quality, timeliness, and completeness. Every vendor in this report has skills in this regard but they differ in the scale at which they can operate. The number of organizations and sources from which they can ingest and process data is shaping up to be an important differentiator for providers. This set of capabilities is marked by fairly mature technologies and techniques but they are being deployed against a rapidly expanding universe of health-related information.

EHR Vendors Do Not Own the PHM Market
No vendor today has anything like a “PHM Platform.” The largest EHR vendors aspire to develop such an offering and have the resources to pull it off. Hospitals and health system turn to these vendors for all of their PHM needs, but it is not unusual for them to assemble their own solution from a variety of vendors supplemented with internally developed capabilities.

But these offerings come with price tags with little appeal outside of the large HCOs. Independent physician practices, most with limited budgets and no significant IT development staffs, are more interested in turnkey capabilities from a single vendor. Often this means their EHR vendor, but just as often it means an independent vendor with a full range of PHM capabilities. While EHR vendors are fielding increasingly full-featured solutions, they have not cornered the market.

 

Bottom Line
Not all providers and payers have fully embraced value-based care and payments but the need for, and interest in, enabling solutions for PHM continues to grow. Armed with this report, providers can distinguish between the capabilities and services needed to help them meet their complex information and workflow needs for multi-disciplinary, multi-organizational teams striving to optimize the health of populations. This report will help providers sort through the different vendors and solutions in this confusing market.

Prior Authorization: Productivity Sink In Dire Need of Convergence

Prior Authorization is often viewed as the poster child for throwing the Quadruple Aim off balance with its pursuit of cost reduction at the expense of provider experience, but my latest research for Chilmark Research shows that new PA models and maturing PA technology solutions could benefit both providers and payers.

Traditionally, primitive PA and its associated impacts account for the great divide in provider-payer relationships. The sheer volume of PA requirements is getting increasingly more onerous for providers, as payers attempt to stem cost pressures. Provider PA and payer PA suffer from redundant processes and staffing, burdening the industry with administrative costs in excess of $1 billion annually – despite significant opportunity to use technology to automate and alleviate the burden.

My latest report, Tackling Prior Auth: New Solutions to Address Provider-Payer Friction, provides an assessment of new PA technology coming into the market, along with a detailed look at specific vendors. The report identifies prior authorization market trends, challenges encountered, and includes a specific focus on provider-payer convergence in this market segment. The conclusion offers projections of the future market trajectory for PA technology and vendors, as well as recommendations for providers when evaluating PA solutions.

PA solutions are on the cusp of a breakout moment, partially driven by both the growing adoption of value-based care (VBC) arrangements, as well as sophistication of new enabling technologies, including APIs, NLP, and AI. A new PA model is emerging that promises to deliver mutually beneficial results for providers and payers with far less pain, better integrating CDS, claims, and order workflows at the point of care.

With the dubious honor of being one of the thorniest pain points in provider-payer collaboration, and sitting at the start of the revenue cycle, PA is a logical starting point to establish greater provider-payer convergence. Chilmark Research projects that this new evolution in PA technology will serve as a petri dish for greater forms of convergence that will then spread to other VBC strategies.

Providers and payers will be challenged to step outside past perceptions surrounding the PA process, to look with enthusiasm upon new solutions in the market for innovation to improve results, building new levels of trust in the process. We project that progressive convergence of provider and payer UM proficiencies and technologies will transform the entire PA function over the next 5 years.

Based on briefings with 11 vendors as well as extensive secondary research, this Market Scan Report investigates the market and technology challenges in this high-stakes market sector. The report answers the following questions:

  • How is PA evolving for providers and payers alike, given the growing expansion of VBC adoption?
  • What is the current state of pharmacy and medical PA technology and process?
  • Who is innovating in this space to improve the provider-payer experience and clinical and cost outcomes?
  • What should healthcare organizations (HCOs) consider as they decide on a solution?
  • Where do significant gaps remain that HCOs will struggle to fill?

Anyone interested in better understanding how both providers and payers can differentiate with automated PA, how such automation will increase mutual success with VBC arrangements, as well as evaluation criteria for specific vendor solutions, will gain strategic insight from reading Tackling Prior Auth: New Solutions to Address Provider-Payer Friction. HCOs, payers, healthcare IT vendors, consultants, investors, patient advocates, and others will also benefit from this in-depth research report. There will be a free webinar on the subject this afternoon at 1pm ET, which you can register for here.

Top 7 Things to Look for at HIMSS17

imagesThe final countdown has begun. In a few short days I and the rest of the Chilmark Research team will make our annual pilgrimage to the big health IT confab, HIMSS17, to rub shoulders with some 45,000 of our closest friends.

I have a love-hate relationship with this event. I love the opportunity to meet with many leading advocates, innovators, developers, and users of IT who are all truly trying to improve the delivery of care – to improve the patient experience. This is my/our tribe. These individuals and even organizations are who we as analysts seek out, looking to have an in-depth conversation. These conversations are enlightening, help us further refine our research agenda, and provide us the opportunity to accurately report on exactly what is working and, frankly, what may still be more vaporware than software.

HIMSS is not all sweet-smelling roses. What frustrates me the most is the hype. Now I know that vendors pay a pretty penny to exhibit their wares at HIMSS and, having been on the other side of the fence, I know intimately the challenges of trying to differentiate yourself from all the others that surround you. But what I truly hate is when the latest fad or buzzword enters the hype-cycle and every single vendor claims to have that solution, to address that buzzword du jour.

Years ago I remember walking by booth after booth of vendors claiming they had a Health Information Exchange (HIE) solution. When I saw such proudly displayed in the Dell booth, I knew it was all BS and decided to separate the wheat from the chaff with our first report on the HIE market. That report was a huge success and really put wind in the sales of what was then a very small company. In recent years it has been population health management (PHM), a misnomer if there ever was one. Until the last 12-18 months, not a single vendor has been capable of fully supporting an organization’s PHM strategy. There are simply too many moving parts to PHM. Simplistic care gap analysis with robo-emails and calls is not PHM. The sad thing is, these buzzwords get so over-used, so misconstrued, and so abused that they become meaningless – I’m coming close to detesting the term PHM.

Enough of a preamble. The following is what I will be on the lookout for at HIMSS – and you should, too.

1. Artificial intelligence (AI) is big, everywhere, but are we truly seeing traction? This term, along with machine learning and cognitive computing, will be on prominent display at HIMSS17. I would not be surprised if this is the top buzzword at HIMSS this year, but what I really want to know is how AI is actually being used. What are the use cases? Where will it scale first (e.g., consumer, clinician, back-office, radiology…)? What impact will it have on existing processes and workflows? How will it impact staffing levels?

2. Precision medicine: Is it real or still theoretical? There’s been a lot of hype on precision medicine the last couple of years but little action. Will be interested to learn how much traction some of the early innovators are getting (NantHealth) and what new entrants (2bPrecise) are planning. Tremendous amount of opportunity here that overlaps some of the current work being done in AI – how will these two come together in the future to improve and optimize the delivery of care for the individual?

3. How will care management and patient engagement merge – who is thinking beyond silos here? A core tenet to effective care management is patient activation and self-care, yet care management and patient engagement solutions remain by and large completely divorced from one another. Who among vendors, providers, and consultants is truly thinking beyond silos and looking to effectively meld care management and patient engagement?

4. Who is using IoT and PGHD at scale? Despite all the talk of health Internet of things (IoT) and patient generated health data (PGHD), our research to date has yet to find an organization that is using IoT and PGHD at scale for remote care monitoring. Sure, there are plenty of pilots, but as one healthcare executive said to me: Its one thing to do such for 100 patients, quite another for 10,000 – we’ve yet to figure out how to scale the workflow across the enterprise and community.

5. Outcome measures, anyone? The focus of quality initiatives (and measures) for years has been on process measures. We are getting to a level of maturity in the industry’s use of IT that we need to be thinking beyond process measures to outcome measures. In a recent briefing, a leading HIT vendor proudly showed how its clients excel at meeting process measures. When asked how these same clients do on outcome measures – well, that was a question the company had no answer for. It’s time we start figuring this out. I want to know who is doing this on a routine basis and for what use cases.

Provider+Payer+risk copy6. How are vendors looking to support PHM and VBC? Core to our research in 2017 is gaining a better understanding of provider-payer convergence. Our thesis is that providers have a core competency in population health management (PHM), whereas payers have competency in value-based care (VBC). As these two entities increasingly collaborate to improve access and care delivery within a community, how will vendors provide a platform to support such requirements?

7. What’s next? a.k.a., reading the Trump administration tea leaves and what may unfold across the healthcare sector over the next few years. The new administration has made a lot of pronouncements pertaining to healthcare, from pharmaceutical pricing to repealing the Affordable Care Act. We still do not know how all this will play out, and that lack of clarity is likely to impact budgets. I want to know: How big is that impact and how might it impact IT spend going forward? While I can already imagine every vendor telling me that it has a great pipeline, a great backlog, etc., I remain unconvinced. I’ll be digging deep on this one.

 

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