The New Accountability

Payers and providers are recognizing the need to work collaboratively on at-risk programs.

This article first appeared in the March 2016 issue of HealthLeaders magazine.

Of the many changes necessary to accommodate healthcare reform, the switch in accountability be-tween payer and provider may be one of the most fundamental. Accountability is changing as long-standing fee-for-service payments make the shift to risk-based compensation models.

The financial component of risk-based reimbursement can be thought of as the payer and provider sharing positive or negative results depending on the provider delivering better care for lower cost. The industry is moving from a system where virtually all factors contributing to the revenue stream are known to one where important factors are unknown. That introduces, at least for providers, the risk of financial failure. In the face of such uncertainty, payers and providers are moving forward slowly.

Overall, 41% of respondents to the HealthLeaders Media 2016 Payer-Provider Strategies Survey say that they are participating in at-risk programs such as ACOs that offer both upside and downside risk. Nearly two-thirds (64%) of organizations with net patient revenue of $1 billion or more participate in at-risk programs with both upside and downside risk, which is a higher degree of participation than medium-revenue (47%) or low-revenue (27%) organizations.

Although 18% of respondents say they are not involved in any at-risk programs, that includes a high proportion of those who are in organizations with net patient revenues lower than $250 million. More than one-quarter (26%) of low-revenue organizations do not participate in at-risk programs, compared to 8% of medium-revenue organizations and 7% of high-revenue organizations.

Robert Sehring, central region CEO of OSF HealthCare System, which consists of 11 acute care hospitals and a children's hospital serving patients in Illinois and Michigan, says, "I suspect low-revenue organizations would be more challenged to invest to the extent necessary in things such as data analytics and care management."

Those who are investing expect a return. "If your organization has invested in building the infrastructure and creating opportunities to bend that cost curve and reduce unnecessary admissions, you certainly want to have financial relationships that let you share in the reward of those reductions," Sehring explains. Indeed, concern about matching reward and risk is the area of conflict with payers mentioned most frequently by organizations with $250 million or more in net patient revenue. Fifty-five percent of medium-revenue organizations and 54% of high-revenue organizations report the concern that payers receive unearned benefit from providers' work is among their top areas of conflict with their top-tier payers, while just 24% of those with low revenue place that concern in the top three.

Taking on risk is the aim, but in the here and now, issues related to revenue and cost top the list of items included most frequently by providers as areas of payer-provider conflict: the inability of providers to increase fees (42%), payers' failure to adequately address cost curve (41%), and negative consequences as a result of plan redesign (41%).

Ann Boynton, director of payer strategies and value-based contract management for UC Davis Health System, says, "There's so much focus on the dollars at the top—the top three in particular. At-risk issues are not where the day-to-day struggles are."

Higher percentages of medium- (26%) and high-revenue (21%) organizations than low-revenue organizations (13%) say that payer progress on at-risk programs is too slow. Looking at those who say that payer progress is too slow, Juan Serrano reminds us that the direction is a new path for payers, as well. His comments for this report came as he was Catholic Health Initiatives' senior vice president of payer strategy and operations; he is now president and CEO of Munich Health North America.

"It's difficult to implement a coherent shared-value proposition that relies on payment reform, payment change, sharing of critical information, and aligning new incentives for each stakeholder in the equation. It's hard work," he says. "In some cases, payers have started up a new segment within their insurance company to deal specifically with the provider community and to begin to partner and explore opportunities."

On the provider side, Serrano notes the high experience level of those providers who have made at-risk payment models work. "When I look at the integrated providers that are working, they've typically been at it for years, sometimes decades." While such providers may serve as examples, emulation is difficult. "Many in the provider community are interested in value-based reimbursement … but not necessarily equipped to do it."

The importance of data
The shift to at-risk payment models means that organizations will depend on data in new ways. "Data continues to be king," says Sehring. Industry trends in the use of data include assessing risk for patient populations, identifying segments of patient populations that warrant provider attention, tracking progress as care is delivered, and monitoring efficiency along the way. "You need to start with robust data and then you need the analytics capabilities in order to be able to make the necessary connections."

Nearly one-third (30%) of respondents use payer data to support their risk-assessment function, including 39% of those with net patient revenue of $250 million or more. And 31% say that access to risk-adjusted patient data is among the top areas from which they derive benefit from their relationships with payers, while 29% say the same for access to aggregate claims data.

Payer claims data can augment a provider's view of its patient population when the right steps are made. "It's not just about taking a dump of the payer data and dicing and slicing that in order to produce some information," Sehring says. "Rather, can you take that data, link it up with your internal clinical data from the electronic medical record and health risk assessments, if you have them, and other data in order to paint a more complete picture of that patient and that patient population?"

Such an enhanced set of data, he says, can support functions such as risk stratification, identifying gaps in care, and examining wellness status. "It's being able to combine data, to analyze it, and then push it out to providers at the right time. Then it's not just information, but it's actionable information."

Providers that work with payer data can use some help doing so. Although support for risk-related analytics is included as a top benefit from payer relationship by only 19% overall (seventh place), such support is the item included second most frequently by organizations with $1 billion or more in revenue among the payer activities that provide them with the most benefit.

"There's a steep learning curve in terms of understanding what to do with the information that is made available by the payers," says Serrano. "The payer community has to become more transparent in organizing data and making it available to providers. And the provider community has to be-come more adept at receiving and hosting data, as well as understanding how to interpret it and manage with it. And providers need to layer in data from additional sources within their systems that may not typically have been mined before. Finally, providers need to figure out how to make that information consumable by the end user."

Data and analytics are keys to understanding risk. And if the financial foundation of the industry is shifting to risk-based payments, providers must acquire the data and acquire the interpretive skills. Says Boynton, "It's really important when you're trying to scope out what your own risk tolerances are." Taking on risk needs more of a foundation than making cost projections by looking at historical performance. Boynton cautions, "You can't just say, 'These patients cost us this much last year; we'll just assume that's what it's going to cost this year.' You have to really understand what's going on with the patient population for which you are assuming risk. Aggregate claims data will really provide insights into what the major issues are that are facing a provider's patients."

Access to claims data is among the top three items for negotiation for 54% of high-revenue organizations, and it is the item mentioned most frequently by that segment. And although access to claims data is seen as an objective by providers when in negotiations with payers, Serrano reminds us that data transfer can be complex. He says, "Sometimes we interpret unwillingness to share data as reluctance. But in reality, if we dig a little deeper, we see that organizing the data, making it consumable, and warrantying the data to be correct and defensible takes time, effort, and money—investments to get to the point where the data is actually reliable and can be shared effectively."

Most respondents (52%) want to pursue value-based metrics in their next payer negotiation—the item included most frequently. The core questions to consider, says Boynton, are related to revenue. "If there's money tied to this, how much is it? And how much do I have at risk?" The answers to those questions can influence strategy and tactics. With metrics known, she says, "Providers can begin to put the pieces together to say, 'Here are the areas that we're going to really focus on.' "

In addition to their importance as starting points for strategic and tactical appraisal of at-risk agreements, metrics are on top of the chart of negotiation objectives because the determination of appropriate metrics can be an iterative process—not quite trial and error, but adjustments may be necessary. Providers want to ensure that metrics do not leave them vulnerable in some way.

Boynton offers an example of how an organization with a relatively small at-risk population might be more vulnerable to randomness, particularly regarding conditions that might incur high costs. She says, "There's a level of randomness, so that no matter what you do, the smaller the population, the greater that impact is likely to be." That example leads to more fundamental questions. Providers want to know, she says, "How are you judging me? What do I need to know about how you're judging me?"

There's no shortage of metrics in healthcare, and the use of metrics associated with at-risk performance has the potential to be even more problematic than the metrics associated with executive compensation. The issue can be especially difficult because providers work with many payers, and payers work with many providers.

Says Sehring, "We probably have pay-for-performance or some version of metrics and analytics with probably 10 or 12 different payers. You would like to see a standardized set of metrics that are important to the payer and important to the provider that we could agree upon across all of these different relationships. That's not where we are today."

Implementing a diverse set of metrics across a provider's more or less static medical staff can be problematic. At OSF, the printout of the spreadsheet that the ACO group uses to track performance occupies two 11" x 17" sheets of paper. Sehring says, "We can't put that in front of our providers and say, 'Here is what we want you to focus on.' "

As the industry moves toward population health, the concept of risk will extend along the care continuum, meaning that providers may not have, as mentioned above, a more or less static medical staff. The industry is responding to increases in the administrative and tactical burdens associated with delivering value-based care through an increase in narrow networks and clinical integration.

Assessing accountability
What are we accountable for, and to whom are we accountable? On a top-line basis, there are three parties involved in healthcare accountability: the provider, the payer, and the patient. We are seeing that the industry's shift to value-based care reorders accountability. Serrano says, "It's obviously a challenge to realign accountabilities when healthcare economics have been built on a foundation of fee-for-service, with little in the way of utilization controls." The shift of risk to providers, he says, "is fundamentally intended to bring more accountability to the provider community. We also continue to encourage accountability on the part of the healthcare consumer as we transition to new reimbursement methodologies."

If an organization is accountable and under contract, the contract must define performance. In addition to the complexities of having many metrics and many partners, there is the issue of recording accurate descriptions of services and communicating about the delivery of services. Says Serrano, "In order to effectively manage global risk, global capitation, or any other economic models, we need to become more data rich than we are even today."

Serrano says that additional attention will be needed from both provider and payer. "Payers and providers simultaneously need to become more sophisticated and more precise in coding, billing, and administration of data. We have to understand how to behave in a more accountable way with respect to how we are delivering services, referring patients to other providers, and how we're staying connected to patients. We need to help them achieve overall health and well-being. This activity goes far beyond the procedure or the therapy or intervention that we might have delivered at a point of service."

Some gain important exposure to the mechanics of delivering value-based care, put themselves on a path to making known some of the many unknowns, and develop stronger ties with payer partners by participating in ACOs. Says Boynton, "To make ACOs successful, it requires a much greater level of trust to be able to work in that environment, and a much higher level of commitment from all the organizations that are involved."

The ACO model may be laying a foundation for standardizing metrics, too. Sehring sees signs that Pioneer ACO participants recognize that the scope of the program has built a foundation of experience that may be extended. "Many of the providers who are involved with the Pioneer ACO try to use those metrics with other payers. They say, 'Here is a large group of benchmark data that is used by CMS in probably 300 or 400 different ACO relationships. Let's start with these as a basis, sort of a guidepost on how we want to approach metrics.' "

With the Centers for Medicare & Medicaid Services as a leading driver, the industry is moving toward risk-based payment models. Despite broad exposure to risk-based models of one kind or another, the fee-for-service payment model shows considerable resiliency, so providers and payers can expect an extended transition period. As new working relationships emerge, the transition will require changes to data recording, data collection, data exchange, and data analytics. These activities—previously done somewhat independently—will be accomplished with at least the acknowledgment of the needs of the other parties in the risk-sharing arrangements.

Although each party in the transition—payers, providers, and patients—will be involved in many aspects of change independent of each other, achieving the objectives of better outcomes and reduced cost will involve closer collaboration.

Collaborating on risk-based contracts can and does work. And although the scale may be small when considering the industry overall, those who are involved must dedicate considerable resources to the activity.