Next-Generation Value-Based Payment Strategies

Next-Generation Value-Based Payment Strategies

Contents

Executive Summary � � � � � � � � � � � � � � � � � � � � � � � 3

Introduction � � � � � � � � � � � � � � � � � � � � � � � � � � � 5

New Challenges � � � � � � � � � � � � � � � � � � � � � � � � � 7

What Have We Learned? � � � � � � � � � � � � � � � � � � � � 9

The Need for Standardization � � � � � � � � � � � � � � � � � 11

Analytic Intelligence is the Currency of VBC � � � � � � � � � � 13

Trust Through Transparency � � � � � � � � � � � � � � � � � � 15

Analytics Drives Next-Generation Payment Innovation � � � � 17

Provider Engagement is Key to Practice Transformation � � � 19

Empower Specialists to Scale VBP � � � � � � � � � � � � � � � 21

Contracting and Reconciliation Processes � � � � � � � � � � � 23

Holistic View Drives Quality � � � � � � � � � � � � � � � � � � � 25

Coordinated Analytics Empower an End-to-End Approach � � 27

How Change Healthcare Can Help � � � � � � � � � � � � � � � 29

Author � � � � � � � � � � � � � � � � � � � � � � � � � � � � � � 31

Next-Generation Value-Based Payment Strategies 2

Executive Summary

Table of Contents

3Next-Generation Value-Based Payment Strategies

Table of ContentsExecutive Summary

If COVID-19 has taught us one thing, it’s that fee-for-service models are brittle� The need to transition to value-base care is more urgent than ever�Stakeholders across the U.S. healthcare industry agree that eliminating waste and reducing the cost of healthcare while improving the quality of care is essential. While current value-based care (VBC) initiatives show promise and prove the methodology works, scaling and ensuring adoption remain a challenge.

To access the next-generation of alternative payment strategies, payers need to transform rich data into intelligence, which requires a new set of strategic disciplines.

This will allow them to achieve trust in the data and how it is derived, improve collaboration with care providers, and provide actionable intelligence conveniently delivered and detailed enough to prescribe the behavior change. Achieving this requires that the industry aligns to a standardized definition of care, consistent utilization measurement, and consistent quality measurement. Without this yardstick, there is no baseline to truly understand performance.

Coordinated analytics operating from a common definition of care will ensure alignment, increase trust, improve provider engagement, and improve the quality of care. Giving the providers a more complete view of the care continuum will help them identify opportunities to improve care and lower costs.


Introduction

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Table of ContentsIntroduction

U.S. healthcare has been knee-deep in value-based care and other alternative payment models (APM) innovation and experimentation for a decade now. In recent months, however, the plight of hospitals forced to delay elective procedures to take on high-cost COVID-19 cases has exposed the brittle nature of legacy fee-for-service (FFS) models and illuminated the need to accelerate the adoption of more VBC.

Years of mixed results have left some industry stakeholders doubting the potential for VBC to drive meaningful change. Some programs have failed to produce meaningful savings or improved outcomes, or have taken too long. Others were not a good economic match for providers or never gained adequate support. Still others showed promise but fell victim to their inability to scale.

But some VBC programs have produced undeniable results. Humana recently reported that its move from FFS to value-based payments slashed medical costs by 18.9% for seniors enrolled in Humana Medicare Advantage plans in 2019, compared to costs for those in traditional FFS Medicare.5

The bottom line: The methodology works, but scaling and ensuring adoption remain as hurdles�

1. Central Intelligence Agency (CIA), “Country Comparison: Life Expectancy at Birth,” The World Factbook. 2. Centers for Medicare and Medicaid Services, “National Health Expenditure Data: Historical.”3. Committee for a Responsible Federal Budget, “American Health Care: Health Spending and the Federal Budget”4. New York Times, “The Huge Waste in the U.S. Health System”5. FORBES, “Humana: Moving Doctors From Fee-For-Service Cut Medicare Costs 19%” by Bruce Jaspen, Oct 7, 2020

Globally, the U.S. ranks 43rd in life expectancy,1 despite spending $3.6 trillion on healthcare per year—more than twice the average among developed countries.2,3 As much as a quarter of this spending is wasteful. This translates to $760 billion to $935 billion per year—a sum comparable to the government’s annual spend on Medicare.4


New Challenges

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Table of ContentsNew Challenges

Aging population… Pandemic impact… Demonstrated brittleness of FFS…Increased employer pressure… Need for price transparency…Continued consolidation…Digitalization of the industry�

Identifying effective methods to reduce waste and improve outcomes that scale is challenging without the tools and technology to translate data into actionable insights�

Much of what has been learned over the last decade provides insight into how to address these and future problems. We need to apply these learnings to lay the foundation for a new healthcare model that achieves affordability and improved outcomes.


What Have We Learned?

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Table of ContentsWhat Have We Learned?

Episode of care models can deliver medical savings as high as 7�5%�6

77% of respondents in a 2018 survey reported improvement in care quality plus improvements in provider relationships�6

It takes an average of 10�9 months to launch an episode of care program and over half remain dissatisfied with their current analytics, automation, and reporting�7

6. Change Healthcare, “The State of Value-Based Care in 2018,” Produced by ORC International and sponsored by Change Healthcare7. Ibd


The Need for Standardization

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Table of ContentsThe Need for Standardization

For VBC models to succeed and flourish, the industry needs a standard to drive to a consistent view of performance. This only happens when stakeholders align to a common

definition of care, consistent utilization measurement, and consistent quality measurement. Without this yardstick, there is no baseline to truly understand performance.

Performing this kind of analysis at scale is difficult�

Processing massive amounts of data and the ongoing enhancement of data in this process are challenging for most healthcare organizations.

Challenge #1

Beyond technology, the intelligence delivered requires a change management process in the organizations using it—because what must change is behavior.

Challenge #2


Analytic Intelligence is the Currency of VBC

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Table of ContentsAnalytic Intelligence is the Currency of VBC

Analytic intelligence is quickly becoming the fundamental differentiator for healthcare organizations. Healthcare organizations are seeking more and more comprehensive views of performance to enable improved decision making (decision support, centers of excellence, provider network design, alternative payment models, etc.).

The aging demographic is a good example of why more comprehensive analytics are a wise investment. The growth in Medicare Advantage plans is emerging as a new challenge for health plans as the population volume will be at levels never seen before. In addition, the pandemic is projecting an unprecedented volume of commercial lives to go to Medicaid.

This demographic shift makes it even more critical to understand how health problems manifest, what care coordination is most effective, and how to proactively identify the care patients need�

8. Bone And Joint Center, Derick M. Johnson, DO, “WHAT IS THE RIGHT AGE FOR HIP REPLACEMENT?” 9. U.S. Department Of Health And Human Services, “Diabetes Statistics“10. Ibd

67Average age of hip

replacement recipients8

25%Americans 65 and older

have diabetes9

43�8%Prediabetes10

As Americans age, their use of complex care delivered by specialists increases�


Trust Through Transparency

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Table of ContentsTrust Through Transparency

While analytic intelligence is the currency of VBC, analytics is the currency of trust. Analytics provides the information that informs all parties on how their relationships are structured

for a new win-win. Developing trust via information transparency is essential to instilling a tighter, more productive partnership between payers and providers.

The information shared between both parties requires extensive education�

• Re-learn how to negotiate

• Identify the opportunity for improvement to providers

• Engage with the network much more frequently

Health plans need to

• Interpret the new information they are given

• Be more aware of the care continuum and the choices they promote to the consumer

• Make clinical practice changes to improve performance

Providers must learn how to


Analytics Drives Next-Generation Payment Innovation

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Table of ContentsAnalytics Drives Next-Generation Payment Innovation

Analytics and automation are powering innovation in healthcare by translating the data into useful insights. Analytics techniques that rely on data-driven decision making and machine learning strategies can find patterns in large data sets and the inclusion of artificial intelligence (AI) allows for predictive opportunities. Automation helps payers pinpoint the right providers, target the right episodes of care (EOC), and set the right payment.

Analytics facilitate the implementation and maintenance of bundled payment programs, provide transparency to providers on performance, and expand the use of episode bundles to more types of care. Analyzing patterns in provider claims history and identifying outliers at both ends of the spectrum will help providers meet value-based payment goals and encourage best practices by identifying providers such as surgeons whose procedures result in fewer complications and readmissions.


Provider Engagement is Key to Practice Transformation

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Table of ContentsProvider Engagement is Key to Practice Transformation

Value-based care programs rely on the primary care physician (PCP) to coordinate care to oversee the quality and costs of that care. When they transition the care to

a specialist, they need to retain visibility into that care to effectively manage it. This is huge concern when developing value-based models.

11. Primary Care Collaborative, “Spending for Primary Care”12. Centers for Medicare and Medicaid Services, “National Health Expenditures 2017 Highlights”

PCPs need visibility and transparency into the data but equally important is access to the data in a way that is easy to understand to evaluate the cost and quality metrics�

PCP costs represent only 5�8—7�7% of total U�S� healthcare spend11

But they control roughly 63% of the total spend12


Empower Specialists to Scale VBP

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Table of ContentsEmpower Specialists to Scale VBP

Specialists also need these tools, as they typically determine admissions and select facilities where patients are treated� When the PCP has visibility and insights into the specialist’s cost and quality performance, they can make determinations about which specialist they use. This can help engage specialists in the VBC model when they see volume impacted by performance. Similar to how PCPs adapted to value-based care—specialists’ incentives will be aligned to improving care and lowering costs.

Traditionally, specialists are paid via FFS and have not been engaged in care coordination. The PROMETHEUS Analytics® methodology and EOC help create incentives for specialists to engage in care coordination.

For example, consider an orthopedist who has a nurse care coordinator to coordinate care and ensure patients aren’t staying in a skilled nursing facility longer than necessary. Without aligned incentives, they won’t be motivated to invest

in preventative care and to effectively manage that part of the patient’s treatment. They might let the skilled nursing facility determine when the patient is ready to be sent home. That raises a significant issue, given that skilled nursing facilities might be paid per-day/per-patient and could be incentivized to keep the patient longer, while costs for that episode climb.


Contracting and Reconciliation Processes

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Table of ContentsContracting and Reconciliation Processes

Holistic analytics allows payers to connect the dots between the PCP and the specialist referral to align the program incentives and enable informed care coordination. This

allows payers to calculate shared savings amounts or shared risk amounts to accurately pay providers based on the episodes of care and VBC agreements.

Performs 30 knee replacements with a budget of $23,000 per episode�

If the procedures average $21,500 per episode, they share in the savings, and get 50% of the delta between the budget and the actual costs�

Which translates to $45,000 for 30 knee replacements�

Consider the following example of a retrospective shared savings program with an orthopedist:

The revenue impact incentivizes the practice to make sure the patients call them instead of visiting an urgent care facility or emergency room in the event of pain. It ensures that the specialty provider has a vested interest in managing the skilled nursing stay or physical therapy and managing the patient’s experience. The shared savings allows them to get paid for the work they do to keep that patient healthy and recovering.

This is only possible with analytics that serve up the performance data needed to inform care and cost decisions. The data allows payers and providers to identify process improvement opportunities to improve care and performance. Next-generation analytics allow payers to find the episodes, reconcile it, and use the insights to effectively collaborate with the provider network by communicating exactly what is required to improve cost and quality.


Holistic View Drives Quality

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Table of ContentsHolistic View Drives Quality

Aligning incentives across PCPs and specialists will drive cost and quality improvements with episodes� For example, one complication of knee replacement is the contraction of veins and connective tissue, requiring intensive physical therapy or surgery. This can be avoided with post-surgical physical therapy coupled with close monitoring to evaluate the risk of contracture. This potentially avoidable complication (PAC) represents a very painful outcome for the patient and increases the cost of the episode given services are required to address the PAC. Avoiding the PAC results in a better outcome for the patient and a lower cost of care.

Giving the PCP and specialist provider insights into the performance will incentivize them to apply resources to avoid PACs to ensure the quality of care and their own performance. Improving the quality of the care also supports quality goals across including population health and Healthcare Effectiveness Data and Information Set (HEDIS) performance measures.


Coordinated Analytics Empower an End-to-End Approach

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Table of ContentsCoordinated Analytics Empower an End-to-End Approach

The holistic view of the care delivered enables a more comprehensive level of analytics.

Giving providers intuitive tools with built-in automation and AI-enabled analytics helps them pinpoint broad strategic improvements rather than piecemeal tactical changes�

User-friendly dashboards with actionable insights about the value of care provides a more complete view of the care continuum to help identify opportunities to improve care and lower costs.


How Change Healthcare Can Help

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Table of ContentsHow Change Healthcare Can Help

Change Healthcare offers PROMETHEUS Analytics, which is designed to support payers in the transition to value-based payment models. PROMETHEUS episodes are designed to identify unwarranted variations of care across similar episodes that allow providers to create unique analytic insights that help improve provider performance and provide consumers more value from their health care experience.

Healthcare organizations use PROMETHEUS Analytics to optimize their provider networks under value-based care reimbursement models. They create unique analytic insights that help improve provider performance and provide consumers more value from their health care experience. PROMETHEUS Analytics is integrated into Change Healthcare’s HealthQx® value-based care platform that enables health plans to optimize payment models, evaluate provider performance, identify care variations, and improve network efficiency.

For more information, contact Change Healthcare at 1-844-217-1199 or www�changehealthcare�com/contact/sales�


www.changehealthcare.com/contact/sales

Table of ContentsAuthor

Andrei Gonzales, M�D�

Assistant Vice President, Value-Based Care Strategy, Change HealthcareAndrei is responsible for product management of HealthQx® and providing strategic context and input to the Change Healthcare portfolio. With over 12 years of experience at Change Healthcare, he manages customer engagements and provides expert guidance to help customers develop and establish pilot programs using the Episode Management solution.


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Next-Generation Value-Based Payment Strategies