Reaching the critical mass of participants in alternative payment models (APMs) necessary to move our health care system away from fee-for-service will require a significant increase in specialist participation. Currently, the two most common approaches to payment reform struggle to do this, despite their distinct approaches. Primary care–based models such as accountable care organizations (ACOs) lack clear opportunities for specialist leadership and participation, making it challenging to align financial and clinical incentives or effectively coordinate care. Episodic bundled payments for surgical procedures and deterioration in medical conditions leading to hospitalization do promote efficient, specialist-led care over set time frames (often 90 or 180 days), but these time frames are often too short for long-term specialist engagement, focused on providing appropriate treatments that meet the holistic needs of patients.
The COVID-19 crisis only compounds the need for accessible, feasible specialty payment models. Although many elective services have restarted, organizations reliant on fee-for-service without a revenue stream have been forced to furlough staff or even close their doors. In contrast, organizations participating in APMs are paid in part through prospective payments or payments tied to outcomes achieved, rather than the volume of services delivered, giving them greater financial protection for weathering such a crisis. Furthermore, these arrangements give organizations a greater stimulus, license, and flexibility to build capabilities, such as data infrastructure for population health management that help drive effective patient-centered care.
Condition-based payment (CBP) is an emerging payment framework that seeks to overcome existing limitations in specialist models by combining core elements of both common approaches. CBP expands upon the existing scope of procedure-based bundled payments through a population-based, ACO-like approach that supports longitudinal chronic condition management by specialists before a surgical episode would begin. Per-member, per-month payments also help facilitate investments in care reforms that promote appropriate use of both non-operative and operative treatments, allowing for more comprehensive care options using multidisciplinary teams. Overall, the model rewards effective specialist management of high-priority chronic conditions using interventions that improve outcomes and reduce costs over the continuum of care (exhibit 1).
Exhibit 1: Opportunities to improve specialized care not addressed through current payment models
Source: Authors’ analysis.
Some organizations are already making significant progress in implementing, testing, and standardizing real-world CBP models that will expand the currently limited data on their effectiveness. The Musculoskeletal Institute at the University of Texas Health at Austin, Dell Medical School (Dell Med) treats patients with a range of musculoskeletal conditions under a CBP model. For more than two years, Dell Med has collaborated with the Duke-Margolis Center for Health Policy and Duke Orthopaedics to analyze the development, implementation, and socialization of CBPs. Additional input from payers, providers, and other stakeholders across health care are helping to develop viable CBP models in more detail and support pilot projects across the country.
However, critical operational barriers remain, and solving them will help build the broad stakeholder agreement necessary for systemic change. On January 31, 2020, with support from the West Health Institute and the West Health Policy Center, University of Texas (UT) Austin-Dell Medical and Duke hosted 48 stakeholders to discuss the most important remaining challenges for CBP model implementation and socialization. Round table discussions among workshop participants around care delivery and payment model redesign highlighted three key themes to guide efforts going forward.
Theme 1: Building The Business Case And Demonstrating Opportunity
Innovators will need to demonstrate the need and potential clinical and financial impact of novel CBP for chronic conditions through a comprehensive business case for CBP-based payment built on two types of analyses. Proactive empirical claims analysis will help identify and characterize high-prevalence, high-cost chronic conditions with a potential for improved efficiency, outcomes, and potential savings. Workshop participants noted particular interest in conditions such as osteoarthritis, low back pain, chronic kidney disease, coronary artery disease, congestive heart failure, and diabetes. Payment model pricing and flow options will build on claims analyses and can be developed using Medicare, multipayer, and institutional data, often through collaborations with academicians and third-party vendors. Combined, these analyses can help model developers define the return on investment (ROI) and identify how a range of parties will benefit from any cost savings.
The above consideration remains one of the thorniest issues in calculating ROI: distributing savings. Any business case for CBP should include a clear overview of how providers can attribute patients, how the financial structure improves on fee-for-service, the potential care pathways available once patients are attributed, and example opportunities for achieving savings. However, addressing this problem inevitably leads to a more complex one: How can payers account for the spillover effect between APMs? As APMs expand, health systems will inevitably end up participating in more than one. For instance, Medicare bundled payment participation may overlap and impact the results of a separate commercial bundle, or an ACO or patient-centered medical home. Given the nature of CBP to encourage longitudinal cooperation and collaboration across providers, integration of APMs is desirable but must be more intentionally incorporated into the model and the business case.
Quantifying how to distribute savings should happen before implementation to reduce confusion and conflict between overlapping entities. The easiest way to account for this in the short term is to double-pay savings, splitting among model participants, but this is not a sustainable long-term strategy. The more realistic, but also more complex approach, will require analyzing how to divide the at-risk dollar among a range of organizations. For example, outcomes for a total knee arthroplasty can be attributed to the hospital and clinical team that cared directly for the patient during the episode, the population-health ACO that helped to control the patient’s comorbidities and optimize them for surgery, the investors that provided funds to build the necessary infrastructures, administrators and coordinators, and the insurance company that provided the incentive for care redesign. Performing this exercise will not only help align interests and goals across stakeholders but also underscore the critical roles of each stakeholder in supporting the models that will drive a better health care system.
With this baseline business case, proponents should consider a variety of factors that will impact where they pitch this model first. Initial efforts should focus on geographic regions with a dominant payer and a critical mass of interested providers, in the hopes of ensuring sustainable system change if the pilot succeeds. Moreover, different organizations will require different cases. Integrated systems and independent practices, for example, have different structures, resources, and challenges, and will respond to different approaches. To supplement the pure financial incentive, the business case should also identify specific components of the APM that will reduce burden and improve the practice environment, such as streamlining redundant quality measures to minimize costs, burden, and complexity.
Theme 2: Developing The Model—Ensuring Feasibility
To ensure ease of implementation and feasibility, model designs should prioritize simplicity. Meeting participants widely felt that developing APMs operating under CBP can be overwhelming; accommodating competing interests and circumstances often results in overly complex models. In many cases, the perfect is the enemy of the good; endless discussion will risk many concluding that CBP models are too difficult, opting instead to stay within the simple but inefficient security of fee-for-service.
To overcome this, motivated payers and providers should co-develop specific CBP pilot models in high-prevalence, high-cost areas both in terms of disease and treatments. This offers a clear path forward for engaging organizations newly interested in payment reform because of the stressors placed on them by COVID-19. UT Austin-Dell Medical and Duke University aim to pursue model development in the longitudinal condition-based management of osteoarthritis with Texas- and North Carolina-based payers and purchasers, respectively, along with any other interested collaborators throughout our network. Each collaboration should have similar high-level goals: Models should consist of care pathways incorporating a set of core, evidence-based capabilities, for example, patient education, structured exercise programs, dietary weight management, patient engagement, and behavioral therapies that can eventually be translated across chronic conditions, diverse provider groups, and multipayer episodes. Practices can configure care pathways using evidence-based practices and consistent definitions for the episode of care, timing of key reconciliation points and other payment milestones by building on experiences from existing APMs, while also incorporating robust methodologies for risk adjustment and analysis. Model configurations should further anticipate and be responsive to the direction of future payment reforms.
As with the business case, successful model development requires solving complex issues around outcome measurement and developing a technology-enabled infrastructure fit for condition-based APMs. Because CBP aims to deliver greater value for patients, models should be driven by the outcomes that matter to them. Patient-reported outcome measures (PROMs) quantify patient self-assessments of their health status. They currently offer one of the most effective tools we have to measure meaningful outcomes and are especially important as patient-specific data insights available to providers as they expand their service delivery through telehealth. PROMs can help account for information asymmetries that may arise from remote rather than face-to-face contact between patient and provider. Enabling technologies necessary for integrating the capabilities and processes for patient outcome collection (and capturing quality metrics in general) should be built from existing platform options (for example, electronic health record systems and third-party measurement platforms). Furthermore, integrating and expanding telehealth capabilities can bolster the continuity and coordination of multifaceted care—both basic tenets in APMs.
However, many organizations have not yet made significant progress in collecting and reporting PROMs. Participants highlighted that development of an outcomes and technology infrastructure requires overcoming multiple barriers. We highlight the most important ones in exhibit 2 and plan to continue engaging stakeholders in the coming years to make progress on these important issues.
Exhibit 2: Challenges to collecting patient-reported outcome measures
|
Challenge |
Goal |
Barrier |
Best Practices |
|
Standardization |
Create universally precise, efficient, and relevant PROMs to track longitudinal outcomes and facilitate shared decision-making |
Many leading organizations have already developed their own resource-intensive workflows around particular PROMs. Additional development and standardization of measures is challenging, plus risks “gaming” |
Use a phased approach to implementing PROMs to transition from payment for data collection alone to using PRO-Performance Measures based on outcomes |
|
Improving Payer Transmission |
Streamline existing reporting process to make PROMs easier to generate, report, and analyze. |
Many providers not ready or uncomfortable collecting and submitting, current infrastructure to submit PROMs to payors cumbersome and inefficient |
Utilize process measures collected at the point-of-care as interim PROs while more are developed, encouraging payer investment in aligned reporting systems. |
|
Business Case for Implementation |
Understand how PROM implementation affects ROI and individual stakeholder responsibilities |
Failure to define the projected value proposition, administrative burden, clarify investment costs and who will bear those costs, andhow payment will support can all muddle ROI and create collective action problems. |
Establish an expert multi-stakeholder outcomes and technology working group to address these questions and develop a phased PROM implementation plan. |
Source: Authors’ analysis from January 31, 2020 meeting.
Theme 3: Socializing The Concept And Aligning Stakeholders
To create a sustainable APM, CBP will need to include a critical mass of interested and willing payers, purchaser, clinicians, and patients, all with different compositions, practice types, market shares, and financial situations. With COVID-19 increasing interest in value-based payment across health care, there has never been a better time to socialize and discuss these concepts with interested organizations.
As efforts ramp up, enabling clinician, practice, and payer champions will be essential for informing practice-based business decisions and organization-specific care redesign for several reasons. First, provider champions can guide innovative efforts through the selection of optimal markets for CBP and delineate potential barriers to transitioning to new payment models. Second, even in optimal markets, the CBP process could look very different depending on existing levels of integration and independence, and clinical champions are best equipped to mobilize support and lead efforts. Finally, as organizations implement CBP, clinical champions can also lead efforts to generate early outcomes data on care and payment to share with interested payers and providers, as UT Austin-Dell Medical and Duke Health plan to do. Throughout this process, clinical champions should collaborate with professional societies, such as the American College of Surgeons and the American Academy of Orthopaedic Surgeons, to help teach clinicians and practices about CBP design and encourage them to participate.
Efforts will eventually need to expand to develop a shared vision that also includes a broader range of stakeholders through workshops, dissemination at professional society meetings, and peer-reviewed publications. While payers and providers will play the largest roles in socializing CBP, participants also underscored the importance of groups such as employers in helping to build a coalition of support. Employers have a unique ability to push enrollees toward promising care models through principles of value-based insurance design such as reference pricing and benefit structure that can actively inform the development and design of future CBP arrangements. Furthermore, they are capable of taking advantage of additional channels to engage employees (patients) in health behavior change and encourage longitudinal patient-reported data collection.
Conclusion
Condition-based payment offers a viable and exciting path forward for specialist-driven, value-based care, but efforts are still in early stages. Diverse initiatives will be needed in the coming years to expand new model designs to a wider range of conditions, address lingering barriers to developing a feasible model framework, engage payers and providers on the vision and business case for these models, and assist in the long, difficult process of integrating and transforming delivery models. Effective results are most likely to come from incremental, shared efforts to standardize model concepts across the health care system in a way that ensures sustainability, transparency, and scalability. UT Austin Dell Medical and Duke will continue to lead through our work developing a CBP model for osteoarthritis and working to socialize the CBP concept to stakeholders and policy makers. As COVID-19 creates new challenges and uncertainty across our health care system, a financially sustainable, high-value financial model for managing a wide range of conditions is more important than ever.
Authors’ Note
Mark B. McClellan, MD, PhD, is an independent board member on the boards of Johnson & Johnson, Cigna, Alignment Healthcare, and Seer; co-chairs the CEO Forum for the Health Care Payment Learning and Action Network; and receives fees for serving as an adviser to Blackstone Life Sciences, Coda, and Mitre.
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