We’ve all heard the expression, “What gets measured is what gets done.” But at The 2017 OPEN MINDS Strategy & Innovation Institute, I learned a new one. If it isn’t measured, it’s like it didn’t exist. That was my takeaway from the comments of Carl Clark, M.D., President & Chief Executive Officer, Mental Health Center of Denver, during his session, Preparing Specialty Provider Organizations For Value-Based Reimbursement: An Overview Of Competencies Required For Success. His comments were made in the context of value-based reimbursement and the need for provider organization executives to not only understand how they provide “value” but to be able to measure that.
Dr. Clark’s organization, the Mental Health Center of Denver, has a value-based capitated behavioral health contract with Colorado Access, a Regional Care Collaborative Organization (RCCO). RCCOs are the current Colorado version of a Medicaid accountable care organization. The RCCOs receive a $9.00 per member/per month (PMPM) fee to perform utilization management and develop and support provider networks. A portion of their PMPM fees are set aside to create incentive payment pools.
The structure of the RCCO arrangement with the state has its own set of performance incentives. The RCCOs receive incentive payments for meeting targets in emergency room utilization reduction, well-child visits, and post-partum visits – and can receive an additional payment for meeting performance targets for post-discharge care follow-up. That means that the healthier the Medicaid population is in Denver, the more money Colorado Access makes. And, these performance measures are passed along, in part, to the Mental Health Center of Denver.
Dr. Clark emphasized that managers need to measure the value they create in order to be effective. He thinks that organizations in health and human services are very good at creating value for both the consumers and health plans – but often fail to capture that value for their own benefit. As he noted, “Services are about people getting better AND driving down costs. If we drive down the cost for health plans, and don’t measure those cost reductions, it is difficult to negotiate a share of the savings.”
He noted that for health plans, sharing in the value means helping keep medical loss ratios down and then sharing in those savings. “If we drive down the medical loss ratio by 50%, let’s split the difference. That’s a model we want to use.” But organizations need the ability to measure those savings – most often through creating health information exchange capability and monitoring and measuring consumer health resource utilization.
Dr. Clark also discussed developing value-based reimbursement with other types of organizations, such as the criminal justice system. But, those shared saving arrangements are more complex. He said that in those instances, executive teams need to have deep relationships with the whole system, to have savings sharing conversations. Dr. Clark noted, “If I can drive down your costs, can you pay us to help make that happen? Inmates with mental illness cost $15 more a day for jail and prison. If you can divert those inmates, those are big savings.”
But having a system for measuring the savings is key. So how do manager of provider organizations take their first steps toward having the data needed for shared savings arrangements with health plans? For more, I reached out to OPEN MINDS Senior Associate, Ken Carr, who writes:
Having a system for measuring the savings is definitely important. So how do managers of provider organizations take their first steps toward having the data needed for shared savings arrangements with health plans?
Using data to negotiate those arrangements requires the capacity to capture data, analyze that data, and adapt processes to ensure that the intended goals are achieved. Capturing data is about building an effective technology infrastructure; utilizing cross-functional teams to configure the technology and document the right data; and ensuring that adequate workflows are in place to ensure data integrity. Effective data analysis focuses on communicating service and financial results throughout the organization, analyzing data against targets, and bringing staff together to determine how to improve services.
A system for quality improvement is then used to sharpen processes and create better results. In this way, data is captured, analyzed, and used to achieve the results in the shared savings arrangement.
For more on preparing for the change to value-based reimbursement, join OPEN MINDS Senior Associate Ken Carr on September 27 for the session, “Preparing Specialty Provider Organizations For Value-Based Reimbursement: An Overview Of Competencies Required For Success” at the The 2017 OPEN MINDS Executive Leadership Retreat, in Gettysburg, Pennsylvania.