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By Sarah C. Threnhauser

“Whoever has the gold makes the rules.”

I don’t think the creator of “The Wizard of Id” comic strip had health and human services in mind with this quote. But it is true that the organizations that manage and coordinate consumer health care do make the rules in many ways. This raises a question about which organizations are “making the rules” in care for consumers with chronic conditions and complex support needs.

Based on the many presentations at our 2018 OPEN MINDS Performance Management Institute, it appears that primary care entities and hospitals and health systems have a leg up in the move to value-based reimbursement and the “care coordination” that goes with it. The 2017 Value-Based Payment Study from the American Academy of Family Physicians (AAFP) found that 47% of primary care practices looking for VBR contracts (see 2017 Value-Based Payment Study). By contrast, only a third of specialty providers are participating in VBR (see The 2018 OPEN MINDS Performance Management Executive Survey: Where Are We On The Road To Value?).

Hospitals and health systems participate in VBR through two primary mechanisms: accountable care organizations and bundled payment methodologies. In 2016, there were 8.4 million Medicare beneficiaries enrolled in ACOs, representing 14.7% of the Medicare population (see The 2018 OPEN MINDS Medicare ACO Update: A Four-Year Trends Report). The Medicare bundled payment program is also getting an expansion (see It’s Not Too Late For Medicare Bundled Payments). As of April 2017, 1,295 organizations, including 330 acute care hospitals, participated in one or more episodes through this initiative. In November 2017, The U.S. Department of Health and Human Services (HHS) finalized a modification to this initiative that makes participation mandatory in 34 of the original markets, and voluntary in the remaining 33 geographic areas.

So what are hospitals and health systems doing to prepare for success in this changing market? The recent American Hospital Association (AHA) report, Hospitals And Health Systems Prepare For A Value-Driven Future, outlined a set of five competency areas—with 41 specific functional capabilities—including contracting and provider network management; clinical and care management; analytics financial management; and governance and organization.

Capabilities Pay for Performance (P4P) Bundled Payments & Upside Shared Savings Up- and Downside Shared Savings Global Budget/Capitation
Contracting & Provider Network Management . Contracting with payers
. Provider agreements with quality commitment and P4P funds distribution terms/approach
. Contracting with payers
. Affiliation and participation agreements with providers
. Provisions requiring adoption of protocols, standards of care, shared savings distribution terms/approach
. Payer, provider and group contracts
. Fulfillment of network adequacy, division of financial responsibility (DOFR) and provider payment terms
Clinical and Care Management . Develop and engage patients in quality improvement and disease management programs
. Develop registries and performance dashboards, identify and report quality targets with provider network participants
. Care coordination capabilities, including discharge planning
. Development of quality and utilization benchmarks and standards, clinical protocols and coordinated work flow processes
. Care management capabilities, including high-risk case management
. Clinical integration with affiliated provider network
. Targeted disease management programs
. Utilization management and utilization review
. Post-acute care management and coordination
. Pharmacy benefits management
. Prevention and wellness programs
Analytics . Financial and payment modeling of P4P measures
. Performance-based funds distribution to affiliated providers
. Financial and payment modeling of P4P measures
. Management of funds for distribution to affiliated providers and downside payments (losses) to payers
. Payment processing and claims adjudication capabilities
. Underwriting
. Reinsurance
. Maintenance of reserves
Governance and Organization . Medical direction and oversight of quality improvement (QI) programs
. Provider engagement in QI program development
. Change management expertise
. Medical oversight of and provider engagement in quality, care coordination, protocol and standards development programs and processes . Medical oversight of care and disease management programs
. Clinical integration governance
. Legal and antitrust evaluation
. Corporate governance with clear role for board, executive, medical direction, state regulatory reporting, compliance, management and operations

I found this to be very similar to the approach taken by my colleagues in our OPEN MINDS Value-Based Reimbursement Readiness Assessment, an assessment designed with specialty provider organizations in mind. The assessment has seven key competency areas—financial performance monitoring, value-based payment capabilities, encounter reporting, revenue cycle effectiveness, strategic alignment around population health, culture of innovation, and workforce adequacy—with 33 functional capabilities.

For more on our specialty assessment, check out my colleague Ken Carr’s presentation, Financial Management Issues In Population Health Management: Preparing For Value-Based Reimbursement, from The 2017 OPEN MINDS Performance Management Institute.

For executive teams that are looking at considering their reimbursements through value-based contracting, developing these new functional capabilities is key to sustainability and success. The phrase “be prepared” comes to mind. For more on these functionality capabilities, check out:

  1. Are You Ready For Risk-Based Reimbursement? How To Assess Readiness & Negotiate Contracts
  2. Reinventing Your Organization In A Complex Market: A Guide To Building A Sustainable, Performance-Driven Organization
  3. Managed Care Comes To Social Services – Some Advice From The Field
  4. Getting Ready For The Era Of Telehealth
  5. Primary Care Practice Readiness For Medical Homes
  6. New York State Medicaid Health Homes Serving Children: Updates On Readiness & Implementation Activities
  7. Key Interoperability Approaches For Success With Value-Based Payment Models (Executive Web Briefing Recording)
  8. New Integrated Certified Community Behavioral Health Clinics Certification Criteria Feasibility & Readiness Tool (I-CCFRT)
  9. Data & Analytics In A Pay-For-Value Market: Strategies For Successful Population Health Management (Executive Web Briefing Recording)
  10. How Prepared Are Health & Human Service Provider Organizations For Value-Based Reimbursement?

And more specifically, to learn how to develop and implement bundled rate reimbursement models, be sure to join us at The 2018 OPEN MINDS Strategy & Innovation Institute on June 5 for the session, “How To Develop A Case Rate: A Guide To Bundled Payments”, led by Ken Carr, Senior Associate, OPEN MINDS, and featuring Paul Duck, Vice President, Strategy & Development, Beacon Health Options.

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