For many organizations, the move to a value-based reimbursement (VBR) reimbursement can be daunting. There is the need to negotiate contracts, determine costs, reconfigure technology, train staff, and adjust the revenue cycle. But, after all the system changes, the big question is financial sustainability. Can these new program models provide stability in revenue and margins?
To understand how executive teams can navigate these challenges, I heard from executives of two organizations at The 2019 OPEN MINDS Management Best Practice Institute during the session Building A Value-Based Sustainability Strategy: How To Develop Innovative Programs & Manage Your Service Line Portfolio. The session featured Jamie Vandergon, LPC, President and Kim Scott, Chief Executive Officer at Trillium Family Services; and Faith Richie, Senior Vice President, Development, Telecare Corporation. Both of these organizations have made significant investments in moving their financial models to ‘the next level’.
Trillium Family Services talked about two VBR models they have participated in – changing residential beds to slots and a tiered case rate for outpatient services. Ms. Vandergon and Mr. Scott explained that in 1999 they had 49 residential beds for children with traditional funding, but they realized that the future was in providing community-based care. The Trillium team worked with the Oregon legislature on a budget model that allowed them to provide residential alternatives using a slot-based methodology. More recently, Trillium has participated in a tiered case rate with risk corridor and incentive payments for outpatient services that was developed by a coalition of health plans and provider organizations. This is a newer model and Trillium does not yet have results.
The results? For the conversion of residential beds to slots, individuals with no involvement in the child welfare system had a mean residential stay of 130 days and a mean community length of stay of 87 days. At discharge, the average difference between Child Abuse Potential Inventory at the beginning and end of treatment was 20.75. At six months follow-ups 84% were living in a family home, 12% were living in a foster home, and 4% in an institutional setting. Trillium did not share specifics on the financial results of this model.
Ms. Ritchie from Telecare talked about creating a pay-for-success (PFS) model for community-based mental health services for individuals with serious mental illness (SMI) in Santa Clara County in California. The goal of the program is to reduce participants’ utilization of emergency, inpatient, and contracted psychiatric services, as well as jail days. Telecare is incentivized for meeting these goals (see Santa Clara County, California, Selects Telecare For Mental Health Pay-For-Success Project and Social Impact Bonds—A Performance Update & An Opportunity). The clinical model is straightforward – housing and a flexible array of clinical services are provided to individuals with SMI who are high utilizers of services in order to promote self-management.
The financial model is a little less straightforward. The overall net cost of the project is $19.6 million (including the federal Medicaid share). Over the course of the six years, Telecare will receive or have withheld $1.4 million in service fees based on their performance. If the agreed upon targets are met at the end of the six year period, Telecare will receive an additional $11.2 million. Its important to note that Telecare is at-risk for the cost of services including housing for the project.
At the end of the day, I walked away with three big lessons in assuring the sustainability of programs reimbursement based on performance and value – know your costs, manage your culture changes, and have configurable technology.
Know your costs – Ms. Ritchie explained that when Telecare entered into their PFS arrangement, they had a proven clinical model, but it was a new geographical area. As a result, they drastically underestimated the cost of housing by $2 million (they are Silicon Valley adjacent). She noted they should have completed a careful evaluation of the real estate market and suggests when developing a new payment model try to limit the number of new variables. Mr. Scott explained that before Trillium Health Services enters into any sort of value-based arrangement, they do an extensive cost analysis that includes facility replacement, workforce, and the need for cash reserves.
Change your culture – Ms. Vandergon noted that after adopting a VBR arrangement its important to monitor your culture and provide continuous education. After Trillium adopted a model that removed utilization review for inpatient services, staff were extremely happy with having less paperwork. However, clinical professionals then became too lax without the reviews and length of stay actually crept back up, which effected cost.
Dashboards and a configurable EHR – Both organizations noted that it its very important to have an easily configurable EHR and dashboards to track metrics and performance. Ms. Vandergon noted that they didn’t properly take into account the need to adapt their EHR and ended up having to complete a lot of manual processes. Additionally, she explained that you have to be prepared to bill both under the VBR arrangement while still submitting FFS claims for discrete services within the arrangement. This was a requirement by the state who was afraid of being audited by the federal government and something they didn’t anticipate.
For more on how organizations are implementing VBR, join us at The 2019 OPEN MINDS Executive Leadership Retreat on Monday September 9 in Gettysburg for the Innovative Treatment Programs For Value-Based Partnerships: An OPEN MINDS Executive Summit & Showcase. The Executive Summit will feature case studies from Andrew F. Vitullo, Vice President of Development, Kolmac Outpatient Recovery; R. Marie Wenzel, MSW, LSW, PEACE Program Director, Horizon House, Inc.; Kathleen Mahieu, ME.d., MBA, Lead Business Consultant for Strategy & Innovation, Aetna Behavioral Health; Brandi Mauck Phillips, Chief Executive Officer, Allegheny HealthChoices, Inc.; and Lee Anne Langhurst, LCSW, Vice President, Account Management, Talkspace.