Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid


Good Data, Better Value-Based Care Can Boost Population Health

Timely data is key to reducing the costs of a hospital’s most expensive high-risk patients, while value-based contracts sustain the population health management efforts.

Source: Thinkstock

With just 5 percent of patients accounting for nearly one-half of the nation’s healthcare spending, hospitals and health systems have a significant opportunity to address a large proportion of their costs by improving the health of a relatively small number of individuals.

In order to do so, healthcare organizations need to develop population health management interventions tailored to their high-risk patients, including super-utilizers and those with a variety of chronic conditions.

Real-time clinical data access is the foundation for patient interventions that reduce both unnecessary utilization and overall care spending. Providers must use the data to stratify their patients by risk, and then leverage that information to establish targeted care plans that help them cut costs.

But gaining access to comprehensive, timely health data is a major challenge for hospitals and health systems. The information is hard to find and even harder to use for identifying high-risk patients who could benefit from population health management efforts.

How can healthcare organizations start a population health management journey to reduce the costs of their high-risk patients? And just as importantly, how can they get paid for delivering proactive, comprehensive, preventative care?

Finding the right high-risk patients

Risk scores are key to finding the patients that have the greatest probability of experiencing expensive adverse healthcare events.

However, high-risk patients come in a variety of shapes and sizes, and may respond very differently to the same intervention.

For example, high-risk patients with complex medical conditions may not respond well to basic educational initiatives on improving lifestyle. They may require a tailored care plan that addresses multiple chronic conditions.

“Risk stratification will need to provide insights into which patients will respond to which interventions at the right time in order to provide value to healthcare organizations,” Chilmark Research recently stated. “Risk stratification efforts must be coupled to both the downstream outcomes desired by the organization and the actual interventions the organization offers.”

To connect high-risk patients with the right intervention, hospitals and health systems should create clear and distinct definitions of the patients most qualified for each of their programs. The definition should align with the organization’s population health management resources and community partnerships, but also be flexible to account for the fact that the needs of individual patients are constantly shifting.

Zachary Hafner, MBA, National Partner of Consulting at the Advisory Board

Zachary Hafner, MBA, National Partner of Consulting at the Advisory Board

Source: Advisory Board

“This is one of the most interesting ‘ah-ha’ moments that the folks have in thinking through population health,” stated Zachary Hafner, MBA, National Partner of Consulting at the Advisory Board. “You have a population pyramid and there is a small number of people at the top of the pyramid that account for a significant portion of the cost, but providers don’t realize that it’s not always the same individuals who comprise that wedge of the pyramid.”

A high-risk frail elderly patient may pass on, while an asthmatic pediatric patient with housing instability finally receives coordinated care and moves down the pyramid. At the same time, a patient with warning signs of diabetes and heart failure may fail to change his lifestyle and transition to the high-risk wedge. Providers also have patients who linger in the high-risk space.

Hospitals and health systems will be able to control costs and improve outcomes by simultaneously targeting a specific population based on the organization’s resources and monitoring patients who move in and out of the high-risk bracket.

How to Get Started with a Population Health Management Program

The challenges of accessing good data

At the heart of high-risk patient interventions is population health data. But real-time, reliable information is hard to come by.

Hospitals and health systems traditionally start with claims data to pinpoint their most expensive patients. Providers can easily access the standardized information from payers, but the retrospective nature of the information may not meet all their population health planning needs.

Without timely information, providers may miss the chance to prevent an unnecessary emergency department visit or avoid a major event, such as a heart attack.

Claims data also is not comprehensive enough to truly identify high-risk patients, who experience medical and socioeconomic issues not listed in medical billing information, stated Hafner.

“Just because you have information on claims doesn’t necessarily tell you about a person’s health condition,” he said. “You can imagine someone who has diabetes, congestive heart failure, and an emerging kidney problem. You look at their utilization pattern and they have lab tests and visits to a primary care physician, maybe a visit to the emergency room, but you cannot tell from looking at that data what conditions this person has.”

Additionally, risk profiles that only use data from claims and their EHR account for just ten percent of patient’s actual chances of undergoing a costly and serious outcome, Chilmark Research reported.

At the Camden Coalition of Healthcare Providers in New Jersey, the need for real-time health data led to the creation of a health information exchange (HIE) with its affiliated hospitals and locations. The HIE gave the organization real-time data to identify high-risk, high-cost patients.

Kelly Craig, Chief Strategy and Information Officer at Camden Coalition of Healthcare Providers

Kelly Craig, Chief Strategy and Information Officer at Camden Coalition of Healthcare Providers

Source: Camden Coalition of Healthcare Providers

“We built out a health information exchange in our community and we were able to start feeding in admission, discharge, and transfer (ADT) feeds from those healthcare institutions that we were able to look at every day and also get a list of who had been admitted to the hospital within the last 24 hours,” said Kelly Craig, the organization’s Chief Strategy and Information Officer.

With real-time data supplementing the insights from claims information, the Camden Coalition established criteria for identifying high-cost, high-risk patients.

The organization targets patients who have had two or more inpatient admissions within the last six months, Craig explained. But if the admission is not related to a chronic condition or involves a cancer patient, then the patient does not qualify for the high-risk patient intervention.

Similarly, nursing home patients may account for a large portion of total healthcare costs. But because they have constant access to medical care, they typically do not need as much additional support for their high-risk needs from other providers.

Real-time data access also enabled the Camden Coalition to flag patients who may have social risk factors contributing to unnecessary utilization and excessive costs. When potentially high-risk patients interact with the care system, providers conduct chart reviews to look for social risk factors.

“Once we get someone’s name through the health information exchange, we can actually go into the EHR and do a chart review to get that detailed information,” Craig said.

“We get a list of people with two or more inpatient admissions and then from there, they have to have at least two chronic conditions,” she continued. “Then, we’re looking for three other high-risk indicators that we realized are causing folks to go in and out of hospitals. We’re looking for housing instability, mental health comorbidities, or substance-use comorbidities, if not both. Often people have both.”

As high-risk patients are identified in real-time, the Camden Coalition sends a team of providers to address the patient’s medical and social needs while he is still in the hospital. If the patients accept the intervention, they receive support from a multi-disciplinary team that includes a nurse, community health worker, psychologist, and other community-based resources.

Patient-Reported Data Helps Providers Find High-Cost Patients

The Difference Between Big Data and Smart Data in Healthcare

Creating tailored care plans to manage high-risk patients

Developing targeted care plans is the next step for reducing the costs of the defined high-risk patient group. A well-designed intervention addresses both the medical and social needs of complex patient groups.

WellSpan Health, an integrated health system of over 1,200 physicians and advanced practice clinicians at more than 130 care locations, recognized that their high-risk patient group needed to connect with not only the right provider, but the right community resources.

Chris Echterling MD, WellSpan Health's Medical Director of Vulnerable Populations

Chris Echterling MD, WellSpan Health's Medical Director of Vulnerable Populations

Source: WellSpan Health

Through the Bridges to Health program, providers use an enterprise data warehouse to pinpoint patients who incur $50,000 or more in charges over three inpatient, observation, or emergency department visits in a year, explained Chris Echterling MD, the system’s Medical Director of Vulnerable Populations.

Once patients agree to join the program, Echterling and his colleagues connect the high-risk individuals with a multi-disciplinary team of providers. Similar to the care teams of the Camden Coalition, WellSpan’s collaborative provider group includes a physician, nurse case manager, behaviorist, nutritionist, physical therapists, and financial counselors. The system also works with a county human services case manager.

The Bridges to Health program also established a call center for high-risk patients seeking medical advice. Providers triage patient symptoms during the call and direct them to the appropriate care setting.

“The operator always passes on every call regardless of how apparently insignificant it is to one of the providers on-call,” he stated. “We really know that patient, so we can interpret what they mean when they say they have chest pain or they’re having an anxiety attack and we’re able to come up with a solution that usually that doesn’t involve going to the emergency room.”

“It also helps that we’re almost always able to say, ‘I’ll see you tomorrow morning,’ or, ‘Our nurse will see you if you’re home tomorrow morning,’” he continued. “A lot of times when the patients know that they will have immediate access to us, they don’t feel like they need to go in right now if they know they can see us within a couple hours.”

The program has decreased inpatient, emergency department, and hospital observation utilization between 25 to 40 percent. A 30 percent decrease can equate to about $200,000 in savings over a patient population, Echterling said.

The intervention also shortened hospital lengths of stay by boosting clinician confidence.

“Even for those who go into a hospital, we see a shortened length of stay because of the course of communication with the inpatients,” he said. “The patients are able to be discharged because the hospital team feels comfortable knowing we are going to see them tomorrow morning or we are going to see them tomorrow at their home. They say, ‘Oh, they definitely can go home since I know you’re there to catch the patient after we discharge them.’”

ACOs Restructure Healthcare Staffing for High-Risk Patients

Designing Care Models to Treat High-Need, High-Cost Patients

Generating revenue to support population health management

Identifying and treat high-risk patients should improve health outcomes and prevent costly healthcare events. But establishing a process to pinpoint patients and developing comprehensive care plans requires significant up-front capital and resources.

Unfortunately, the traditional fee-for-service payment model does not support the costs of starting up population health management programs or providing care navigation services.

Until providers engage fully in value-based care payment models, reimbursement structures are unlikely to cover the costs of the interventions, cautioned Hafner.

“If a health system is at full-risk for a population, these interventions pay for themselves,” he said. “The top one-percent of a commercial or a Medicare population has a per-member-per-year or an annual spend per person in the $250,000 range. You take a group of people whose care is $250,000 a year. You reduce that to $100,000 a year and you do that for 20 patients, you start to see real dollars add up.”

“But, in fee-for-service, and even in shared savings model, there’s just not enough dollars generated to pay for those types of multi-million-dollar investments to build and support those types of care models,” he added.

At the moment, however, few hospitals are operating under full-risk financial arrangements. Only one-third of healthcare organizations received over half of their revenue from some type of risk-based model in 2016, said recent a Brandeis University study.

“For health systems that only have a little or no risk or are only trying to dip a toe in the water, those models don’t pencil out,” Hafner acknowledged. “But, for health systems that are going hard into Medicare Advantage, are working directly with employers on shared risk deals, and are being aggressive with their own population health management, they can really achieve a very significant impact.”

Hospitals also may not have access to full risk models in their market. AMGA reported in 2016 that 18 percent of healthcare leaders said that they have no commercial risk-based reimbursement plans in their market and another 46 percent said only 1 to 19 percent of commercial plans offered two-sided risk.

There are several reasons why payers may be reluctant to establish accountable care contracts with two-sided financial risk models, explained Joe Martin, Executive Director of Pennsylvania's Healthcare Cost Containment Council.

“If you’re an insurer, you have the issue of people switching insurance plans so you’ve made the upfront investment, then, they switch to a different company,” he said. “The original insurer is wondering, ‘Where’s the return on my investment? I’m not seeing it. Somebody else is getting it.’”

But providers who tend to contract based on the patient’s outcomes, not the payer’s financial return, have a stronger incentive to move into value-based care.

At WellSpan Health, a collaborative approach to designing new payment models is helping to fund their population health management efforts, said Echterling. 

“We’ve chosen several accountable care contracts that are mainly commercial and Medicare Advantage,” he said. “Then, we recently negotiated a different payment model with at least two of our managed care organizations.”

“They care deeply about keeping our patients out of the emergency room and we do too, but we need to recover some of the costs of all the intensive services. So, we’ve come up with an agreement with two of them where they have agreed to pay us an amount that, while not covering their cost, is at least getting us close to that.”

The health system justified the difference between payment and expenses by seeing the program as a learning lab. Developing novel care models and sharing best practices hold value, but the payment system will need to shift further to accommodate large scale high-risk patient interventions, Echterling noted.

“Ultimately, we’re really preparing for what we see as an increasingly managed care value-based payment system in the future and we know we’re going need to have these skills and we believe it makes sense to start developing them now, even if the current payment environment overall is not necessarily going to pay for interventions like this at this moment,” he stated.

In addition to addressing the needs of individuals at the top of the cost pyramid, risk-based reimbursement will gear organizations towards preventing rising-risk patients from ever incurring more significant spending.

Using the savings from high-risk patient interventions, providers can expand their population health management efforts and prevent rising-risk patients from incurring excessive costs.

Organizations typically start by addressing the needs of high-risk patients because they generate the greatest cost and care burdens. Providers can avoid a majority of the unnecessary utilization and spending though by developing care plans to prevent rising-risk patients from experiencing worse conditions or events.

Using real-time data and value-based contracts, providers can work down the pyramid and extend population health management efforts to a broader range of patients, keeping patients at the bottom from ever reaching the top of the cost pyramid.

Exploring Two-Sided Financial Risk in Alternative Payment Models

This article was originally published on September 11, 2017.


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