Payment reform spurring sea change at clinical level


Above: Bill Spears builds his strength at NHC Health Care in Johnson City. (Photo by Jeff Keeling)

By Jeff Keeling

(First in a series)

NHC Health Care Administrator Tyler Williams

NHC Health Care Administrator Tyler Williams

Bill Spears pedals a specialized exercise bike inside a therapy room bustling with activity at Johnson City’s NHC Health Care. The Kingsport resident’s arms and legs work in tandem under the watchful eye of a tech. Spears came to NHC from Holston Valley Medical Center, where he had been admitted after a stroke. He wants to go home and stay there, quite naturally, and so he’s working hard to do the things that may prevent an avoidable return to the hospital.

“They said I was doing good,” Spears says.

“They” are the people at NHC. Along with all the other players in Spears’ “continuum of care,” from his primary care and specialty physicians to the hospital system itself, they want Spears to stay home as well – barring unavoidable circumstances that require a readmission to the hospital. For the past several years, value-based payments and a financial brew of carrots and sticks driven by the Centers for Medicare and Medicaid Services (CMS) have begun flipping traditional fee-for-service medicine on its head. The reforms, which come with an alphabet soup of acronyms – “MIPS” and “MACRA” are top-of-mind these days in the provider community, while “MSSP” is kind of old hat – have spurred the creation of accountable care organizations (ACOs) and other collaborations designed to adapt to the changing model.

Talk to the providers who are navigating the changes, and you’ll often hear support for the theory that’s driving the changes, even as they struggle – along with every other element of the health care sector – to translate the theory into practice.

“This is something we’ve really tried to work on for patients for years,” says Dr. B.J. Smith, who sees patients at NHC through his recently formed company, Integrated Health Transitions. “We want patients to get well and go home, and be able to stay home and have the best quality of life they can. Previous payment models wouldn’t reimburse for those sorts of things. They take a lot of time, and take a lot of effort on the side of the health care system. Previous models weren’t designed toward that at all.”

The reform theory, in a nutshell, goes like this: Traditional fee-for-service payment models created a segmented care model in which providers were paid “to do things to people.” This drove up health care’s cost in the U.S. without making the average American healthier than people in advanced economies that have much lower costs of care. Hospitals, physician practices and post-acute care facilities such as NHC did their own thing, billed for it, and focused on volume.

“We’ve tried to solve a societal problem in a fee-for-service system with really very few governors on it, so we’ve built systems that are very good at managing care that’s critical in nature,” says Rich Panek, CEO of State of Franklin Healthcare Associates (SoFHA). SoFHA is a partner with several other practice groups in a highly successful ACO called Qualable, which puts the practice deeply into value-based payments. “We’ll go ahead and race two helicopters to a car wreck on the highway. If you get in a bad wreck, you want to be in the United States … but we don’t do very well with preventive and chronic care, because the systems weren’t designed that way.”

One result of the focus on volume, CMS and other payers concluded, was far too many avoidable readmissions, and while that may have been good for business under the fee-for-service model, it was neither sustainable on a macroeconomic level nor the best thing for patients and their families.

Dr. B.J. Smith consults with NHC patient Charlotte Luten

Dr. B.J. Smith consults with NHC patient Charlotte Luten (Photo by Jeff Keeling)

“Continuity of care throughout the continuum really is the best situation for each and every patient,” says Tyler Williams, NHC Johnson City’s administrator. “When a patient comes in, if they’re here for a couple days, they bounce back to the hospital, they’re there for a couple days, come back here – that’s not an ideal situation. There’s not the oversight and follow through, and that’s just the nature of going through different levels of care.”

Payers, led by CMS, felt a need to start rewarding providers for their ability to keep patients healthier, and do it in settings and using practices that reduced cost. Several years ago, the introduction of MSSP (the Medicare Shared Savings Program) and other newfangled payment models began bringing home to providers that the changes were real. And one of the most important methods for reducing cost was reducing readmissions, since inpatient hospital care is the most expensive link in the healthcare chain.

Readmissions come to the fore 

It was right there in black and white. Mountain States Health Alliance reported to bondholders that its January to March quarter saw inpatient admissions decline by 530 (3.4 percent) compared to the same quarter of 2015. Some of that was thanks to a mild flu season, but the first note in the “management discussion” went to the heart of reform:

“Readmissions declined by 240 in the quarter as intensive efforts, which have been made in partnership with physicians and post-acute providers to reduce overall cost of care in alignment with Medicare and Payer value-based purchasing initiative, gain traction.”

Changes at CMS with respect to reimbursement philosophies have been accelerating, with hospital systems getting nicked if they don’t meet certain readmission rate targets. Lower readmission rates mean fewer inpatients, though, and fewer inpatients mean major bottom-line reductions – especially while the payment models remain in transition. MSHA CEO Alan Levine, though, is convinced there will be no turning back from payment reform, especially as it becomes ever easier for payors and consumers to access reliable data about cost and quality.

“When I got into this (industry) as an assistant administrator,” Levine says, “we’d have discussions about, ‘we’re not hitting our admission target. How do we get more admissions?’ There are still large multistate systems that have that philosophy. They think this is just a passing phase. I don’t think it is. The infrastructure of the payment system is changing.”

MSHA COO Marvin Eichorn calls the change at this point “a mixed bag.” MSHA is in year four of a value-based payment model with CMS, and “avoidable readmissions” as determined by the agency incur a 3 percent penalty. “But if you just look at it financially, the penalty is a fraction of how much revenue you lose if you do in fact achieve the lower readmissions,” Eichorn says.

So even as “success” equates to some short-term pain, Levine says MSHA is pushing forward.

“We built into our incentive program this year for all of our executives, and everybody, reduction in readmissions,” Levine says. “It’s a weird business model. We’re incentivizing our own people to destroy our own business.”

Whether it’s the road to destruction or the journey of disruptive innovation remains to be seen. Regardless, the pressure to reduce readmission rates is not solely impacting hospitals. Williams says NHC’s Johnson City facility had a readmission rate of about 23 percent last year.

Levine says with 45 percent of the variation in total cost of care in the post-acute environment, “that’s where there’s a lot of attention right now.” Williams agrees. “CMS is currently measuring skilled nursing facilities and rehab centers for their readmission rates,” he says. “CMS hasn’t announced, but we expect there will be penalties for skilled nursing facilities, probably sometime in 2018.”

The continuum of care

The hope is that it all comes out in the wash as payment models keep pace sufficiently with the changes providers are making. Those changes are taking place throughout what’s called the continuum of care, from post-acute facilities like NHC to physicians’ groups like SoFHA. Dr. Morris Seligman, MSHA’s chief medical officer, says all are intertwined in efforts to keep patients healthier, make their stays in hospitals and post-acute facilities shorter and more effective, and keep them out of the hospital whenever possible.

“As the local groups become more sophisticated in managing their patients – and they’re incentivized too, through their own ACO and other incentive programs to do a better job of managing and keeping patients out of the hospital – that’s just another piece of the equation,” Seligman says. “And as we get better at developing the local network with post-acute, that’s not only going to affect how long patients are staying (in hospital) waiting to go to post-acute, but better management on the other end is going to affect inpatient (admissions) as well.”

Mountain States Health Alliance CEO Alan Levine. (Photo by Adam Campbell)

Mountain States Health Alliance CEO Alan Levine. (Photo by Adam Campbell)

Levine says MSHA is paying a company called Reliant to find patients most likely to end up with readmissions. Reliant uses predictive modeling, and has identified the 45 most likely “Diagnostic Related Groups” to have a readmission within 30 days of discharge. For patients who fit certain parameters, discharge planning begins upon admission. Additionally, because post-acute providers play a major role in readmissions, MSHA has sent a request for proposals to all the region’s post-acute providers asking for their readmission rates and overall cost of care. Levine says the end result will be “a small number of facilities that will be in our preferred network.” Wellmont Health System already has implemented its own preferred network of post-acute providers.

While there are plenty of kinks to work out in practice, NHC’s Williams says NHC hasn’t wasted time bemoaning the changes. Hospital systems’ reimbursements already are getting nicked if they don’t meet lower readmission rates and other quality targets, so those systems are demanding accountability from the skilled nursing facilities that provide post-acute care. For the sake of business, and also for the sake of people like Bill Spears, Williams doesn’t want NHC to be left on the outside looking in as hospital systems develop preferred provider networks for post-acute care.

“You can moan and groan about it, or whenever there’s change you can look for an opportunity,” Williams says. “We realize change is coming, and there’s going to be opportunity. What it’s going to do going forward, in my opinion, is those subpar providers – it’s going to be nearly impossible for them to stay in business.

Number crunching and hand holding – the providers develop their methods

NHC has responded in a variety of ways – all of which require top line expense – to make sure it’s a provider of choice as the reforms continue. Data is crunched like never before to mine information that can inform best practices, and collected for submission to CMS and other payers to prove quality metrics are being reached – a requirement that will only increase as the payment model continues changing and consumers become more savvy.

“You can go to the CMS website (, and it shows all of our data, including our readmission rates,” Williams says.

Even Smith, small as his practice is, must figure out a way to design and build the types of data metrics that are important to payers. “That’s been something that’s very different, but frankly, if I can’t report them and I don’t show I’m complying with these things, they’re going to start adding penalties – taking money away from reimbursement that I otherwise would receive.”

Also at NHC, as well as SoFHA, nurse practitioners, case managers and social workers fill roles in this approach that once might have led observers to scratch their heads and ask, ‘that’s a healthcare job?’ Smith, who currently bills Medicare using a standard payment model but plans to join an ACO, is also helping NHC lower readmissions and length of stay. Time was, a physician would visit NHC once or twice weekly, and a nurse practitioner for another handful of days. Now, Smith is in five days a week, along with two full time nurse practitioners. They’re even helping facilitate policies and procedures to move NHC toward the Holy Grail – better outcomes, accomplished in less time, with fewer readmissions.

“Dr. Smith and his nurse practitioners here at this center, the last three months, their average readmission rate has been right around 5 percent,” Williams says. “His model is proving, at least from my perspective and NHC’s perspective, that it does work.”

The same holds true at SoFHA, where Panek says they track readmission rates per facility for their patients. Dr. Randy Hoover of SoFHA has staffed three nursing homes with a system whereby nurse practitioners see patients each weekday, with additional physician coverage.

“It’s the same model that BJ’s working,” Panek says. “We saw that 2015 readmit rates were higher than we had hoped, so for our patients we wanted to staff the nursing homes at a higher level, and we have had a substantial decrease in readmits doing that.”

Across the therapy room from Spears, Charlotte Luten is meeting with Smith. Luten, too, wants to go home and stay there. It is with patients and their families that the rubber truly meets the road as providers deal with reform. Smith and the nurse practitioners at NHC begin networking with doctors at the hospital before a patient even transitions to post-acute care, Williams says. During the post-acute stay, Smith works closely with staff, teaching them how to recognize dangerous situations or improve on care that’s being delivered. And when patients leave for home, “here are your prescriptions, see you in a couple of weeks, and good luck until then” is no longer standard operating procedure.

“We’re making personal calls to arrange for some sort of transportation, or making sure some follow up is done,” Smith says. “Things that typically the patients were depended on to do. We’re having to go an extra step, to make sure they get medicines when they go home. Oftentimes as physicians, we didn’t try to see, ‘ok, does their insurance pay for this medicine?’ We would just say, ‘this is the best medicine for you,’ not knowing that many times patients don’t fill those medicines if they’re too expensive. We’re having to be more active in those things.

“Patients want to be well cared for. They don’t want to have unnecessary complications, and if you focus on preventing those things in the first place, patients will appreciate that.”

Note: Several weeks after his therapy session, Bill Spears was “doing great,” according to Smith. He was scheduled to be discharged and sent home the week of July 4.

Next month: How SoFHA and Qualable are having success with the sea change; players speak out on potential reform pitfalls, needed tweaks; Ob/Gyn MD-turned-Congressman Phil Roe weighs in; “bundled payments”(and their importance) explained.


About Author

Comments are closed.

Pin It on Pinterest

Share This