Payment reform:‘Right thing to do,’ but ‘devil is in the details’


By Jeff Keeling

Second in a two-part series. Read the first story at

Mary Snyder, who has experienced the changes health care payment reform has engendered, walks with Tennessee First District Congressman Phil Roe, MD, who as a member of the Congressional Doctors' Caucus is deeply involved in reform policy.

Mary Snyder, who has experienced the changes health care payment reform has engendered, walks with Tennessee First District Congressman Phil Roe, MD, who as a member of the Congressional Doctors’ Caucus is deeply involved in reform policy.

“I really believe Dr. Dykes saved my life,” Mary Snyder says.

Mary Snyder wasn’t just sick late last fall. She was really sick. The Jonesborough resident’s congestive heart failure (CHF) had hit her with a vengeance. She had fluid on her lungs (pulmonary edema), a common side effect of CHF. Snyder’s daughter and primary caregiver, Novice Snyder, took her to see Dr. James Dykes, her primary care physician with Johnson City Internal Medicine. For many years, the standard of care for CHF exacerbation has been hospitalization until a patient is well enough to go home. Thanks in no small measure to major shifts in how health care is paid for, that standard is changing.

“Dr. Dykes said, ‘you know, instead of putting you in the hospital, I think we can take care of this in our acute care clinic,” Novice Snyder recalls. “We said, ‘if that doesn’t put her in the hospital, great.’”

Snyder’s husband died several years ago, and Novice Snyder, an only child, has to take time away from her job when her mother is sick. During hospitalizations, Novice would usually stay overnight with her mom. The episodes were stressful, and they were costly. So the Snyders were all ears when Dykes told them State of Franklin Healthcare Associates (SoFHA) had recently opened a clinic where it was treating several conditions that had previously meant an automatic hospital stay.

Mary Snyder started treatment around Dec. 1, 2015 and went in each weekday for about three weeks, usually for a few hours. She was on home health care for another couple of months, and it’s been smooth sailing since. “She is doing better than she has in years,” Novice Snyder says. “It was fabulous. She was able to be at home she was comfortable, she could sleep in her own bed.”

The difference in how Snyder received treatment has everything to do with health care payment reform and the changes it is helping to drive in clinical practice. The different treatment approach also saved Snyder and Medicare a good bit of money. SoFHA CEO Rich Panek says for CHF exacerbation, treatment cost at the clinic typically will run roughly one-fifth or less the cost of an emergency room admission and the subsequent hospital stay.

Dr. Rick Moulton, medical director of clinical integration for State of Franklin Healthcare Associates.

Dr. Rick Moulton, medical director of clinical integration for State of Franklin Healthcare Associates.

SoFHA opened its acute care clinic just a couple of months prior to Snyder’s treatment. Along with massive “population health” infrastructure, including personnel to conduct much more in-home care and case management, SoFHA and its partners in the Qualuable Accountable Care Organization (ACO) have invested in data analytics, technology and other resources designed to meet payers’ expectations (primarily, CMS, the Centers for Medicare and Medicaid Services) in the new healthcare paradigm.

“The first thing we wanted to do well on was access to care,” SoFHA’s medical director of clinical integration, Dr. Rick Moulton, says. “If you don’t provide access to care, then your patient will end up in an emergency room or somewhere else outside of your care.”

Building the model

Panek says Qualuable, having started in 2013, is in its second three-year term in what’s called a “Track 1 MSSP (Medicare Shared Savings Program) Model.” The approach is significantly tied to CMS and its Medicare Shared Savings Program. The model is tied to patients over a longer term. With Holston Medical Group – SoFHA’s co-founding partner – and other Qualuable members Mountain Region Family Medicine, Medical Care LLC, Highlands Physicians Inc. and now ETSU Physicians and Associates – SoFHA has built infrastructure designed to keep its patients like Snyder healthy, at the lowest reasonable cost.

One crucial measure of success, Moulton says, is hitting a “minimum savings rate” that qualifies an ACO for a bonus distribution under the MSSP model. Only about 25 percent of MSSP programs are successful, Moulton adds. “That means 75 percent have built an infrastructure and did not succeed in their contract, so that infrastructure build, they lost,” he says.

State of Franklin Healthcare Associates CEO Rich Panek

State of Franklin Healthcare Associates CEO Rich Panek

Panek says the minimum savings rate each year comes from a predetermined benchmark set by CMS. Qualuable’s 2016 bar is 2.5 percent, with its preliminary spend benchmark “per attributed Medicare life” (patients in the program) set at $7,729. “To be eligible for shared savings we must save at least $193.23 per attributed life, and successfully report/perform for 33 quality measures,” Panek says. “The amount of any shared savings retained by the group is based on a formula that considers quality performance.”

Qualuable’s quality performance rating was 91 percent for the 2014 performance year, Panek says. For all these efforts – if an ACO hits its shared savings target – it gets up to 45 percent of the shared savings. CMS gets 50 percent, Uncle Sam gets another 5 percent that is “sequestered,” and the ACO’s take is some portion of the remaining 45 percent, adjusted for quality performance.

It hasn’t been easy, Panek says. From new employees to data infrastructure, SoFHA has spent more than $2 million helping develop Qualuable’s overall infrastructure to position its practices to succeed in the new paradigm. In 2016 alone, Panek says, Qualuable’s budget is $2,642,000, with SoFHA covering 36 percent of the total. All told, SoFHA will spend at least $1.5 million for population health and MSSP participation infrastructure this year. And that’s in a model the government considers “no-risk,” because it doesn’t have a downside penalty for not hitting targets – only an “upside” opportunity for a bonus. “We would tell you we have the cost of the infrastructure at risk,” Panek says.

Beyond the infrastructure spend is the matter of getting not just doctors from the same practice, but doctors from multiple practices buying into specific approaches and pulling on the oars together.

“You need all the principals at the table relative to a physician consensus,” Moulton says. “After they reach the consensus that has to be disseminated to over 500 physicians in Qualuable, and it has to be implemented and physicians have to be trained on specific protocol, and it has to be monitored.”

Sharing best practices: An extensivist clinic by any other name…

The people at SoFHA didn’t create the idea of an acute care clinic out of whole cloth. They modeled much of what they’re doing on a clinic HMG had started. HMG was the first practice in the ACO network to begin treating patients with what insurance companies deem “ambulatory sensitive conditions” inside what it named an “extensivist” clinic, as opposed to admitting them to hospitals. Moulton says among the conditions in this category are congestive heart failure (CHF) exacerbation; chronic obstructive pulmonary disease (COPD) exacerbation; urinary tract infections; and dehydration.

Led by CMS, insurers want to see as many as possible of the patients who manifest those conditions treated in a less expensive setting than the hospital. The theory, Moulton says, is this: “If a practice is advanced, it should be able to take care of them in its (clinics) instead of these patients ending up in the hospital.” Therein lay the rub, at least at first, Moulton says. “Most clinics do not have the setup to have a prolonged stay for patients that might need care three to four hours a day, and maybe have that two to three days in a row.”

SoFHA Director of Nursing Dawn Tipton, Moulton and Lead Patient Care Coordinator Carol Shrum all collaborate in the new care models.

SoFHA Director of Nursing Dawn Tipton, Moulton and Lead Patient Care Coordinator Carol Shrum all collaborate in the new care models.

HMG’s chief medical officer Dr. Shelton Hager along with Drs. Eric Schwartz and Chris Neglia, told Moulton, Panek and Dawn Tipton, director of nursing – population health for SoFHA, about their system, the medications they used and other foundational information. “We used it as a best practice and brought it to SoFHA last October,” Moulton says. “Dawn helped with the nuts and bolts of staffing the clinic, getting the medicines for the clinic, and provided space.”

From Oct. 20, 2015 through mid-June, Moulton says, SoFHA had avoided 100 hospitalizations, “just basically using one internal medicine group inside of SoFHA (Johnson City Internal Medicine).” It’s all working, Moulton says, because the SoFHA team learned from HMG’s model, then “created the culture” in which it became accepted at JCIM.

“We did a test run for a month, and holy smokes, it worked beautifully, and the doctors liked it because they’d see their patients maybe two or three days in a row, treat them outpatient, and they’d go home and stay with the family. They’d finish the treatment, and sometimes three days the patient would have been in the hospital they will sleep in their own bed.”

Indeed, Moulton says, the change in approach isn’t just about numbers, though that is largely what drove it at the beginning. The other key result, he says, is “patient comfort and well being” for people like Mary Snyder.

Nonetheless, numbers play a key role in the equation, including numbers derived from bundled payments.

A little bundle —  not necessarily of joy

A practice known as “bundled payments” is one major factor driving providers throughout the continuum of care to change their approach. Tyler Williams, the administrator at NHC Health Care in Johnson City, explained the concept this way to a reporter:

“If you have hip or knee surgery at JCMC, CMS says, ‘we’ll pay you this flat rate for all of the care that needs to be required around that hip or knee replacement,’” Williams says. Those procedures are just two of many examples around which the bundled payment system may operate.

“Anything that happens within the next, say, 90 days after that surgery, is considered a part of that bundle and will have to be paid for out of that lump sum that we’ve given you.” In this case, “you” is the entity known as the “indexed provider.” Often that is a hospital system, but it can also be a skilled nursing facility like Williams’s, or a physician practice – whoever the initiator of the procedure is.

Say Mountain States Health Alliance is the initiator for procedure ‘x’ for Medicare patient Mrs. Jones, Williams says, and x’s bundled payment total is set at $15,000 by CMS. All the ancillary providers involved in Mrs. Jones’s care episode bill CMS in the standard way – essentially, fee-for-service. CMS then summarizes the entire thing. If it all adds up to some amount less than $15,000 – say, $12,500 – CMS takes a share of the difference, and MSHA gets the rest. “If it comes back over,” Williams says, “they’ll come back to the indexed provider and say, ‘you owe us the difference.’”

Independent physician B.J. Smith and Tyler Williams, NHC Healthcare administrator.

Independent physician B.J. Smith and Tyler Williams, NHC Healthcare administrator.

That shared savings and shared risk model has ripple effects beyond the indexed providers, says Dr. B.J. Smith. Indexed providers can follow trend lines from other players in the care continuum. “A hospital may say, ‘you’re doing a bad job taking care of our hip and knee patients,’” Smith says. ‘Shape up, or we’re going to start sending them over to this other guy.’”

The practice is gaining steam, Williams says. CMS has mandated bundled payments for hip and knee replacements in 75 major markets.

“Our model is completely changing. The readmissions is just a small piece of the bigger picture. The underlying theme to all of those is quality-based care and accountability.”

“MACRAeconomics”: When is it too much, too fast?

The Qualuable partners entered a three-year MSSP program in 2013, and reupped this year. In the interim, Congress passed a replacement for the long-loathed Medicare “Sustainable Growth Rate.” The SGR was a flawed law that had to be tweaked each year through the so-called “doc fix,” to avoid huge payment cuts to providers. It was also based mostly on the old fee-for-service model. First District Tennessee Congressman Dr. Phil Roe, R-Johnson City, helped author the MACRA law, which passed overwhelmingly in April 2015.

The new law is complex, it’s designed in part to save the government money, and it accelerates payment reform. Its implementation isn’t sitting so well with many providers. The American Medical Group Association says the law changed the healthcare financing system, “in the most significant and far reaching way since (Medicare’s) inception in 1965.” The group’s Institute for Quality Leadership topic this year? “Succeeding Under MACRA and Risk-Based Payment.”

Mountain States Health Alliance (MSHA) CEO Alan Levine said the law is accompanied by 900 pages of rules, and that data are showing 85 percent of small physician practices will be penalized under the new system. By 2018, Levine says, 90 percent of Medicare payments are slated to fall under value-based arrangements.

“This thing isn’t even a final rule yet,” Levine says. “We’re talking seven months from now, their whole payment system changes. There are four sections: quality resource use, advancing care information and clinical practice and proven activities. Each of these buckets is an element of what your payment will be. I think they should be doing this a lot more slowly and a lot more incrementally.”

Roe says he agrees, and as an author of the law, he’s doing what he can to convey providers’ concerns. Roe, who worked as an OB/GYN physician for more than 30 years, keeps his finger on the pulse of providers, and says he’s developed good relationships with people at the Mayo Clinic, Johns Hopkins, Vanderbilt and other major medical centers. “They know they can come to me, and I know they’ll tell me the truth about what’s going on,” Roe says. Using what they learn in those conversations, he and colleagues in the Congressional doctor’s caucus have spent time with the man overseeing MACRA’s implementation: Dr. Pat Conway, CMS’s chief medical officer and deputy administrator for innovation and quality.

“The devil’s in the details,” Roe says. “We brought (Conway) in and said ‘look, we want to help you get this right and when we’re hearing problems out in the field, for instance, if it’s an implementation issue where we need to wait a year, wait a year. Don’t cram it down and expect success when you know you’re going to get failure.’ So we’ve worked on that.”

For all its difficulties, payment reform is the right direction for American health care, Roe says. “It’s the way to look at health care. A continuum of care from the time of healthy children’s lifestyles all the way through your life. And your patient becomes your partner in this. It’s to their benefit and to your benefit. Mainly, you want to get better outcomes to patients at lower costs.

“We’ll get this right and there will be hiccups, there’s no questions about that. But before they become tidal waves, we just want them to be little ripples in the pond.”

“The right thing to do,” but it takes everyone

Physician groups are adapting to healthcare reform, Panek and Moulton say. Hospitals are too, as well as they can while being hard hit by the continuing shifts to outpatient care. But two more important pieces will be part of a successfully completed puzzle, provider representatives say. One is the payer community, led by CMS and the government. The other piece is the patient population itself.

On the regulatory end, providers who speak to the Business Journal mention several points. Dr. B.J. Smith, who has a solo practice that dovetails well with the changes, says with the heavy reliance on data sharing between providers, some of the older privacy laws inhibit exchange of information. “We really depend on easy, quick information for those patients who are transitioning from the hospital to post-acute to home,” Smith says. “We need efficient exchange of information. Oftentimes privacy laws have, maybe unintentionally, gotten in the way of that exchange of information.”

It’s also tough for smaller practices to meet the raft of reporting requirements necessary to meet CMS regulations under the new payment models. Smith expects small practitioners to align at some level with larger ones, or for entrepreneurs to help meet some of those requirements by creating boutique services for smaller providers. But MSHA Chief Medical Officer Dr. Morris Seligman says with bonuses and penalties becoming more and more prevalent under the new model – and reporting requirements expensive to maintain – things could get as tough for small practices as they’re getting for hospitals due to the lower admission volumes.

“If you are an independent physician, or even in a small group, the resources you will need not only from a tech perspective but also personnel for monitoring all this will be cost-prohibitive,” Seligman says.

Beyond the pace of reform from above, the willingness for patients to take more responsibility for their own wellness is a critical issue. Moulton says a large part of SoFHA’s top line expense has involved home visits and case management under a team led by Carol Shrum, a nurse practitioner. Patients who comprise part of those “attributed lives” to which SoFHA CEO Panek refers are educated on their own disease processes, and cajoled to be part of the solution.

“We have to create systems to make sure you will do well, and that means tracking you down when you don’t show up for needed tests or needed appointments,” Moulton says. “That’s the paradigm shift that SoFHA has gone through over the last five years.”

If Mary Snyder is any indication, some patients are responding well. She says she’s lost 80 pounds at the behest of her cardiologist, and does everything he tells her to in order to mitigate her CHF. “If he tells me to jump, I ask, ‘how high?’”

Those kinds of responses will be imperative if the changes occurring are to be successful, providers say. Like Roe, they say the shift is the right thing. “It’s a major transformation for the hospitals, and it’s been a major transformation for our groups,” Moulton says.

Panek says SoFHA and other physician practices have to consider the hospital systems a partner. “There’s things that we all agree on and we implement and there’s things that we approach differently, but we still talk and work through these things. We have to have the best hospital system, the best equipment, the best surgeons for us to do well.

“Any link in the chain that’s weak, we’re in trouble. Because we’re accountable for all that.”


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