Navigating Volume to Value: A Formula to Improve Patient Health, Provider Finances

In today’s transaction-based service model, patients make their own appointments, the care they get varies depending on the provider’s memory and skill level, and it is up to patients to coordinate and manage their own follow-up. The population health management (PHM) business model moves patients away from accessing the health care system on an as-needed basis—using whatever benefits their insurance will allow—to a true value-based market, which is more patient-centric, more accessible, provides better value, and allows a higher degree of consistency. “CareMore is one of the true, shining examples of population health management on the delivery side and on the success side, in terms of creating a viable financial model as well,” says Zachary Hafner, Principal, Oliver Wyman (Chicago, IL), a global management consulting firm. “Across all funding sources, we are going to see an incredible change in the way consumers access health care and purchase health care.” Hafner was a member of a three-person panel discussing “Finding a Winning Business Model in Population Health Management: CareMore Case Study” held on June 17 during the HFMA National Institute ANI 2013 in Orlando, Florida. Two other panel members included Brendan Baker, CFO, and Scott Mancuso, MD, Senior Medical Officer, CareMore Health Plan, Cerritos, California. Past Versus Future Consumers who are buying care based on value today represent just $232 billion of the total $2 trillion health care market. By 2025, the value market will represent 63% of the market and 70% of the health care spend, or $3.7 trillion. That’s Hafner’s estimate. He defines the value market as individuals buying their own insurance, either direct or on the exchanges; dual-covereds (Medicare–Medicaid); managed Medicaid plans; employer high-deductible plans or insurance subsidies; and Medicare Advantage. “As we start to see half or a third of our business accessing and buying care based on value, you’ll find the existing business model simply won’t allow you to be successful,” he adds. Hafner brands this change in business model a “volume to value revolution,” but moving from a transactional to a PHM model is not just one evolution. Think of it as a progression, he says, and we are in the middle of the first wave, the move to patient-centered models of care. The second wave will focus on getting consumer engagement while the new systems of care are being built. The third wave, a few years off, will entail investigating and investing in the science of prevention. Tip of the Pyramid When building a PHM model, it’s best to use a pyramid approach, focusing first on the top 1%, then progressing to the top 5%, representing 45% to 50% of resource consumption, and including poly-chronics, frail elders, and end-of-life care: “That’s where the big opportunities and the most money are,” he says. Within the top 1% of Medicare patients, the average spend is $207,000, per person, per year. At 2%, it drops down to almost half at $118,000, per person, per year. The fifth percentile drops to $68,000 per person, per year. The next 25% in the population-stratification pyramid include those at risk for a major intervention. The remaining 70% at the bottom of the pyramid are either healthy or have minor issues. By focusing on the top end and building in a downward spiral direction, a new PMH system can create a viable business. “You need to think about stratifying according to population, and then structuring your care delivery around the needs of those patients,” Hafner says. “There are different kinds of patients, and we need different care models for each. High-end patients need a lot more care.” Players Split the Field Not every early population health management player is playing for the entire population, Hafner emphasizes. Different players are going for specific parts of the pyramid. CareMore, which provides Medicare Advantage plans in California and Arizona, and HealthCare Partners are focusing on the tip of the pyramid—the poly-chronic patient segment. CareMore specifically targets chronically frail patients. “Our goal is to take the chronically frail population, aggressively manage them in an outpatient setting, and reduce unnecessary hospitalization,” Mancuso explains. “This way you improve their outcomes.” Mancuso describes a clinical care center (CCC) within each community as basically ground zero, where the model tracks approximately 40% of members who are frail and are actively treated with a multi-disciplinary approach. Primary-care physicians (PCPs) manage approximately 60% of member patients who don’t need to visit CareMore’s CCC. Certain patients—those with diabetes, heart disease, ESRD, or COPD—need more care than primary-care physicians are able to provide, Mancuso explains. They need nutritionists, exercise specialists (not just recommendations to do exercises), physical therapists, and possibly mental health professionals, all of whom are part of each CareMore CCC team, he adds. Stratifying According to Population CareMore’s model is based on a foundation of primary-care physicians, extensivist physicians, case managers/nurse practitioners, and clinical care centers. Extensivists—physicians focused on care of the frail elderly—determine the type and level of care needed to best treat each patient. They track everything that goes on in the course of a patient’s treatment, Mancuso says, and are supported by a robust IT infrastructure that runs a variety of software programs, including Johns Hopkins’ predictive modeling software; a software program that identifies sick patients; and Ascender, a predictive modeling tool that identifies targets based on claims data. “When a new member of CareMore needs multiple-discipline care and may need to be seen up to 25 times a year, it can be done in the care center,” Mancuso explains. “A PCP doesn’t have time to do that.” The CareMore method greatly reduces unnecessary consultations: CareMore members don’t need a cardiologist to manage their blood pressure, or a nephrologist for diabetes updates. “When that happens, you get fragmentation,” Mancuso says. “All of these services are available in the CCC.” Proactive Patient Management Depression and anxiety are prevalent in the senior population so CareMore makes psychiatrists or mental health professionals available to them. Mental health counselors who do depression screens spend about two hours with members talking about their day-to-day activities and how it will impact their overall care. “A lot of our patients are not financially sound,” Mancuso explains. “They can’t get needles [for diabetes treatment]; they can’t pay $3 for a statin drug. They may not have access to a pharmacy. These are things we want to prevent right out of the gate.” Lastly, CareMore’s case managers don't just check boxes on the computer screen, they ‘dig,’” Mancuso says. Whether a member has an acute episode or needs long-term management, case managers take “ownership” of patients for the remainder of their lives. They ask questions of patients and families and contact a patient every day if necessary, Mancuso says. Case managers dispatch all services necessary both in and out of the hospital, including home-based services, CCC visits, transportation, and other social services. There is no cost to members for any of CareMore services, and transportation to the care center is free. “When someone 'no shows' in our clinic, a nuclear bomb goes off,” Mancuso says. “We make sure that patient is brought under critical intervention. We send a social worker into his or her home.” Results, Results, Results Needless to say, the role of hospitals and specialists is greatly reduced. “We use the hospital for tests and procedures,” Mancuso explains. “If our patients don’t need tests and procedures, they don’t need to be in the hospital.” Medicare data indicate an average 20% hospital readmission within 30 days, Mancuso says. The number for CareMore in Phoenix, Arizona, is 6%; in Los Angeles, California, 13%-14%. “I’d like to see it below 10% in every market we have,” Mancuso says. A third of CareMore’s member population has diabetes, according to Baker, the CFO. CareMore’s Insulin Starts program educates this group on the basics, and Insulin Camp allows CareMore’s staff to observe these patients for a day and provide training on diet and exercise. All members receive free gym memberships and personal coaches. Hospice, palliative care, and life management are also a very important part of CareMore’s overall service. CareMore staff talks to patients and extended families about their goals of care. “We want to meet their goals. If their goal is not to be in the hospital, we have to explain to them how important it is to get to our care center,” Mancuso says. “About 75% to 85% of our patients will die in hospice; I’d like it to be 90% because in reality that is meeting the patients’ goal for care.” Despite the fact that CareMore’s patient base is sicker than average, earning the plan a risk adjusted factor (RAF) score of 1.3, the company performs well on other key metrics: the average hemoglobin A1c for diabetic patients attending the diabetic clinic is 7.08 and the amputation rate among diabetic patients is 60% better than the national average; average length of stay is 3.8 days; bed days per 1,000 is 1,052; admit rate per 1,000 is 280; and readmission rate is 14.7%. Clinical Partners CareMore targets neighborhoods—rather than entire counties—with high Medicare penetration in which to build a CCC, and contracts with one or two hospitals and approximately 30 to 50 PCPs, Baker explains. “We’re putting out a big investment, typically $1.6 million in the first year with training, staff, supplies,” he adds. Providers are paid a guaranteed monthly payment (essentially a capitation), and because the CCCs provide so much of the care, CareMore’s PCPs in Los Angeles earn the equivalent of 159% of Medicare, Baker says. PCPs also have the opportunity to earn bonuses and share in profits, with one high-performing practice of eight PCPs in Los Angeles earning an additional $1.7 million in bonuses and share of profits. Baker described a particularly successful partnership with one Los Angeles health care system. At the outset, there were standing orders in the hospital that a patient presenting with a particular condition receive a standard list of tests and services. CareMore’s extensivist was able to unclip some of those services to be delivered only as needed, with resistance from the CNO, but support from the CEO. “That’s where we were able to save all those variable costs at the hospital, all those unnecessary things that were being done for every single patient whether they needed it or not,” Baker says. “CareMore helped the hospital reengineer its care; the patients get exactly what they need, when they need it, and nothing more. “This is delivery system meets insurance.”Deborah Hauss is a contributing writer for HealthCXO.