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Health Care

Redefining How Health Payments Work

By Ken Little, posted Mar 24, 2017
Kelly Schaudt, center, Wilmington Health’s senior director of lean operations, speaks with doctors at the group, whose ACO became a participant in the Medicare Shared Savings Program in 2013. (Photo by Chris Brehmer)
Local health care providers are part of a national trend moving toward alternative payment models to determined how they’re reimbursed.

Wilmington Health was the first locally to set up an accountable care organization (ACO) several years ago and is in the midst of helping providers in other regions set up their ACOs.

Other major health care systems in the area have also set up ACOs and are moving forward with their implementation.

The Centers for Medicare & Medicaid Services announced in January that more than 359,000 clinicians are confirmed to participate in four of the agency’s alternative payment models in 2017, including local primary health care systems.

Clinicians who participate in alternative payment models (APMs) are paid for the quality of care they give to their patients. It’s a shift for the industry away from being reimbursed per services performed to total patient care reimbursement.

As of Jan. 1, the Centers for Medicare & Medicaid Services tallied a total of 480 ACOs nationwide in its Shared Savings Program that cover over 9 million assigned beneficiaries – an increase of 1.3 million people compared to a year earlier.

In addition to Wilmington Health, other regional health care systems with ACOs in place include New Hanover Regional Medical Center and Novant Health, operator of Novant Health Brunswick Medical Center.

Wilmington Health also recently announced that it has taken on a consulting role “and has successfully prepared and garnered acceptance” for the Shannon Clinic in San Angelo, Texas, and Onslow Memorial Hospital in Jacksonville for those systems to participate in the Medicare Shared Savings Program.

Others look to Wilmington Health for management services “because we are having a real impact in changing the system,” said Kelly Schaudt, Wilmington Health’s senior director of lean operations.

Wilmington Health CEO Jeff James said its ACO, called Physicians Healthcare Collaborative, is one of the highest-ranked statewide and nationwide in terms of quality and value. In 2015, it ranked No. 1 in North Carolina and 12th nationally out of 405 ACOs at that time.

Schaudt said that adjustments have been made since Wilmington Health rolled out its ACO.

“I think our key learning is that there is no magic bullet to solving the challenges facing health care systems, legislatively or otherwise. But rather there are many ‘levers’ that need to be pushed to effect real change,” she said.

New Hanover Regional is also a participant in CMS’ Shared Savings Program through its ACO, called Physician Quality Partners.

“Health care reform efforts are focusing on shifting from a fee-for-service system that reimburses providers based on volume of treatment provided to one focused on pay for performance,” said Lydia Newman, NHRMC’s executive director of clinical integration and Physician Quality Partners. “Alternative payment models are part of that effort to tie payment to improvements in health outcomes and reductions in unnecessary costs.”

She said these payment reform strategies, such as ACOs and bundled payment programs, not only have providers monitoring population health but also looking for ways to make sure health care to patients is delivered efficiently without unnecessary duplications and costs.

Under the systems, care providers are expected to coordinate when seeing the same patient. An emphasis on preventative health and follow-up care also is part of the value-based reimbursement approach.

With more advancements in medicine, Newman said, “once deadly or life limiting diseases such as cancer, HIV, heart failure, COPD and diabetes are now becoming long-term chronic illnesses.”

“Patients can live much longer with a host of chronic illnesses, but to do so successfully requires continuous and proactive monitoring of their conditions and close coordination across providers and systems,” she said. “Therefore a main focus of health systems moving forward will be on proactively managing population health.”

The approach also can have an impact on containing rising health care costs. The focus on preventive care “is a huge driver in not only the individual’s health, but really the entire population of an area, which has big ramifications on cost,” Schaudt said.

“By engaging patients in monitoring their day-to-day health, staying on top of chronic issues and getting the necessary screenings, we are going to drive healthier patients that utilize the system less for high-cost issues and increase their overall wellness.”

Novant Health “has been involved in alternatives to the traditional feefor- service model of payment before CMS coined the term alternative payment models,” said Derek Goldin, vice president of business development for Winston-Salem-based Novant Health.

“As an organization, we’ve learned quite a bit about the mechanics of the alternatives that CMS has made available,” he said. “The federal government recognizes the mechanics of MACRA [Medicare Access and CHIP Reauthorization Act of 2015] are very complex, and CMS is deploying resources to the broader provider community to help physicians and other caregivers understand and make the changes necessary to adopt the programs.”

Schaudt said the shift to ACOs drives “three key elements in the health care system: transparency, importance of preventive care and appropriate point-of-delivery.”

She said that, in combination, the three elements “can drive down overall cost to the patient and the system, while simultaneously improving patient outcomes through higher quality care.”

“Transparency efforts are now providing the patient with access to actual cost and quality data that until now was seemingly held behind a gate in Fort Knox,” Schaudt said.

“Wilmington Health, along with all accepted ACOs across the country, are publicly providing how much a patient will spend on average by using our physicians services and many key quality measures focused on preventing higher cost health concerns from occurring or unnecessary trips to the emergency room or hospital.

“That is pretty powerful stuff and gives them the opportunity to make a value decision based on actual comparative data.”

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