Despite the new White House administration’s plans to repeal and replace the Affordable Care Act, the healthcare value-chain from government payers to providers to third-party insurers will still center on the care delivery model.
One of the most fundamental changes in the healthcare system that has been accelerated by the Affordable Care Act is the transition away from fee-for-service contracts in favor of a value-based payment methodology. Structurally, this approach provides physicians with incentives to embrace cost containment and quality of care rather than volume. This is essential because the Arizona Health Care Cost Containment System (AHCCCS) requires that by 2018, at least 50% of covered lives must be under value-based contracts. In addition, Aetna, along with other partner organizations, predicts that by 2020, as much as 75% of its business will be in value-based arrangements.
The composition of these models varies; however, the principles are grounded in developing clinical integration across a healthcare organization’s infrastructure and points of access.
Clinical integration
At Phoenix Children’s Hospital, the institutional approach centered on building and developing the nation’s first pediatric clinically integrated organization (CIO). Across this system of care, Phoenix Children’s Care Network (PCCN), established in 2013, is creating a care coordination environment incorporating an integrated enterprise approach to access, collaboration, patient satisfaction and care/treatment delivery. Hand in hand with quality improvements is a focus on efficiencies that result in costs savings for the patient, provider and payer.
As a pediatric-focused care coordination model, PCCN is pioneering a new platform of healthcare delivery, a network developed with a pluralistic physician partnership methodology based on quality patient outcomes and cost metrics. The PCCN pediatric CIO is rooted in the development of a robust quality improvement program with accountability among independent physicians and the connected health system. It rewards and integrates physician members around a common commitment to quality measures based on scientific evidence and cost improvement.
PCCN offers patients access to more than 1,000 providers, representing more than half of all general pediatricians across metro Phoenix, as well as 80% of pediatric subspecialists, including all of Phoenix Children’s Hospital’s sites of service. PCCN is composed predominantly of community-based physicians representing more than 100 independent pediatric practices.
Population health management
Behind the movement toward value-based contracting is the development of risk management protocols with a keen insight toward population health management. Across the care continuum, an approach designed around best practices, clinical standards and performance is transforming how healthcare is practiced and consumed.
This contemporary model is designed on a value proposition framework, which eliminates the current inefficient delivery system and instead focuses on collaborative care that promotes quality outcomes. Network partner reimbursement rates are tied directly to documented evidence of superior care and cost-efficiencies. PCCN relies upon integration and alignment across the network. This level of integration requires uniform standards for care delivery, including evidence-based, standardized clinical protocols. In addition to physician collaboration, PCCN's reporting mechanisms, communication platforms and data aggregation all work together to create a cohesive system of care.
Operational elements and process
A large piece of this mentality is revolutionizing the standards that define the value offering. As an example, PCCN is at the forefront of establishing quality measures for pediatrics, on par with adult medicine metrics.
Adult Accountable Care Organizations have a list of 33 measures developed by the Centers for Medicare & Medicaid Services. Faced with the need for quality measures, PCCN providers—not payers—worked diligently to identify and ratify 13 primary care and 34 specialty measures. Primarily based on data gathered from claims information, the measures are pediatric-focused and provide the baseline for PCCN’s population health advances.
These initial measures are the foundation of PCCN efforts to improve quality outcomes, eliminate clinical redundancies and avoidable patient encounters and, ultimately, lower the cost of care.
In 2017, PCCN is moving more than 100,000 lives into fully risk-based models. This is an opportunity to test the processes and programs in place, and truly own the medical management of our populations, and influence outcomes. There is institutional confidence that the clinically integrated methodology can succeed in a risk-based environment with the strategies currently implemented.
Encouraging results
Thus far, the trajectory toward value-based contracting and effective management of the risk portfolio is extremely positive. Data indicators demonstrate PCCN’s efforts to improve care and control costs are working. Looking at quality results from PCCN’s first full contract year with Mercy Care Plan and Health Choice Arizona, two value-based agreements created by the state’s Medicaid payment modernization effort, network providers exceeded state standards across multiple measures.
- Babies younger than 15 months were seen at specific milestones.
- Children ages 3 to 6 received their well exams and preventive services on time.
- The number of young adults ages 12 to 21 attending their annual wellness visits increased, ensuring they enter adulthood healthy and with proper care.
- Children ages 12 to 24 months had appropriate access to a primary care pediatrician.
- Children ages 25 months to 6 years had appropriate access to a primary care pediatrician.
- Children ages 7 to 11 years had appropriate access to a primary care pediatrician.
- Adolescents had appropriate access to a primary care pediatrician.
- Tracking began for a number of diabetic patients whose A1c levels were checked twice per year.
- Asthma-related visits to the emergency room declined.
- Overall ER utilization across the entire patient population decreased.
This demonstrates that the value-based and population health model is changing the complexion of the healthcare sphere. Fortified by the participation of a large number of physicians and mature health systems focused on improving care and managing costs, CIOs are equally appealing to payers actively developing value-based contracts.
As CIOs gain popularity across the country, more payers and large employers are seeking to align with clinically integrated networks to curb costs and offer more competitive, complete health coverage. The equation is based on an incentive framework: compensation depends on valuation of effective and quality outcomes, not on procedures and volume.
Across the pediatric and adult realm, the challenges of this transition toward a value-based system are answered by increasingly innovative approaches to solve the complexities. Efforts such as PCCN provide a winning and repeatable formula for ensuring the finest healthcare for patients.
Chad Johnson is senior vice president of Phoenix Children’s Care Network. He formerly served as the chief executive officer at Children’s Health Network in Minneapolis, Minnesota.