Value-based contracting methodologies: A roadmap to becoming a clinically integrated organization

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11/18/2016

The healthcare industry is undergoing a significant evolution, moving away from long-standing fee-for-service agreements toward value- and risk-based arrangements centered on innovative physician-hospital alignment models, quality improvement initiatives and cost-savings strategies. Aetna, a Fortune 50 commercial payer, predicts that by 2020 as much as 75% of its business will be in value-based arrangements. Successful participation in these new payment models is grounded in meaningful clinical integration across a health system’s infrastructure and relationships with physicians.

Phoenix Children’s Hospital, Phoenix, adapted to these changes in healthcare delivery by forming Phoenix Children’s Care Network (PCCN), a clinically integrated organization (CIO) dedicated to pediatrics. PCCN includes nearly 1,000 community-based pediatricians, pediatric specialists, and employed providers of Phoenix Children’s Hospital and its various sites of service. Its quality improvement program requires accountability among independent physicians and an aligned health system, incentivizing network providers for improving quality and controlling costs.

Population health management

Quality measurement and data aggregation and reporting are important components of value-based and risk contracting. These insights provide physicians with actionable information that influences the quality of care provided to patient populations with specific medical conditions such as diabetes or asthma. PCCN relies upon data, integration and alignment across the network to develop uniform standards for care delivery and evidence-based, preventive-focused clinical protocols for patients who fall within specific disease types. These are the tenets of population health management; however, achieving the goal of population health is not without its obstacles.

Hurdles to development

At the crux of clinical integration is the need for providers to deliver the right care at the right time in the right setting. These conditions are especially critical to high-risk, complex patients whose clinical needs are significant and expensive. PCCN implemented a care management program to ensure pediatricians have the tools to manage these patients across the network, keep patients out of the emergency department and make referrals to specialists when necessary.

However, establishing this program was not without complications. Disparate EHR systems across the network’s practices made it difficult to securely gather and analyze patient data.

To mitigate this challenge, PCCN partnered with Arizona Health-e Connection (AZHeC), a public-private partnership formed to create a statewide exchange of health information, allowing clinicians across the network to document and access a patient’s complete medical record. This initiative will ultimately improve communication and access to actionable patient health information that influences care directives and clinical performance.

A secondary challenge is the very nature of payer agreements. The Patient Protection and Affordable Care Act has complicated payer contracting, making it difficult for independent practices to negotiate on their own behalf. Instead, there is an increasing desire among health insurers to partner with larger physician-hospital organizations, which are better-equipped to meet the steep requirements of value-based contracting.

But even for those practices that have aligned with CIOs, the transition to value- and risk-based contracting is complicated, requiring significant investments in education and infrastructure to prepare for these new reimbursement models. In response, PCCN also partnered with AZHeC’s Practice Innovation Institute, an organization whose goal is to prepare 2,500 Arizona providers for successful participation in value-based, alternative payment arrangements. The components of this blueprint include:

Outreach, education, coaching and direct assistance with processes and workflows, allowing participants to navigate through the phases and milestones of practice innovation
Risk management at the network level instead of the practice level, to protect physicians by providing them with the financial and infrastructural support they need while positioning them competitively in the rapidly evolving contract environment

PCCN providers will see key rewards for their patients and practices, including improved patient outcomes and experiences, financial success in alternative payment models and greater awareness of healthcare spending, resulting in healthier communities.

Capturing and sharing actionable data

In the fourth year of PCCN’s development, the clinical integration model is taking on new characteristics allowing for greater sophistication and efficacy. It’s evident in the augmentation of PCCN’s data and technology infrastructure. Whether in stand-alone clinical settings or systems of care, physicians struggle to access and use quality data. Effective clinical integration depends on doctors having access to actionable data to influence patient care.

PCCN is investing heavily in a robust technology platform to share insights at the practice level, allowing physicians to identify gaps and inefficiencies in care. This data can assist, for example, in monitoring a diabetic patient’s ability to maintain healthy A1c levels and adhere to recommended well-child visits. These systems enable effective care coordination and improve communication across the network.

Process

As the nation’s very first CIO dedicated to pediatrics, PCCN has made significant capital investments, both monetary and human, in the infrastructure to operationalize and grow the CIO. The network is committed to ongoing improvement and best practices, which includes:

Pursuing a rigorous accreditation process to achieve clinical integration that specifically follows Federal Trade Commission guidelines
Adopting a new model for accountability that requires providers to build their network toward the goal of assuming financial risk
Cementing the links between and among all channels of the clinical environment to achieve enhanced communication and efficiency

Selecting performance metrics specific to the pediatric population is crucial to improving care. Adult accountable care organizations assess their performance based on a list of 33 measures developed by the Centers for Medicare & Medicaid Services. Faced with the need for quality measures of their own, PCCN providers – not payers – identified 13 baseline primary care (see sidebar) and 34 specialty measures. These measures are the foundation of PCCN’s efforts to improve outcomes, eliminate clinical redundancies and avoidable patient encounters, and lower the cost of care.

Results

Quality results from PCCN’s first full contract year with Mercy Care Plan and Health Choice Arizona (two value-based agreements borne of the state’s Medicaid payment modernization effort) show promise. Network providers exceeded state quality standards for the following measures:

Babies under 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 emergency room utilization across the entire patient population decreased.

The network’s quality improvement efforts were a direct result of a provider alignment strategy that includes the recruitment of engaged pediatricians whose goals are to improve quality and decrease utilization of duplicative and unnecessary clinical services. The uptick in performance and identification of clinical efficiencies resulted in significant overall healthcare cost savings for Mercy Care Plan and Health Choice Arizona.

The value-based and population health model is changing the complexion of healthcare delivery. Fortified by the participation of a large number of physicians and a pediatric health system, CIOs are equally appealing to payers actively developing value-based contracts. As CIOs gain popularity, more payers and large employers are seeking alignment 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 the achievement of quality and cost containment goals, not procedures and volume. As the healthcare marketplace continues to adjust, organizations such as PCCN provide a sustainable formula for high-quality healthcare.

PCCN primary care metrics