HMGT 420 PART 2 OF 2

CHAPTER

21

CLINICAL INNOVATIONS FOR VALUE-BASED CARE

Learning Objectives

Upon completion of this chapter, you should be able to

• identify key elements in a clinical program to increase the value delivered in healthcare;

• enumerate the elements of care coordination that can reduce waste and optimize the clinical experience;

• review strategies for reducing hospital readmissions of patients with multiple chronic conditions;

• understand the role that palliative care plays in improving the care delivered while reducing unnecessary care;

• discuss the features of an effective program focusing on transitions across the continuum of care; and

• design structures that can advance care coordination, improve clinical integration, reduce readmissions, incorporate palliative care, and enhance the value being delivered in healthcare.

The movement toward value-based healthcare requires a key redesign in the manner in which clinical care is delivered. Given the history of health- care delivery in the United States, significant fragmentation exists in the

way care is delivered, and this fragmentation results in duplication of services, gaps in care delivery, and lack of coordination. When patients transition across the continuum of care, handoffs become at-risk events in which gaps can occur and important concerns can fall through the cracks. Such gaps can lead to suboptimal care, which may then result in readmission to a facility, thus duplicating care delivered, worsening outcomes, and eroding the patient experience.

This chapter will examine the ways that value-based healthcare can reduce fragmentation, particularly by coordinating care more effectively, improving care transitions, and redesigning healthcare resource delivery to focus on readmission prevention. The chapter will also discuss the use of patient-centered medical homes, federally qualified health centers, and integrated delivery systems to address

continuum of care The full range of settings and stakeholders involved in the delivery of care to a patient; it may include an acute care hospital, a home health agency, a nursing home, a rehabilitation unit, and other points of service.

readmission An instance where a patient has been discharged from a healthcare facility but later has to be admitted again for the same condition; readmission within a short period after discharge may result from a patient’s fragility, poor medical care, or poor planning prior to discharge.

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The Core Elements of Value in Healthcare22

the various challenges associated with fragmentation. The healthcare sector will need to invest time and resources to effectuate these changes, but, ultimately, the economic costs of delivering care should come down in the long run. As provid- ers gain experience with new care delivery mechanisms, and as payment reform encourages transition, structural changes will strengthen the focus on value.

Coordination of Care

Value-based reforms motivate providers to accurately diagnose and effectively treat patients at the first encounter, with the aim of minimizing costs related to ineffective or unnecessary care. One of the most important clinical elements of value-based healthcare is coordination of care, which refers to the activities intended to organize patient-care efforts and to ensure that key information is shared with all participants in the delivery of the patient’s care (Agency for Healthcare Research and Quality [AHRQ] 2016). Effective coordination makes care safer and more efficient, reducing costs while maintaining high-quality care and better health. In short, it allows people to remain healthy and spend less time in the hospital (Beveridge 2016).

Care coordination seeks to mitigate the disjointed manner in which US healthcare has traditionally been delivered. Often, processes vary across primary care and specialty sites, and patients are unclear about important aspects of their care program, such as why they are to see a certain specialist and what to do with clinical instructions—if those instructions are even provided. Primary care providers might not know the recommendations of specialists, and specialists might not know why a patient has been referred to them. Clinical information is often lost (AHRQ 2016).

Skills needed for effective care coordination include teamwork, case management, medication management, familiarity with health information technology, and ability to maintain effective patient relationships. Good care coordination programs are characterized by a culture that values accountabil- ity and communication. Such programs account for the challenges that arise during transitions, make use of care plans, include monitoring and follow-up activities, empower patients, plug into community resources, and align with population and patient-specific needs (AHRQ 2016).

Effective care coordination requires the ability to use multiple metrics to identify populations with modifiable risks and to tailor strategies to align with the needs of specific populations. Electronic medical records can facilitate effective communication and outreach. Care coordination requires skilled staff members who have undergone appropriate training and licensure processes and are prepared to provide case management services (Farrell et al. 2015).

Changes in reimbursement programs have further underscored the need for improved care coordination. Bundled payments are a novel approach

coordination of care Activities intended to improve communication among caregivers, payers, and the patient and to ensure that care is delivered in a coordinated, synchronized, and timely manner.

bundled payment A form of reimbursement whereby the payer negotiates with the provider to deliver all services associated with an episode of care at a predetermined rate, with the provider assuming some risk for the delivery of care.

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Chapter 2: Cl inical Innovat ions for Value-Based Care 23

whereby all services associated with an episode of care are compensated at a predetermined amount and, thereafter, all stakeholders in the chain of care delivery are expected to allocate compensation based on the cost of resources used. An episode of care may start three days before admission, and it may end 30 days after hospitalization. Under the bundled payment model, if the cost of care delivered is less than the negotiated reimbursement, the provider keeps the savings; if the cost is more than the negotiated reimbursement, the provider incurs a loss. This arrangement reflects the idea that risk sharing will motivate providers to be more efficient in the way they deliver care. Bundled payment is effective for well-defined procedures such as knee replacements. The bundled care model relies on coordination of care to be effective, and it enables the patient to connect with the health system through timely communications that may be automated as well as personalized (Winzenread 2016). The goal is to align incentives for all providers to minimize waste (Thorpe 2012).

A significant portion of Medicare spending on beneficiaries—exceeding 70 percent—can be traced to patients under management for five or more condi- tions (Thorpe and Howard 2006). Thus, coordination of care has tremendous implications for Medicare spending. The traditional fee-for-service model has incentivized the delivery of volume-based care, where “more is better”; however, the market is moving away from this model and placing a greater emphasis on coordination of care, particularly for patients with multiple chronic diseases.

Case Example: Coordination of Care Universal Health, a managed care health plan in California, specifically serves patients with issues related to behavioral health. One of Universal’s products caters to Medicare beneficiaries who carry a diagnosis that may include bipolar disorder or schizophrenia. These patients may also have chronic medical conditions such as diabetes, hypertension, lung disease, or congestive heart failure.

Behavioral health is traditionally a challenging area of healthcare to manage. Often, medical conditions go untreated because of a patient’s debilitating mental illness. In some cases, patients with significant schizo- phrenia may be functionally homeless even if they have a home, since they are incapable of managing daily affairs.

One such patient, Barbara, had a history of frequent admissions to local acute care hospitals. In one hospitalization, she was admitted because of uncontrolled hypertension and heart failure exacerbation. At that time, she had not seen a primary care physician in over a year, and she had not filled her prescriptions nor kept any specialty appointments. Univer- sal Health has contracted with an independent practice association (IPA),

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The Core Elements of Value in Healthcare24

Imperial Health Holdings, to deliver medical care and to coordinate the care of patients like Barbara. Universal Care receives funds from Medicare and, in turn, has entered into a risk-based contract with Imperial to provide professional services.

A social worker visited with Barbara during a recent admission. Bar- bara had been stabilized on psychotropic medications during her hospital- ization, and she was set up for a psychiatric evaluation by the contracted psychiatric group in the city within 72 hours of discharge. Imperial had established a contract with a local cab company, and Barbara was provided a cab voucher for the trip to the psychiatrist. Barbara was also on a regimen of cardiac medications for hypertension and heart failure. She was scheduled for an appointment with the contracted cardiology group within the week.

The social worker visited Barbara’s home to ensure that it was safe for Barbara. A field intervention nurse and a home health aide arranged for thrice-a-week visits with Barbara for the ensuing month. Subsequently, a lifestyle coach would visit Barbara and make arrangements to take her to a local adult-activity day center.

Upon discharge from the hospital, Barbara kept her appointments with the psychiatrist and the cardiologist. The social worker also arranged for Barbara to maintain regular follow-up wellness visits with her primary care physician. The discharge plan, physician visit notes, and clinical plan for Barbara were all documented in the electronic medical record and communi- cated to the health plan, the IPA, and Barbara’s providers. The primary care physician was provided with copies of the discharge summary. In addition, the cardiologist and psychiatrist were provided with the clinical records, as well as the reason for the referral, to help ensure that their management plans addressed Barbara’s clinical needs. The care was coordinated by the nurse case manager at Imperial, who worked closely with the case manager at Universal Health.

Because Universal Health is a managed care plan and responsible for administering the pharmacy benefit, it had access to Barbara’s medi- cation refill history. When Barbara did not refill her prescription after the 90-day supply ran out, Imperial was notified, and the social worker who had been assigned to Barbara visited her at her home. Imperial’s case manager communicated with the social worker, and they determined that Barbara appeared to be having increasing psychotic episodes. The nurse conferred with the medical director at Imperial, who advised that Barbara see the psy- chiatrist. The physician, in turn, recommended a short admission to optimize her psychotropic medications. Given that Universal would be paying for the hospitalization, Imperial communicated with Universal’s medical director,

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Chapter 2: Cl inical Innovat ions for Value-Based Care 25

The case example in this section demonstrates several important aspects of value-based healthcare, specifically with regard to patients who have multiple intractable chronic conditions that cannot be managed by a single individual. In the case, the payer and provider collaborated in a risk-based contract to deliver care, and their success resulted from the effective care coordination managed by a case manager who in turn leveraged several clinical and commu- nity resources. Information technology enabled real-time data sharing among stakeholders, wasteful care was avoided, and the patient was able to maintain a better quality of life.

Readmission Prevention

One of the negative effects of fragmentation of care in the US health landscape is that patients who have been discharged from a hospital often have to be readmitted for the same condition for which they were originally hospitalized. The prevention of such readmissions is an important element of value-based care. Readmissions are often avoidable, and they represent duplicative and wasteful healthcare. Numerous studies have shown that readmissions are often caused by a lack of coordinated care. This finding is especially true for patients with congestive heart failure, diabetes, chronic obstructive pulmonary disease, and coronary artery disease.

Section 3025 of the Affordable Care Act (ACA) requires the Centers for Medicare & Medicaid Services to reduce payments to acute care hospitals that have excess readmissions. For a hospital that has a higher-than-expected readmission rate relative to the national average, Medicare will apply a penalty of up to 3 percent of the total Medicare revenue received by that hospital. This measure has resulted in an 8 percent decrease in readmissions nationally in the

who agreed that the short psychiatric admission would allow clinical stabi- lization, which in turn would avoid any worsening of Barbara’s hypertension and heart failure. Barbara had stopped her cardiac medications as well.

After this psychiatric admission, Barbara’s condition was stabilized with longer-acting antipsychotic medication. Since that time, her schizophre- nia has been well controlled, and she has been able to adhere to her medi- cal plan with frequent intervention from the case managers, social worker, lifestyle coach, and activity center. As a result, Barbara has maintained a higher level of functionality, been engaged in her community, and reduced her frequency of hospitalization from once every six weeks to twice a year.

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The Core Elements of Value in Healthcare26

five-year period since its introduction, and it is now being expanded into the commercial insurance sector (Belliveau 2016b). The penalties cost hospitals more than $500 million and apply to such conditions as heart attacks, heart failure, pneumonia, chronic lung disease, hip and knee replacements, and coronary artery bypass surgery (Rau 2016).

The first disease states that Medicare targeted with its readmission penal- ties were congestive heart failure (CHF), coronary artery disease, and pneu- monia. Thus, patients with a principal diagnosis of CHF who are readmitted to a hospital within 30 days of a prior hospitalization have become a key target for coordinated care. The coordination effort starts at admission, when care coordination teams, along with discharge planners, start assessing a patient’s ability to thrive in the community. Several protocols have been developed to identify patients who have a high risk of readmission (Boutwell 2012).

Specific patient education and training, along with efforts to effect accurate medication reconciliation, have been proving effective in mitigating readmission. Once the domain of acute care hospitals, CHF is now becoming a concern of post-acute facilities as well. Because of bundled payments, nurs- ing homes have a vested interest in ensuring that their patients do not develop avoidable disease flare-ups that necessitate readmission to the hospital. Home visits, nursing home visits, and postdischarge calls are becoming the norm.

Several innovative medical groups are now taking the initiative to have staff visit patients at home and ensure that patients who have been diagnosed with CHF maintain an appropriate diet, minimize salt intake, and use accurate weighing machines regularly. This intervention may seem unusual, but it is particularly important because gradual but steady weight gain can be indica- tive of fluid buildup that leads to imminent CHF and hospitalization. Several health systems have created high-risk clinics that can be staffed by physician extenders such as nurse practitioners or physician assistants. Patients can come to these clinics to be evaluated if they are unable to get an early appointment with their primary care doctor or specialist. A timely intervention of this nature can help avoid a readmission.

Case Example: Readmission Prevention ABC Health System is a three-hospital system in Los Angeles County that receives 40 percent of its revenue from Medicare. Upon expansion of Medi- care’s hospital readmission program, ABC had almost $6 million at risk in readmission penalties. Given that the system’s net income was $9 million, ABC was at risk of having 66 percent of its profitability wiped out.

To address the issue, ABC established a team that included the sys- tem’s chief medical officer, chief financial officer, director of pharmacy and two

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Chapter 2: Cl inical Innovat ions for Value-Based Care 27

other clinical pharmacists, chief nursing officer, nursing directors, emergency department leadership, social workers, and case managers. Over a six-week period, the group developed a readmission program targeting patients admit- ted with a CHF diagnosis. The key elements of the program were as follows:

1. The system effectively identifies Medicare beneficiaries who have been admitted with a diagnosis of CHF.1

2. The system deploys a CHF team to manage the inpatient care of the patient, supplementing the care provided by the cardiologist and primary clinical team.

3. The patient is entered into a CHF pathway whereby the patient undergoes extensive counseling about CHF and medication management.

4. Once the patient has completed the hospitalization, has been given the medication list, and has information about dry weight,2 the care coordination team ensures that postdischarge plans are established.

5. A social worker or community worker visits the patient at home to ensure that living conditions are stable and that the patient has resources to adhere to a cardiac diet conducive to management of CHF.

6. A clinical pharmacist calls the patient once a week to go over the medications and ensure that the patient is taking the medications as directed.

7. The case worker coordinates with the CHF team and the patient’s clinical team to ensure that the patient keeps a scheduled office visit within 72–96 hours of discharge. (At times, this step requires the use of a cab company to transport the patient to the medical office.)

As the program evolved over a three-month period, the CHF readmis- sions team determined that not all patients needed such intensive interven- tion. The team then developed a new protocol using a metric called the LACE index, which incorporates length (L) of hospital stay, acuity (A) of admission, comorbidities (C), and emergency (E) department use to identify patients at a higher risk of readmission3 (Wang et al. 2014).

In the 10-month period that the pilot was in place, the readmission rate for the same diagnosis within a 30-day period fell by approximately 8.3 percent, and the reduction was sustained. Based on the success of the pilot, the program was expanded to include patients admitted with a diagnosis of myocardial infarction and, later, chronic obstructive pulmonary disease.

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The Core Elements of Value in Healthcare28

Case examples, such as the one that accompanies this section, underscore the importance of taking a multidisciplinary approach to such challenging issues as complex care coordination and readmission prevention. If the challenges can be effectively addressed, over time, the investment needed to implement these readmission-prevention initiatives should be recouped through the sav- ings harvested while delivering high-value healthcare.

Typically, the recipients of these types of services are patients who are the most vulnerable. For instance, a patient might have depression, type 1 diabetes, and end-stage renal disease requiring hemodialysis. The same patient might have stunted intellectual and social development, stemming from medical conditions that manifested themselves at a young age, as well as mental health issues and an uninvolved or unsupportive family. Such a patient may become a frequent visitor to the emergency department with multiple admissions. Often, the patient may leave the hospital against medical advice.

An effective intervention to address such a situation may begin with establishing a rapport with the patient. Often, a social worker is invaluable in this step. Setting limits is important. Another key element is the development of a coordinated plan with the inpatient and outpatient providers. Further collaboration with adult protective services, dialysis providers, social workers, and behavioral health professionals can also contribute to success.

One health system that initiated an intensive case management program experienced a reduction in ER visits from 1,663 to 922 and a reduction in admissions from 300 to 188 for a group of 230 patients (Sundberg 2013). An additional benefit of such a program is the likely reduction in redundant and repetitious diagnostic care, lowering the cost per case. Such a program can lead to an improvement in the quality of life for patients and providers, as well as for the patients’ families and friends. Furthermore, it emphasizes the important point that fully managing an illness requires looking beyond the realm of medical treatment.

Palliative Care

A patient’s greatest utilization of medical services occurs during the last six months of life. With advances in healthcare, patients now are living longer with multiple chronic diseases that must be better managed. Because of the complexity of the diseases and their natural progression, patients may be liv- ing with discomfort, distress, and misinformation about what their chronic illnesses entail. As people’s life expectancies increase and their comorbidities increasingly affect their quality of life, palliative care becomes an important part of the continuum of care. Palliative care focuses on relieving the pain, stress, and symptoms that accompany chronic and serious illness (Silvers, Sin- clair, and Meier 2016), and it aims to improve the experiences that patients

palliative care A branch of healthcare delivery dedicated to ensuring that the patient is made as comfortable as possible in the setting of significant morbidity and illness.

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Chapter 2: Cl inical Innovat ions for Value-Based Care 29

and their caregivers have with the healthcare system (Casarett et al. 2008). Palliative care can be provided in outpatient settings as well as in inpatient and post-acute inpatient sites.

Evidence suggests that timely palliative care can improve the quality of care, reduce overall costs, and sometimes increase a patient’s longevity (Silvers, Sinclair, and Meier 2016; Smith, Bernacki, and Block 2015; Casarett et al. 2008). Some experts have pointed out that, as the use of capitated payments increases and patients become more actively engaged in their care, the demand for pal- liative care will rise, because of the value such care delivers (Silvers, Sinclair, and Meier 2016). However, as palliative care develops into its own specialty, prior therapeutic relationships with primary physicians must be maintained so that fragmentation of care does not become exacerbated. Internists and specialists must maintain primary palliative skills related to such areas as pain manage- ment, depression, and expectations about intensity of care. Specialty palliative experts can become involved in the management of refractory pain; complex depression; conflict resolution within family, staff, or treatment teams; and the management of expectations with futile care (Quill and Abernethy 2013).

With effective palliative care and techniques for managing pain, shortness of breath, and other symptoms, the utilization of emergency services can be mitigated. These and other benefits of palliative care have been supported by research. A study of cancer patients showed that improved communication and education related to the patient’s condition can lead to reductions in chemo- therapy, oncology service mortality, and 30-day readmission rates (Temel et al. 2010). Similarly, a study by the health insurance company Aetna demonstrated that effective palliative care can lead to fewer intensive care unit bed days, fewer total acute care days, reduced emergency department use, improved member satisfaction, and a savings of approximately $12,000 per participating member (Krakauer, Agostini, and Krakauer 2014). As palliative care becomes increasingly accepted, the delivery of value in healthcare will improve, and overutilization of services that do not enhance wellness will decrease.

Despite its benefits, basic palliative care may no longer be adequate once a patient’s condition deteriorates—particularly when the patient approaches the final stages of an illness and death becomes more certain. At this point, hospice care, with the expert management of pain and other symptoms, plays an important role. Hospice care is a form of palliative care provided to termi- nally ill patients and their families. It aims to meet not only physical needs but also the patient’s emotional and spiritual needs. Hospice care does not actively seek to prolong the patient’s life or hasten the patient’s death; rather, it seeks to maximize the person’s quality of life near the end of life. Effective hospice care confers better quality of life to the patient, and it helps weakened patients avoid the risks of overtreatment. Patients receiving effective hospice care may also benefit from increased psychosocial support, which may have the effect of prolonging life while reducing unnecessary utilization (Connor et al. 2007).

hospice care A form of palliative care provided to terminally ill patients and their families.

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The Core Elements of Value in Healthcare30

Case Example: Palliative Care ABC Health System initiated a palliative care program in 2014 in an effort to serve the needs of patients with advanced metastatic cancers. Initially, the medical staff resisted the program because of concerns that a focus on palliative care would simply cut short the care delivered to patients, thus hastening their death. Furthermore, the oncologists were concerned that their referrals would come down, which was reflective of the volume- based practice patterns inherent in healthcare. Over a six-month period, the health system used grand rounds and lectures to educate the medical and patient community about the relevance of palliative care. Subsequently, an oncologist, Dr. Smith,4 became a supporter of a pilot program and offered to champion the program across the health system.

Dr. Smith began communicating the program’s goals and progress, and through extensive outreach, a palliative care team was assembled. The team was led by Dr. Smith and consisted of a case manager, a nurse practitioner, a clinical pharmacist, a social worker, ministers from the spiritual services department, and a community worker. Knowledge about palliative care began to spread, and, over the next year, staff, patients, families, and some physicians began requesting palliative care consults. As the referral requests became more frequent, a palliative care specialist was brought onto the team.

Palliative care rounds became a daily occurrence, often in the oncol- ogy ward and the intensive care units. These rounds involved intensive meetings with families and patients, as well as with the clinical teams. The palliative care team would make recommendations about comfort measures and address the spiritual and support needs for those involved.

The medical staff eventually became more supportive of the program and asked that the palliative care consultant also get involved in the medical care. As a result, the consultant started leaving medical recommendations concerning pain and symptom control. The palliative care program became so successful that, after 13 months, it was averaging a few hundred consults per month—a large increase from the program’s early stages, when there might have been a couple of consults per month.

One of the physicians who had been initially resistant commented: “I appreciate the contribution of the palliative care team. I might have 15 minutes to spend with a patient, of which perhaps 2 minutes will be spent counseling the family, simply because of the number of patients I have to see. But thanks to palliative care, families get 45 minutes of interaction with nine people. I get to see my patients and do a good job. Families are hap- pier since they now feel a lot more involved, informed, and comfortable. My really sick patients are also getting better and more comprehensive care.”

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Chapter 2: Cl inical Innovat ions for Value-Based Care 31

As the accompanying case example illustrates, palliative care and hospice care, when used appropriately and in a timely manner, have the potential to drive good value in healthcare delivery. Better education, symptom control, and proactive management serve to minimize unnecessary discomfort and overuti- lization of the emergency room as well as specialty care. Such overutilization often delivers needless invasive interventions with no meaningful improvement in quality of life, morbidity, or mortality; it serves only to drive up cost without improving outcomes or the patient experience. Thus, any initiative seeking to improve value in healthcare must incorporate a robust palliative care effort.

Care Transitions

The care delivered to patients shifts to different locales as disease processes improve or worsen. Care transitions are the activities involved in transferring a patient from one setting to another along a continuum of care—for instance, moving a patient from a hospital to a nursing home, to the patient’s home, or to another facility in the community. Care transitions, when properly imple- mented, can improve patient care outcomes and reduce cost. Inadequate care transitions, however, can have a negative impact on patient well-being and on costs. One study has estimated that readmissions will cost 2,200 hospitals nearly $280 million in Medicare payments and that inadequate control of care transitions can lead to wasteful spending of $25 to 45 billion (Burton 2012).

Poor care transitions are a leading cause of readmissions in the United States, and a major contributor to this situation is a health system that is decen- tralized, complicated, and not well organized. As part of an effort to encourage health systems to focus on care transitions, the Centers for Medicare & Med- icaid Services (CMS) has been authorized to withhold payments to hospitals by 1 percent for patients with heart failure, acute myocardial infarction, or pneumonia whose readmissions exceed a particular target. In addition, CMS has introduced new codes that cover transitional care management based on the complexity of the patient.5 Care transitions provide an important oppor- tunity for the clinical team to find common goals with the next team at the next setting that will be caring for the patient.

care transition The activity involved in delivering care to patients as they are being moved from one level or setting of care to another; breakdown during transitions can lead to significant morbidity and mortality.

Such positive comments and experiences helped the palliative care team expand its services. Length of stay for patients served started trend- ing downward, and, as the team became involved in the outpatient setting, readmissions and avoidable admissions started trending down as well.

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The Core Elements of Value in Healthcare32

A common cause of transition problems is the lack of effective communi- cation between facilities and providers. When communication is lacking, critical information can be missed, with a meaningful negative impact on the patient’s care. Another cause of problems is the insufficient engagement of caregivers and patients in the transition process. Lack of engagement is often related to poor communication, inadequate preparation, or a disorganized transition process. Stakeholders might not have adequate expectations for accountability and a clear process for managing the transition. Thus, the stakeholders may consider a poorly designed process to be acceptable and have little impetus to improve it.

A formal referral process, incorporating the electronic medical record, can help provide structure to ensure that key information about patient care is not missed. A checklist can facilitate the collection and sharing of all necessary information, such as consultant notes, lab results, radiology reports, operative notes, discharge notes, and follow-up information (Woodcock 2014).

The ACA encourages the establishment of several new structures to incen- tivize effective care transitions and further develops the concept of medical homes. In organizations that have a large number of uninsured and indigent patients, a hybrid model incorporating federally qualified health centers (FQHCs) is a viable option. FQHCs, also known as community health centers, are written into federal law as entities that receive federal support to serve indigent patients, as well as patients with Medicare or Medicaid, in a medically underserved area. Because of the funding provided and the infrastructure made possible, FQHCs are uniquely positioned to serve the needs of indigent patients and the uninsured. They can provide primary care, specialty care, outpatient diagnostics and therapeutics, behavioral health services, pharmacy, and urgent care services, as well as long-term services and support. They can address the problems inherent in transitions of care.

Federal law mandates that FQHCs are reimbursed under a prospec- tive payment system whereby Medicaid revenues are received in proportion to the Medicaid patients served. The law also provides grants to absorb the cost of serving uninsured patients. Although FQHCs are paid on a fee-for- service basis, they may become part of broader reform initiatives focusing on serving medically complex patients while improving outcomes and enhancing efficiency. As FQHCs transition to a capitated payment system and use their electronic record systems, they are reporting frequent contact with patients with a reduction in face-to-face encounters. This shift has improved outcomes while reducing wait times (Belliveau 2016a).

FQHCs may be positioned to deliver effectively on the “triple aim” of better quality, lower cost, and improved health by reducing overall utilization. One study compared patients in an FQHC with those in non-FQHC settings and found that FQHC patients exhibited lower rates of multiple-day admissions, less usage of inpatient bed days (by 25 percent), fewer emergency department visits (by 20 percent), and a lower rate of 30-day readmissions (by nearly 5 percent). FQHCs thus demonstrate value through investment in primary care

federally qualified health center (FQHC) An entity that receives federal support to serve indigent patients, as well as patients with Medicare or Medicaid, in a medically underserved area; also called community health center.

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Chapter 2: Cl inical Innovat ions for Value-Based Care 33

(California Primary Care Association 2013). These entities, made possible by funding from the federal government, in many ways resemble medical homes, which are discussed in the next section.

Case Example: Care Transitions ABC Hospital was functioning as a safety-net hospital in a socioeconomically challenged region with a population of approximately 1 million people. A large number of people in the region had coverage under Medicaid or high- deductible insurance plans, or simply were not insured. As a result, the population had significant barriers to access. Most providers were unwilling to accept Medicaid rates of reimbursement, and the providers that were willing to care for these patients had long waiting lists.

In light of these problems, patients would often use the emergency room (ER) at ABC Hospital as a primary care clinic. In many cases, admissions that should have been avoidable became unavoidable because patients were unable to seek care earlier, when the illness was less serious. Patients were also being admitted because of lack of reliable follow-up from the ER. Normally, a patient with chest pain could be discharged after being ruled out for a myocardial infarction and receive an outpatient stress test, if a follow-up could be scheduled. However, since this populace often did not have reliable follow-up, the patient would remain in the hospital an extra day for the additional testing to be completed, at great cost to patients, the health system, and the payer. (Typically, a test done as an outpatient is significantly cheaper than a test performed within the hospital.)

Given these challenges, ABC Hospital decided to collaborate with a regional FQHC to set up a satellite clinic across the street from ABC’s ER. After the FQHC satellite clinic was established, an uninsured patient or a patient on Medicaid could be referred to the care coordinator in the ER, who would set up an appointment for the patient at the FQHC within 96 hours. In this manner, patients who could be safely discharged from the ER were being connected with a primary care physician (PCP) at the FQHC, who would then coordinate follow-up care. The health record system in the ER was linked with that in the FQHC so that the PCP had access to all the relevant information.

Over the next 16 months, the number of avoidable ER visits started decreasing, and patients who had been admitted had a safe discharge plan at the FQHC. The FQHC started extending its operating hours so that it could also function as a walk-in urgent care clinic. A laboratory, X-ray machine, and basic pharmacy were also added to the FQHC so that patients’ transi- tions of care could be effectively managed and comprehensive care could be provided in a single setting, and often in a single visit.

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The Core Elements of Value in Healthcare34

Patient-Centered Medical Homes and Patient Outreach

The patient-centered medical home (PCMH), as defined by the National Committee for Quality Assurance (NCQA 2017b), is a delivery model in which care is provided by physician practices with the aim of strengthening the patient–physician relationship. The model seeks to replace episodic care based on illnesses and patient complaints with coordinated care based on a long-term healing relationship. Innovative programs are leveraging the promise of infor- mation technology to help reach this goal. Changes are being introduced in clinical practice whereby a call center operates during clinic hours, renewal of prescriptions is facilitated telephonically, an increased number of urgent care appointments are possible each day, and 24/7 access to physicians is available (Mazzolini 2013).

Many techniques to improve patient access and outreach have involved interactive website access, web messaging, and telephone calls. Improved con- nectivity can facilitate responsiveness, enable simple issues to be addressed remotely, and encourage selective use of office visits, making face-to-face clini- cal interactions more useful when they occur. Some physician practices have achieved a state where contact volume is spread across 20 percent visits, 40 percent telephone calls, and 40 percent web messaging. A successful redesign requires care that is continuous rather than episodic, and proactive rather than reactive. Such a shift leads to patients becoming activated for self-management. Typically, a small minority of patients drives the majority of demands on a pri- mary care practice; enhanced processes for outreach and contact through the PCMH model can help mitigate these demands by allowing for synchronous engagement of the patient (Jackson et al. 2013).

Medical groups lend themselves well to the medical home model. Several groups have developed comprehensive care centers (CCCs) where patients with chronic diseases can be moved. The CCC approach promotes the engagement of specialists, who can manage chronic diseases while freeing the primary care doctors to focus on individualized primary care. Electronic linkages that allow tracking of patients are important. This model works well with the capitated model toward which healthcare is moving.

Efforts to manage chronic diseases such as diabetes in underserved popu- lations will benefit from interventions at the community level. For example, a program in Chicago provides home visits by a trained community health educator to bridge the chasm between medical management, self-care, educa- tion, nutritional support, social work, and counseling. These low-cost inter- ventions promise to show a significant return on investment, given that even one prevented case of dialysis, limb amputation, or blindness will more than offset the cost of a community health educator (West 2013). To this end, the ACA reauthorized the Patient Navigator, Outreach, and Chronic Disease

patient-centered medical home (PCMH) A delivery model in which care is provided by physician practices with the aim of strengthening the patient–physician relationship.

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Chapter 2: Cl inical Innovat ions for Value-Based Care 35

Prevention Act of 2005. This act authorizes several federal organizations, such as the Health Resources and Services Administration, to award grants for model programs that provide prevention, early detection, treatment, and appropriate follow-up care for individuals from underserved populations with cancer or chronic diseases (GovTrack.us 2017).

Mobile clinics represent another novel approach to minimize barriers to healthcare access. An urban mobile health clinic in Massachusetts success- fully lowered patients’ blood pressure, leading to a 32.2 percent reduction in the relative risk of myocardial infarction and a 44.6 percent reduction in the risk of stroke. This clinic resulted in a calculated return on investment of 1.3. Mobile clinics may thus prove to be a viable modality for delivering healthcare to underserved communities with poor health status and high use of emergency departments (Song et al. 2013).

Coordination of care should be embedded in the patient’s primary site of care. The site may have a single assigned PCP or a group of providers who rotate in seeing the patient; as long as the records are easily obtained, the care can be coordinated. The site must be able to provide convenient access and comprehensive primary care. Research suggests that patients who find it easier to contact a clinician after normal business hours are less likely (by 7.4 percent, according to one study) to visit the emergency department. Ease of access provides important support, suggesting that coordinated provision of expanded hours of care may further reduce expensive and avoidable emergency room visits (O’Malley 2013).

Case Example: Comprehensive Care Centers The following case has been adapted from Jain and Lessin (2015).

Two Anthem health plan subsidiaries in Memphis, Tennessee, have been delivering care to more than 14,000 Medicaid beneficiaries. In an attempt to provide a care delivery model rather than an insurance program, the subsidiaries have created comprehensive care centers where primary care has been integrated.

Medicaid beneficiaries are assigned to one of three CCCs, and primary care providers at the centers help patients manage such chronic conditions as hypertension, diabetes, and heart failure using on-site disease manage- ment programs. Navigators proactively contact the patients to engage them with the CCCs. Upon entry into the Medicaid program, patients also undergo a comprehensive evaluation to identify physical, cognitive, and behavioral needs. In addition, routine lab and radiology assessments are completed to stratify the patients by risk and refer them to the appropriate special- ists. The program allowed one of the subsidiaries, CareMore, to find that

(continued)

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The Core Elements of Value in Healthcare36

A Proposed Model for Care Delivery

As this chapter has demonstrated, well-designed structural changes can enable institutions to assume the financial and clinical risk of delivering effective health- care so that incentives and results are well aligned. A proposed model for care delivery is shown in exhibit 2.1.

15 percent of the newly enrolled patients had mental illness and should be referred to in-house mental health professionals.

CareMore has also implemented a medical “extensivist” model, in which clinicians follow patients across various sites of care and seek to eliminate several of the pitfalls of care transitions. Extensivist clinicians see patients in the clinic, the hospital, and the post-acute care facility. To facilitate such intensive follow-up, their patient load is limited. This model has helped CareMore keep its readmission rates 40 percent lower than the national average.

The CCCs in Memphis are located in the areas where the beneficia- ries are based. Operating hours are from 7 a.m. to 7 p.m., and same-day appointments are available. Such easy access to primary care is expected to reduce avoidable ER visits.

Telehealth

NH

RCFE HH HospiceHospital A

(hub)

Hospital C

Hospital D

Hospital E

Hospital F

Hospital G

Hospital B

Physicians: solo/groups

UM/care coordination

Population health / contract directly with employers / insurance exchanges / research & innovation

Health information exchange / HIS / clinical intelligence / pharmaceutical management

Actuarial expertise & risk / health plan

IPA/ACO/ foundation employed

Note: ACO = accountable care organization; HH = home health; HIS = health information system; IPA = independent practice association; NH = nursing home; RCFE = residential care facility for the elderly; UM = utilization management.

EXHIBIT 2.1 A Model to

Deliver Value

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Chapter 2: Cl inical Innovat ions for Value-Based Care 37

Under the proposed model, primary care sites, acute care hospitals, and post-acute care facilities will coordinate activities to ensure effective tran- sitions of care, coordination of care, and efficient care delivery. Through this coordination, primary care “super-sites” will be created so that care can be delivered seamlessly. This structure would reside on a foundation that is linked through effective information technology and electronic medical records. In this system, care coordination teams will work to provide efficient care and act as effective advocates for the patients. As legislative changes due to the ACA and subsequent amendments take hold, access to insurance is increasing.

Summary

Clinical innovations are an important part of the effort to drive more value into US healthcare. By addressing fragmentation in care and investing in infra- structure, better quality of care can be delivered at a lower cost. The cost can be reduced by eliminating duplication of care and by preventing avoidable medical misadventures. With a faster time to diagnosis, more accurate diag- nosis, and shorter response time, illness can be treated more quickly, cheaply, and effectively. By coordinating the care, the benefits are maintained, because patients do not fall through the cracks.

Key innovations to help achieve this value proposition involve the rede- sign of care delivery for better coordination of care across the entire continu um. Better transitions of care improve outcomes and the patient experience, and team-based approaches ensure that discharges are safe and readmissions avoided. Greater adoption of palliative care and hospice care are important in ensuring that patients avoid futile care that only increases discomfort and morbidity with- out meaningful improvement in mortality. As federally qualified health centers, comprehensive care centers, and medical homes become more established, patients will have improved access to comprehensive care. Vulnerable patients will also have faster access to care, which will avoid unnecessary emergency room visits and hospitalizations.

These changes are already under way, but significant investment is needed for information technology, electronic medical records, payment reform, multidis- ciplinary teams, and risk-based contracting. These investment costs will ultimately be recouped through the lower cost of delivering greater value in healthcare.

Notes

1. For Medicare inpatient admissions, these cases would be in diagnosis- related groups (DRGs) 291, 292, and 293.

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The Core Elements of Value in Healthcare38

2. Dry weight is the ideal body weight determined for a patient once heart failure has been treated with diuretics and other cardiac medications. The goal of a CHF program is to ensure that the patient does not exceed this dry weight, because an increase in weight is indicative that the patient is reaccumulating fluid, which is a common precursor of a readmission.

3. The components of a LACE score are length of stay (in days), acuity of admission, comorbidities, and emergency department visits. Comorbidities include previous myocardial infarction, cerebrovascular disease, peripheral vascular disease, diabetes without complication, congestive heart failure, diabetes with end-organ damage, chronic pulmonary disease, mild liver or renal disease, any tumor, dementia, connective tissue disease, AIDS, moderate or severe liver or renal disease, and metastatic solid tumor. A LACE score higher than 9 indicates a high risk of readmission.

4. Names have been changed to maintain anonymity. 5. Two new Current Procedural Terminology (CPT) codes have been

introduced: 99495 and 99496. The codes reimburse for communication, education of the patient, assessment and support for the treatment plan and medication management, identification of resources, and facilitating access to care and services. Telephone contact with the patient is needed within two business days of patient discharge, and a face-to-face visit is required within 14 days of discharge.

Discussion Questions

1. Discuss the role that clinical innovations can play in increasing value in healthcare delivery. a. Provide examples of innovations and describe how they can be

implemented to drive value. b. How can value be measured for each innovation?

2. As the chief quality officer for your health system, you are responsible for driving changes to increase value in healthcare delivery. Identify the infrastructure changes that will be needed, and include a discussion of what resources the changes will require. Also, prepare a response to potential concerns that the cost of the infrastructure changes might not be recouped from the proposed savings. Your response should include a comprehensive discussion of the expected savings, as well as the cost of implementing the changes.

3. Hospitals that reduce readmissions may stand to earn lower revenue because of the reduction in volume.

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Chapter 2: Cl inical Innovat ions for Value-Based Care 39

a. Discuss what regulatory changes will be needed to motivate hospitals to reduce readmissions.

b. Explain how other stakeholders can work to reduce readmissions. c. Identify the winners and losers from a successful initiative to reduce

readmissions. 4. What are some ways that greater incorporation of palliative care can

serve to improve the patient experience? Discuss what safeguards are needed to ensure that care is not unreasonably denied to patients.

5. Discuss how FQHCs, CCCs, and PCMHs can improve value in healthcare. a. Discuss features in these entities that drive value. b. What infrastructure is needed to deliver care that is coordinated,

proactive, and patient specific? Your response should address infrastructure needs involving professionals, information technology, capital investment, patient education, and protocols.

c. What resources will be needed to implement these changes? Draft a response to potential concerns that the cost of the infrastructure might not be recouped from the proposed savings.

6. Consider the following case: You are the chief quality officer of Andromeda Health. A hospital with an affiliated group, your organization has been struggling to ensure that patients with certain medical conditions, such as heart failure, do not get admitted to the hospital repeatedly. Your chief financial officer (CFO) has informed you that the recent move to value-based care has led to penalties for readmissions within 30 days of patients with congestive heart failure. You have been asked to develop budget-neutral initiatives to reduce readmissions. One of the initiatives you are considering involves a clinical team that works with patients based on protocols. You are also evaluating capital expenses and infrastructure investments to reduce readmissions. Your CFO has shared with you the following details:

Revenue per initial admission: $10,000 Penalty per readmission: Admission is not reimbursed Cost per admission: $9,000 Number of initial admissions per year: 200 Readmissions: 26 Salary for pharmacist: $50/hour Salary for medical director: $100/hour Salary for nurse: $50/hour Rent for additional space: $1 per square foot per month

a. Calculate the readmission rate for heart failure. b. What is the potential readmission penalty? c. What is the annual revenue from these admissions?

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The Core Elements of Value in Healthcare40

d. What does the readmission rate have to be to break even on this revenue source?

e. Estimate the reduced readmission you can achieve. f. Based on this estimate, create a proposal to reduce the readmission

rate. Your proposal should address the clinical staff needed, the information technology infrastructure needed, and any clinics that might be necessary. Provide a cost structure for this program.

g. Based on the data provided, identify the readmissions reduction needed so that the cost of the initiative is covered by the savings of avoiding the readmission penalty.

h. Estimate how long it will take to achieve the savings. i. Develop a two-page memo to your CEO detailing your strategy

and justification.

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CHAPTER

41

VALUE AND PAYMENT REFORM

Learning Objectives

Upon completion of this chapter, you should be able to

• understand the need for payment reform as part of the effort to increase value in healthcare delivery;

• discuss pay-for-performance reforms that can drive value in healthcare; • discuss the risk-based contracting reforms that can enhance value

in healthcare (e.g., accountable care organizations, shared savings, capitation);

• examine the rationale for why these reforms are likely to enhance value; • review the results of such reforms that have sought to deliver lower cost

and better outcomes; • propose methodologies to effectively incorporate payment for

performance in contracts; and • devise strategies whereby payment reform can improve operations

geared toward value-based care.

Although the argument for value in healthcare is strong and several clinical initiatives are driving meaningful changes, impediments to the move- ment remain. One key issue is revenue loss for stakeholders. Hospitals

stand to lose significant revenue from readmission prevention initiatives, and physicians whose income is based on the number of services provided will lose revenue if the volume of services decreases. Payers stand to gain from value- based initiatives if their costs go down while revenue stays stable; however, providers drive the utilization. Thus, payers have limited ability to increase value without more systematic changes in the manner that healthcare delivery is structured and incentivized.

For value to permanently become a part of the healthcare equation, all stakeholders must be able to benefit from the new paradigm. At the same time, stakeholders must face consequences if value erodes or does not increase. Changes in the rules guiding healthcare should be geared toward enhanc- ing the value proposition, and incentives must make value-focused arrange- ments economically viable for payers and providers. Penalties should motivate

3

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