Better care at lower costs

Editor's note: Following is an edited excerpt of the transcript for Modern Healthcare's May 6 editorial webinar, “Building the continuum of care: Now that you own it, how best to weave it into your operation.” The panelists were David Grabowski, professor of health policy at Harvard University; Michael Rowan, executive vice president and chief operating officer at Catholic Health Initiatives; and Linda Young, president of Ascension Health's Reverence Home Health & Hospice. Modern Healthcare reporter Melanie Evans moderated a discussion exploring the challenges providers face as they reach into a broader continuum of care with the goal of delivering better care at lower costs.

Melanie Evans: What's at stake as providers and payers are trying to develop an appropriate risk adjustment model, what are some of the lessons we learned from the last time around, and what are the current challenges in developing a payment that adequately compensates for the complexity of various patients? 

David Grabowski: Even if we just think about hospital payment, we used to have cost-based payment. We obviously moved to a prospective payment system based on the diagnosis- related groups, or DRGs, in the early '80s, and that was a hope that we can begin to curb some of the high spending and high utilization in the hospital sector.

I think we've seen a big decrease in length of stay, but what that caused was a lot of shifting across settings, and the use of post-acute care mushroomed the readmission problem.

So now as we begin to think about global payment, we're back to sort of thinking about, how do we adequately adjust risk? I've yet to meet the provider who doesn't think they're caring for a sicker set of patients. And so risk adjustment is incredibly central to any of this.

I think the real challenge here is that, one, we're working outside the data. We can begin to look at, for example in bundled payment, what does 30-day utilization look like following discharge? But trying to get the appropriate rates for the hospital system, for the physicians in the bundle, and then the post-acute providers as well, is really challenging. And then thinking about how that rate gets divided up.

We can all agree that utilization is too high under the current system. But then thinking about how we actually account for this very different mix of patients across providers is really challenging.

Now imagine that you're trying to risk-adjust an entire set of healthcare services. Imagine it's a dually eligible individual and you're trying to risk adjust all their Medicare and all their Medicaid.

We can all agree there's a lot of inappropriate utilization, some waste that we could eliminate in the system, but trying to figure out what's the appropriate payment rate? I think given the number of services that are in the bundle or in the capitated rate with the complexity of the patients makes this incredibly challenging.

Think about even our current payment systems. If you take home health payment, we have all the outlier payments and complexities and the risk. All of that is so complex. That's just for home healthcare alone. Now think about putting home healthcare in this bundle or in a capitated rate. It's that much more complex for a very sick population mix.

Evans: Michael, how has Catholic Health Initiatives tackled the question of risk adjustment as you diversify your services?

Michael Rowan: In many ways, when we think about this whole idea of appropriate risk adjustment and payment, it's really a scary proposition because this is a new and different kind of work, and the reality is, if you get it wrong, disaster looms out there. And so as an organization, we're trying to go into the whole process by doing a series of pilots out there with smaller populations so that we can kind of test the waters. And I note we're also trying to begin to think about how we learn to manage the care of the population we're already at risk for, and that is our own employees.

It's about understanding a population and its utilization patterns, and it's then about understanding how you can impact those utilization patterns and what's the cost of impacting those utilization patterns. For us, it's meant that we've had to import new skills into the organization—epidemiology, actuarial science—and we started to build infrastructure specifically around business intelligence data management so that we can intelligently support risk in insurance ventures.

You look back at the '80s and '90s with the whole HMO thing, and their reaction to getting it not quite right was to withhold care. And as we move forward, that's not what we want to do.

We want to be very clearly focused on, how do we prevent the need for expensive care so that we operate within whatever parameters of risk there are out there, and how do we do that by creating wellness in both individual patients and across the defined population so again they don't need expensive care? This is a major undertaking for any organization and certainly for any organization that's historically been an acute-care, hospital-based kind of organization.

Evans: Can you describe the risk tools that you may have developed to stratify patients as they're admitted in the post-acute setting so that they get the appropriate intervention or care that they need?

Rowan: In many ways, we're just starting that process, and probably we see it right now in our kind of primitive way beginning to rely on two things:

No. 1 again is data, and that is we're building our own internal data exchange, our enterprise information system, focused on a business intelligence function where we can take information and make intelligent decisions and predictive behavior about specific populations.

And that's a particular challenge for us as an organization because, historically, we didn't even have our own data. We started off buying our own information about our patients, often from insurance companies and the like, but now we're starting to accumulate that data. So that's one piece of it. And it literally is a business intelligence function within CHI.

The second piece is building out our care model, and in our care model we're trying to develop, if you will, two things. One, a chronic-disease-management capability—that is, we know the optimal way to take care of any population of diabetics. And then secondarily, what we call an extensivist care model. We're beginning to think about how you manage those transitions of a patient during any particular illness, be it acute or chronic, from what's happening pre-acute, to inpatient, to post-acute, to home care, to chronic disease management. And it's really those handoffs, it's that coordination.

Linda Young: As I think about Reverence and the work that we're doing in home health, I go back to Mike's comments that he just shared related to chronic-disease management, the capability related to that as well as managing the transitions.

I think it's just critical that home health is at the table during these discussions because as we think about the patient movement from one entity to the next, it really is that handoff from one provider to the next that makes a huge difference in the patient's outcome.

Part of the work that we need to cont-inue to focus on is related to the IT system and assuring that as we build our health systems and think about each of the entities within a system—taking care of that patient from birth through the end of life—we really do need to have health systems that talk with each other so that handoff can be transparent and the information that each provider or level of care needs is available at the time that the new level of care is being delivered. So as it relates to the risk adjustments and evaluating outcomes based on a patient's risk, I think it's work that is absolutely ongoing as we speak and critical to the success of our management of the patient's care.

Grabowski: There are actually now companies that are working with a lot of these systems that are basically managing or even taking on the risk of their post-acute population and using a big database to help sort of assign, or help to assign, patients to particular post-acute settings, whether the individual needs skilled-nursing facility care, home healthcare, and then how much care and kind of matching this individual to a whole database of individuals with similar risk characteristics.

And, obviously, we can't account for all the different risks, and it's more than just health that's going to impact your need and level of post-acute care. There's family. There are all sorts of other unobservables, if you will, that are at play here. But there is this sort of industry coming up that is actually even above the provider level to think about system-level management of post-acute care.

Evans: Are there ways that CHI has sought to systemically incorporate some oversight so that you can maintain standards, be it quality or customer service?

Rowan: I think a lot of it comes down to your basic thought process on working with contractors, and that is the development of service-level agreements.

Each time we contract with someone who participates with us, you know, I could say in developing or delivering post-acute service, but the same thing could apply to developing IT systems. We try to build into the contractual agreement, service level agreements, which say these are the metrics that you have to operate under if you are considered to have fulfilled your end of the contract.

Now, that sounds pretty good and pretty easy, but the real challenge—especially as we move into post-acute care and building out the continuum—is what should the standards and benchmarks be, because sometimes they don't exist out there. If we're involving ourselves all the way to the population health management, there's also this whole challenge of pre-acute care, if you will. That is, how do you keep people out of the acute side to begin with? And that's an area we even know less about to set standards, benchmarks and expectations than on the post-acute care side.

Evans: Linda, I'll ask you as well. Are there ways that you have tried to address maintaining standards as you have both consolidated and expanded?

Young: One of our corporate departments is a quality department, and the responsibility for those folks is to oversee the quality operations and outcomes for all of our sites. We also see that that's a very local function, and so we have local quality associates who work very closely with the corporate department, so that way we can really make sure that the outcomes that we are achieving with the care that we're providing are meeting the standards that we want as we continue to grow and expand across the state.

Follow Melanie Evans on Twitter: @MHmevans