Practice-based initiatives

As discussed earlier, the medical or health home has received attention largely because of its potential to improve the care for patients with chronic conditions. A number of policy issues related to medical homes remain unresolved and are targets for additional testing that can be facilitated through the CMMI. Indeed, the first “opportunity” listed among models to be tested by the CMMI is “promoting broad payment and practice reform in primary care, including patient-centered medical home models for high-need applicable individuals” (PPACA 2010, Section 3021).

Among the key issues to be addressed is whether specialty practices, such as those of cardiologists and neurologists, which care for patients with chronic conditions on an ongoing basis and adopt most of the practice elements recommended for medical homes, should qualify as a medical-home eligible for a different payment approach – whether or not the practice is formally designated as a patient-centered medical home. Already a debate has begun about this issue as some specialists have adopted medical home elements and seek recognition (Casalino et al. 2010).

Another fundamental question on which active debate continues is whether the medical home concept should apply to all patients served by a practice or should instead target patients with chronic conditions, who arguably are best able to be supported by the enhanced medical home capabilities. Currently, most of the activity in pilots and demonstrations has featured “transformation” of the practice for all patients served, but some commercial insurers are resisting the notion that practices need additional payments to serve all of their patients differently when the small number of patients with severe and multiple chronic conditions drive so much of the spending and may uniquely benefit from the elements of the medical home, akin to the Chronic Care Model.

A key implementation issue is whether medical homes should be recognized and thus eligible to receive additional payment primarily through an assessment of their capabilities to provide patient-centered medical home care or through an assessment of their performance as measured through a growing number of quality and utilization metrics. Current demonstrations vary on the balance of upfront assessment of capacity versus monitoring actual performance.

Among models addressed in specific sections of the PPACA (2010) are the following:

Multi-payer Advanced Primary Care Practice Demonstration (MAPCP)

The MAPCP Demonstration will allow FFS Medicare to join Medicaid and private insurers in state-based health reform initiatives aimed at improving the delivery of primary care through use of advanced primary care practices (that is, patient-centered medical homes). CMS will provide an enhanced payment to participating practices for their Medicare patients commensurate with other participating payers in exchange for provision of continuous, comprehensive, coordinated, and patient-centered health care. Implementing a common payment method across multiple participating payers is intended to reduce administrative burden, align economic incentives, and provide participating practices with the resources needed to function in a more integrated fashion. The demonstration will be conducted under state auspices, and as announced by CMS, eight states have been selected: Maine, Vermont, Rhode Island, New York, Pennsylvania, North Carolina, Michigan, and Minnesota.

To be selected, states had to meet certain requirements, including having a state agency responsible for implementing the program, being ready to make payments to participating practices six months after being selected, and having mechanisms in place to connect patients to community-based resources. Ultimately, over 1,200 medical homes are expected to be involved serving almost one million Medicare beneficiaries. The demonstration will last for three years (CMS 2010a; CMS 2010b).

Accountable Care Organizations (ACOs)

The concept of an “accountable care organization” has emerged as one of the most influential delivery and payment innovations included both in PPACA and being pursued in the private sector. As defined by McClellan colleagues (2010), “ACOs consist of providers who are jointly held accountable for achieving measured quality improvements and reductions in the rate of spending growth … these cost and quality improvements must achieve overall, per capita improvement in quality and cost, and ACOs should have at least limited accountability for achieving these improvements while caring for a defined population of patients” (pp. 982–983). ACOs may involve a variety of provider configurations, ranging from integrated delivery systems to physician group practices to networks of individual practices to hospitals with aligned and/or employed physician practices. All configurations must have a strong primary care base.

The impetus for establishment of ACOs comes from the growing pressure of escalating health care costs combined with evidence that at least some of the spending appears to improve neither quality nor patients’ experience with the care they receive. Although experts dispute the exact amount of wasted spending, it is generally thought to be substantial (Fisher et al. 2003; Gottlieb et al. 2010; Zuckerman et al. 2010). ACOs are thought to hold promise for cost containment because responsibility for containing costs (while improving quality and patient experience) is placed directly with clinicians on the front lines of care, who can better target waste and inefficiency if motivated to do so, rather than with distant third-party payers, including managed care plans and Medicare (Berenson 2010c).

Patients with chronic care conditions in need of improved care management and care coordination would be a major focus of ACOs. In one recent accounting, half of Medicare beneficiaries had five or more chronic conditions and were responsible for 76% of Medicare spending (Thorpe & Howard 2006).4 Patients with chronic conditions, especially those with multiple conditions, often receive suboptimal care despite the fact that individual clinicians may be practicing according to professional standards. In theory, the ACO would address the fragmented care that results from clinicians practicing in silos, producing different diagnoses and treatment plans, prescribing incompatible medications, and delivering redundant, costly care.

Supported by a payment model that rewards high quality, cost-effective care, an ACO would become the entity that organizes chronic care management, consistent with its own culture and delivery characteristics. The payer, whether Medicare or another public or private payer, would not specify models of chronic care management to be used, leaving those decisions up to the ACO. Instead, the payer would establish program specifications and performance measurement related to cost, quality, and patient experience of care to incentivize the ACO to perform well.

Many of the specific approaches described earlier, including various forms of medical homes, are anticipated to be core elements within an ACO structure. However, the ACO, rather than the third party payer, would have flexibility to determine which care models to use and would be responsible for assuring that the specialists and medical home clinicians were coordinating care and that hospitals were working with a medical home to assure a smooth transition of care from hospital to home.

The PPACA includes various models of ACOs and ACO payment. Section 3022 (PPACA 2010) specifies a Shared Savings Program that is based on the Medicare Physician Group Practice (PGP) Demonstration approach, in which FFS payments continue as usual, but the ACO receives a share of savings achieved if total Medicare Parts A and B spending for patients assigned to the ACO is less than a spending target. Proponents of the shared savings approach for ACOs believe that an incremental, nonthreatening program design is the best way to gain initial participation by diverse provider systems across the country and to nudge them in the desired direction of change (Berenson 2010c). Others argue that the shared savings approach is too weak to achieve significant cost containment because it maintains FFS and its inherent incentives to generate unnecessary services. Instead, many advocate the need to move to payment models that involve some degree of financial risk, such as partial or global capitation (Berenson 2010c; MedPAC 2010b). A complete discussion of the merits of different ACO configurations and the various payment models to support them is beyond the scope of this chapter.

Most of the ACO attention has focused on the potential of ACOs in Medicare. However, two sections of the PPACA describe ACO or ACO-like demonstrations in Medicaid. The Medicaid Global Payment System Demonstration (PPACA 2010, Section 2705) would permit up to five states to test a global, capitated payment to a safety net hospital system or network as a replacement for fee-for-service. This demonstration was supposed to have begun in fiscal 2010, and to last three years. The CMMI would be responsible for evaluating the demonstration.

The Pediatric Accountable Care Organization Demonstration (PPACA 2010, Section 2706) would test pediatric ACOs and would be expected to use the payment approach and other design features called for under Section 3022, the Shared Savings Program described above. This demonstration is scheduled to begin on January 1, 2012, coincident with the Shared Savings demonstration in Medicare and conclude Dec 31, 2016, a full five-year demonstration.

Neither demonstration explicitly discusses care for beneficiaries with chronic conditions. Yet, as discussed above, the basic purpose of the shared savings and global capitation payment approaches is to internalize to an organization the incentives to reduce costs while improving quality.

CMS Federal Coordinated Health Care Office (FCHCO)

Section 2602 of PPACA (2010) established a new Federal Coordinated Health Care Office to address the unique problems of the almost 9 million beneficiaries dually eligible for Medicare and Medicaid, more than 7 million of whom still receive fragmented FFS care in both programs (Bella 2010). In two special open-door forums held by CMS leadership in late November 2010, Melanie Bella, the Director of the FCHCO, indicated the new office would pursue two major efforts: (1) improving the alignment between the federal government and the states on benefit structure, eligibility determination, regulations and the array of other program elements that impact beneficiary service; and (2) testing new care models and payment systems. In this latter effort, the FCHCO will work in conjunction with the Center for Medicare and Medicaid Innovation. In the first of these initiatives launched in December 2010, up to 15 state Medicaid agencies will have the opportunity to obtain contracts of up to $1 million to design and implement demonstrations for more integrated care.

Encouraging effective transitions from the hospital to other settings

So far, we have considered approaches to chronic care management, such as medical homes and ACOs, designed to provide patient-centered care that is coordinated across provider silos and provided longitudinally to decrease care fragmentation. The PPACA also includes chronic care management and coordination provisions that are much more targeted to vulnerable periods of time when patients are prone to mishaps because of a lack of care coordination (Coleman & Berenson 2004). In particular, the PPACA focuses attention on the problem of faulty care transitions from hospitals to home or to post-acute care facilities.

This emphasis on improving care transitions is based on research that has demonstrated that Medicare patients were readmitted within 30 days nearly 20% of the time (Jencks et al. 2009) and that specific interventions could reliably and substantially reduce the rate of these readmissions (Coleman et al. 2006; Naylor et al. 2004). Perhaps the most disturbing finding in the research is that more than 50% of the time, the patient, who was sick enough to be in the hospital, was readmitted without seeing a health professional in the interim between discharge and readmission (Jencks et al. 2009).

Two different payment approaches are available to try to incentivize hospitals, and through hospitals other providers, to do a better job of ensuring a high quality discharge that provides patients and families with the information (and, ideally, skills) to resume responsibility for their post-hospital care and assures that appropriate follow-up care is provided, whether from the patient’s usual source of ambulatory care or by a hospital employee with direct knowledge of the patient’s in-hospital care and follow-up needs.

Section 3025 of the PPACA (2010) provides for a “Hospital Readmissions Reduction Program” intended to reduce the rate of avoidable readmissions. An “avoidable or preventable readmission” is considered to be an admission clinically related to the prior admission that could have been prevented by: (1) the provision of quality care in the initial hospitalization; (2) adequate discharge planning; (3) adequate post-discharge follow up; or (4) improved coordination between inpatient and outpatient health care teams (Goldfield et al. 2008). Since 2009, CMS has reported quarterly on the Hospital Compare website the rate of readmissions for beneficiaries with the diagnoses of congestive heart failure (CHF), heart attack (AMI), and pneumonia (PNEU). Beginning in Fiscal Year 2013, hospitals will have their base diagnosis related group (DRG) payments reduced for “excess readmission rates,” as defined by statute.

An alternative approach would not rely on measuring readmission rates but would change the inherent payment incentives related to readmissions for all hospitals. In what has been called a “warranty” payment approach, the initial hospitalization for a subset of conditions would guarantee that a readmission would not be required within a specified time period, and there would be no (or more likely reduced) additional payment for readmissions within that time. The base payments for these conditions might be increased to make up for the lack of payment for the “warranty” readmissions (Berenson 2010d). This approach has precedent in existing payment policy. For example, in the Medicare in-patient, psychiatric hospital prospective payment system, no additional payments are made for readmissions within the first 72 hours of discharge.

Section 3026 of the PPACA (2010) also provides for a “Community-Based Care Transitions Program” (CCTP) that will assist hospitals with high readmissions rates in improving their transitions for high-risk Medicare beneficiaries. The CCTP builds on the Care Transitions sub-national theme in the 9th Scope of Work through which 14 Quality Improvement Organizations (QIOs) facilitated communities working together to address care transitions. Eligible entities for CCTP are statutorily defined as hospitals with high readmission rates that partner with community-based organizations (CBOs) or CBOs that provide care transition services across the continuum of care and have governing bodies with representation of multiple health care stakeholders, including consumers. In selecting CBOs to participate in the program, CMS will give preference to current Administration on Aging (AoA) grantees that provide care transition interventions with multiple hospitals and practitioners or entities that provide services to medically underserved populations, small communities, and rural areas. CBOs in the CCTP will define their target population and strategies for identifying high-risk patients; specify care transition interventions, including strategies for improving provider communications and patient activation; and specify a budget including a per eligible discharge rate for care transition services. The program will run for five years beginning January 1, 2011 (CMS 2010c).

Conclusions and recommendations, near and longer term

The contributions that effective care management/care coordination can make to improved quality of care at lower costs, particularly for people with multiple chronic conditions, have now been widely demonstrated. Fortunately a number of approaches to financing and paying for care management/care coordination have been and are currently being tested, and the implementation of the many provisions of the PPACA that address various aspects of care management should help to establish the evidence base required to support this essential aspect of health services delivery. Our conclusions at this early point in the transformation of health care payment and delivery system change that the PPACA will hopefully encourage are as follows.

• “One size does not fit all,” either in the care management model or the approach to financing and payment. Different models are more effective with different segments of the population and for different purposes. The financing approach will, therefore, differ depending on the purpose.

The diversity in the population with multiple chronic conditions and/or functional limitations, the progression of needs over time for any given individual, and the considerable heterogeneity in market conditions and organizational capacity across the country require that multiple models be available.

The care management model must be targeted to the appropriate population segment (such as high-intensity care management for high-risk beneficiaries, and management of transitions from the hospital to home for most beneficiaries). High-intensity care management can be supported through full or partial risk-adjusted PPPM-capitated fees paid to a variety of different organizational entities. Transitions from the hospital to home or other community-based settings can be encouraged through hospital payment policies that penalize preventable readmissions. The shared savings model for ACOs might encourage adoption of effective transitions models because reduction in hospitalizations is essential for generating savings.

• Effective care management for people with multiple chronic conditions and/or functional limitations requires linkages between medical care and social support services, and under current fee-for-service financing, linkages among fund sources.

The medical dimension of care that works well for people with acute clinical problems is not sufficient to address the needs of many people with multiple chronic conditions and/or functional limitations. Linkages to social service and other state/community-based resources are needed. An interdisciplinary team, including nurses, social workers, pharmacists, and others, is required to provide needed support. This team can be made available and financed in a number of different ways and need not be employed by the same organization that provides medical care, as long as there is a close linkage among all components.

• For the dually eligible population with multiple chronic conditions and/or functional limitations, both Medicare and Medicaid funding sources must be integrated to address care management requirements.

In FFS, the benefit structure of neither program alone covers the spectrum of medical and social support services needed by this population. However, SNPs and integrated programs have demonstrated that dual-eligibles can be provided high-quality, cost-effective care. The requirement that no later than 2013 SNPS must also have contracts with state Medicaid programs should expand the number of beneficiaries receiving effective care management and coordinated services. The new Federal Coordinated Health Care Office at CMS established in 2010 under PPACA should greatly facilitate the SNP and other approaches to serving dual-eligibles.

• Fee-for-service payment is inherently limited in supporting care management activities and providing incentives for effective performance. PPPM fees and risk-based payment models offer greater potential for supporting the team-based care and HIT-supported practices that show promise for improving clinical quality, patient experience, and cost.

As Kane (2009) has noted, “fee-for-service payment is the anathema of effective chronic disease care. Any system that emphasizes production units, especially those based on personal contact, discourages precisely the kinds of activities that lie at the heart of proactive primary care” (p. 2342). Instead, payment approaches, such as a PPPM fee per eligible beneficiary or more comprehensive per capita payment models, can be scaled to the care management model, risk-adjusted for patient complexity, and provide incentives based on the quality of care and care management, patient experience with care, and health spending for a defined population of patients. Such approaches can be used in addition to or in place of FFS payment.

Mixed payment models provide a way to moderate undesirable FFS incentives to permit clinicians to do the right thing. However, because of the possibility that practices may not balance incentives but would instead respond to each incentive separately, it is essential to do risk adjustment in any approach involving a form of capitation and to employ performance measurement. While it is not yet possible to measure overall “value” – quality/cost for a practice or organization, measures are now available for assessing performance on some important aspects of chronic care management, especially those related to patient and family experience with their care.

Notes

1. The latter would specify discrete activities, including at least discussion with the discharging hospital-based physician, review of a discharge summary, non-visit-based communication with the patient shortly after discharge, communication with nurses or other care coordinators assigned to the patient post-discharge, and performance of medication reconciliation if needed, by phone or e-mail.

2. We do not refer to this payment approach as PMPM because in this situation patients are not members of a health plan, which usually involves enrollment and restrictions on patient choice of provider.

3. In health economist Joseph Newhouse’s formulation, partial capitation refers to making some payments for FFS, at reduced rates for standard payment schedules and the rest using a PMPM approach. In the context of Accountable Care Organization payment, the term is being used to describe an approach that would provide bonuses and penalties to providers based on whether actual spending is less than or exceeds an expenditure target, with the application of corridors to reduce both upside gain and downside losses. It more properly should be labeled “partial risk,” rather than “partial capitation,” because the payments remain FFS.

4. This analysis used a liberal definition of a chronic condition. By definition, a chronic condition is supposed to produce some degree of disability, although definitions vary on duration needed to consider a disability chronic (for example, 3 months or 12 months). The study cited considers treatable medical conditions that do not directly produce disabilities, such as hyperlipidemia, to be a chronic condition. Over time, more and more such treatable conditions have been identified, and treated, leading to a significant increase in numbers of chronic conditions per person.

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