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Transcription:

Alexa: Hi Everyone, Thank you so much for tuning in to the Avalere podcast series. My name is Alexa Trost and I’ll be talking today with Fred Bentley, the Avalere managing director of the Health Plans and Providers practice, about value-based care and post-acute care organizations.

So Fred, it’s 2019 and the healthcare industry has been talking about value-based care for a long time. Where are we today with value-based care?

Fred: Well I think we’re at an interesting inflection point right now in terms of the value-based care models and the evolution that we’ve seen. We’ve been talking, as you noted, we’ve been talking about this for it feels like just about a decade now. And it used to be the case when I would talk about this everybody was really worked up about accountable care organizations (ACOs) and bundled payments and everybody was talking about it, but nobody knew what they were or what they did or how they worked. That’s clearly changed. ACOs have clearly gained a foothold in just about every major market in the US; There’s at least 1 significant ACO if not a handful. So again, it’s not this this like mythical creature anymore. These are organizations that really are impacting how care is being delivered and whose delivering that care. The same thing with bundled payments you know we’ve seen whether it’s the joint replacement, the mandatory model that’s still in place – the CJR program or the Bundled Payment for Care Improvement Advanced – which is the new bundled payment program. Those are enjoying a lot of participation.

The other thing, and I’ll get back to this in a second, we now have a wealth of data on performance so it’s no longer a wait and see, let’s see how this all plays out. We have a decent sense for which models work, which ones don’t, and which ones are going to survive. But the other point that I would make is that we’re at an interesting inflection point and it’s the case that CMMI, which is the Center for Medicare and Medicaid Innovation or the Innovation Center, is still in the driver’s seat in terms of really pushing forward on new models, new payment delivery models, new demonstration programs – certainly under Secretary Azar and the head of CMMI Adam Boehler – have been very aggressive about big, bold new models and I think we’re going to see a lot of new models come out in the next few months so stay tuned to that. But it’s also important to note that in some respects, Medicare and CMS have been leapfrogged by some payers. So, Medicare Advantage plans – many of them have started developing their own ACOs, developing their own bundled payment arrangements, and other total cost of care contracts. I think that’s another really interesting thing to note if your post-acute care executive or anybody in the healthcare industry that cares about value-based care, is that it’s really just not Medicare Fee-for-Service (FFS) now that we see on the Medicare Advantage side with commercial plans that they have gotten much more aggressive on that front.

Alexa: Great, and what have we learned in the last few years about value-based care?

Fred: As I said, I think the data has really started coming in and there’s a couple things that we know. I would say the biggest takeaway from the data related to the bundled payment programs, patient-centered medical home models, the Medicare-Shared Savings ACO model, is that this takes a long time to get in place. This is not an overnight thing where you suddenly decide that you’re going to become an ACO and then the clinical models change, and the business models change. In fact, it’s an administratively complex arrangement so just getting the systems in place to be able to manage bundled payment arrangements or say to manage under a shared-savings arrangement is no small feat. That’s easy compared to changing clinical practice and I think that has certainly taken a lot more time. And yet, what’s interesting particularly we did an analysis a couple of months ago on latest batch coming in on the Medicare-Shared Savings program which funds the ACO models. It is the case that those ACOs that have been in place for 4 or more years are really starting to bend the cost curve. And it has been our finding when we look across both Medicare Shared-Savings Programs as well as bundled payment arrangements – it’s really not necessarily which model or which track you’re in, it’s how long have you been in the program. Have you stuck it out? And as I said, that magic period really seems to be at the 4- or 5-year mark where the case of the Medicare Shared-Savings ACOs that they really start to achieve meaningful savings.

Alexa: And where does post-acute care fit in with value-based care?

Fred: Here again we’re at an interesting point in the evolution of value-based care and where the post-acute providers fit in. I think up until about a year ago or certainly 2 years ago, the reality is that ACOs were not paying attention to post-acute care. They were really trying to figure out how to get their physicians on board, how do they get their clinicians to change clinical practice and a similar story in the bundled payment arrangements. I would say certainly in the last year or so, those entities those risk-bearing organizations and I would say also the payers themselves, have really been turning the spotlight on to post-acute care and I would say skilled nursing in particular so there’s a lot more scrutiny. We have a lot of evidence now of much tighter management around which patients go to say a skilled nursing facility versus home health or a home with no post-acute benefits – so really managing that referral process and tightly managing length of stay. So, it’s a tough time right now if you are a post-acute care provider in a market where there are some dominant ACOs or aggressive payers or organizations, say hospitals or health systems, that are a part of a bundled payment arrangement. You are certainly feeling the heat and it’s showing up in your bottom line.

I guess I would say I’m optimistic as I think about the future and there’s really 2 reasons for that. One is that we do have evidence, not as much as I’d like, but there is definitely evidence that an increasing number of payers as well as ACOs are really starting to see post-acute providers as partners not as entities that are downstream that need to be tightly managed or avoided at all costs. In fact, the sense is that home health providers, skilled nursing providers get to know patients in a way that even physicians don’t. And they valuable data and valuable insight and so it behooves the ACOs and the payers to move to a model where they really do create win-win arrangements. So as I said that’s cause for optimism, the other one is that even though the new Bundled Payments for Care Improvement, the BPCI Advanced program, does not have a track for post-acute care providers to manage the post-acute phase of an episode that fell by the wayside with the old BPCI program. We have several of our clients and we’ve seen across the industry that there are a number of post-acute organizations that we successful in that program, in the old bundled payment program, and there are now able to leverage that data to show that they can manage readmissions effectively, that they can manage length of stay, that they can manage downstream utilization during say 90 days of a post-hospital portion of an episode. So, there’s success on the industry side and then upstream, the payers and the ACOs are gaining a little understanding that they didn’t have before around the value of post-acute care.

Alexa: So putting yourself in the shoes of your post-acute clients, what do executives need to know and do now to ensure success in the future?

Fred: You know the first thing and this is kind of striking because it’s a lot of the work that we do with our post-acute client is, trying to help them understand and more specifically use data to really understand how is it the ACOs in their market the risk-bearing health systems that are say in a bundled payment program, how are those entities performing? What are their pain points? Are they really struggling with readmissions, are they struggling with readmissions with heart failure patients? I hear time and time again from ACO executives, from health system executives, and also from payer executives they’re kind of struck by the fact that when they get approached proactively by post-acute executives and post-acute organizations, those organizations have really not done their homework. They really come in with sort of a generic value proposition, they haven’t looked into performance to really understand what are those unmet needs, what are the specific challenges for the given organization that their talking to. So that’s critical. That is doing your homework and, this may sound self-serving, but we have the data others have the data I mean it’s not a mystery out there. It’s just doing that legwork and being thoughtful about it and targeted in your messaging.

In terms of messaging I think it is still the case that a lot of organizations don’t create a very compelling value proposition. I think the days of home health providers, skilled nursing providers, other post-acute providers coming in and saying “hey, we’ve been in the market, serving this community for decades now and people love us,” that just does not cut it. You absolutely have to have data on your performance on readmissions, on length of stay, on total cost of care. Again, the data is out there it is possible to create that story, I just think a lot of post-acute organizations have been slow to do that. And then finally, you as a post-acute organization have to increase your risk tolerance. I think for a lot of post-acute organizations they’re still very risk averse and it’s understandable the margins are very thin. But, the reality is that you’re not going to find meaningful partnerships unless you demonstrate to the payer or the ACO or the organization that’s in a bundled payment arrangement that you’re willing to pilot something, that you’re willing to experiment and most importantly that you’re willing to put some skin in the game in terms of both upside bonus potential as well as downside risk.

Alexa: Thank you so much for that overview, Fred. If you want to learn more about value-based care you can go to our website Avalere.com or you can tun in to future podcasts.