SummaryTune into another episode of Start Your Day with Avalere. In this segment, Chris Johnson of Landmark Health joins Fred Bentley, Managing Director in Avalere’s Center for Healthcare Transformation, to discuss his organization’s experience as an early participant in CMMI’s Direct Contracting payment model and how value-based models can advance home-based care.
Fred: Hello, and welcome to another episode of Avalere Health Essential Voice in our Start Your Day with Avalere podcast series. My name is Fred Bentley, and I’m a Managing Director in Avalere’s Center for Healthcare Transformation. I’m honored to be joined today by Chris Johnson. He is the Vice President and Head of Corporate Development at Landmark Health, a leading provider of in-home medical care in the US. Landmark has been rapidly growing and serving as an innovator in the burgeoning home-based medical care industry.
In addition to being an innovative organization, Landmark is also one of the first participants in the Direct Contracting model. The Direct Contracting, or DC, model is a payment model that has been launched by CMMI, or the Center for Medicare & Medicaid Innovation. It builds on the government’s experience with Accountable Care Organizations (ACOs) and other total-cost-of-care-based payment models.
The DC model creates powerful incentives for participating providers like Landmark to deliver efficient, high-quality care by shifting financial accountability, both the upside bonus potential as well as downside risk to organizations to manage Medicare fee-for-service patients.
The program officially launched in January of 2021 and Landmark is part of that first cohort of Direct Contracting entities. They’re currently in the implementation phase and will be going live on January 1 of next year.
Chris, before we delve into the Direct Contracting model and your experience to date, I’d love for you to provide an overview of Landmark and the unique role that you play, particularly as it relates to the Medicare Advantage patient population.
Chris: Well, Fred, first of all, thank you for having me. I’m very excited to be with you on this podcast. Yes, so Landmark is an in-home primary care provider. We don’t have any physical clinics. All of our visits occur in our patients’ homes. Our physician-led teams deliver longitudinal in-home medical care, behavioral care, and 24/7 in-home urgent care, and our patients have access to a full interdisciplinary care team including a nurse care manager, social workers, pharmacists, dietitians, and what we call healthcare ambassadors, who are individuals in a non-clinical role that provide additional services to members in their home.
As you noted, we contract with health plans and risk-bearing provider groups, primarily Medicare Advantage plans, to identify members with the highest chronic disease burden, generally patients with 6 or more chronic conditions such as congestive heart failure, COPD, type 2 diabetes, or chronic kidney disease. Our average patient is about 80 years old and has 9 chronic conditions.
We enter full-risk value-based arrangements for these members and manage them in collaboration with their existing primary care and specialist care providers, extending their care plans into the home. We typically don’t charge for our services. Since we’re at risk for the total cost of care for our membership, we must generate medical savings to guarantee a return to our health plan, pay for our own services and operations, and then generate a surplus to fund the continued growth of our platform.
We found that our model can repeatedly deliver 20 to 25% reductions in avoidable hospitalizations and skilled nursing facility (SNF) days in the populations that we manage. We’re excited by this outcome because it helps us to fulfill our mission of transforming healthcare in the communities where we operate by increasing our patients’ healthy days at home, in their communities, surrounded by their families and loved ones.
Since our first house call in October 2014, so just over 6 years ago, we’ve successfully expanded to 17 states in over 200 counties, and care for around 140,000 Joes and Josephines, as we affectionately call our patients.
Fred: Great, thank you. Very helpful context. Given that you all have jumped into the deep end in terms of taking on complex patients and going at full risk, which scares most of the providers out there, what was attractive about Direct Contracting? Why did Landmark opt to get involved in the DC arrangement instead of getting involved in the Medicare Shared Savings Program for ACOs or the next gen ACO model?
Chris: It’s a great question, Fred. As an organization, our goal is to ensure that all seniors have access to in-home medical care. Today, around 60% of Medicare beneficiaries are in traditional Medicare or Medicare fee-for-service, though this number is shrinking as Medicare Advantage grows. CMS has done studies on this traditional Medicare population and found that at least 17% have 5 or more chronic conditions.
This represents for us millions of seniors across the country who we believe have been locked out of innovative care models like Landmark because of the payment mechanism in fee-for-service Medicare. Historically, we have not been able to serve traditional Medicare patients because the cost of delivering our services is not covered by the fee-for-service payment that Medicare covers for doing a house call. Many of the services that we provide, like pharmacist consult and social work support, don’t even have billing codes associated with them in Medicare, but we do them because we know that they have a significant impact on the lives of our patients and reduce the overall medical costs that they will incur down the road.
So, we’re incredibly excited about Direct Contracting because for the first time, we’re able to go at full risk for the overall savings generated by our model on traditional Medicare patients. Even though the fee-for-service payments CMS will make to Medicare will not cover our direct operating costs, we’re willing to go at risk because we know we can help our patients reduce the number of hospitalizations and the number of days they spend in skilled nursing facilities by over 20%. This will translate into significant financial savings that we’re now able to benefit from as a DC entity because we’ll be able to take both full upside risk as well as be on the hook for full downside in this model. To your point, that can be very scary for some organizations who are not used to it. At Landmark, I think we are fortunate in that we had to think about that type of model to get our organization off the ground 6 years ago.
I might just add one more nuance. I’ll speak for Landmark, but I think this is true for many other innovative clinical models that are coming to the scenes, especially supported by Medicare Advantage. Our savings don’t rely on utilization management approaches. In fact, as a medical group, we generally are not delegated for utilization management. So, our savings are the result of proactive and comprehensive care that helps patients avoid those emergency room and hospital admissions.
I think that ties in very nicely to Direct Contracting because it will really showcase how we can reduce healthcare costs by providing more comprehensive and preventive primary care that gets in front of many disease exacerbations. Most importantly, we’re improving the lives of our patients by keeping them healthy and at home, and not needing to go to the hospital for a COPD exacerbation or a heart failure exacerbation because we prevent that actual exacerbation from occurring.
Fred: Yeah, very helpful distinction. I think it’s safe to say that most health plans would prefer not to do what you do or pull that off in terms of intervening early to avoid catastrophes down the road. So that’s very impressive to be able to accomplish that.
Moving into the lived experience with Direct Contracting so far, I know we’re still in the very early innings here and Landmark and several others won’t be going live in the program until January 1, but thinking through this, what’s been most surprising for you and your colleagues about the Direct Contracting model and participating in Medicare fee-for-service? Were there any “aha” moments? It’s one thing to think about it, but then as you’ve been in the middle of planning and implementation, have there been any realizations that have risen to the fore?
Chris: Yeah, we’ve appreciated Avalere’s partnership and thought leadership as we’ve gone through the process of coming up to speed on Direct Contracting. I’d say, first, as an organization, we’ve never participated in fee-for-service Medicare prior to Direct Contracting, so there’s certainly been a learning curve as we start to understand the mechanics of traditional Medicare. We’ve been very grateful to CMS and the CMS Innovation Center’s team that’s focused on Direct Contracting and their general willingness to not only listen to our concerns, but also to solicit our input on things that we’ve done in Medicare Advantage that might be valuable to think about in Direct Contracting.
I think the most surprising aspect for us has been the evolving nature of the program in that timelines are shifting. They’ve shifted quite a few times over the course of the Direct Contracting program so far, and some of the methodologies of the model seem to be somewhat living, meaning that what they looked like or what we thought they would look like a year ago, is different than what they’ve evolved to look like today.
For an organization like Landmark that’s making big investments to move into Direct Contracting, it’s made it hard for us to make resource allocation investments because the goalposts are still moving a little bit, whether that’s timelines, methodologies, etc. That’s just been a new experience for us, having not worked in a lot of innovation center models.
The second realization has been the complexity of some of the model, especially the financial model. As an organization, we’re very comfortable operating in a full-risk environment and we’ve done that with dozens of Medicare Advantage organizations across the country, but we found that it’s more technical and nuanced as we’ve gone into Direct Contracting than our traditional Medicare Advantage contract. So that’s been surprising. There’s certainly been a learning curve. We’ve done a lot of that with you, Fred, and others from the team at Avalere over the last few months.
Fred: Yeah, it is. If nothing else, it’s been a quite a learning experience. Having worked with other organizations at the inception of new programs, whether it’s ACOs or BPCIs, the Bundled Payments for Care Improvement programs, we are accustomed to shifting timelines and goalposts, but the devil is in the details and each one of these programs is very unique.
Speaking of unforeseen complexities, I’d be remiss if I didn’t bring up COVID-19 and the global pandemic that has fundamentally altered just about every aspect of life. To what extent has that impacted Landmark as you guys have been gearing up for the Direct Contracting model?
Chris: It’s a really interesting question. With the incredible work of our medical groups and our clinical operations team across the US, we were able to pivot just over a year ago when COVID entered the US really quickly, almost overnight. So last March when we first started to understand the high transmission rates of COVID within the US, we began to see that there was going to be a lack of personal protective equipment (PPE). We quickly shifted from all in-person visits to almost 95% virtual visits over the course of a day or so. We used that time to build up our supply of PPE to be able to then reinitiate our house calls with our patients.
I credit a lot of that not only to our team and their ability to make that pivot quickly, but also to the financial arrangement that we have with our health plan. Being a risk-bearing provider that’s in value-based arrangements, we didn’t have to worry about how each encounter was going to be billed. What we needed to think about was, what’s the right thing to do for patients to help keep them healthy, to help keep them from being exposed, and to help them stay in the community? So, we really saw our team actually shouldering more of the care than we normally did for these patients who are having trouble seeing specialists, who had other providers that weren’t able to transition to virtual-first approaches early on.
Within about a month after the pandemic started, we were able to start to significantly ramp up our in-person visits again to provide many of those vital services that our patients needed. A lot of the care that we provide does require actual in-person consults from our providers with their patients.
I think Direct Contracting and other similar models that enable providers to be in value-based arrangements would have allowed an easier shift into disturbances like COVID. They also would have helped prevent a lot of the financial issues that were impacting health systems and provider groups across the country, especially at the height of the pandemic.
Fred: That’s fascinating to hear how you all adapted. We’ve certainly seen several other medical groups we work with, who, before the pandemic had absolutely no interest in value-based contracts or risk-based arrangements, suddenly see there’s a level of stability there when you’re paid on a per capita or per member basis, as opposed to sweating every claim that you submitted or didn’t submit. We’ll see how that plays out over the long haul around interest in moving away from a purely volume-based arrangement.
To wrap up, I know that Landmark has joined with several other organizations to launch the Moving Health Home Alliance, which is a collection of several different organizations, all of whom are innovators in the home-based care space and really want to see policy and the regulatory environment support that, both as we soldier through the pandemic and beyond it. What’s your take on how you see Direct Contracting and other value-based models playing into the coalition’s goal of advancing home-based care?
Chris: We’ve been incredibly excited about the Moving Health Home coalition. One of the goals of that initiative is to redefine what in-home care looks like. I think over the last several decades, we’ve started to see home health as a very defined model of care. The members that you see in that coalition, from Landmark to Amazon to Dispatch, are showing that there is a remarkable amount of care that can be delivered in the home if we enable new payment models to persist. That’s where I think Direct Contracting is a critical enabler to innovation, and the innovation that brings care into the home, brings care to our patients where they’re living.
I see the keys to transforming healthcare living at the nexus of primary care, the home, and value-based care. You really need all 3 of those to think about how you would dramatically transform care in the US. For primary care to have the maximum impact on what we think of as the most vulnerable and needy populations, it needs to meet patients where they are, and for most patients that’s in their home, however they define that, whether that’s a single residence or some sort of senior living community, or maybe even an institutional setting.
To create incentives for the longer visits, the investments in the care platforms that we need to enable comprehensive primary care, we believe that you need value-based care to reward the provider for the long-term value they’re generating, not just to cover the costs of what they’re doing in the moment with the patient.
Finally, to ensure higher-cost in-home care models are being used appropriately in a way that improves quality and reduces costs, we need to make sure that we’re reimbursing them on the value that they create. Otherwise, we risk increasing fee-for-service payments to compensate for the higher costs of in-home services, but we don’t have a mechanism to ensure that those visits are being used for the right patients and the right situations, and we potentially risk adding cost to the system that’s in excess of the value that the services are creating.
I see Direct Contracting as a great tool for introducing that value-based framework that’s going to hopefully unlock new innovative models of in-home care, as well as other innovative models in primary care, and probably models that we haven’t even thought of yet. So, I’m really very bullish on this and very excited to see that CMS is looking at ways to shift the whole healthcare system to a more value-based paradigm.
Fred: Well, thank you so much. And on that final note of being bullish and optimistic, I think it’s particularly exciting that we have a relatively new administration and new leadership at CMMI and CMS, so it’s an exciting time to see where they’re going to go with innovation, both with Direct Contracting and with more promotion and support around home-based care. So again, thank you so much, Chris, for your time, and thanks to everybody for tuning in to the Avalere Health Essential Voice podcast series. Please stay tuned for more episodes in our Start Your Day with Avalere series. If you’d like to learn more, please visit us at www.avalere.com.
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