ACOs, Population Health Management Share a Common Thread

There may be no 'I' in team, but there is one in self-interest, and 59% of healthcare leaders feel it's keeping the industry from solving its problems, according to the cross-sector version of the 2012 HealthLeaders Media Industry Report.

Yet while more than half of healthcare leaders say self-interest is inhibiting an industry solution, 53% of leaders say their respective organizations will participate in an accountable care organization in the next five years. These two conflicting stats provoke a question; how can an industry that's laden with self-interest become selfless enough to successfully operate ACOs, which require deep partnerships? The answer may lie in the collaboration that's necessary for population health management.

PHM is often defined as the health outcomes of a group achieved by addressing a broad range of factors that impact that group's health, such as environment, social structure, resource distribution, etc. Several pilot PHM programs across the U.S. report anecdotal success with improving patient outcomes while reducing costs.

A report from the American Medical Group Association, ACOs and Population Health Management, clarifies the relationship between the two concepts. As the reimbursement environment transitions from volume-based reimbursement to a value-based one focusing on quality care and efficiency, providers will be held accountable and could lose out financially if the health of their patients doesn't improve.

"When Medicare and some private payers begin to contract with ACOs, they will initially reward these organizations on the basis of shared savings; however, the leaders of the ACO movement are predicting there will be other reimbursement methods, including prepayment models such as partial and full capitation," the AMGA report notes.

The report goes on to say that "unlike volume-based reimbursement, which encourages the provision of more care, prepayment forces providers to switch their emphasis from merely treating sickness to also maintaining or improving health to prevent costly avoidable illness and unnecessary care.

Payment bundling and shared savings—two other payment models for ACOs—also require the improvement of population health. So, it is clear that if physician groups aim to succeed as ACOs or ACO members, they will have to move to a population health management approach that is aligned with the new reimbursement models."

And it's not just the providers who need to "aim to succeed" through an ACO. Payers are banking on these approaches to patient care to help drive costs down for them as well. QualChoice, a health plan based in Little Rock, AR, fell into PHM about eight years ago when looking into pay-for-performance programs, says Richard Armstrong, MD, vice president of medical affairs for the health plan, which was started in 1994 as a third-party administrator by the University of Arkansas for Medical Sciences.

With 2010 premium revenue of $150 million, the company has grown considerably and now operates a provider network, administers corporate benefits, and markets healthcare insurance and other ancillary coverage.

"We started out looking at how to help primary care physicians do better in their practices with controlling the downstream costs and to develop pay for performance—and [P4P] has a certain quality to it that's like population health management," he says. "So pay for performance helped our PCPs [primary care physicians] learn to manage their populations."

The initial program has morphed into PHM, says Armstrong. QualChoice now looks at both quality and efficiency measures and establishes targets for physicians treating various patients within the plan, such as diabetics. Physician payments are based on practice results which are scored against the pre-determined metrics. Once all the segments being tracked are scored, they're totaled against a larger dollar target. With an eye on cost reduction, any savings that are shown in the comparison are then shared evenly between the practice and the payer.

"We are focusing on the quality of care, and the metrics help show how we're bringing value," explains Robert Hopkins, Jr., MD, FACP, FAAP, professor of internal medicine and pediatrics at the University of Arkansas for Medical Sciences. The University of Arkansas has been working with QualChoice in hopes of seeing a difference in the community's health through PHM.

Accurate and current data is essential from everyone participating in this program, says Armstrong. Payers and providers must find a way to aggregate data so the information can drive better treatment and results. Moreover, the payer must accurately identify the population to manage by acuity as well as the cost of the care to the overall system.

"As a well-known 2003 RAND study showed, patients receive only 55% of recommended acute, preventive, and chronic care.… In a PBPH [practice-based population health] framework with ACO financial and clinical performance requirements, patients who have all the precursors of high-cost/high-risk conditions will have to be identified and managed," the AMGA report states.

Moreover, the AMGA report says, "For patients with multiple chronic conditions, the number of 'care gaps' increases significantly. Overall, a PBPH practice will have thousands of care gaps to identify, manage, and close to achieve compliance across its population. … Validated Health Risk Assessment (HRA) instruments have been incorporated into the health benefits packages of many employers and third-party insurers, producing a lot of data demonstrating the magnitude of health risk in our populations."

Data can bedevil pilot PHM programs. Though in theory payers and providers are willing to work together, in practice data sharing can be a hurdle, especially with so many IT systems in use across the healthcare industry. Typically some type of shared technology system is needed.

"You want to look at those patients who are in the ambulatory [setting] all the time and understand how they become part of the ambulatory metrics. You also want to focus on those with diabetes, and to follow the patients with high blood pressure to make sure that these patients aren't developing worse problems," says Hopkins. "You need to look at all the data, but getting it can be a bit challenging."

Armstrong agrees that information sharing isn't usually due to a lack of willingness, but disparate IT systems. At the beginning of their PHM program, QualChoice was tracking patient populations manually and providing monthly progress reports (with month-old data) to the providers. Not an ideal scenario for those hoping to catch patient problems in the early stages. To help aggregate data for comparison and improve care-related communications between the payers and providers, this year QualChoice installed an integrated care management system from Trizetto.

QualChoice is hoping the new system, which automates the process of managing members' chronic illnesses as well as the continuum of care including case, disease, and utilization management, will allow it to use clinical resources more effectively, explains Armstrong.

"As we pioneer our program, we have to help the practices get accurate, on-time information about the patients," he says. "This [technology] delivers information about the members so that we can all spot the gaps in care. You can see when a patient is admitted and discharged; you can coordinate labs and put flags in the system. Now we can get the providers the information in real-time, so we can all work better together."

For CFOs, charged with protecting the financial best interests of their organizations, it's vital to recognize the role PHM can play in cost reduction efforts. Only by working together can the different entities of the healthcare industry reduce costs, achieve healthy balance sheets, and foster a healthier population.