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Developing Value-Based Payment Models

By Christopher Cheney  
   October 14, 2015


Weinstein also is a founding member of the High Value Healthcare Collaborative, a coalition of value-oriented health systems across the country serving 70 million patients. "It's not just Dartmouth-Hitchcock trying to move New England; we're trying to move the country."

He says the HVHC has been involved in value-based care initiatives such as promotion of three- and four-hour bundled care protocols for sepsis treatment. Adoption of the Surviving Sepsis Campaign protocols at Dartmouth-Hitchcock led to dramatic improvements in clinical outcomes, Weinstein says. "By the way, saving lives also saves money, and also helps providers run their businesses better."

He says Dartmouth-Hitchcock has fully embraced the transformational power of value-based care.

"This is a time when there's an industrial revolution in healthcare and the old models are broken," says Weinstein, adding that Dartmouth-Hitchcock has become a leader in accountable care contracting because value-based care fits with the organization's culture. "We didn't go into this ACO work to make money. We did it because it matched our values and the way we practice medicine."

Dartmouth-Hitchcock's experience with value-based healthcare innovation stretches back years. The Dartmouth Atlas project was founded in 1996 to track variations in healthcare spending nationwide. In recent years, Dartmouth-Hitchcock has been among the early adopters of several value-based payment initiatives, including Medicare's first accountable care organization program featuring upside and downside risk, Pioneer ACO.

Dartmouth-Hitchcock has lost some money participating in Pioneer ACO, a demanding venture with a roster that has dwindled to 18 participants after launching with three dozen provider organizations in 2012. Like Medicare's most popular ACO program with providers, the Medicare Shared Savings Program, the Pioneer ACO is afflicted with a value-based innovation irony. Assuming they make effective value-based changes, providers that have been riding high on the fee-for-service model will gain more from the Pioneer ACO contract than providers that have historically posted low utilization rates.

Despite taking a financial blow in the Pioneer ACO program, Robert A. Greene, MD, MHCDS, FACP, executive vice president and chief population health management officer at Dartmouth-Hitchcock, says the chance to learn and lead is priceless.

"We have been disappointed with Pioneer ACO," Greene says. "We saved CMS about $20 million, but because of the ways that contract is structured, we may end up sending a couple million back to CMS. We view that as a tremendous learning process and opportunity. We have been more successful in
other contracts. But Pioneer ACO has been an opportunity to influence and give perspectives on future ACOs at CMS."

From Dartmouth-Hitchcock's financial perspective, Pioneer ACO has three primary flaws, he says.

"For the first three years of the contract, CMS used the 'matched cohort' methodology instead of applying a more time-tested risk adjustment methodology approach," Greene says. "This was corrected for the fourth year of Pioneer by converting to a version of the Hierarchical Care Condition methodology that is more similar to that used by Medicare Advantage plans. [Second,] benchmark trending factors were solely based on national trends, and therefore did not necessarily reflect the specific region and market that Dartmouth-Hitchcock's Pioneer ACO operated in. This has been somewhat addressed in the fourth year of Pioneer by adding a locality adjustment factor, but we don't believe this goes far enough to address the disparate differences between regions. [Finally,] the baseline is established by applying an algorithm to a defined set of historical claims incurred by an attributed population, and then trended. The challenge with this approach is that ACOs that start out with lower per beneficiary per year Medicare spends, and lower rates of utilization have less opportunity to generate shared savings results compared to ACOs that start out with higher per beneficiary per year Medicare spends and/or higher rates of utilization."

Dartmouth-Hitchcock has operated financially successful value-based payment models with Medicare and commercial payers, Greene says.

"Dartmouth-Hitchcock was one of 10 participants in Medicare's Physician Group Practice Demonstration model, which was the precursor to Medicare's shared savings programs. Over the five years of the PGP Demo, we met or exceeded quality measures in each year and earned $10.6 million in shared savings payments over the course of the five-year contract period. We have had a shared risk contract with Anthem since October 2010," Greene says.

"Over the past four completed contract periods," Greene says, "Dartmouth-Hitchcock has passed the quality gate in each year, and earned $6.7 million in shared savings payments over the course of the four-year contract period. We have also had a shared risk contract with Harvard Pilgrim Health Care since January 2011. Under this contract, we have earned $1.7 million in shared savings payments over the course of the past four completed contract periods.

"All three of these contract models have one thing in common: Our financial performance and quality scores are compared to our own performance year over year," he says. "Dartmouth-Hitchcock has been more successful under models that reflect our continuous improvement process. Because our utilization started low, compared to much of the U.S., we have been less successful under models that require Dartmouth-Hitchcock to produce results that are better than a 'reference population,' 'market,' or 'peer group.' "

Greene says Dartmouth-Hitchcock was able to make a significant impact on the rulemaking for the newest Medicare ACO model, Next Generation ACO, which was unveiled in March. "We can see in the changes they have made in Next Generation ACO, they have incorporated some of our ideas."

For providers with a history of low service volumes to succeed in the transition to value-based payment models, "redesigning care becomes imperative," Greene says, noting that Dartmouth-Hitchcock is focusing on developing patient-centered medical homes, telemedicine capabilities, and clinical partnerships.

Dartmouth-Hitchcock is leveraging telemedicine across a broad range of care delivery, including a telestroke program that, in collaboration with the Mayo Clinic Arizona, provides patients with 24/7 access to a neurological assessment.

"We see telemedicine as a huge opportunity. It solves some interesting problems that people have been thinking about for a long time, like rural patient management and remote sensing programs. The big question now is, how do we best integrate those things into patient-centered
medical homes?"

One of Dartmouth-Hitchcock's new partnerships is a clinical affiliation with Woonsocket, Rhode Island–based CVS Health's MinuteClinic. "There are people who just need convenient care and need to pop into someplace, and MinuteClinic has the same version of Epic for electronic medical records. That information will upload directly into Dartmouth-Hitchcock's electronic record. On Monday mornings, there will be an alert, and the doctors and nurses here will know what happened with their patients at MinuteClinic over the weekend."

Partnerships represent a huge building block for all healthcare providers as they transition from volume-based to value-based financing of their services, Greene says.

"You have affiliates instead of adding space for inpatient beds or spending on other costly investments," he says, noting the clinical affiliation Dartmouth-Hitchcock has established with New London (New Hampshire) Hospital, a federally designated Critical Access Hospital about 25 miles from the health system's main campus in Lebanon.

"New London used to run eight beds out of their 25, which was not sustainable. Now, we coordinate with them. We keep their care local, and we can start using our telehealth capabilities with this population of patients. Their average daily census is up to 20 patients. It's a win-win because it frees up more of our beds in Lebanon for tertiary care," Greene says.

As an organization, Dartmouth-Hitchcock continues its journey to adopt value-based care delivery, Weinstein says.

"We are already on the right side of this curve," he says. "We are going to put our money where our mouth is. We do not want to sustain an unsustainable health system. We need to change this system, and I have dedicated my life to doing that, and we're making incredible progress."

That progress includes solid performance in several value-based contracts with commercial payers, Greene says.

For example, Greene notes that despite not earning a shared savings payment from Cigna for the most recent contract performance period, Dartmouth-Hitchcock's rate for inpatient admissions per 1,000 patients was 4% below the New Hampshire market's, and the related cost of care for these inpatient admissions was 1% below the state market. Also, the advanced imaging scans per 1,000 patients rate was 8% below the state market's and avoidable emergency visit rates were 3% below the state market's, he says.

The attributed members assigned to its Anthem risk contract increased 32% from the 2013–2014 contract performance periods, yet it was able to keep admissions per 1,000 rates flat year over year, Greene says. Dartmouth-Hitchcock also was able to reduce emergency room visits per 1,000 patients by 6.5% during this same time period. Despite this significant growth in membership, overall cost of care increased just 1.9% between 2013 and 2014.

Greene also notes that the attributed members assigned to the Harvard Pilgrim risk contract increased 17% from the 2013–2014 contract performance period, yet Dartmouth-Hitchcock was able to reduce admissions-per-1,000 rates by 17% year over year and was able to reduce emergency room visits per 1,000 by 22% during this same time period. Despite this substantial growth in membership, the overall cost of care increased just 0.8% between 2013 and 2014," he says.

Christopher Cheney is the senior clinical care​ editor at HealthLeaders.

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