Category: Financial Management

Preparing Your Board For Value-Based Contracting

By Joe Naughton-Travers, Ed.M., Senior Associate & Executive Editor, Management Newsletter, OPEN MINDS

 

Discussions about organizational strategy can easily take a negative turn, especially when talking about whether boards of directors at specialty provider organizations are up for the challenge of governance in a value-based market. Admittedly, the focus on value and increasing financial risk in contracts is testing the limits of board governance, particularly for non-profit organizations that are often financially risk averse.

This is mostly the result of how boards have traditionally functioned. The role of board members is often focused on financial controls and financial sustainability—defined as a “positive bottom line.” For non-profit organizations, this also means seeking financial donations to support the organization’s mission. But many of these financial management systems and practices were developed in an era of cost- or volume-based reimbursement and aren’t up to the task when reimbursement is based on performance or when those reimbursements can include downside financial liabilities.

The solution requires adjusting the board’s role and educating members on governing under new financial requirements of value-based payer contracts. There are four key ways to do this:

  1. Teach your board about value-based reimbursement (VBR) models and potential financial risk.
  2. Discuss how VBR models can impact profitability and cash flow.
  3. Address the budget needs for infrastructure investments required for VBR.
  4. Develop new performance and financial reports for monitoring VBR contracts.

Teach Your Board About VBR Models & Potential Financial Risk

It is critical that all board members understand the changes in health care and the major environmental trends. Those trends include the adoption of technology, the push to integrate with primary care and treat the “whole person,” and the shift to different financing models that include value-based and risk-based contracts with health plans. Additionally, they’ll need a primer on VBR and the competencies required for success with value-based reimbursement contracts. (For a deep dive into that process, check out The OPEN MINDS October 2022 Management Newsletter, Preparing for the VBR Challenge.)

Discuss How VBR Models Can Impact Profitability & Cash Flow

Next, it’s important that your board understand the financial risks and impacts of common VBR models. A helpful classification system for understanding payer reimbursement models is the Alternative Payment Model (APM) framework, originally presented by the Centers for Medicare and Medicaid Services (CMS) and later modified and refined by a Health Care Payment Learning & Action Network work group (see What is the Health Care Payment Learning & Action Network?). The framework classifies APMs in four categories and eight subcategories, specifying decision rules to standardize classification efforts.

While the detailed models may appear complex, it’s important for the board to understand some of the implications:

  • Fee-for-service (FFS) VBR models with bonuses for performance have the least financial risk if the base payment is sufficient.
  • Models with upsides (financial bonuses) and downsides (financial penalties) can have considerable risk and require organizations to project and manage performance to meet financial targets.
  • Cash flow may be considerably different than under FFS models, particularly when bonuses and penalties are calculated annually. This means that most organizations will need to strengthen their financial reserves.

Address The Budget Needs For Infrastructure Investments Required For VBR

It is quite likely that your organization will need to make some significant investments in infrastructure and staff to be successful in a VBR world. These may include investments in technology and data analytic capabilities (electronic health records, financial and business intelligence software), enhanced operations for performance management, and an array of staff competencies (and possibly new staff positions) for performance and cost management, analytics, and payer contract management.

Develop New Performance & Financial Reports For Monitoring VBR Contracts

Finally, you’ll need additional performance and financial reporting for the board. Traditional income statements and balance sheets are not sufficient for providing board members with the level of financial detail required to implement and manage VBR models and risk-based contracts. Board members will need:

  • Data about the current performance of the organization on the metrics defined in VBR or risk-based contracts.
  • An explanation of the financial implications of the current performance.
  • A projected year-end income statement based upon current payer contract performance, with both optimistic and pessimistic projections.
  • 60-to-90-day cash projections to help the board understand the financial operations of the organization and the timing of payments under VBR and risk-based contracts.

The modern health care board is changing with the shift to VBR and risk-based contracts, and a company’s board requires a new set of perspectives and skill sets across the continuum of the health care system. Bringing your board up to speed is essential as you proceed with your strategic planning.

Moving Beyond Fee-For-Service With Health Plans: Essential Elements To Getting Paid For Value

Slowly but surely, value-based reimbursement (VBR) is happening in the specialty provider marketplace. 40% of specialty provider organizations reported participating in a VBR contract (an increase of 13% from the previous year) according to our 2022 OPEN MINDS Performance Management Executive Survey. But, only 10% of specialty provider organizations have 20% or more of their total revenues in VBR contracts.

But behavioral health provider organizations are lagging in the move away from fee-for-service (FFS) contracts to VBR as compared with other health care specialties. 80% of health plans reported paying cardiovascular specialists using some value-based contract—that is 22% in mental health.

The VBR term covers a wide range of alternatives to fee-for-service reimbursement. A helpful classification system for understanding payer reimbursement models is the APM Framework originally presented by the Centers for Medicare and Medicaid Services (CMS) and later modified and refined by a Health Care Payment Learning & Action Network work group (see What is the Health Care Payment Learning & Action Network?). The Framework classifies APMs in four categories and eight subcategories, specifying decision rules to standardize classification efforts.

  • Category 1: Fee-For-Service With No Link To Quality & Value
  • Category 2: Fee-For-Service Linked To Quality & Value
  • Category 3: APMs Built On Fee-For-Service Architecture
  • Category 4: Population-Based Payment

Oftentimes, providers equate VBR with the Category 2 payments models—still FFS but with some additional upside for operations, reporting, or performance. But I consider these to really be “VBR-lite” with Category 3 and 4 being the real VBR models! And for most provider organizations, it’s the Category 3 shared savings model (with both upside and downside risks) that they should be aspiring to succeed under. It is critical to understand is that the tipping point for provider organizations is this shift from a FFS model with some links to quality and value to shared savings models (i.e., from Category 2 to Category 3 payment models). It requires a fundamental change in an organization’s operations and mindset.

From my perspective, there are five key elements a provider organization must have when making this shift to a real VBR model:

  • Element #1: Market-Focused Performance Metrics
  • Element #2: Operations & Technology to Support Performance Management
  • Element #3: Financial Modeling & Cost Management Capabilities
  • Element #4: Organizational Strategic Alignment Around Value
  • Element #5: Health Plan Business Management Operations

Let’s review each of these elements in more detail.

Element #1: Market-Focused Performance Metrics

The first element is finding the performance metrics to demonstrate the value of your organization’s services to health plans and then being able to track, report, and manage them. Well, let’s begin with some of the data we have from the 2022 OPEN MINDS Performance Management Executive Survey. The survey reported the top five VBR performance measures for specialty providers as well as for primary care providers and Federally Qualified Health Plans (FQHC’s). For specialty providers, the top five performance measures were:

  • Follow-Up After Hospitalization
  • Hospital Readmission Rates
  • Emergency Room Utilization
  • Access to Care Measure
  • Consumer Satisfaction

Simply put, these metrics indicate that health plans want to providers to do three things:

  • Prevent emergency room utilization and hospitalization whenever possible and reduce emergency room and hospital readmissions
  • Make it easy to access care
  • Keep consumers happy

As a provider, if you can make these three things happen consistently and are able to report it, you are well-positioned to move into a VBR contract with a health plan. Aside from these metrics, there are many others for specific consumer populations and service lines. In some instances, health plans will mandate the value measures; in others, you may have the opportunity to propose metrics you are tracking to the health plans rather than have them decide for you.

Element #2: Operations & Technology To Support Performance Management

Once you have the performance metrics selected, you must determine out how you are going to track and report them—this is Element #2. The data is likely to be recorded in your electronic health record system and reported from there. Let’s walk through how the data would be collected and reported for each of the top five VBR performance measures I covered above:



As you can see from the above examples, to be successful in managing performance metrics you must have a system to track and report them AND have your staff utilize them. For your organization, the steps for Element #2 are as follows:

  1. For each of the performance metrics you’ve selected in Element #1, determine the data elements that need to be collected and what software system you will use to record and report them. Most will be recorded in your electronic health record system, but they could be data from your general ledger system (e.g., if a metrics is related to cost data) or a separate database (e.g., if a payer provides you with cost of care data as a performance metric.)
  2. Determine and develop the reports needed to manage performance as described in the above examples.
  3. Train staff to utilize the reports and modify operations to embed their use in operations in order to ensure performance management.

Don’t underestimate the operational requirements to getting the reporting in Element #2 into place. Elements #1 and #2 are where the rubber meets the road. If you can’t report on metrics related to value performance in a timely manner AND know how to act on them, you’ll fail in your VBR contracts.

Element #3: Financial Modeling And Cost Management Capabilities

With Elements #1 and #2 in place, you have a VBR performance measurement system in place—recording, reporting, and managing the metrics. For Element #3, you minimally need the competencies and tools to do the financial modeling for the VBR contract (BEFORE you accept it) and the on-going reporting to identify and manage variance in financial performance.

To do the financial modeling, you build a budget for the clinical program that includes assumptions about the revenues that will be received based on your assumptions about operations and performance. E.g., if the VBR contract includes bonuses for specific performance metrics, what percentage of the bonuses will you receive for which metrics? Your assumptions may include other factors depending upon the performance metrics (e.g., length of stay, anticipated service mix and frequency, cost of care, etc.). Each of the revenue assumptions must have a solid clinical and operational grounding. (Past performance data is optimal if you have it.) Ideally, you’ve developed the assumptions and the VBR program budget before you’ve accepted the VBR contract. Once the VBR program is up and running, you also need to have reporting in place for each of the assumptions that impact revenues or costs so that you can monitor and manage them.

The second component of Element #3 in the ability to report and manage the unit costs of the services you deliver in the VBR contract. While it is possible that your VBR contract has a performance metric about your cost to deliver services (and thus need to report it), it is more likely that you are simply using unit cost reporting and management to control your expenses to increase your margin for the VBR program.

Element #4: Organizational Strategic Alignment Around Value

With Elements #1, #2, and #3 in place, you are in an ideal position to manage service delivery under a VBR contract. You’ve budgeted the program with clear assumptions about performance and other factors that impact revenues (Element #3). Performance metrics are selected, and you can track and report them as well as the staff that know how to use them (Elements #1 and #2). You also have reporting about variance from your operational assumptions so that you can intervene and manage performance. (Element #3).

But that is not enough for success in VBR. Element #4 is about making sure that you shift your organizational culture to support a business model that can operate in a VBR-driven environment. This is a culture that now focuses on performance, not just productivity. Quality is key, but quality (like value) is often in the eyes of the beholder. Quality is defined by consumers and payers. With new treatment interventions coming to the market on a regular basis, provider organization’s clinical leadership will need to become adept at adding new consumer treatment options to their service offerings to help improve performance, reduce cost, and ensure satisfaction. There is need for nimble administrative and clinical management teams that can analyze and respond to performance variance. The teams with rapid actionable information—that act on that information—are the teams that are going to succeed.

There are tools that can be used to advance the change and innovation required for value-based contracting—whether that’s for data mining, business intelligence, lean services, root cause analysis, key performance indicators (KPIs), leadership development, or enhanced financial operations. But this cultural transformation is difficult. Executive teams of specialty provider organizations need to get on top of this and develop a strategy to “fit” into value-based relationships with health plans and payers.

Element #5: Health Plan Business Management Operations

Element #5 is essentially the capability to “pitch” a value-based reimbursement model to health plans. You may already have these health plan business management operations in place. Perhaps you are already a preferred provider with a health plan, making it easier to develop a VBR contract. Or maybe a health plan has already approached you with a VBR contract, in which case having Elements #1 through 4 in place will be sufficient. This article is too short to cover all the details about how to develop health plan operations, but here are some of the keys to a successful winning health plan relationship:

A crucial piece for developing those relationships with health plans is the development of a value proposition statement. The value proposition statement is your “so what” statement. It’s a quick way of demonstrating the value your organization can offer using quantitative data. Your goal as a provider organization is to deliver services that increase consumer service quality and decrease system costs. You need data to show that your organization can deliver on the desired performance. As described in the previous Elements, the goal is to find the most relevant way to measure performance, to analyze the data to demonstrate where your team adds value, and then to find a way to highlight how your performance achievements will impact health plans’ results.

All health care organizations should be planning for VBR and other alternative payment models. The five Elements I’ve described in this article help you put into place the key operational requirements needed to accept and manage a VBR contract. But they are just the beginning of a paradigm change of how your organization operates and delivers services. Get these core Elements in place and simultaneously conduct a more thorough gap analysis of your readiness for VBR (see The OPEN MINDS Value-Based Reimbursement Readiness Assessment). So VBR is not a passing fad, and it will impact your organization if it hasn’t already yet.

40% & Counting

By Monica E Oss, Chief Executive Officer

The proportion of U.S. health care reimbursement dollars paid in advanced value-based reimbursement (VBR) models—contracts with shared savings, downside financial risk, and/or population-based payments—just passed 40%. The slow adoption of VBR with financial gain sharing and downside risk sharing—along with the unique challenges to specialty provider organizations in participating in these arrangements—may cause executive teams to think there isn’t much movement. But this development is glacial—slow but changing the landscape along the way.

In addition to the national snapshot of reimbursement patterns, the recent survey by the Health Care Payment Learning & Action Network (see APM Measurement Methodology And Results Report  and The 2020 LAN APM Measurement Effort), also reported that the reimbursement model that health plan executive think will grow the most in the next year were arrangements with both shared savings and downside financial risk. This includes reimbursement with fee-for-service-based shared-risk and procedure-based bundled/episode payments

This trend is reflected in some current market developments. In a recent earnings report, Wyatt Decker, M.D., CEO of Optum Health, said that the company had exceeded their projections for value-based reimbursement. Optum Health has raised its projects of consumers in VBR arrangements from 500,000 new consumers to 600,000 (see Optum Health Has Raised Its Expectations For Value-Based Care Participation. Here’s Why). The increase was attributed to changes in provider reimbursement for dual special needs consumers with high acuity who need care across the continuum and wrap-around services in the home.

In other news, the federal Department of Health and Human Services (HHS) proposed testing models that use value-based payments in Medicare Part B to link payment with a medication’s clinical value (see HHS Proposes Testing Value-Based Payments For Medicare Part B Drugs). This plan also includes testing total-cost-of-care models to assess whether the models result in changes to drug utilization, reductions in total spending, and improvements in beneficiary health outcomes. And in January the Colorado Department of Health Care Policy & Financing (HCPF) launched its first two value-based contracts for the Colorado Medicaid pharmacy program—two Medicaid value-based contracts with drug manufacturer Novartis (see Colorado Medicaid Implements Two Pharmacy Value-Based Contracts With Novartis). Both contracts hold Novartis financially accountable for meeting the clinical outcomes demonstrated in clinical trials.

And in February, the U.S. Centers for Medicare and Medicaid Services (CMS) announced it will increase performance measurements and the use of value-based reimbursement for nursing homes (see CMS Planning New Staffing Requirements & Value-Based Reimbursement Plans For Nursing Homes). This will include an effort to reduce unnecessary medications, staffing, and the inappropriate use of antipsychotic medications, and strengthen the skilled nursing facility (SNF) value-based purchasing (VBP) program with incentive funding to facilities based on quality performance.

Among specialty provider organizations, 45% are participating in some form of VBR. But only 9% have more than 20% of revenue coming from VBR contracts (see The OPEN MINDS 2022 Survey On Value-Based Reimbursement In Specialty And Primary Care).

From our recent discussions with health plan executives, the challenge for specialty provider organizations in participating in robust VBR arrangements is attribution of consumer care coordination and financial management responsibilities. (For more on this, see my articles on the presentations by Dr. Indira Paharia, Chief Operating Officer, Behavioral Health, Centene Corporation, Eric Bailly, LPC, LADC Business Solutions Director, Behavioral Health Clinical Strategy, Anthem, Inc. at The 2022 OPEN MINDS Performance Management Institute—Collaborative Care At Scale – More Important Than Ever and The Choppy Road To Better Value.) My takeaway is that specialty provider organizations have two possible approaches for moving ‘upstream’ in risk arrangements with health plans—specialty service programs or health home/medical homes with primary care.

The question for executive teams of specialty and primary care provider organizations is how to navigate this change in the market and maintain (and grow) revenue. For an answer to that question, I recently spoke with my colleague and OPEN MINDS Senior Associate, Paul Duck. His observation—executive teams need to think less about volume and more about value. “They need to understand the ‘value’ of their services to consumers and payers—and develop models to get paid for that value.”

“Most provider organization executive teams have not adequately prepared their infrastructure for arrangements with downside financial risk—their data systems, their clinical delivery systems, and their culture,” explained Mr. Duck. “While many professionals service consumers with behavioral and cognitive disorders have traditionally had a mindset that therapies are more of an art form than science, the science has grown over the past decade and payers want to reimburse on this emerging new science and the performance it will bring.”

“Executive teams need to retool for the four major market shifts that are top-of-mind for payers—“integrated” care coordination models, ‘hybrid’ service delivery models, and a push for lower costs and value with financial alignment with risk sharing reimbursement.”

To test how prepared your organization is for reimbursement arrangements with risk sharing, check out the got an error message when trying to link to this on PRC OPEN MINDS Value-Based Reimbursement Readiness Assessment. And for more on the changing health and human service reimbursement landscape, check out these resources in The OPEN MINDS Circle Library:

And for even more, join us on June 16 at The 2022 OPEN MINDS Strategy & Innovation Institute for the session, Metrics Matter – Utilizing Quality Measures & Key Outcomes As Performance Drivers, featuring Isamu Pant, Director of Business Intelligence, Aurora Mental Health Center; Dominick DiSalvo, Corporate Director of Clinical Services, KidsPeace; and Tammy Pearson, Senior Associate Director, Marshall Center of Excellence for Recovery, Marshall University.

VBR Marches On – A Trend Driving 2022 Strategy

By Monica E. Oss, Chief Executive Officer

We started the year with the release of new reports on the continued movement away from fee-for-service reimbursement to alternate, value-based reimbursement (VBR) models. Over half of health systems are planning to move to “payvider” market positioning in 2022 (see Nearly 60% Of Health Systems Aim To Become ‘Payviders’ In 2022). These ‘payvider plans’ include many arrangements – provider-sponsored health plans; direct contracting with health plans; joint ventures with health plans; and risk-based contracting. In addition, a new survey found 56% of health plans and pharmacy benefit managers (PBMs) report using outcome-based, non-fee-for-service provider reimbursement. However, when it comes to mental health reimbursement, only 22% reported having outcomes-based contract (OBC) (see 56% Of Payers Had Outcomes-Based Provider Reimbursement In Place As Of September 2021).

This disparity between the use of VBR for reimbursement for behavioral health services and other areas of health care is not new. Our survey, The 2021 OPEN MINDS Performance Management Executive Survey: Where Are We On The Road To Value, reported 53% of specialty provider organizations serving consumers with chronic and complex conditions are participating in VBR, compared to 74% of primary care organizations. And, 12% of specialty provider organizations reported 20% or more of their revenue was tied to VBR, compared to 32% of primary care organizations.

There are several reasons for this disparity. Many specialty provider organization executives report difficulties securing VBR contracts. Health plan executives express concerns about balancing choice and access with value-based contracts for behavioral health. In addition, when it comes to behavioral health reimbursement, health plans have issues with linking behavioral health provider compensation to total cost of care in systems with capitation of primary care services; with data sharing and systems interoperability; and with making necessary system changes.

Executive teams of specialty provider organizations need to get ahead of this curve and develop a strategy to “fit” in established value-based relationships. That will involve understanding the dominant health plans in their market areas – and how they prefer to contract for delivering services to consumers living with behavioral health and cognitive conditions. With that market information, executive teams can decide if new partnerships, a merger, or an investment in a different service delivery and management capacity is the best strategy.

Many executive teams are skeptical of participating in the new alternative payment methodologies because the options are limited. Fee-for-service rates for undifferentiated services have been flat for a number of years (on the decline, on an inflation-adjusted basis). To maintain margins, executive teams need to build a plan for creating “value-added services” that get above-market reimbursement. Or, the other options for margins is VBR.

In 2021, there were some great perspectives on future health plan strategy from our keynote speakers at our institutes and summits. To watch any of those presentations, check out:

For the VBR year in review, check out these 2021 resources in the OPEN MINDS Industry Library:

And for even more, join OPEN MINDS on February 10 for The 2022 OPEN MINDS Performance Management Institute, where OPEN MINDS Chief Marketing Officer, Timothy Snyder and OPEN MINDS Senior Associate, Casey Zanetti, will present the executive seminar Maximizing Revenue, Aligning Internal Growth Strategy & Succeeding In Value-Based Care.

Who Should Do What? Scope of Practice; Treatment Tech Shift Clinical Best Practices

By Monica E. Oss, Chief Executive Officer

There has been a long debate about the scope of health care practices. What type of licensed clinical professionals can perform particular functions? Should psychologists and/or pharmacists prescribe psychotropic medications? What supervision do nurse practitioners and physician assistants need? (Should ‘physician assistants’ be renamed ‘physician associates’?)

Psychologists can prescribe in five states: Louisiana, New Mexico, Illinois, Iowa, and Idaho (see Can Psychologists Prescribe Medications?). The scope of pharmacists’ practices is state-dependent and varies widely from state-to-state (see Mapping U.S. Statewide Protocols For Pharmacist Prescriptive Authority). Pharmacists may or may not give injections and immunizations and prescribe everything from naloxone, tobacco cession aids, travel medications, and more. Physician Assistants are licensed to practice in all 50 states, the District of Columbia, all US territories, and the uniformed services. Physician Assistants are authorized to prescribe medications in all jurisdictions where they are licensed, except Puerto Rico (see PA Prescribing and Assessing Scope of Practice in Health Care Delivery: Critical Questions in Assuring Public Access and Safety).

Executives of health and human service organizations need to plan to leverage the ‘value’ of their clinical team members by developing systems where they can work at the ‘top of their practice’—with most of their time going to the services that require their specific level of training. But that is easy to say and much harder to accomplish in practice. This type of service specialization is an essential part of the specialization needed to achieve maximum operational efficiency—and the highest value.

But there are two factors that complicate plans for specialization to increase value. The first is that in systems that are increasingly rewarded for a ‘whole person’ approach to care—which runs contrary to specialization. The second is that health care treatment technologies are reaching a level of sophistication that they can be a replacement for some of the work of licensed clinical professionals. The key for executive teams is using technology to address both of these issues. The first is ‘virtual integration’—creating a singular consumer data set that is available to all health care professionals. The second is to use data—both small data and big data—to develop algorithms that curate the recommendation of treatment services for specific consumers—both treatment technology and the most appropriate clinical professional. These are essentials to sustainability—building organizational efficiencies that result in competitive advantage.

For more on our coverage of efficiency and effectiveness in staffing models—and in emerging treatment technology, check out these resources in the OPEN MINDS Industry Library.

Scope of Practice Issues

Digital Treatment Trends & Strategy

Digital Treatment Developments

For more on managing and practicing at the top of your team’s skillsets, join me for The 2022 OPEN MIND Management Best Practices Institute in Newport Beach, California from August 30 to September 1, 2022.

The Opportunities & Challenges Of VBR – Making It Work On The Ground

By Monica E. Oss, Chief Executive Officer

Despite significant movement, behavioral health is trailing the rest of health care domains in value-based reimbursement contracting. Forty-five percent of specialty provider organizations have some value-based reimbursement (VBR)—compared to 72% of primary care organizations (for more, see, The OPEN MINDS 2022 Survey On Value-Based Reimbursement In Specialty And Primary Care). And at the health plan level, 22% of plans report having some form of VBR for mental health services in 2021, compared to 79% in the cardiovascular services and 54% in respiratory services (see 56% Of Payers Had Outcomes-Based Provider Reimbursement In Place As Of September 2021).

This gap is due to a combination of factors. Some are due to the structure of financing and reimbursement in health plans. (For more on key opportunities for specialty provider organization value-based contracting, see Treatment Transformation Ahead and The Sustainability Challenge – Capitalizing On Emerging Market Opportunities In Behavioral Health.) Others are due to issues as diverse as consumer choice and provider organization readiness.

How can executives of provider organizations and health plans work together to make this happen in the behavioral health space? Getting to the answer for that question was central to the recent 2022 OPEN MINDS Health Plan Partnership Summit session, “Looking For Quality Outcomes? It Starts With Innovative Value-Based Contracting,” delivered by Monica Collins, senior director, system transformation, Magellan Behavioral Health of Pennsylvania, and Charlotte Chew, vice president, outpatient operations, Pyramid Healthcare.

In January of 2018, the Pennsylvania Medicaid program implemented new requirements for the value-based purchasing (VBP) initiative for the behavioral health HealthChoices program. The state’s goal was to have an increasing percentage of total medical expenses paid through VBP over a three year period (for more, see Pennsylvania Medicaid Moving To Value-Based Reimbursement For Behavioral Health and Pennsylvania Medicaid Managed Care Contracts). Pennsylvania’s value-based strategies requirements fall along a continuum. There are fee-for-service payments linked to performance (low risk), supplemental payments attached to shared savings and risk (medium risk), bundled payment arrangements (medium risk), and global payments based on quality measures (high risk). Eventually, 30% of total medical cost must be in VBR arrangements by year five (originally set for 2022). Pennsylvania originally set staggered targets, beginning with 5% in year one, and increasing to 10% each year.

While the pandemic has slowed the implementation timeframe, Ms. Chew and Ms. Collins discussed the planned value-based relationship between Magellan and Pyramid Healthcare—and the steps required to make it work. In the model, there are limited shared savings models based on spending targets that encourage coordination of behavioral health care. The model also requires addressing social determinants of health (SDOH) issues.

But challenges to getting this up and running are substantial. There are multiple provider organizations among consumers and across episodes of care, which makes it harder to coordinate care. There also exists a lack of medication assisted treatment (MAT) services available and resources for follow up care. The speakers offered two pieces of advice—develop a collaborative model to solve problems and engage at a ‘grassroots’ level to assure success.

Work together to solve hurdles. Operationalizing value-based models has a number of hurdles to overcome—including attribution, managing care transitions, and having the right staff in place. Much of the time well spent involves connecting consumers through various points of care transitions from inpatient to outpatient community models. It’s also difficult to define what ‘value’ is and what drives outcomes—from reduced emergency room visits, medication adherence, better nutrition, less comorbidities, etc. To maximize effectiveness, the whole care delivery system needs to work together to attribute consumer outcomes back to the providers that serve them (see Specialty Primary Care As A Growth Strategy). Magellan and Pyramid Healthcare recommend having weekly touchpoints to examine data, discuss successes and opportunities, and share information among teams to clinically shape what happens next.

Get to the grassroots level. For both payer and provider organization management teams, this requires a cultural shift, centered around the consumer experience, utilizing peers, and making sure all the right information gets to provider organizations (see Nimble Applies To Information Too). Ms. Chew explained how “much of the work has to happen at a local level in different pockets or pilots, balancing expectations and taking the best parts of certain programs and models and adapting and integrating them into others.” One strategy that Pyramid Healthcare introduced is an alumni program, where consumer peers can continue to be involved and integrated into the community, with certified training, job placement assistance, and linkages to wellness programs.

Specialty provider organization executive teams need to renew their focus on getting in ‘first-position’ with health plans by creating opportunities for financial alignment—and for increasing revenues through achieving superior outcomes. In a health care landscape where fee-for-service reimbursement is not keeping pace with inflation (even before this year of hyper-inflation), this shift is a key to sustainability.

For an assessment of organizational preparedness for value-based reimbursement, take the OPEN MINDS Value-Based Reimbursement Readiness Assessment. For more information on value-based reimbursement strategies and partnerships, checkout these resources in the OPEN MINDS Industry Library:

And for more discussion on value-based payment and strategies, join me for the following executive seminars at The 2022 OPEN MINDS Management and Best Practices Institute in Newport Beach, California on August 30: How To Build Value-Based Payer Partnerships: An OPEN MINDS Executive Seminar On Best Practices In Marketing, Negotiating & Contracting With Health Plans.

Making Tech Work

By Monica E. Oss, Chief Executive Officer

Tech investment in health care is big. Eighty percent of health care provider organization executive teams are looking to make additional investments in technology in the next five years (see Future Of Healthcare Report: Exploring Healthcare Stakeholders’ Expectations For The Next Chapter). As a result, the health care tech market is expected to grow from $326.1 billion in 2021 to $821.1 billion by 2026 (see Healthcare IT Market by Products & Services, Components, End-User, and Region).

Currently, tech investments by specialty provider organizations have focused on EHRs (88%) and telehealth platforms (85%). About half of specialty provider organizations have invested in referral tracking systems, health information exchange technology, fundraising tools, ePrescribing tools, and clinical decision support systems (see The Computer Is A Moron and The 2021 OPEN MINDS Health & Human Services Technology Survey). But the changing landscape is changing the tech functionality that specialty and primary care provider organizations need to maintain competitive advantage and sustainability. According to The OPEN MINDS 2021 National Behavioral Health Electronic Health Record Survey, 56% of these provider organization executive teams report having tech functionality gaps—and 21% stated an intention to procure a new EHR (see The Times Have Changed. So Have Our EHR Concerns.). Our team at OPEN MINDS thinks this focus will be on integrated analytics, technologies supporting hybrid care delivery (scheduling, mobile, visit verification, etc.), consumer engagement, and managing alternate reimbursement contracts.

But with more technology come problems of implementation and optimization. First, there are privacy and security issues. About a third of behavioral health provider organizations were cited by Accreditation Commission for Health Care (ACHC) for having incomplete, substandard policies related to protection of patient data (see One-Third Of Behavioral Health Organizations Have Incomplete Policies For Health Information Protection). The ACHC also cited 26% of these organizations for missing documentation, 20% for missing information on staff background checks, and 20% for missing information on staff Hepatitis B vaccination. And the on-line apps in the behavioral health field are not doing much better (see Does Mental Health Privacy Really Matter To Consumers?).

Another issue—adoption of data-driven decision making. A recent survey found that 74% of health care provider organizations use clinical decision support technology—but in limited ways. The key uses of clinical decision support are medication orders (30%), lab orders (24%), and medical imaging orders (20%) (see The Process Matters). And, only 16% of community mental health center executives have adopted measurement-based care (MBC) technology (see 16% Of Community Mental Health Centers Use Measurement-Based Care, Despite Knowledge Of Value).

For more, I reached out to my colleague and OPEN MINDS Senior Associate Joe Naughton-Travers to get an understanding of why, when technology is so critical to the future competitive advantage of provider organizations, are there so many challenges in both adoption and implementation. “I think the biggest issue for health and human services is that organizations usually don’t have a technology strategy and roadmap,” Mr. Naughton-Travers said. “Some organizations are still struggling to get the basic data systems in place (EHR, human resources information systems, and general ledger systems) and others are still a long way off from achieving analytic and performance optimization. In terms of poor management practices, the problem is usually the lack of formal project planning and project management in both selecting and implementing technologies.”

How to plot a path to tech success? He had three recommendations—systematically identify technology gaps, adopt a deliberate adoption roadmap, and make sure you have the right staff to get the job done.

Systematically identify technology gaps—Provider organization executive teams should conduct a regular needs assessment to ascertain what functions they are lacking, and what tech can fulfill that need. This needs assessment should be concurrent with implementation planning for a strategic plan. Answering three critical questions should drive the process: what competency do you need, who on your team will be using the tool, and how will that technology adoption create and drive value for the consumer, the payer, and the care continuum?

Develop a deliberate tech adoption roadmap—Once an executive team has determined the technologies needed to achieve both strategic and business objectives, a timeline for selecting and implementing new tech tools is the next step. Managers need to look beyond “the basics” and identify the technology requirements needed to support strategic plan objectives.

Invest in the right staff—New technology brings new competency requirements among executives and managers. Success requires upgrading the skills of existing team members and/or finding new team members with the competencies to implement, manage, and optimize the new tools. Technology is no longer an afterthought—the entire executive team needs to be involved with ongoing technology planning and optimization.

Mr. Naughton-Travers concluded, “When technology implementations fail to achieve their goals, it’s a “double whammy”—you have spent a bunch of money and the problem you needed to solve still exists. Far too many organizations make this exact, costly mistake.”

For more on technology adoption and implementation, check out these resources in The OPEN MINDS Circle Library:

And for more on getting your “tech game” where it needs to be, mark your calendar for June 14-16 and The 2022 OPEN MINDS Strategy & Innovation Institute in New Orleans, Louisiana. Be sure to check out the session, Technology For Innovation: How Do You Know What You Need?, featuring Julie Sjordal, Chief Executive Officer at St. David’s Center for Child & Family Development, along with OPEN MINDS Senior Associates, Carol Clayton, Ph.D. and Sharon Hicks.

How To Manage The 5% With Multiple Chronic Conditions & Complex Support Needs

By Monica E. Oss
There is a lot of investment money going into the mental health field—in fact, $14.7 billion in the first half of this year (see Why Are Digital First Mental Health Companies So Popular?). Much of that investment is focused on digital behavioral health systems and tools for both professional and self-care.

However, these new platforms and tools are not the perfect fit for every consumer with a mental illness. In fact, 25% of consumers with any mental illness have a serious mental illness (SMI). In all, 13.1 million consumers, or 5% of the total United States population, have an SMI (see Key Substance Use & Mental Health Indicators In The United States: Results From The 2019 National Survey On Drug Use & Health). Of consumers with SMI, 27% have co-occurring substance use disorders. We also know that SMI consumers on average tend to die 10 to 25 years earlier than the general population—and have a mortality rate that is twice as high as that of the general population because of chronic physical medical conditions such as cardiovascular, respiratory, and infectious diseases; diabetes; and hypertension (see Premature Death Among People With Severe Mental Disorders). 20% of the SMI population lives in poverty Approximately 20% of jail inmates and 15% of state prison inmates have an SMI (see Mental Health & Criminal Justice). 33% of the homeless population has an SMI (see 250,000 Mentally Ill Are Homeless. 140,000 Seriously Mentally Ill Are Homeless).

For the approximately 5% of the population—those with multiple chronic conditions and complex support needs—that use a majority of the health care resources, a different approach is needed to assure good consumer outcomes and prevent inappropriate use of resources. That population was the focus of our recent discussion with Carole Matyas, Vice President, Operations at Sunshine Health, and the keynote speaker at the upcoming 2021 OPEN MINDS Executive Leadership Retreat.

On September 22, Ms. Matyas will deliver the keynote address, The Future Of Managing Care For Consumers With An SMI—What Works. The cornerstone of progressive interventions for the high-risk/high-needs population with a serious mental illness is based on a “whole person” treatment strategy that encompasses medical, behavioral, pharmacy, social needs, and caregiver collaboration and coordination. Ms. Matyas will review Sunshine Health programs that are showing promising positive outcomes such as reduced use of acute/crisis care, better engagement with primary care that improves medical health outcomes and addresses high comorbidity issues, stabilized community-based living environment by addressing social needs for the enrolled Medicaid and Medicare members served. She will provide an overview of their Long Acting Injectable (LAI) program with data that demonstrates reductions in emergency department and inpatient services, and increase in community-based and medical services for members.

My takeaway from our pre-Institute discussion with Ms. Matyas? The Sunshine Health approach to optimizing the management of consumers with an SMI has four key components—intensive case management to assure care coordination, leveraging long-acting medications, a focus on primary care, and addressing social support needs.

Intensive case management to assure care coordination. One approach that has improved outcomes for SMI consumers is intensive case management. Sunshine Health took its top 400 high-needs, high-risk consumers (who have 30+ hospital admissions a year, go to the emergency room every other week, and reject any type of community-based treatment) and had its staff provide proactive and intensive case management services in collaboration with a host of community provider organizations and stakeholders. For example, case managers work closely with a telehealth provider organization that Sunshine Health contracts with to ensure that consumers discharged from hospital have their seven-day follow up appointment virtually and then connect them with an outpatient provider organization for ongoing care.

Leveraging long medications. Sunshine Health has been encouraging provider organizations to use long-acting injectables (LAIs) for antipsychotic medication administration. Ms. Matyas shared that SMI consumers receiving monthly LAIs have shown significant stabilization in their mental health and also do better at getting care for their comorbid medical conditions, engage with peers socially, and are even able to have part-time employment. She said, “We are promoting use of LAIs and really going a long way in working with hospital systems, primary care physicians, and mental health providers to make it easy to obtain those medications, administer them, monitor, and do outreach so members continue treatment. While the medications can be expensive, the results definitely show reductions in hospitalizations, readmissions, and emergency room visits as well as better outcomes from community-based treatment.”

Sunshine Health has a number of strategies to increase the use of LAIs. They do not require provider organizations to obtain prior authorizations to administer LAIs. In addition, if clinical professionals start an LAI when a consumer is in the hospital, case managers make sure to follow up with the consumer to make sure they get to the outpatient provider organization for their next dose when it’s due. They also have a “concierge program” within their pharmacy network and customer service representatives call members to schedule an appointment for their next LAI dose. Some pharmacies are also authorized to administer the LAIs. Sunshine’s provider relations team is charged with providing information about LAIs to community mental health and primary care provider organizations.

Ms. Matyas said, “We have a goal of increasing long acting injectables 25% year over year. During the pandemic, we had interruptions with folks getting their long acting injectables, but we are working towards getting back to normal state, which is encouraging.” And now there are two barriers to overcome to extend the use of LAIs, she added. The first is adherence which becomes challenging when consumers are say, cycling in and out of homelessness and are not stable in their environment or engaged in their treatment. The other issue is that there’s a history of long acting injectables not getting authorized by managed care. So provider organizations need to be educated and learn that “they don’t have to jump through a lot of hoops” to be able to prescribe LAIs if appropriate for the consumers.

Focus on primary care. Sunshine Health is encouraging provider organizations to go the integrated care route by participating in health home models and value-based reimbursement (VBR) models. They are also leveraging data to encourage collaborations and equipping primary care provider organizations to better address the needs of SMI consumers. Recently, they launched a behavioral health home program and seven community mental health centers have signed up to date. These centers have co-located primary care and behavioral health services and are delivering whole-person care under value-based contracts.

VBR is the cornerstone for integrated care. Sunshine Health offers incentives for provider organizations to address “gaps in medical and behavioral care.” In the behavioral health homes program, the incentive program is contingent on preventive health screenings being conducted for all consumers and on addressing the comorbidities that SMI consumers have. All provider organizations in Sunshine’s network—whether they are primary care practices or community mental health centers—are expected to address comorbidities and to report on the array of HEDIS measures related to both medical and behavioral care. Ultimately, Ms. Matyas explained, “The goal is to move more to value-based care, where we can impact members by having them in a health care environment so that they don’t have to go eight different places to get the care they need. They should be able to be more easily referred and seen, for whatever service it is they need. Value-based care incentivizes providers to work together without dictating a one-size-fits-all model.”

Sunshine Health embeds behavioral health services in primary care and offers psychiatrists who can consult on prescribing patterns and other issues in the care of SMI consumers. Ms. Matyas explained, “Every member covered by us is assigned a primary care provider regardless of whether they have an SMI diagnosis or not. So every one of the 5% of our 2.6 million members with SMI has a primary care physician. We take the data to our primary care practices and say, ‘Here are the demographics of the population assigned to you and here are the care gaps.’ The primary care practices will tell us whether they can handle the whole-health needs of these SMI members or want us to move them to a different provider. Or the practices may say they are equipped to handle some things but not others. So then we bring in behavioral health quality practice advisors to work with them, or we move the SMI members to a primary care practice that is better suited to work with this population.”

Addressing social support needs. Sunshine Health addresses social determinants of health (SDOH) in a variety of ways. Many of their behavioral health provider organizations have robust case management programs and the case managers connect consumers to social supports as needed. The health plan maintains a database of community resources that these case managers can access on request. They also offer micro grants to small community projects that support social needs. Some of their Medicaid programs, like the SMI specialty plan, have expanded benefits such as housing rental deposit or one month’s advance rent to help consumers get into housing. They’ve distributed cell phones and tablets for consumer use. SMI consumers get $35 a month in over-the-counter benefits from CVS to buy non-prescription items.

The fact that health plans are looking at primary care as the hub for SMI treatment should be a wake-up call for specialty provider organization executives who believe that their niche in serving this population assures a steady stream of business. Assuming responsibility for the whole-person care (medical, behavioral, and social) of the SMI populations served and participating in value-based arrangements are becoming the basics for sustainability planning.

Addressing Social Determinants As A Path To Revenue Growth

By Monica E. Oss

Over the last 15 years, there have been many pilot projects by payers, health plans, and public and private entities to address social determinants of health (SDOH). In the past couple years, we’ve heard from several health plan executives about their SDOH initiatives (see Mind, Body, Community: Kaiser Permanente’s Unique Approach, Innovation: Tag, You’re It, ‘Leaning In’ To Medicare: Social Needs Opportunities, Will Investing In Social Determinants Pay Off, Housing = Health: The Five Levers, and Medicaid Wants More Than Health: Be Prepared For Contract Changes). We’ve seen many new SDOH program launches by health plans—UnitedHealthcare’s recent Empowering Health grants, Humana’s Bold Goals program, Horizon Blue Cross Blue Shields of New Jersey’s Neighbors in Health program, and North Carolina Medicaid’s Healthy Opportunities Pilots, to name just a few. And there are the requirements to address SDOH under new Medicaid managed care contracts in a number of states (see Medicaid Authorities & Options To Address Social Determinants Of Health).

For specialty provider organizations, the question is how to address SDOH—and find a funding stream to do just that. Previously, we outlined the two paths to adding social service supports and supports coordination to traditional service lines. One way is to add a social supports coordination element that will get more referrals or improve reimbursement under value-based reimbursement arrangements—and pay for itself as an enhanced service feature with more total revenue for existing services. The other way is to build social supports programs that health plans or government payers will reimburse—and build a new revenue stream. Whatever option an executive team chooses, return-on-investment analysis is key. I wrote recently about our six-step model for assessing the effectiveness (both proactively and in practice) of enhanced social service programming in Building An ROI For Social Service Referrals.

We heard two great case studies of provider organizations that are taking the second path— building service lines for social services with payer/health plan revenue—during the session, Incorporating Social Determinants Of Health Into Your Practice To Improve Patient Outcomes & Increase Reimbursement at last week’s 2021 OPEN MINDS Management Best Practices Institute (session recordings and decks are available at https://openminds.com/live-mbpi/sessions/ until September 27). June Simmons, President and Chief Executive Officer of Partners in Care Foundation and Karin Annerhed-Harris, Vice President, Business Development at Resources for Human Development (RHD), shared how they are working with health plans on unique initiatives to address SDOH for complex consumers.

June Simmons, President & CEO, Partners In Care Foundation

Partners in Care Foundation builds community networks to provide a single point of access for consumers. Partners in Care contracts with health plans—and sometimes with health systems—to provide care management and home and community-based social services. Their goal is to integrate all community health resources and supports into a seamless delivery system for easy access and management. Ms. Simmons said, “If you’re just referring Ms. Smith to go down the street where they provide meals, it’s one thing. But if you’re paying for something, it’s a whole new paradigm. And sometimes you’re going to have to pay for care coordination and concrete services on a targeted basis.”

Partners contracted with Blue Shield of California (BSC) in 2014 to provide SDOH services to BSC consumers through primary care practices. BSC pays Partners for specialized staff—community health advocates (CHAs)—who are trained and supervised by PIC, and embedded in medical practices. To date, Partners has trained and placed 70 CHAs in three years. CHAs assess and analyze consumer needs, work with consumers on care planning, connect them to services, follow up, and track outcomes. The relationship with BSC has grown since over time, with Partners providing a variety of SDOH-related services.

Partners also operates specialized Outreach and Engagement Centers for Anthem in California, Georgia, Colorado, and Virginia. Through these centers, they develop care plans, engage with consumers, and make sure they get the needed social services. “You can take a horse to the water but you can’t make it drink. So engagement is crucial to ensure that consumers actually use the services they are connected to and that’s why the health plans partner with experts like us.”

For health plans, the benefit is in contracting with a single entity that manages the comprehensive network of social care. Access to supports becomes easier for consumers. Data sharing between the health plan and community-based organizations is also streamlined and simplified. Ms. Simmons said, “So if you’re a health plan and want to address a certain population—maybe it’s young moms and kids, maybe it’s frail elders and keeping them out of the nursing home—are you going to go out and identify all the agencies involved, organize them, and contract with them? Or would you like a lead entity that’s going to do that for you—curate the services, qualify the agencies, be the central intake, the oversee the quality, and do the billing?” Working with a trusted local entity is a far more practical and efficient route for health plans in Ms. Simmons’ opinion. She said, “A more mature community entity can bring their neighboring health and human service provider organizations into an organized delivery system, so consumers don’t have to be referred to multiple entities.”

Karin Annerhed-Harris, VP, Business Development, Resources for Human Development

Resources for Human Development addresses food and housing needs. RHD provides outpatient and residential services for consumers with mental illness, substance use disorders, and intellectual and developmental disabilities. RHD partnered with Temple University Hospital and two managed care organizations (MCOs)—Health Partners Plans and Keystone First—to pilot the Housing Smart program. The program was intended to reduce avoidable emergency room utilization and hospital readmissions among homeless individuals through peer outreach, supportive services, and subsidized housing resources.

The MCOs agreed to criteria for eligibility and generated a list of member referrals for RHD. RHD provided the high-users experiencing homelessness with access to housing vouchers that are good for two years. The consumers were housed in apartments across Philadelphia and local food banks provided three meals a day for three months, followed by cooking classes. The pilot resulted in a 74% drop in emergency room use, 48% reduction in hospitalizations, and a 76% increase in outpatient hospital visits. And with stable housing, 12 consumers in the program are actively engaged in behavioral health outpatient services.

At the outset of the program, Temple generated a list of eligible people using target population criteria and shared that with the MCOs. They enrolled 25 high utilizers prioritizing consumers with opioid use disorder, persistent mental illness, and co-occurring physical health conditions. RHD used an MCO-funded team comprising a peer support specialist, care coordinator, and tenant services coordinator to engage consumers in services. While the MCOs reimburse for services, 36% of the program is grant funded and goes toward housing, Ms. Harris said. RHD is exploring expanded health plan funding, now that Pennsylvania allows health systems and MCOs that can save money through a value-based agreement to use the profits to fund housing.

Lessons learned—partnership, evidence-based interventions, data sharing, and more. Ms. Simmons shared the four key elements for successful integration of SDOH—strong partnerships to form a comprehensive community network of care, the capacity to deliver home-based services, the use of good screening tools to assess consumer needs and preferences, and the delivery of evidence-based interventions for SDOH.

At RHD, Ms. Harris attributes the success of their pilot to robust partnerships and collaborations (between provider organizations, a health system, health plans, and other community organizations); cross-sector tools and training; and data sharing to enable a holistic view of consumer needs, goals, and care gaps.

The takeaway for provider organization executives? As my colleague and OPEN MINDS Senior Associate Cathy Gilbert, who moderated the session, said, “Entrepreneurial provider organizations have the opportunity to package many consumer support services that were previously not reimbursable and turn them into new revenue streams in partnership with plans. Providing these services drives better outcomes for consumers and ultimately reduces overall costs.”

WellSpan Health & Gateway Health Launch Value-Based Partnership For Medicaid Members

On July 29, 2021, Gateway Health, a Pennsylvania Medicaid managed care plan, and WellSpan Health a health system in central Pennsylvania launched a value-based partnership focused on connecting Gateway Health members with primary care professionals. Gateway Health and WellSpan are proactively contacting Gateway Health’s Medicaid members who visit the health system through emergency or urgent care visits, but do not have a relationship with a primary care provider organization. WellSpan case managers will work one-on-one with the Gateway members to address barriers, such as transportation and cost, to establishing an appropriate primary care relationship. Financial details about the partnership have not been disclosed. The goal is to reduce the number of potentially preventable emergency department visits among Gateway members.

Through this value-based partnership, Gateway Health and WellSpan aim to deliver an enhanced level of care, improve health outcomes, and lower health care costs for Gateway Health’s Medicaid members receiving care at WellSpan’s 200-plus health care locations. The partnership will utilize data insights and value-based programs to proactively manage the health care needs for more than 24,000 Gateway Health Medicaid members living in South Central Pennsylvania.

This partnership expands on an existing relationship between Gateway Health and WellSpan. For the past 18 months, they have partnered together for better maternal care and coverage through Foundations Pregnancy Support Services, a program offering coordinated, comprehensive care for mothers and their children with opioid use disorder. WellSpan partners with other Medicaid insurers to provide this support. However, WellSpan said that the commitment and innovative partnership with Gateway Health has resulted in more than double the number of members enrolled than with any other insurer.

Gateway Health was founded in 1992 as a Medicaid managed care plan. It currently provides Medicaid and Medicare Advantage plans. It covers health care services for nearly 340,000 members annually.

Non-profit WellSpan Health is an integrated health system that serves the communities of central Pennsylvania and northern Maryland. It has more than 1,600 employed physicians and advance practice professionals; a regional behavioral health organization; a home care organization; eight hospitals, and more than 200 consumer care locations.

For more information, contact: