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The Dose - JK Wall

Welcome to The Dose, which tackles the finances behind local health care and life sciences and points to the most interesting national analysis. Your host is J.K. Wall.

Health Care & Life Sciences / Life Science & Biotech

Community set to go whole hog on new value-based payments

September 4, 2015

Talk, as they say, is cheap.
 
And for the past five years, talk has far exceeded action on paying hospitals and doctors in new ways—so they earn more when patients are healthier rather than being rewarded solely for delivering more treatments.
 
Hospitals have touted their accountable care organizations and population health programs, and health insurers have played up their pay-for-value contracts.
 
But only small amounts of actual dollars that flow into hospitals have been affected by these changes. At Community Health Network, for example, less than 5 percent of its nearly $2 billion in annual revenue comes from value-based contracts.
 
But Community CEO Bryan Mills told me this week that his hospital system is diving head first into being paid for value—that’s health care speak for keeping patients healthy and out of the hospital. Mills said his goal is to make 75 percent of Community’s revenue—or $1.5 billion a year—be covered by value-based contracts. And to do that in the next three years—provided he can get health insurers to play along.
 
“Some have said, ‘We’re willing to dip our toe in the water,'” on value-based payments, Mills said. But at Community, he added, “We’re jumping.”

Community announced a key way to get to that goal this week, when it unveiled Primaria Health LLC,  a joint venture with Chicago-based VillageMD.
 
VillageMD negotiates contracts with health insurers such as Aetna, Cigna and Humana as well as Medicare Advantage plans, which pledge doctors to provide high-quality care to a specific group of patients and, if the cost of caring for those patients grows slower than expected, to split the savings with the insurer.
 
VillageMD helps doctors save money by analyzing the medical records and medical claims of a doctor’s patients, then identifying which ones are spending the most on health care or at-risk of becoming a high spender. Those patients are usually those with diabetes, congestive heart failure, coronary artery disease or other complex and chronic diseases.
 
Finally, VillageMD provides extra staff members—social workers, dieticians, nutritionists, care coordinators, nurse navigators, behaviorists. Those extra staff members make sure patients  are taking all the medication they’ve been prescribed, help them change their diet, exercise or smoking habits, and connect them with other medical specialists as needed.
 
The problem is that health insurers—private insurers as well as the federal Medicare program—have traditionally paid doctors only when they physically touch a patient. There are no payment codes, known as CPT codes, for services that happen outside a physician’s office.
 
“We’re focused on how to optimize the patient encounter within the delivery system, but there’s a need to focus outside the CPT codes as well,” said Tim Barry, CEO of VillageMD.
 
Via Primaria, VillageMD will work with Community employees to provide those same services to Community’s 300 primary care physicians, who already see roughly 450,000 of the 600,000 patients that come through Community’s facilities each year. Primaria already has 65 former Community employees on staff, with plans to ramp up to 500 in a few years.
 
Primaria will pitch its services to the more than 800 independent primary care providers in a 38-county area of central Indiana where Community’s patients come from. Those providers won’t pay Primaria upfront, but would likely share some of the bonus payments they earn from insurers with Primaria, according to Barry.
 
Mills stressed that Primaria won’t be asking those independent physicians to join Community. “This is not a recruitment program,” he said. He also added that Community’s goal is not to save money via Primaria—meaning doctors will be paid the same, just in a different way.
 
It might seem intuitive to pay hospitals and doctors based on how well they do at keeping patients healthy, but, Mills said, “That hasn’t been how health care has worked.” Doctors receive no money for checking up with patients at home to make sure they’re taking their medicines, or making sure their power isn’t turned off in summer when heat can aggravate asthma.
 
“It’s been about 'What do I get paid for?'” he said, “less about 'What’s the right thing to do?'”
 
That’s a jaw-dropping statement from a career-long health care executive. But even more stunning is that Mills seems willing to stake Community’s finances on changing that reality.

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