Innovative Care Models for High-Cost Medicare Beneficiaries: Delivery System and Payment Reform to Accelerate Adoption

This paper illustrates how Medicare Advantage plans and accountable care organizations could benefit from adopting innovative care delivery models, and suggests policy changes to accelerate spread.
Published Online: June 05, 2015
Karen Davis, PhD, APN; Christine Buttorff, PhD; Bruce Leff, MD; Quincy M. Samus, PhD; Sarah Szanton, PhD, APN; Jennifer L. Wolff, PhD; and Farhan Bandeali, MSPH

Objectives: About a third of Medicare beneficiaries are covered by Medicare Advantage (MA) plans or accountable care organizations (ACOs). As a result of assuming financial risk for Medicare services and/or being eligible for shared savings, these organizations have an incentive to adopt models of delivering care that contribute to better care, improved health outcomes, and lower cost. This paper identifies innovative care models across the care continuum for high-cost Medicare beneficiaries that MA plans and ACOs could adopt to improve care while potentially achieving savings. It suggests policy changes that would accelerate testing and spread of promising care delivery model innovations.

Study Design and Methods: Targeted review of the literature to identify care delivery models focused on high-cost or high-risk Medicare beneficiaries.

Results:This paper presents select delivery models for high-risk Medicare beneficiaries across the care continuum that show promise of yielding better care at lower cost that could be considered for adoption by MA plans and ACOs. Common to these models are elements of the Wagner Chronic Care Model, including practice redesign to incorporate a team approach to care, the inclusion of nonmedical personnel, efforts to promote patient engagement, supporting provider education on innovations,and information systems allowing feedback of information to providers.The goal of these models is to slow the progression to long-term care, reduce health risks, and minimize adverse health impacts, all while achieving savings.These models attempt to maintain the ability of high-risk individuals to live in the home or a community-based setting, thereby avoiding costly institutional care. Identifying and implementing promising care delivery models will become increasingly important in launching successful population health initiatives.

Conclusions: MA plans and ACOs stand to benefit financially from adopting care delivery models for high-risk Medicare beneficia- ries that reduce hospitalization. Spreading these models to other organizations will require provider payment policy changes. Integration of acute and long-term care would further spur adoption of effective strategies for reducing or delaying entry into long-term institutional care.

Am J Manag Care. 2015;21(5):e349-e356 

Take-Away Points

This paper presents 9 delivery models for high-risk Medicare beneficiaries in different settings that Medicare Advantage (MA) plans and accountable care orga- nizations (ACOs) could adopt to achieve better care at lower costs.
 Common to these models is a team approach to care, including nonmedical personnel, and providing care in home- or community-based settings to avoid costly institutional care.

Our review of the literature included intervention models such as Advanced Primary Care, Home-Based Primary Care, CAPABLE, MIND at Home, PACE, Hospi- tal at Home, Hospital Elder Life Program, Transitional Care, and INTERACT. Policy changes to permit MA plans, ACOs, and service providers to share Medicaid long- term care savings would further accelerate adoption.

About a third of Medicare beneficiaries are now covered by Medicare Advantage (MA) plans or accountablecareorganizations (ACOs).1 These organizations have an incentive to adopt innovations in care delivery that yield better care, improve patient outcomes, and lower costs.MA plans are at financial risk for the total cost of Medicare services, and Medicare ACOs are either at full or partial risk, or eligible for shared savings. Delivering care in a way that reduces the costly use of inpatient hospital care and emergency departments (EDs) helps these organizations to realize savings and gain market share.

Factors that place Medicare beneficiaries at risk for higher acute, post acute, and long-term care utilization and expen- ditures include age, number and type of chronic conditions, functional impairment, income level, and social support system (eg, living alone). Those Medicare beneficiaries with multiple chronic conditions, functional impairment, and low income, and/or who are living alone or in institutions, account for most Medicare expenditures and high rates of ED visits, hospitalizations, readmissions, and nursing home placements.2 These high-risk beneficiaries also tend to spend the most—5% of Medicare’s beneficiaries account for more than 40% of the costs.3,4

Despite the potential for savings, adoption of innovative care delivery models focused on the highest cost, highest risk patients is limited—in part, this reflects the need for large- scale testing of innovations in care delivery, as evidence is limited on what works and why. The Center for Medicare and Medicaid Innovation (CMMI) is starting to fill this gap with $10 billion in funding to experiment with innovative payment models and improved care delivery systems, as part of the Affordable Care Act.5-7 CMMI has launched a number of initiatives, with the primary focus on ACOs, bundled payments for care improvement, and primary care transformation.8,9 These initiatives have helped spur the development of ACOs, health systems, and advanced primary care practices. The first evaluation results for Pioneer ACOs indicate some modest success in improving care and lowering costs.10 Better targeting of high-risk beneficiaries and the use of models that manage care across the continuum could yield greater savings. For the high-risk individuals who transition frequently across settings of care, to date less emphasis has been placed on specific tools or care models, which could enhance quality of care and patient experience, as well as to reduce cost (Figure).

The largest obstacle to the diffusion of innovative delivery models that integrate care is a lack of aligned financial incentives and the presence of a fragmented payment system across different providers. MA plans often continue to pay providers on a fee-for-service basis, giving providers little incentive to provide lower-cost, higher-quality care. The closer integration of the insurance and provider functions, however, is starting to align provider incentives. Integrated delivery systems with MA plans or managed care at-risk provider contracts have the incentive to identify methods of providing better care at lower costs. This has spurred peer-to-peer learning and the creation of a Medicare Innovations Collaborative to provide technical assistance to promote the simultaneous adoption of multiple complex-care models.11

Collaborations will continue to grow as Medicare and other payers begin paying for total care for a population over time or over an episode, with accountability for quality and patient health outcomes.12 Identifying interventions that prevent long-term nursing home admissions could yield significant savings, as non-alignment of incentives across providers, families, and social service agencies has been a barrier to the diffusion of models of care that reduce these admissions. Medicaid is responsible for many long-term care costs, adding more complexity in designing incentive strategies to reduce long-term care admissions.

This paper examines how integrated delivery systems, health systems, and MA plans bearing financial risk could benefit from adopting specific care delivery models across the care continuum that show promise of better results for high-risk Medicare beneficiaries. It also explores policy changes to create a global payment system, which is more amenable to implementing new care delivery models. 


Innovations for High-Risk Medicare Populations

The budgetary pressure to bend the cost curve for Medicare beneficiaries is likely to persist or accelerate as those born after World War II become eligible for benefits. Since the majority of spending is concentrated among a minority of beneficiaries, the importance of appropriately targeting innovation initiatives on high-cost, high-risk subpopulations will increase. The diversity of beneficiaries by health status, functioning, living arrangements, and income suggests that rather than focus on a uniform program with uniform benefits, Medicare might look to adapt benefits and care delivery to the specific needs of Medicare beneficiary sub-groups based on their health risks. As the population ages, with unprecedented growth in the oldest cohort, considering the risks of long-term care as well as acute care grows in importance.

Table 1 describes characteristics of potential high-risk beneficiaries based on the authors’ estimates from the Health and Retirement Study for 2010.13 Beneficiaries eligible for both Medicare and Medicaid are 4 times more likely to have 6 or more chronic conditions than beneficiaries with incomes 200% or more of the federal poverty level not covered by Medicaid, and they are 3 times more likely to have 2 or more restrictions in activities of daily living. Dual eligibles are more likely to live alone and more likely to be disabled than higher-income Medicare beneficiaries with incomes 200% or more of the federal poverty level. Those Medicare beneficiaries with incomes below 200% of the poverty level who are not covered by Medicaid are also more at risk than higher-income beneficiaries, with a greater likelihood of having multiple chronic conditions and functional impairments, as well as to be living alone.

To illustrate how strategies that target high-risk groups that are designed to achieve savings could work, we offer promising care delivery innovations as examples here. Interventions showing modest success have generally tried to improve coordination among the patient, family members, providers, and even social service agencies. All of the select innovations incorporate the major elements of the Wagner Chronic Care Model, including practice redesign, patient engagement, provider support and education, and information systems designed to furnish feedback of information to providers.14 The Wagner Chronic Care Model is applicable to this high-risk Medicare population because most members have chronic conditions in addition to functional limitations. The model stresses the need for patients to be actively involved in their care, as well as practice redesign, ongoing provider education, and meaningful use of information systems. Successful models that are able to demonstrate savings will likely have some aspects of all 4 elements. 

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