When determining whether to participate in a voluntary alternative payment model (APM), many healthcare organizations consider financial performance to be the leading decision factor. That is, is the provider estimated to make money or lose money if it participates in the program? In this article, Northwestern Medicine (NM) discusses the alternate criteria that influenced its decision to enter a Medicare APM, Bundled Payments for Care Improvement (BPCI) Advanced, despite projected losses. Ultimately, NM determined that opportunity existed to further streamline care pathways and, in doing so, eventually break even financially. In addition, NM contends that participation in voluntary Medicare APMs provides a unique opportunity to build competencies such as strategic data analysis, high-risk patient identification, and strong inter—care setting partnerships. Finally, NM argues that although APMs hold promise, policy changes must be made to ensure the long-term sustainability of models such as BPCI Advanced.

The American Journal of Accountable Care. 2019;7(3):30-33

 Over the past decade, the United States has experienced a large increase in the number of providers participating in alternative payment models (APMs), which are designed to incentivize the provision of cost-efficient and high-quality care. In 2018, the Health Care Payment and Learning Action Network reported that the percentage of healthcare payments reimbursed under shared savings, bundled payment, and/or population-based payment models had increased from 23% in 2015 to 34% in 2017. This climb was facilitated by the large number of new APMs, such as the recently launched Bundled Payments for Care Improvement (BPCI) Advanced model. With the increasing availability of voluntary models, providers have a number of factors to consider when contemplating participation. Using BPCI Advanced as a case study, this article explores these decision factors, as well as how much stock should be placed in projected financial performance. Finally, we present thoughts regarding the long-term sustainability of APMs such as bundled payment programs.

Under BPCI Advanced, participants may select between 1 and 37 clinical episodes for which to accept financial risk, meaning that they are accountable for the care that beneficiaries receive and the associated healthcare expenditures across a 90-day postdischarge period. If Medicare payments for services provided to beneficiaries during this time exceed a target price, the participant must pay back the difference to Medicare.

Meanwhile, if payments fall below the target price, participants are eligible to receive the difference as savings. Northwestern Medicine (NM) is participating in BPCI Advanced with the major joint replacement of the lower extremity (MJRLE) episode (eg, knee replacement, hip replacement). It is doing so despite the fact that it is projected to sustain a loss in this episode based on the current data made available to it by the Center for Medicare and Medicaid Innovation (CMMI).

Like many healthcare organizations, NM chose to enter its first Medicare bundled payment program with the MJRLE episode. Relative to other conditions, such as simple pneumonia, MJRLE is often viewed as comparatively easier to operationalize in a bundled payment model due to the relatively low variation in patient acuity; the mostly elective nature of the procedure, which lends to easier patient identification; easily identifiable efficiency opportunities; and ease of mapping out optimal care pathways from before to well after the procedure.

NM entered the original BPCI in 2015 and successfully executed a multidisciplinary, pre- and postoperative clinical pathway across the clinical care continuum with high provider adherence rates for patients undergoing MJRLE. Early in the program, performance was uneven, and NM even experienced a few quarters of losses, but its financial performance improved and became more consistent as it executed and refined interventions. To date, NM has averaged a 4% quarterly savings rate in BPCI MJRLE episodes.

Despite this fact, when NM received its preliminary BPCI Advanced target prices, it found itself in an unfortunate position, as did many other health systems with previous success in BPCI MJRLE or the mandatory Comprehensive Care for Joint Replacement program. When NM compared average episode payments from the most recent full year of BPCI Advanced baseline data (fourth quarter of 2015 to third quarter of 2016) with the 2018 preliminary target prices, NM was projected to lose approximately 9% over the course of a year.

How is it that NM could generate average savings of 4% in one program but be projected to lose 9% in another program for the same 90-day MJRLE episode? The answer comes down to the target price methodology. Under the original BPCI program, participants’ target prices were based on their own historical average episode payments. The methodology utilized for BPCI Advanced is much more complex. Instead of focusing on a provider’s own historical experience alone, BPCI Advanced uses national data with regional and provider-specific adjustments. Rather than a simple historical average, BPCI Advanced uses 2 compound log normal models to estimate the impact of various patient- and provider-level factors on episode spending. These models generate parameter estimates, which are ultimately used to calculate the 3 major components of the target price calculation (

). Together, the components generate a target price that is adjusted for patient case mix and the hospital’s historical efficiency and trended forward based on the episode utilization of like providers in a regional peer comparison group. Although this method is complex, CMMI is to be applauded for developing the most sophisticated and comprehensive risk adjustment methodology featured in a Medicare bundled payment model to date. The modification also appropriately acknowledges the need to move beyond purely historical averages, as over time efficient providers would be disincentivized to participate.

Back to the original question: What about this methodology makes it more difficult for NM to achieve savings in the MJRLE episode? One of the main drivers is the peer adjusted trend (PAT) factor, which is based on the utilization of like providers in a Census region. NM’s MJRLE episode has a PAT factor of less than 0.90, which essentially means that the utilization and corresponding expenditures for the MJRLE episodes initiated by providers in NM’s peer comparison group were lower than what CMMI predicted. In other words, providers in this peer group, like NM, have already become more efficient at delivering care to patients undergoing MJRLE. Additionally, the PAT factor effect is likely to compound over time as providers continue to pursue efficiencies in the MJRLE care pathway, and the resultant target price will continue to decline. Similar arguments can be made for the acute care hospital (ACH) efficiency measure, which is used to calculate the standardized baseline spending (SBS) figure. The SBS will decline as a provider becomes more efficient.

With all this in mind, readers are probably, rightfully, wondering why NM decided to participate in BPCI Advanced with the MJRLE episode. The answer boils down to a few key points:

NM believes that further opportunity exists to better coordinate care for patients undergoing MJRLE.

 During BPCI, it made great strides toward optimizing the immediate pre- and postoperative periods for patients undergoing MJRLE. NM engaged physicians through data sharing and education, identified and conducted risk assessments to ascertain the appropriate discharge setting for patients, proactively educated patients on their care pathways to help set informed expectations, and partnered with skilled nursing facilities to coordinate care for patients and set quality goals. Process iteration has revealed what works and where roadblocks lie. NM has yet to meet all of its quality and utilization goals, but it believes that lessons learned during BPCI have enabled it to develop the plans and infrastructure necessary to attain these goals during BPCI Advanced.

NM believes the pursuit of these opportunities will enable us, at a minimum, to break even.

 Generating buy-in to engage in a new model is difficult if stakeholders believe that the economics of the model are so stacked against them that no matter what they do, losses are a certainty. If NM is able to meet its quality and utilization goals for the MJRLE population, it is projected to eventually break even in the MJRLE episode.

NM participated in the BPCI original MJRLE episode for 2.5 years, and it took considerable time to build the infrastructure and clinical engagement necessary to generate success. After spending more than 2 years sharing data and results with physicians, more and more NM physicians understand the role of APMs and how they can translate to care improvements for patients. NM does not want to lose this crucial engagement.

New competencies are necessary to succeed in a rapidly shifting reimbursement landscape.

 Finally, the BPCI Advanced MJRLE episode is not the end game. NM strives to develop the competencies necessary to effectively manage patient care within and beyond its walls for all patient populations. As time goes on, the economic incentives established by payers will increasingly align with this goal. HHS Secretary Alex Azar recently signaled his intent to release additional mandatory bundles

 while CMS Administrator Seema Verma has touted the benefits of Medicare Advantage.

 The lessons that NM learns and the capabilities that it develops from managing the Medicare MJRLE population will be applied to the broader orthopedics population, as well as to patients with other disease groups, in the future.

Recommendations for Long-term Sustainability

This article was written in the context of NM’s current preliminary MJRLE target price. Although the final target price will be updated to reflect Medicare rate changes and its patient case mix, NM does not expect its projection to change significantly as a result. However, it is likely that the target price could decline in future performance years when Medicare sets a new baseline period and reruns its methodology. It is possible that following this change, NM (and many other BPCI Advanced participants) may be forced to withdraw from the MJRLE episode due to significant unavoidable financial losses.

CMMI can prevent this with refinements to the target price methodology. Specifically, we recommend that CMS consider one or all of the following possible changes:

Do not rebase; utilize the 2013-2016 period as a fixed baseline for the entirety of BPCI Advanced.

 CMS is set to rebase targets for performance year 2020, meaning it will alter the baseline to include more recent years—years that reflect a higher portion of providers pursuing efficiencies in the MJRLE care pathway. This action will inevitably cause target prices to decline. In order to provide more predictability and stability to target prices, CMS should elongate the periods between rebasing (minimum of 3 years). If and when rebasing is required, CMS should simply elongate the baseline by 1 year (add on 2017) instead of shifting the entire period forward (eliminating 2013 and potentially 2014).

Apply a floor to the ACH efficiency measure and/or PAT factor.

 As previously stated, ACH efficiency measures and PAT factors below 1.0 signal that a provider is historically efficient and that providers in peer comparison groups are historically efficient, respectively. These factors are directly applied to a dollar amount to calculate the target price. To prevent target prices from reaching unsustainably low figures, CMS could place a floor on these adjustment factors by prohibiting them from falling below 0.85, for example. Identifying an appropriate floor would require extensive consideration, but the principle of applying a floor is a worthy and sensible policy. CMS has previously applied caps when setting target prices in other models, as it capped quarterly changes in trend factors under the original BPCI.

All of these proposals seek to address the ever-present challenge of any APM’s benchmark methodology: how to prevent the race to the bottom. When a model adjusts a target price to reflect a single provider’s or provider group’s historical efficiency, the target will continue to decline as providers become more efficient. However, there is a floor to this efficiency beyond which the decreases in utilization necessary to match a declining target price would likely threaten the quality of patient care. Thus, a floor must exist in target price methodologies.

APMs such as BPCI Advanced play an important role in healthcare. It is likely that innovation will occur at NM as a result of participation and that performance will continue to improve. Its efforts and the lessons learned via participation will position NM as best possible to manage future challenges in joint replacement and other episodes of care. However, the threat and realization of significant financial losses will stifle innovation and performance improvement if NM and others withdraw from participation. There is a floor to possible efficiencies in care, and CMS must acknowledge this fact as it refines target price methodologies.

 Northwestern Memorial HealthCare (JW, HAJ, BW, DM), Chicago, IL.

 The authors report no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

 Concept and design (JW, HAJ, BW, DM); analysis and interpretation of data (JW, DM); drafting of the manuscript (JW, DM); critical revision of the manuscript for important intellectual content (JW, DM); administrative, technical, or logistic support (HAJ, BW); and supervision (HAJ, BW).

 Jessica Walradt, MS, Northwestern Memorial HealthCare, 251 E Huron St, Chicago, IL 60611. Email: Jessica.walradt@nm.org.

1. Azar AM II. Remarks on primary care and value-based transformation. HHS website. hhs.gov/about/leadership/secretary/speeches/2018-speeches/remarks-on-primary-care-and-value-based-transformation.html. Published November 8, 2018. Accessed March 15, 2019.

2. Speech: remarks by CMS Administrator Seema Verma at the Medicare Advantage and Prescription Drug Plan Spring Conference. CMS website. cms.gov/newsroom/fact-sheets/speech-remarks-cms-administrator-seema-verma-medicare-advantage-and-prescription-drug-plan-spring. Published May 9, 2018. Accessed March 15, 2019.

Articles

This article explores Northwestern Medicine’s decision to participate in a Medicare alternative payment model (APM) despite projected losses.

The Cost of Learning: Participating in APMs Despite Projected Financial Losses

The American Journal of Accountable Care. 2019;7(3):24-25

Over the past 30 years, even after major strides to expand access, improve outcomes, and control costs, fulfilling the promise of delivering high-quality, affordable care that aligns with the individual goals and needs of this country’s patients remains elusive. Increasingly, the missing ingredient seems obvious: trust.

Everyone recognizes the value of trust in underpinning meaningful, resilient patient—physician relationships. But it’s more than that. Trust in an increasingly complicated and integrated healthcare system requires an ecosystem in which organizations and the individuals within them proactively model trustworthy behavior and nurture it in others. Unfortunately, data show that our levels of trust are low, while the precipitous rise in cynicism and misinformation spreads throughout society.

Gallup polling reveals that confidence in almost all institutions in the United States, including Congress and the news media, has greatly deteriorated over the past 4 decades. What’s especially sobering is the fact that the most dramatic decline has occurred in “confidence in the medical system,” which fell by more than 50%, from 80% in 1975 to 38% in 2019. Confirming this trend, data from the General Social Survey show that confidence in the people running medical institutions has also steadily dropped, from 61% in 1974 to just 37% in 2018.

As trust in healthcare has declined, alternative sources of information have arisen to challenge and even supplant rigorous scientific knowledge and experience—sources that are accessible on a variety of platforms that make little effort to validate their medical claims. Such information, be it true or false, can have a powerful and potentially dangerous impact on patients. The stubborn persistence of antivaccination messages in the face of overwhelming evidence of vaccine safety is a case in point.

News coverage of dozens of children contracting measles and communities declaring public health emergencies should be urgent clarion calls for a national conversation on rebuilding trust in medicine and science. Overcoming current trends requires a different, collaborative, 360-degree approach that engages everyone. Each aspect of the healthcare ecosystem must examine itself and proactively choose to build trust if we ever hope to improve our healthcare system.

At the American Board of Internal Medicine (ABIM), we know firsthand what it’s like to enjoy, and then lose, trust. That’s one of the things that makes me a wounded but wiser messenger. It is humbling to accept that one’s organization has lost trust, as did ABIM, and yet the situation offers an incredible opportunity for transformation. In 21st-century America, getting to trusting relationships is a journey, not a destination. It’s a continuous process that makes us better. ABIM’s organizational learnings about rebuilding trust have educated us about the risks for other healthcare organizations and the importance of proactively focusing on building trust.

Two points of good news: First, although rebuilding trust may require new technology and procedures, it isn’t rocket science. It requires us to act toward others the same way we would like to be treated. Second, we can build on work that’s already being done to replicate and apply those hard-earned lessons to practices across the country. That’s already happening.

Thinking back to one of my own patients, it was her first visit to my office, and I was 30 minutes late. By the time I saw her, she was understandably furious. Instead of being defensive, I apologized sincerely. She calmed down. We were able to start over and tackle the issue that brought her in. For 20 years, we worked together in sickness and health, as patient and physician. That encounter taught me that people need to be respected and heard in the doctor’s office or the trust needed to care for them will never develop.

Last year, the ABIM Foundation asked leaders in healthcare to examine trust in a variety of contexts, interactions, and relationships—including between physician and patient, physician and physician, physician and health system, health system and payer, and physician and government and within healthcare systems&mdash;within the communities that they serve. Since January, we have published a series of Viewpoint articles in 

 based on those discussions, accompanied by suggestions of practical steps to nurture trust, better support patient care, and help laypeople develop a more discerning eye for credible medical information.

 series, the ABIM Foundation launched a Trust Practice Challenge to directly address the “trust gap” in healthcare by identifying and promoting existing practices that promote trustworthiness.

 Through the Trust Practice Challenge, the ABIM Foundation recognized 8 organizations for confronting the friction points where trust can break down in the daily practice of medicine, developing new approaches to address them, and putting procedures in place to systematize those solutions. The challenge celebrates the passionate commitment that providers have to their patients and highlights the special insights that they glean from their interactions.

While some of those innovations focus on patients’ interactions with physicians, others examine the important role that institutions like health systems and payers have in developing and deploying technology to improve care coordination. Perhaps most importantly, each of the innovations has a framework that might be measured over time and perhaps recalibrated, if need be, to judge and improve its effectiveness.

As a primary care physician, I felt particularly inspired by UnityPoint Health’s efforts in Des Moines, Iowa, to connect with its LGBTQ patients. In launching a primary care clinic focused on this community, the health system recognized the community’s particular needs and the importance of creating a safe space for patients to feel comfortable by developing a trusting relationship with their care team. After altering a number of care practices, the organization now has an opportunity to close potential gaps in delivering coordinated, patient-centered care.

Beyond Individuals—Organizations Have a Critical Role

Looking ahead, beyond the innovations of individual physicians and their organizations, we seek to identify opportunities to rebuild trust on a scale substantial enough to deliver the quality, affordable, and attentive care that patients deserve. Achieving that vision will require the engaged participation of large organizations with the broad reach and resources to systematize the most promising trust-building approaches.

With the proactive support of organizations, we can forge a new standard of care throughout our healthcare system that recognizes trust as an essential component in quality healthcare. Under this rubric, each stakeholder would be accountable for its contribution to trust in healthcare and charged with identifying pathways to rebuild and nurture trust going forward. Whether it is a major health system, provider association, insurer, gold-standard accreditor, or nationwide patient group, each has a critical and additive role to play in improving the healthcare system.

, the ABIM Foundation launched a national conversation about overuse in healthcare and galvanized a movement with the support of more than 80 partners. Together, we flagged more than 550 commonly overused procedures with limited clinical value and encouraged conversation about them between patients and physicians. In large part, 

 is successful because it focuses on the patient−physician relationship. Over time, it built trust, especially between patients and their physicians and among physicians themselves.

Now we need to do more. Rebuilding trust within our healthcare system and nurturing an ecosystem in which trust is a core operating principle requires a more comprehensive and sustained effort. It can’t just be physicians and patients. We need everyone.

The urgency of the crisis of trust that we face in healthcare has grown more pointed over the past several years. The ABIM Foundation is committed to generating solutions and looks forward to collaborating with other organizations to enhance trust together.

Building trusting relationships is hard work, to be sure, but it is work we can and must do for our profession and for our patients.

American Board of Internal Medicine and ABIM Foundation, Philadelphia, PA.

 The author reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Concept and design; drafting of the manuscript; and critical revision of the manuscript for important intellectual content.

Richard J. Baron, MD, American Board of Internal Medicine, 510 Walnut St, 17th Floor, Philadelphia, PA 19106. Email: rbaron@abim.org.

1. Baron RJ, Berinsky AJ. Mistrust in science—a threat to the patient-physician relationship. 

. 2019;381(2):182-185. doi: 10.1056/NEJMms1813043.

2. Eight organizations named winners of Trust Practice Challenge. ABIM Foundation website. abimfoundation.org/what-we-do/rebuilding-trust-in-health-care/trust-practice-challenge. Published May 2019. Accessed July 30, 2019.

The promise of high-quality, affordable care aligning with the individual needs of patients remains elusive. Increasingly, the missing ingredient seems obvious: trust.

Building Trust Can Improve American Healthcare

Berwick and colleagues’ vision of the Triple Aim foresaw achievement of its goals through assigning responsibility for a population to an “integrator.” It was thought that an insurer would be best situated for this role, but with 45% of those aged 19 to 64 years either uninsured or underinsured, a significant portion of chronic disease care is not paid for by insurers. This article proposes that chronic disease care amenable to streamlining and inexpensive pricing be decoupled from the insurance system, with designation of an alternative integrator to administer a Registry+Bundle. This integrator would acquire and distribute, at a low cost, the medications necessary to manage a disease for a given population.

The American Journal of Accountable Care. 2019;7(3):26-29

 article, Donald Berwick, MD, MPP, FACP, and colleagues introduced the Triple Aim: “improving the individual experience of care; improving the health of populations; and reducing the per capita costs of care for populations.”

 In their vision, these goals would be achieved by recognizing “a population as the unit of concern” and assigning responsibility for that population to “an ‘integrator’ able to focus and coordinate services to help the population on all three dimensions at once.”

Ideally, Berwick et al said, that integrator would be an entity “such as Kaiser Permanente, [that] has fully integrated financing and either full ownership of or exclusive relationships with delivery structures, and…is able to use those structures to good advantage,” but the “role might [also] be within the reach of a powerful, visionary insurer; a large primary care group in partnership with payers; or even a hospital, with some affiliated physician group.”

As CMS administrator, Berwick presided over accountable care organizations and other payment models that applied the Triple Aim to Medicare beneficiaries. In their 2008 article, Berwick et al used the example of congestive heart failure (CHF) as a chronic illness as one upon which “an integrator would act differently, assigning much more value and many more resources, for example, to the monitoring and interception of early signs of deterioration.” Remarkably, the rate of hospital admissions for CHF among the Medicare population has dropped from 2222 per 100,000 in 2001 to 1364 in 2015.

But the picture is much different for diabetes, a condition afflicting many Americans not eligible for Medicare. Hospital admissions for short-term complications in the adult population have increased, most notably in the group aged 18 to 64 years: from 52.6 per 100,000 in 2000 to 92.3 in 2015.

 Hospital admissions for long-term complications of diabetes among those aged 18 to 64 years increased from 78.3 per 100,000 in 2000 to 92.0 in 2015, while dropping significantly in the Medicare population.

 The pattern is similar for amputations and end-stage renal disease incidence: improvements in the Medicare age group but flat or worsening numbers for the nonelderly population, with negligible improvements or backsliding in the first 2 years of coverage under the Affordable Care Act (ACA).

The premise of this article is that a significant portion of the disparity between advances in CHF care and retrogression in diabetes care can be attributed to differences in insurance coverage between the elderly and nonelderly populations. Americans 65 years and older are covered by Medicare. About one-third of Medicare beneficiaries are enrolled in managed care plans, and of those in fee-for-service Medicare, only 19% lack supplemental coverage to cover cost sharing.

 Only 12% lack prescription drug coverage.

 Nearly one-third of beneficiaries enrolled in Part D prescription drug plans receive low-income subsidies that reduce cost sharing, and half of Part D plans offer coverage before the $415 deductible is met. In short, conditions are favorable, if not quite ideal, for the management of chronic conditions.

The situation is different for the nonelderly population. Of adults younger than 65 years, 12.4% remain uninsured, but in the judgment of The Commonwealth Fund, fully 45% of those aged 19 to 64 years are “inadequately insured.”

 The Commonwealth Fund counts as underinsured those whose out-of-pocket costs equal 10% or more of household income, individuals living under 200% of the federal poverty level (FPL) whose out-of-pocket costs equal 5% or more of household income, or those whose insurance deductible is 5% or more of household income.

The Commonwealth Fund finds that “more people who have coverage are underinsured now than in 2010, with the greatest increase occurring among those in employer plans.” According to the Kaiser Family Foundation 2018 Employer Health Benefits Survey, “Over the past five years, the average annual deductible among all covered workers has increased 53%. Forty-two percent of covered workers in small firms and 20% of covered workers in large firms are in a plan with a deductible of at least $2000 for single coverage.”

 Health advocates’ principal concern with these developments has been that those who are uninsured or underinsured “report cost-related problems getting care and difficulty paying medical bills.”

 But there is an additional and equally serious problem. I argue here that insurers covering the population younger than 65 years are unable to effectively integrate care because high deductibles leave consumers on their own for too much of the management of their chronic conditions—both because front-end care is not covered and because the deductibles make insurance financially unattractive to many consumers, leaving them uninsured. As a society, we have the tools to make deadly chronic diseases manageable: They represent the very archetype of high-value care yet too often go unused.

This article urges achievement of the Triple Aim for the uninsured and underinsured living with chronic conditions by designating an alternative integrator to organize care that is not paid for by insurers. Although a prominent policy option to address this problem is the elimination of cost sharing through adoption of generous single-payer or “Medicare for All” programs, this article proposes an option that accepts the current insurance system and legal regime as they exist today. I do so because the parsimony of existing insurance cost-sharing designs can in one sense be taken as a virtue—it challenges us to devise integrated care within very spartan cost constraints.

When Berwick et al spoke of a “population” for which an integrator could be held accountable, they did not limit the concept to those enrolled in a health plan; indeed, they suggested that a “registry that tracks a defined group of people over time would create a ‘population’ for the purposes of the Triple Aim,” giving as an example “all of the diabetics in Massachusetts.” A registry is an appropriate entity around which a more inclusive alternative to integration by a health plan could be structured.

The population with diabetes is an appropriate starting place for conceptualizing this alternative because anecdotal evidence suggests that many consumers with diabetes have felt forced to funnel scarce healthcare dollars directly to the day-to-day expenses of managing their illness,

 According to Bloomberg, pharmaceutical manufacturer Sanofi has said that about 10% of patients purchase its insulin in cash.

 An analysis of National Health and Nutrition Examination Survey data finds that 10% of nonelderly participants with diabetes remained uninsured after ACA implementation,

 which is roughly the proportion of other nonelderly Americans. This could suggest that individuals with diabetes do not perceive any more value in insurance offerings than do average Americans.

It is important to note also that undocumented immigrants and those below the poverty line in non—Medicaid expansion states cannot access ACA insurance. Further, about a quarter of low-income adults experience change or gaps in insurance coverage annually due to “churning.”

 For these populations, an alternative integrator is a must.

Our goal should be to provide integrated chronic care to both the uninsured and underinsured, with a cost below the average deductible amount for single coverage in employer-sponsored insurance ($1350). I propose a collaboration among stakeholders outside the insurance sector that could include physicians; nonprofit hospitals that are required to undertake “community health improvement” activities to meet community benefit requirements; philanthropies, entrepreneurs, or existing businesses that have historically been content to operate with low margins; and, ideally, state governments, which purchase care for employees and Medicaid recipients and also are traditional protectors of public health (

 Imagine that a consortium of such actors maintained an aggregated registry of patients with diabetes, which, like other chronic disease registries, tracked whether patients are current on evidence-based care, but also paired it with a bundle of all the services (eg, care coordination support) and medications necessary to manage the disease for this population. Critically, the entity would acquire or manufacture and then distribute medications to patients, rather than leaving them on their own to fill prescriptions at the mercy of for-profit pharmaceutical companies. This registry and treatment bundle would represent Christensen and colleagues’ ideal of a focused “value-adding process” business model addressing a defined problem in a straightforward, consistent manner at a fixed price.

 That price should be one that most Americans can afford to pay out of pocket—the cost parameters envisioned by the researchers who discovered insulin and acted to make it available on a not-for-profit basis in 1923. This would recognize the reality that many people with diabetes are uninsured and that the prospect of spreading cost across the healthy population through insurance risk pooling encourages higher prices.

The consortium might begin by placing uninsured and underinsured patients on regimens of low-cost, non—patent-protected “Walmart insulin”

 while approval for and production of biosimilar insulins on the not-for-profit, cooperative Civica Rx model is ramped up. The ultimate objective would be to provide state-of-the-art care at a reasonable cost, and the spread of alternative means of providing insulin would surely bring down the price of branded insulin products. Like Walmart, Amazon, and other pioneers of squeezing costs out of the supply chain, the consortium would permit consumers to obtain a product that costs a few dollars to make—such as insulin

—at a price near that cost. These entities would accept, but not be dependent upon, support from traditional payers.

A preferred feature of the Registry+Bundle would be state-subsidized chronic care for low-income Americans, who receive inadequate support or, in the case of those under the poverty line in non—Medicaid expansion states, no support in managing their condition. Setting a threshold for free chronic care at 200% FPL would address the perverse irony that in many places, uninsured patients with income less than that are entitled to free hospital care for complications of their disease.

Not every disease would be amenable to this approach—some will always be so expensive that their costs must be socialized broadly. Further, this approach is not intended to preclude insurance coverage of treatments that depart from routine management. Finally, wide adoption of this approach would have consequences for drug innovation, which would have to be addressed.

High-deductible health insurance is designed more as a back-end safeguard against catastrophic events than as front-end assistance with ongoing costs of chronic disease care. The comfortable middle class sees this insurance as crucial for protecting their assets, and by guaranteeing coverage to those with preexisting conditions, the ACA ended “job lock.” But for people living paycheck to paycheck, more immediate medical expenses may be a priority. We should not overlook opportunities to address chronic disease care outside the insurance sphere. CMS is considering a Geographic Population-Based Payment model option, which contemplates some entity assuming responsibility for the total cost of care for all Medicare beneficiaries in a given region, but an equally ambitious approach to population health would be to establish a regional structure to assure chronic disease care regardless of insurance status.

Stakeholders and policy makers should acknowledge that some of the most important care in the United States is self-financed. But it does not follow that such care cannot be integrated within the meaning of the Triple Aim, only that a more creative method of organizing care is required.

 Dialysis Patient Citizens, Washington, DC.

 Concept and design; analysis and interpretation of data; and drafting of the manuscript.

 Jackson Williams, JD, Dialysis Patient Citizens, 1012 14th St NW, Ste 1475, Washington, DC 20005. Email: Jwilli28@hotmail.com.

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3. Cubanski J, Damico A, Neuman T, Jacobson G. Sources of supplemental coverage among Medicare beneficiaries in 2016. Kaiser Family Foundation website. kff.org/medicare/issue-brief/sources-of-supplemental-coverage-among-medicare-beneficiaries-in-2016. Published November 28, 2018. Accessed April 12, 2019.

4. An overview of the Medicare Part D prescription drug benefit. Kaiser Family Foundation website. kff.org/medicare/fact-sheet/an-overview-of-the-medicare-part-d-prescription-drug-benefit. Published October 12, 2018. Accessed April 12, 2019.

5. Collins SR, Bhupal HK, Doty MM. Health insurance coverage eight years after the ACA: fewer uninsured Americans and shorter coverage gaps, but more underinsured. The Commonwealth Fund website. commonwealthfund.org/publications/issue-briefs/2019/feb/health-insurance-coverage-eight-years-after-aca. Published February 7, 2019. Accessed April 12, 2019.

6. 2018 Employer Health Benefits Survey. Kaiser Family Foundation website. kff.org/health-costs/report/2018-employer-health-benefits-survey. Published October 3, 2018. Accessed April 12, 2019.

. January 7, 2019. washingtonpost.com/news/magazine/wp/2019/01/07/feature/insulin-is-a-lifesaving-drug-but-it-has-become-intolerably-expensive-and-the-consequences-can-be-tragic. Accessed April 12, 2019.

8. Johnson K, Pear R. Seeking cheaper health insurance, Idaho bucks Affordable Care Act. 

. March 9, 2018. nytimes.com/2018/03/09/us/idaho-health-insurance.html. Accessed April 12, 2019.

9. Goodnough A. Success of Kentucky’s health plan comes with new obstacles. 

. December 29, 2014. nytimes.com/2014/12/30/us/kentucky-health-plan-is-flooded-with-the-poorest-and-sickest.html. Accessed April 12, 2019.

10. Koons C, Edney A. Drugmakers discount insulin, and lawmakers ask what took so long. Bloomberg website. bloomberg.com/news/articles/2019-04-10/sanofi-widens-insulin-discounts-ahead-of-congressional-hearing. Published April 10, 2019. Accessed April 12, 2019.

11. Myerson R, Romley J, Peters A, Goldman D. Health insurance coverage for people with diabetes before and after the Affordable Care Act: nationally representative data from 2005-2016. Poster presented at: AcademyHealth 2019 Annual Research Meeting; June 2-4, 2019; Washington, DC.

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The Innovator’s Prescription: A Disruptive Solution for Health Care

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For many Americans, chronic care is not integrated or effectively managed by insurers. Another entity should be designated to bundle this care inexpensively.

The Case for Decoupling Chronic Disease Care From Insurance and Restructuring How We Pay for It

Based on findings from a 2-state study, the authors articulate research-informed action steps for promoting state government roles in the pursuit of a culture of health (COH). The action steps are meant to generate dialogue about what can reasonably be expected from state governments when thinking about health more broadly.

 A 2-state study based on secondary document review and semistructured key informant interviews.

 Archival data were collected and synthesized to create in-depth policy summaries that provided background information and guided the development of semistructured interview protocols. Interviews with state-level stakeholders were recorded and transcribed. Research team members reviewed the transcribed data for major thematic categories and then drafted thematic memos that identified categories that facilitated (or hindered) the state’s movement toward a COH, the findings from which were discussed among all authors. Based on the exploratory findings, the authors then articulated a set of research-informed action steps for engaging state governments in pursuing a COH.

 The state governments of Oregon and Pennsylvania differ in their approaches to and success in ensuring the health of their citizens, and both face similar challenges in their efforts.

 A COH may be easy to conceptualize, but it is by no means easy to accomplish. States face many barriers in pursuing a COH. By understanding both barriers and facilitators of developing a COH and arming themselves with research-informed action steps, those both inside and outside of state government will be better prepared to pursue a COH through state engagement.

The American Journal of Accountable Care. 2019;7(3):4-11

Five years ago, the Robert Wood Johnson Foundation (RWJF) challenged the nation to build a culture of health (COH) to improve health, well-being, and equity.

 To guide this shift from a medical care focus to a broader conceptualization of health improvement and reform, RWJF identified 4 interdependent action areas: (1) making health a shared value; (2) fostering cross-sector collaboration to improve well-being; (3) creating healthier, more equitable communities; and (4) strengthening integration of health services and systems. The COH model is not intended to dictate a specific pathway for action but instead to identify the necessary components of effective action.

Moving toward RWJF’s vision requires engagement, commitment, and a clear fiscal imperative from multiple sectors of society, including multiple levels of government (eg, federal, state, county, municipal, tribal). Although conversations about building a COH are gaining momentum nationally,

 limited studies have been published to date that specifically address the roles or motivations (or lack thereof) of state governments in pursuing a COH.

 More frequently, the challenge of state-level political gridlock has been noted as a barrier to the innovation and change needed to support a COH.

In this paper we summarize findings from a 2-state study (Oregon and Pennsylvania) in which we assessed state government action in the pursuit of a COH. Although they differ in population size and geographic location in the country, Oregon and Pennsylvania have a similar mixture of rural and urban populations, with the US Census Bureau classifying 19% of Oregon’s 3.8 million residents and 21% of Pennsylvania’s 12.7 million residents as rural.

 We combined extant knowledge of these 2 states from the evaluation of RWJF’s recently concluded Aligning Forces for Quality (AF4Q) initiative with new documentation, interview data, and author insights in order to arrive at our conclusions, which we present here as research-informed action steps for promoting state government roles in the pursuit of a COH.

Archival data were collected and synthesized to create in-depth policy summaries that provided background information and guided the development of semistructured key informant interview protocols. Archival data included materials collected and produced as part of the evaluation of the AF4Q initiative

; websites; state health assessments; state health improvement plans; State Innovation Models (SIM) grant materials; state government and departmental organizational structures, budgets, and strategic plans; and materials on nongovernmental state-level organizations working in social determinants of health (SDOH).

The summaries provided a general overview of (1) the political climate of each state government, including its recent political history; (2) state-level priorities, including each governor’s priorities and priorities related to health, healthcare, and SDOH; and (3) where evidence existed of multiple state agencies working together to address COH-related issues. Additionally, the summaries raised issues to explore during key informant interviews.

Semistructured interviews, which were tailored to each respondent, probed if and how major state-level agencies address COH-related issues, the extent of interagency governmental collaboration, and state collaborations with nonstate actors (eg, regional and state-level nonprofit organizations, local governments). Potential respondents were selected based on their roles or were suggested by government employees. Respondents served as deputy secretaries, advisors, directors, coordinators, or policy analysts in state government or held senior leadership positions in nongovernmental organizations. In total, 17 interviews were conducted (8 in Pennsylvania, 9 in Oregon). All interviews were recorded and transcribed.

Several members of the research team reviewed the transcribed data for major thematic categories. Memos were written for each transcript that grouped data by the identified themes. All memos were reviewed by a second analyst and thematic categories were refined based on new insights. Once the interview memos were completed and reviewed, preliminary insights and findings were written and disseminated to the research team for deliberation, which resulted in a high-level evaluation of each state’s undertaking in the 4 COH action areas, from which the authors developed research-informed action steps for promoting state government roles in the pursuit of a COH.

The results from our analysis are as follows and organized by RWJF’s 4 COH action areas.

Action Area 1: Making Health a Shared Value

As part of this action area, RWJF challenges individuals, families, and communities to work to achieve and maintain health. Specifically, we examined each state’s approach to Medicaid expansion and reforms related to the integration of medical care with interventions that address patient needs that are outside of the traditional scope of medicine, such as behavioral health and SDOH.

In Oregon, universal healthcare coverage has been a legislative goal since the late 1980s,

 and “healthy and safe communities” is among Governor Kate Brown’s 4 main priorities.

 In its most comprehensive health reform effort, Oregon passed bipartisan legislation in 2012 that restructured its Medicaid program, the Oregon Health Plan (OHP), by creating coordinated care organizations (CCOs), local entities that are responsible for providing and integrating healthcare, both physical and behavioral, for OHP beneficiaries. This work was supported by a Section 1115 Medicaid waiver that called for the reduction of per capita spending on healthcare by 2 percentage points in exchange for $1.9 billion in federal funds. This enabled a significant expansion of the Medicaid program and full-risk capitated contracting for the entire covered population.

Since 2012, CCOs have saved an estimated $2.2 billion, reduced unnecessary emergency department visits, and improved preventive care for children and adults.

 Multiple respondents expressed their belief that CCOs are playing a

catalytic role in addressing SDOH across the state. In 2018, Oregon enacted Senate Bill 558, commonly referred to as Cover All Kids, which expanded OHP to include eligible children and teens, regardless of immigration status. All other eligibility criteria, such as household income, remain the same.

Conversely, Pennsylvania’s approach to health reform appears to be fragmented, with no unifying goal or strategy. Unlike Brown, Pennsylvania Governor Tom Wolf does not specifically list health among his top priorities, which are defined as “jobs that pay, schools that teach, and government that works”; however, “improve health care” is listed as part of the governor’s action plan.

 Additionally, Pennsylvania’s legislature has been historically split on many health policy reform issues.

 Although Pennsylvania expanded Medicaid in 2015, the mechanism by which that expansion took place changed as a result of the 2014 gubernatorial election. The Section 1115 Medicaid waiver approved under former Governor Tom Corbett was withdrawn by the newly elected Wolf 1 month after it became effective in January 2015. Wolf then implemented a more traditional Medicaid managed care program, HealthChoices, in the summer of 2015. Since implementation began, the state has encountered multiple legal battles regarding the bidding process for managed care organizations to provide physical health services. In April 2018, a state court ruled in favor of the insurers, finding that the state violated its procurement code.

 Early data on HealthChoices show increases in enrollment, health status, utilization, and expenditures, as well as a decrease in hospital uncompensated care; there is no evidence of other cost or quality impacts to date.

 Most recently (July 2019), Wolf signed legislation that creates a state-based health insurance exchange, which is expected to be operational as early as January 2021. The new exchange includes a reinsurance fund that will directly cover some of the healthcare costs for high-cost individuals, which will reduce the premiums for others insured through it.

One area where Pennsylvania is attempting to reform the health system is rural healthcare. In 2015 Pennsylvania received a SIM grant from CMS to transform rural hospitals to be more effective and efficient in their care delivery (described further under Action Area 4). However, this initiative is more of an artifact of the state responding to a specific call for proposals and not a part of a comprehensive strategy.

Action Area 2: Fostering Cross-Sector Collaboration 

Under this action area, RWJF is interested in the number and quality of partnerships, investments in collaboration, and creating incentives and methods to encourage ongoing collaboration. Within state governments, fostering cross-sector collaboration can be accomplished by either promoting interagency collaboration or restructuring governmental agencies in a way that brings complementary services under the same administrative umbrella. We hypothesize that state government support of cross-sector collaboration, either directly through allocation of monies or indirectly through organizational structure and leadership priorities, affects both the robustness of collaborative efforts and the ultimate success of the work. We found scant evidence that either state supports interagency collaboration through the direct allocation of financial resources. However, both states have attempted to facilitate cross-sector collaboration by reorganizing state-level agencies.

In 2009, the Oregon legislature passed legislation that incorporated the departments of Public Health and Addiction and Mental Health, which were previously housed in the Department of Human Services, into a new agency called the Oregon Health Authority (OHA).

After nearly a decade in existence, the Oregon Health Policy Board approved reorganizing OHA by realigning Medicaid operations and policy as a distinct section in the Health Systems Division, thereby realigning the behavioral health programs that are currently spread among the Health Systems, Health Policy, and Public Health divisions. The changes were made to increase accountability in Medicaid operations and elevate the behavioral health program.

 Pennsylvania has struggled with passing legislation to reorganize state agencies. As part of his 2017 budget, Wolf proposed combining 4 agencies—the departments of Health, Aging, Drug and Alcohol Programs, and Human Services&mdash;into a single department. The proposal was met with opposition from advocacy groups and legislators and never implemented.

 In his 2018-2019 budget proposal, the governor proposed the unification of the departments of Health and Human Services,

 but the proposed merger did not make it into the final appropriations bill.

Beyond formal reorganizations, it was noted that when interagency collaboration took place, the efforts in both states did not always involve people at the right level, signaling a lack of perceived value by leadership. Speaking about an interagency work group, one respondent stated, “I’m not sure that the people around the table are [at] a high enough level to be able to make some significant decisions. I think they’re [at a] high enough level to make smaller decisions.” Another respondent frustrated with his interagency collaboration experience noted, “I’ve been involved with the [name redacted] for 10 years and I feel like we never get anywhere.”

Action Area 3: Creating Healthier, More Equitable Communities

Under this action area, RWJF is focused on addressing environmental and policy barriers that prohibit people from living in good health. Both Oregon and Pennsylvania have state-level offices that focus on health disparities and inequities, operate multistakeholder groups to address health disparities and inequities, and grapple with creating healthier, more equitable communities. Oregon’s Office of Equity and Inclusion—formerly known as the Office of Multicultural Health Services&mdash;was created in 1993, whereas Pennsylvania’s Office of Health Equity (OHE) was established in 2007. Beyond racial and socioeconomic inequities, each state wrestles with geography-based inequities, with urban versus rural inequality being a common theme.

Oregon established 3 Regional Health Equity Coalitions (RHECs) in 2011 and added 3 more in 2014 using SIM grant funds. RHECs are tasked with defining their region, priority populations, and focal issues and “power mapping” to figure out the best way to move toward health equity. Several RHECs work closely with their local CCOs to influence policy and system changes. The increased use of medical interpreters was cited as an example of positive change that resulted from a RHEC working with its local CCO.

A unique and, at times, controversial feature of RHECs is that they were designed to focus on communities of color.

 RHECs face pushback from people at all levels of government and across agencies, including within OHA, related to their focus on communities of color versus low-income communities and the speed at which they accomplish results. According to one respondent, the variation in levels of buy-in “usually correlates with more urban versus rural or frontier areas” and is amplified because many Oregonians view the state as “a bunch of white people.” Limited resources will likely prohibit the expansion of RHECs.

At the state level, the Pennsylvania Interagency Health Equity Team (PIHET), made up of 13 agencies and staffed by OHE, began meeting in 2017. PIHET does not receive funds from the governor’s office or participating agencies. PIHET maintains an apolitical stance, framing its work around vulnerable communities—most of which are rural&mdash;versus racial and ethnic disparities. A challenge to PIHET’s strategic planning is that “you have to look at things in 4-year chunks” because changes in administration can have implications for staff, project goals, and funding.

On a regional level, the North Philadelphia Health Enterprise Zone (HEZ) launched in 2016 through a partnership among the departments of Human Services and Education, the City of Philadelphia, and area hospitals, universities, and community partners. Philadelphia is home to the highest number of Medicaid recipients in Pennsylvania, with 13% of the state’s Medicaid recipients residing in North Philadelphia, where nearly a third of all residents live in poverty. The HEZ focuses on 4 key socioeconomic factors: health, community, education, and technology. In 2018, the HEZ received $11.8 million in financial support from the state.

Although monies to address health disparities and inequities appear to be tight in both states, lack of funding is just one of many challenges and not necessarily the most critical one. According to one respondent, “The underlying challenge in all of this is really how do you support the community, how do you support the individuals in the community in terms of economic development, education, job creation, health literacy, and really getting your arms around poverty and the effects of poverty. If you were to ask me to rank the challenges, I don’t think funding would be on the top of my list.”

Action Area 4: Strengthening Health Service/System Integration

As part of this action area, RWJF focuses on integrating health services and other systems in an effort to provide comprehensive and high-value care. Strengthening the integration of health services and other systems is intentionally part of Oregon’s health transformation plan. As part of its Section 1115 Medicaid demonstration, Oregon developed a theory of action model that describes OHA and CCO actions that are associated with 6 transformation levers. Specifically, in relation to lever 3, which focuses on integrating physical, behavioral, and oral healthcare, OHA sets CCO contractual requirements for integration, community health assessment, and quality improvement projects. Additionally, CCOs are required to take steps to integrate and transform care, engage with the community, and complete quality improvement projects.

As the first 5-year contracts for CCOs came to an end, OHA solicited input from Oregonians and commissioned an independent analysis of Oregon’s 2012-2017 Medicaid waiver.

The next phase of Oregon’s health system transformation has been dubbed CCO 2.0. As part of the transformation, Brown asked the Oregon Health Policy Board (OHPB) to obtain input and provide more specific recommendations to the OHA on “how the state and CCOs can further transform health care to continue to improve health outcomes, increase value, and hold down costs.” Specifically, the OHPB was challenged to focus on 4 areas: (1) SDOH and equity, including building stronger partnerships between the healthcare system and other social systems; (2) increasing value-based payments; (3) improving the behavioral health system; and (4) maintaining sustainable cost growth.

In contrast to Oregon’s use of CCOs, the Pennsylvania Medicaid program is broken into 3 components: physical health, behavioral health, and community choices. Components are managed by different entities within the Department of Human Services (ie, Office of Medical Assistance Programs, Office of Mental Health and Substance Abuse Services, and Office of Long-Term Living) as well as the Department of Aging, creating a patchwork approach to providing services to beneficiaries.

Perhaps the best example of an attempt to integrate health services and systems in Pennsylvania is the state’s Rural Health Model. This CMS grant, which is being administered by the Department of Health, is intended to provide rural hospitals with an opportunity to transition from fee-for-service, volume-based reimbursement to a multipayer global budget that is intended to provide predictable funding to maintain crucial health services, improve population health outcomes, increase quality of care, and lower costs.

 As part of the program, hospitals will lead the development of transformation plans with input from community-based organizations and local public health departments, then submit their plans for approval. Population health, including SDOH and opioid abuse, is predicted to be a critical part of each plan.

Action Steps for Engaging State Governments to Achieve a COH 

We used our examination of what Oregon and Pennsylvania were undertaking in each of the 4 COH action areas to articulate 5 action steps to strengthen states’ roles in the pursuit of a COH. Given the small and purposive sample selection, the findings are exploratory and are not generalizable to all states’ efforts to improve or maintain the health of their populations. Instead, the action steps that follow are meant to engender discussion and to guide action until more research is conducted on states’ efforts.

Understand economic drivers and special interests. 

Both Oregon and Pennsylvania appear to value the idea of integration and have (with limited success) attempted to take steps toward the integration of health services/systems, and in some cases (eg, CCOs, the Pennsylvania Rural Health Model) require it. However, healthcare services are “big business,” consuming almost 20 cents of every dollar spent in the economy.

 Healthcare-related programs, such as Medicaid and the provision of health benefits for state employees and retirees, have for many years consumed the lion’s share of state budgets.

 Moreover, the healthcare sector is the largest employer in the United States,

 and healthcare jobs are projected to grow faster than jobs in the general economy.

 The many special interests associated with healthcare include health insurance companies, hospitals and health systems, pharmaceutical and device manufacturers, and the associated businesses that exist because of a lack of integration, such as behavioral health carve-outs and disease care management programs. These special interests, which may feel threatened when states work to implement RWJF’s broad vision of a COH, are vocal when it comes to changes in their respective segments of the healthcare industry, spending more than $711 million a year on lobbying

 to protect their interests and to build strong relationships with the legislators and executive branch leadership who ultimately make the decisions regarding program integration and consolidation. In order to mitigate the influence of special interests, it is important for stakeholders pursuing a COH to identify special interests that may be affected by decisions and to be armed with information, including statistics and budget forecasts that illustrate the impact on the state and its citizens of a broad-based COH approach, as well as the opportunity costs of sticking with a more narrowly defined siloed status quo approach (described later).

Calculate the “opportunity costs” of not achieving a COH. 

Although our 2-state comparison found that Oregon and Pennsylvania are both pursuing efforts in the COH framework, Oregon has a more direct statewide vision related to health, and its efforts appear to be more coordinated and aligned than Pennsylvania’s. To motivate states toward a COH framework, it is important to provide a clear vision of what would look different if a COH was achieved, including health, welfare, and economic consequences. Providing such a vision will help to frame what economists call the “opportunity costs” of not achieving the proposed change, making it more difficult for various interests to oppose such change because to do so would be effectively making a statement that these opportunity costs are valued differently—or not valued at the same level as by those proposing change.

Based on findings from a 2-state exploratory study, the authors articulate research-informed action steps for promoting state government roles in the pursuit of a culture of health.

September 2019

The Cost of Learning: Participating in APMs Despite Projected Financial Losses

Building Trust Can Improve American Healthcare

The Case for Decoupling Chronic Disease Care From Insurance and Restructuring How We Pay for It

Achieving a Culture of Health: Steps for Engaging State Government

Current Value-Based Care Models Need Greater Emphasis on Specialty Care

Implementation Variation in Natural Experiments of State Health Policy Initiatives