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The Risk Conundrum in Healthcare

Evidence-Based OncologyApril 2018
Volume 24
Issue 5

Risk has very different meanings depending on whether one views it from a clinical or financial perspective.

Risk. This 4-letter word is problematic, but not for the usual reasons. In healthcare, the term, and more importantly the concept, is immensely important. Risk has very different meanings depending on whether one views it from a clinical or financial perspective. Clinicians deal with clinical risk analysis multiple times each day as we care for our sickest patients. But so too do healthcare policy experts and healthcare financial leaders, although how they use this terminology and view the concepts behind it is very different from how clinician providers do so. Herein lies a problem, and although it is not a new problem, it has been brought into focus recently: Policy makers are trying to engage clinicians in the transformation of the Merit-based Incentive Payment System (MIPS) into an advanced alternative payment model (APM) under the Quality Payment Program (QPP), which was formerly known as the Medicare Access and CHIP Reauthorization Act (MACRA).1

This article has 2 learning objectives:

  1. To offer clinically and financially oriented readers a better understanding of how clinicians and healthcare policy/finance experts distinctly, and differently, define the concept of risk.
  2. To highlight how issues related to the responsibility of controlling healthcare costs might also serve as an impediment to finding common ground on care- for-value programs.

The advent of MACRA has forced policymakers to require that physicians accept contracts that carry 2-sided financial risk in order to qualify as an advanced APM. Many physicians have been reluctant to enter into these agreements. Part of that reluctance may be related to physicians’ lack of understanding of the nuances of financial risk. But a more important problem may be whether physicians should be held responsible for the total cost of care.

Clinically, the concepts of risk and risk stratification are very important factors in how we triage and care for our patients. The same terminology is used quite differently when thought of in financial terms, however. As long as those 2 worlds or universes don’t overlap there is no real problem. But as mentioned earlier, more and more value-based care agreements include

financial risk terminology. When financial documents speak of risk, and these documents are read by clinicians, who are trained to understand clinical risk, they generally do not clearly differen- tiate the meaning of risk in this nonclinical usage. Because cost of care is then linked to financial risk, the misunderstanding of both issues leads to reluctance by physicians to collaborate. It is important to point out that this reluctance is not due to any lack of agreement related to the importance of value-related care but rather to confusion around the terminology and concepts under- pinning risk and cost of care.

Therefore, in this article, we will describe risk from both a clinical and financial point of view. You, the reader, are likely to be tasked with being the liaison between clinical leaders and financial leaders as they craft agreements that support transformation of care based on the quadruple aim, which builds on the strength and success of the triple aim by involving physicians in the design, development, and rollout of care improvement initiatives.2 This continued involvement of the frontline physicians and nurses increases the likelihood that a given quality improvement initiative will be successful once deployed. Some readers may think of the quadruple aim as a measure intended to lessen burnout. I think that occurs secondary to physicians and nurses feeling valued—feeling that they have been included in the design of a care improvement initiative that relies on their input and expertise and offers real clinical value for their patients.

Risk Scores

This article does not try to serve as a primer on risk scores. To better understand the differences, I will provide examples of both clinical and financial risk systems. Table 1 lists some commonly used clinical risk scoring systems. All physicians, nurses, pharmacists, care managers, residents, and students use these daily in both the inpatient and outpatient settings. It is unlikely that nonclinical healthcare leaders are familiar with most of these. Table 2 describes 2 risk scores frequently used by health policy leaders:

  • Hierarchical Condition Categories (HCCs), developed by CMS, are used with Medicare Advantage programs and CMS initiatives like the Comprehensive Primary Care Plus (CPC+) initiative.3 They attempt to classify patients according to disease severity.
  • Chronic Conditions Hierarchical Groups (CCHGs) is another disease severity model, developed by Milliman.

Both the HCC and CCHG models use information from claims data in a retrospective analysis, while the clinical risk scoring systems use patient history, physical exam, laboratory, radiologic, intensive care unit and surgery monitoring data as real-time clinical measures. I encourage you to acquaint yourself with these various methodologies in order to understand the differences between clinical and financial risk models.

Both systems of risk measures are very important, yet they serve very different functions. The clinical models in Table 1 help the caregiver identify patients “at risk” for certain clinical problems and provide the caregiver the knowledge and flexibility to tailor the care plan, in real time, to minimize those occurrences. The systems in Table 2 offer a patient snapshot at one point in time, usually from a retrospective point of view, that helps the admin- istrative leadership predict the need and intensity of future care.

In my opinion, approaching the issue of risk based on patient care principles, and not issues solely related to cost or savings, could yield some common ground and would be more meaningful for caregivers.

Determinants of Risk

Clinical risk analysis helps a caregiver stratify patients based on disease severity to better design each patient’s individual care plan, which increases the likelihood of their responding to various clinical interventions. Clinicians understand the problems of financial waste and duplicative testing and the benefits of evidence-based guidelines as we develop and improve our patients’ care plans. We understand how those factors impact costs for patients and their families. And what nonclinicians may not realize is that caregivers also understand that the high cost of care alone, or as deductibles or co-pays, often preclude the successful enactment of carefully designed personal plans of care because the patient cannot afford the medicine, the test, the surgery, or whatever therapeutic intervention is suggested. Over the past 8 years an initiative adopted by many physicians that incorporates concerns related to waste and inappropriate utilization of healthcare resources is the Choosing Wisely campaign.4 This initiative started out as a collaboration of a dozen physician healthcare organizations and has now grown to hundreds that share guidelines and best practices in an effort to improve patient care.

Certain ongoing care transformation programs from CMS—including CPC+ and the Oncology Care Model—incorporate cost into their clinical models. Unfortunately, those 2 programs presently involve only a small number of primary care and oncologic practices in the United States. However, as those programs continue and expected gains ensue, we will be able to share their processes of care and successful outcomes with other physicians.

Other care improvement initiatives are currently under way to benefit our patients and their families by improving clinical outcomes of care, including the CMS-initiated Accountable Health Communities (AHC) program5,6 (Table 3). Under AHC, 32 sites in the country will be working to operationalize concepts of care based on social determinants of health (SDH). This is germane to our present discussion because while physicians and nurses have long known of the importance of SDH, they did not take responsibility for including those challenges in their care plans because no processes existed that would allow for them to be improved. The frustrating reality, repeated over and over, was that we could improve our patients’ conditions while they were in our hospitals but upon returning to where they lived, their conditions often worsened, which resulted in their being seen again in our offices or in emergency departments or hospitals. Or, even more sadly, they would succumb to their underlying conditions for reasons that most of us would describe as nonmedical. Now, more and more providers understand that SDH might fall into the care plans as well. So we are, in effect, asking those 32 sites in the AHC grant to demonstrate to the rest of us how best to overcome these healthcare barriers. And so too it may be with issues of cost.7 Most physicians and nurses, outside the above-mentioned programs, do not consider cost and utilization aspects of care as fundamental issues that they are able to control. But this could change. Just like SDH are now being viewed as part of the patient’s care plan, so too might costs of care and utilization. This could happen if we are able to provide physicians and nurses with tools that would help them incorporate these aspects of healthcare into their patients’ plans of care.8 Once that occurs, then collabora- tively designing APMs that include 2-sided financial risk models may be more likely to succeed.

Changing the Terminology

Most clinicians do not understand the broad concept of “1- sided” versus “2-sided risk”: that terminology is very different from concepts in the “clinical risk” realm. One option might be that healthcare policy/finance experts move away from the use of the terms 1- sided and 2-sided risk altogether and adopt other terminology to describe where cost and utilization fit into value-based care agreements. If we truly want to catalyze the move- ment of practices from a MIPS model to that of advanced APMs, we must accept that concepts and terminologies may be hindering our efforts.

But beyond clinicians and financial leaders not being on the same page on concepts of “risk,” a potentially greater problem is identifying who is ultimately responsible for the problem of the rising cost of care in our country.

One school of thought suggests that doctors should be more willing to accept the responsibility for that high cost of care. A phrase sometimes used by these proponents is, “Only God can make a tree and only doctors can order a test.” This overly simplistic idea may have some merit when viewing physicians as some type of global group; however, it holds little real-life value when thinking in terms of individual physicians or practices. According to this school of thought, physicians should accept the responsibility for the high cost of healthcare. One way to have a positive impact on the cost crisis would be for physicians to enter into finan- cial agreements where they are asked to assume “financial risk” for the total cost of care; terminology such as “2-sided risk” or “upside/downside risk” are often used in these agreements. It should not be surprising, though, that physicians are reluctant to partner in these agreements because physicians:

  1. May not agree that they are able to control the costs attributed to them
  2. Do not understand the meaning of risk in these settings

Where Do We Go from Here?

  1. Reserve the use of the term “risk” to clinical care only.
  2. Include caregivers early in the design phase of care improvement initiatives and provider-payer programs. In other words, design programs using the “Quadruple Aim” approach.
  3. Convene providers, payers, patients, families, pharmaceutical companies, and information technology companies in the design of care improvement projects, following the lead of the CMS multi-payer care transformation models. One of the tasks of this group would be that of discussing the many aspects related to health- care costs and how best to lower those costs.

The answer to the question “Who is responsible for the high cost of care in this country?” may surprisingly be an easy one. You are. I am. We are. The responsibility, or blame, does not reside with any single component of our healthcare industry, and if we each act as representative only of one component it will be difficult to change the trending direction of the cost curve. However, we can take our cue from what providers are trying to do in the clinical sector—expand the concept of team-based care to better care for patients and families wherever they are, whether in the hospital, in our offices, in nursing homes, at the workplace, or (the most important “long- term care facility”) their homes. We should expand our concept of team in terms of healthcare policy. That expanded collective might be able to metaphorically get their arms around the multiple reasons why healthcare costs are so high. The blame does not rest only with the physicians, the hospitals, the pharmaceutical industry, the device makers, the payers, the patients or their families: The blame rests on all of the above.

In summary, we need to expand our concept of the healthcare policy team. That group should collaborate on the design of clinical care improve- ment initiatives that incorporate issues of clinical risk and ways to blunt the rising healthcare cost curve. We should avoid the use of the term “risk” in the agreements unless we are speaking to issues of clinical risk. We should be able to hold caregivers responsible for the appropriate use of healthcare resources as a part of patients’ care plans, but it is unfair to hold them responsible for total cost of care. That responsibility resides with the above-mentioned healthcare policy collaborative. Agreements that are part of the MACRA/QPP or other provider-payer agreements should reflect that shared responsibility.

Author Information

Peter Aran, MD, is the incoming dean of clinical affairs and chief medical officer at the University of Oklahoma School of Community Medicine in Tulsa. He was previously medical director for Population Health Management in the payer sector.


  1. Quality Payment Program. CMS website. qpp.cms.gov. Accessed February 23, 2018.
  2. Aran P. To achieve a healthcare homerun, we need to tackle burnout. AthenaHealth website. athenahealth.com/insight/ to-achieve-a-healthcare-home-run-we-need-to-tackle-burnout. Published August 24, 2016. Accessed February 23, 2018.
  3. Sessums LL, McHugh SJ, Rajkumar R. Medicare’s vision for advanced primary care: new directions for care delivery and payment. JAMA. 2016;315(24):2665-2666. doi: 10:1001/ JAMA.2016.4472.
  4. Choosing Wisely. American Academy of Family Physicians website. aafp.org/about/initiatives/choosing-wisely.html. Accessed February 23, 2018.
  5. Accountable Health Communities Model. CMS website. innovation. cms.gov/initiatives/ahcm. Updated January 8, 2018. Accessed February 23, 2018.
  6. Alley DE, Asomugha CN, Conway PH, Sanghavi DM. Account- able health communities—addressing social needs through Medicare and Medicaid. N Engl J Med. 2016;374(1):8-11. doi: 10.1056/NEJMp1512532.
  7. Buntin MB, Ayanian JZ. Social risk factors and equity in Medicare payment. N Engl J Med. 2017;376(6):507-510. doi: 10.1056/NEJMp1700081.
  8. Billioux A, Verlander K, Anthony S, Alley D. Standardized screening for health-related social needs in clinical settings: the Accountable Health Communities screening tool. National Academy of Medicine website. nam.edu/standardized-screening-for-health-related-social-needs-in-clinical-settings-the-accountable-health-communities-screening-tool/. Published May 30, 2017. Accessed February 23, 2018.
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