Dr Stephen Ondra: Consistency Is Driving Payment Reform Momentum

Public and private payers all heading in the same direction in regards to payment reform is sending a consistent message to providers and creating alignment in healthcare, said Stephen Ondra, MD, senior vice president and enterprise chief medical officer at Health Care Service Corporation.

During the America’s Health Insurance Plans (AHIP) National Health Policy Conference in Washington, DC, Ondra sat on a panel that discussed alternative payment models as a way to improve quality and value of healthcare.

AJMC: What has been the progress of implementing alternative payment models in the US?

SO: The process creating alternative payment model implementation has been one that has been catalyzed by the dynamic around the Affordable Care Act and has gained momentum at an amazing pace over the last year. Just starting with the announcement by CMS, their intent to move to 30% of their contracts in traditional Medicare to alternative payment models by the end of this year—which, by the way, they just announced they are almost a year ahead—and 50% by 2018, the Health Care Transformation Task Force, which we were a founding member of, leveraging on that and saying that we plan to have 75% of our contracts in some form of alternative payment model by 2020. Today we can say that 30% of our contracts, much like Medicare, are in alternative payment models. So we’re on the track.

The important part is that consistent message that the provider segment of the market is getting. You’re seeing public and private payers all heading in the same direction, very similar timelines. You’re seeing the purchasers asking for these models—the big corporate purchasers. And you’re seeing more consumers looking for more affordable markets.

So you’re seeing this amazing alignment of everyone in the payer space heading in the same direction. There is nothing that any other business—in this case the provider community—needs more than that consistency of message: everyone is going to the same place. Everyone is heading for that same flag. And that helps them plan. And I think that’s why you’re seeing this momentum gaining pace.

AJMC: Were you surprised when CMS announced it had reached its 2016 goal of moving to value-based payments so early? Or had you suspected they would?

SO: Because there is a lot of meetings like this [AHIP’s National Health Policy Conference] that people go to, I knew that they were on pace. So I had confidence in them. I think the team at CMS has been dynamic, they’ve been innovative, and so while a lot of people are very skeptical about government, I actually had a lot of faith that they were going to do it.

I was a little surprised they were this early. But I was not surprised they made their mark.

AJMC: CMS and AHIP recently led an effort to define core sets of quality measures. What is the importance of that effort?

SO: That’s really important for a whole number of reasons. The first thing is as we’ve moved to alternative payment models based on value instead of fee-for-service volume, you have to ask yourself: what do you mean by value? So that’s a classic equation of quality over cost. And we can measure that denominator pretty well, you can understand what an episode of cost is. That numerator is a little more difficult to measure and when everyone measures it differently, it’s impossible to make sense of it.

So by getting public and private payers working with providers and consumers and purchasers to say, “we’re going to agree on this one subset of 7 categories of measures and agree that we’re all going to use those,” that creates an opportunity, a starting point, to build consistency of quality measures. So you’re all using the same yardstick. Somebody is not on metric, somebody’s on the English system, somebody is on something else, and what does it all mean?

It’s a start for that consistency that we need to be able to measure that numerator, because if we don’t measure quality in a way that is really relevant clinically what you’re going to do is simply have the move for fee-for-value be a race to the bottom on cost. That’s not something anyone wants. So it’s really important that we define that numerator in ways that are consistent. So we say we want to reduce the variability, we want to refine the ease of collection, we want it to be relevant clinically—everybody has different versions how to say that, but those are the 3 things we all want.

When you have a health problem and want to see someone, it would be nice if you had some way as a consumer to understand what is the quality of the outcome of the experience you are expecting. And then how do I relate that to cost, so I can make an informed decision? Right now as a consumer even if you want to make and informed decision on value, it’s really difficult because you don’t have the information you need. Cost is an important piece, but quality is an equally, arguably more, important piece.

AJMC: Talking about the consumers: giving them the information around quality is one thing, but how much do they understand about what that information is saying?

SO: You’ve probably gathered that consumers are a heterogeneous group of people and so you have people with different backgrounds, different levels of engagement. And it’s incumbent on payers and providers to help consumers understand what this all means.

By shifting from an alternative payment model, it’s actually in our business interest. So number 1, it’s the right thing to do: we have a moral and ethical reason to want to help consumers understand. But that only gets you so far in terms of investment. If you can line up that right thing to do with your business model, you’ll actually get the business investment to do that.

When you start doing population health and shared risk, now helping a consumer understand what is value, what is quality, and how do you make good choice and sort out the different options, when it’s in your business interest to do that, you’re going to make the investments to help the consumer. So that’s a big piece of that: how do we provide the consumer with the information so it’s understandable, educational, how to use it? Things that are actionable. So you’re seeing a lot of investment on both the payer and provider side for consumer engagement, whether it’s mobile apps or things that HSCS has, a benefit value advisor to help people understand their out-of-pocket cost. We have tools that we reach out to help consumers make good decisions for them and it actually, in the end, lines up with everyone’s interests.

AJMC: How does the industry reconcile the fact that maybe the consumer’s idea of value is not the same as maybe the provider’s idea?

SO: I think in the end, it’s not as disparate as one might thing. Because if you ask the average person: how do you decide value on anything that you buy? They’re going to tell you it’s the quality of the product and the cost. Well when we define value, we define it in the same way. And if you talk to providers, they’ll probably define it the same way.

I think the definitions are a little bit less disparate than make them out if you’re talking about the same thing. I think almost all of us define value—different words—trying to get at the same concept. Some of it is going to be explicit and consistent about the terms that we use so people understand that.

You say “I’m going to drive my car,” people may not know what brand, but they probably have got an idea that it’s got 4 wheels and a steering wheel and some brakes.

AJMC: How much do consumers know about the move to value-based care, and how much should they be involved?

SO: I think right now consumers are not as informed as they need to be on the shift to value-based care, but they’re catching on very quickly. Just the fact that you have more co-pay and deductible requirements, consumers are starting to understand that they have a responsibility to engage healthcare in a less dependent mode, that they have responsibility and a real stake in this. They have to make a consumer choice.

In the past, they haven’t even had the ability to do that if they wanted to because they didn’t have the information. So you had this sort of learned helplessness. Now they actually are really being engaged and a sense of “we need you to be involved.”

Here’s an example in the difference of involvement: HCSC through Blue Cross Blue Shield of Illinois has the largest accountable care organization (ACO) in the country, a couple hundred thousand people, and in that we predictably over the last several years have saved 2%-3% over what our preferred provider organization (PPO) would normally cost for that same population. We also have a health maintenance organization (HMO) in Illinois with over 600,000 people, and in that we consistently save year-over-year over the decade, 20% to 25%. Well why the factor of 10 difference in the savings? Part of it is, half of the care that goes on in the ACO, happens outside of the control of the ACO. In the HMO, it’s only 5%. By the way, the ACO, HMO, and PPO have similar patient satisfaction, consumer satisfaction, and quality measures. If anything, the HMO can track a little higher.

So why is that? Why do we have the higher savings? The consumer is engaged. They have a financial responsibility in this too. And so in an ACO, you have payer and provider having a stake in the game, but really not the consumer. In the HMO, you have all 3 participants having a stake in the game. So you see a much more effective value proposition, because everybody engaged has a stake.

I’m not saying we want HMOs everywhere. But we can learn something from that. And how do we adapt benefit designs in products that are contained in an ACO that can engage the consumer in a way that has them take some responsibility? Because in the end, we’re going to be more successful if everybody is engaged.Public and private payers all heading in the same direction in regards to payment reform is sending a consistent message to providers and creating alignment in healthcare, said Stephen Ondra, MD, senior vice president and enterprise chief medical officer at Health Care Service Corporation.

During the America’s Health Insurance Plans (AHIP) National Health Policy Conference in Washington, DC, Ondra sat on a panel that discussed alternative payment models as a way to improve quality and value of healthcare.

AJMC: What has been the progress of implementing alternative payment models in the US?

SO: The process creating alternative payment model implementation has been one that has been catalyzed by the dynamic around the Affordable Care Act and has gained momentum at an amazing pace over the last year. Just starting with the announcement by CMS, their intent to move to 30% of their contracts in traditional Medicare to alternative payment models by the end of this year—which, by the way, they just announced they are almost a year ahead—and 50% by 2018, the Health Care Transformation Task Force, which we were a founding member of, leveraging on that and saying that we plan to have 70% of our contracts in some form of alternative payment model by 2020. Today we can say that 30% of our contracts, much like Medicare, are in alternative payment models. So we’re on the track.

The important part is that consistent message that the provider segment of the market is getting. You’re seeing public and private payers all heading in the same direction, very similar timelines. You’re seeing the purchasers asking for these models—the big corporate purchasers. And you’re seeing more consumers looking for more affordable markets.

So you’re seeing this amazing alignment of everyone in the payer space heading in the same direction. There is nothing that any other business—in this case the provider community—needs more than that consistency of message: everyone is going to the same place. Everyone is heading for that same flag. And that helps them plan. And I think that’s why you’re seeing this momentum gaining pace.

AJMC: Were you surprised when CMS announced it had reached its 2016 goal of moving to value-based payments so early? Or had you suspected they would?

SO: Because there is a lot of meetings like this [AHIP’s National Health Policy Conference] that people go to, I knew that they were on pace. So I had confidence in them. I think the team at CMS has been dynamic, they’ve been innovative, and so while a lot of people are very skeptical about government, I actually had a lot of faith that they were going to do it.

I was a little surprised they were this early. But I was not surprised they made their mark.

AJMC: CMS and AHIP recently led an effort to define core sets of quality measures. What is the importance of that effort?

SO: That’s really important for a whole number of reasons. The first thing is as we’ve moved to alternative payment models based on value instead of fee-for-service volume, you have to ask yourself: what do you mean by value? So that’s a classic equation of quality over cost. And we can measure that denominator pretty well, you can understand what an episode of cost is. That numerator is a little more difficult to measure and when everyone measures it differently, it’s impossible to make sense of it.

So by getting public and private payers working with providers and consumers and purchasers to say, “we’re going to agree on this one subset of 7 categories of measures and agree that we’re all going to use those,” that creates an opportunity, a starting point, to build consistency of quality measures. So you’re all using the same yardstick. Somebody is not on metric, somebody’s on the English system, somebody is on something else, and what does it all mean?

It’s a start for that consistency that we need to be able to measure that numerator, because if we don’t measure quality in a way that is really relevant clinically what you’re going to do is simply have the move for fee-for-value be a race to the bottom on cost. That’s not something anyone wants. So it’s really important that we define that numerator in ways that are consistent. So we say we want to reduce the variability, we want to refine the ease of collection, we want it to be relevant clinically—everybody has different versions how to say that, but those are the 3 things we all want.

When you have a health problem and want to see someone, it would be nice if you had some way as a consumer to understand what is the quality of the outcome of the experience you are expecting. And then how do I relate that to cost, so I can make an informed decision? Right now as a consumer even if you want to make and informed decision on value, it’s really difficult because you don’t have the information you need. Cost is an important piece, but quality is an equally, arguably more, important piece.

AJMC: Talking about the consumers: giving them the information around quality is one thing, but how much do they understand about what that information is saying?

SO: You’ve probably gathered that consumers are a heterogeneous group of people and so you have people with different backgrounds, different levels of engagement. And it’s incumbent on payers and providers to help consumers understand what this all means.

By shifting from an alternative payment model, it’s actually in our business interest. So number 1, it’s the right thing to do: we have a moral and ethical reason to want to help consumers understand. But that only gets you so far in terms of investment. If you can line up that right thing to do with your business model, you’ll actually get the business investment to do that.

When you start doing population health and shared risk, now helping a consumer understand what is value, what is quality, and how do you make good choice and sort out the different options, when it’s in your business interest to do that, you’re going to make the investments to help the consumer. So that’s a big piece of that: how do we provide the consumer with the information so it’s understandable, educational, how to use it? Things that are actionable. So you’re seeing a lot of investment on both the payer and provider side for consumer engagement, whether it’s mobile apps or things that HSCS has, a benefit value advisor to help people understand their out-of-pocket cost. We have tools that we reach out to help consumers make good decisions for them and it actually, in the end, lines up with everyone’s interests.

AJMC: How does the industry reconcile the fact that maybe the consumer’s idea of value is not the same as maybe the provider’s idea?

SO: I think in the end, it’s not as disparate as one might thing. Because if you ask the average person: how do you decide value on anything that you buy? They’re going to tell you it’s the quality of the product and the cost. Well when we define value, we define it in the same way. And if you talk to providers, they’ll probably define it the same way.

I think the definitions are a little bit less disparate than make them out if you’re talking about the same thing. I think almost all of us define value—different words—trying to get at the same concept. Some of it is going to be explicit and consistent about the terms that we use so people understand that.

You say “I’m going to drive my car,” people may not know what brand, but they probably have got an idea that it’s got 4 wheels and a steering wheel and some brakes.

AJMC: How much do consumers know about the move to value-based care, and how much should they be involved?

SO: I think right now consumers are not as informed as they need to be on the shift to value-based care, but they’re catching on very quickly. Just the fact that you have more co-pay and deductible requirements, consumers are starting to understand that they have a responsibility to engage healthcare in a less dependent mode, that they have responsibility and a real stake in this. They have to make a consumer choice.

In the past, they haven’t even had the ability to do that if they wanted to because they didn’t have the information. So you had this sort of learned helplessness. Now they actually are really being engaged and a sense of “we need you to be involved.”

Here’s an example in the difference of involvement: HCSC through Blue Cross Blue Shield of Illinois has the largest accountable care organization (ACO) in the country, a couple hundred thousand people, and in that we predictably over the last several years have saved 2%-3% over what our preferred provider organization (PPO) would normally cost for that same population. We also have a health maintenance organization (HMO) in Illinois with over 600,000 people, and in that we consistently save year-over-year over the decade, 20% to 25%. Well why the factor of 10 difference in the savings? Part of it is, half of the care that goes on in the ACO, happens outside of the control of the ACO. In the HMO, it’s only 5%. By the way, the ACO, HMO, and PPO have similar patient satisfaction, consumer satisfaction, and quality measures. If anything, the HMO can track a little higher.

So why is that? Why do we have the higher savings? The consumer is engaged. They have a financial responsibility in this too. And so in an ACO, you have payer and provider having a stake in the game, but really not the consumer. In the HMO, you have all 3 participants having a stake in the game. So you see a much more effective value proposition, because everybody engaged has a stake.

I’m not saying we want HMOs everywhere. But we can learn something from that. And how do we adapt benefit designs in products that are contained in an ACO that can engage the consumer in a way that has them take some responsibility? Because in the end, we’re going to be more successful if everybody is engaged.