Episode Overview
For the second part of our three-part series, we invited Cliff Frank back to discuss the changes among risk-based contracts. Daniel and Cliff explore the pushback with RAF scores, new CMS announcements with potential health equity indicators, and much more.
Listen now to our latest episode of Value-Based Care Insights, as our host Daniel J. Marino and guest, Cliff Frank, dive further into value-based contracts and what has changed over the last few months.
KEY TAKEAWAYS:
- New regulations are making it harder to risk-adjust certain conditions, particularly diabetes.
- The old structure of medical management - where there were a large number of primary care providers referring to a few specialists - doesn’t work well anymore.
- To be successful in value-based contracts, providers must dive into their data and create a model that gives them a better idea of what their performance is.
LISTEN TO THE EPISODE:
Transcript:
Daniel J. Marino:
Welcome to Value-Based Care Insights. I'm your host, Daniel Marino. This is the second of three episodes where we are talking about risk-based contracting. As we all know, risk is becoming even larger part of a lot of our contracts, especially as we move from fee for service to fee for value. Risk-based contracts, especially in the Medicare Advantage world, is really gaining steam. We talked about that on the last episode, and I felt it was important to rerun the episode that we did last October, where we invited my colleague, Cliff Frank, to come in and talk about the basics of risk-based contracts. Well, I have Cliff with us again today, and we're going to spend a little time talking about what has changed.
And I'll tell you in the contracting world, even though that episode ran last October, it seems like an eternity between now and then, given how much has changed in the risk-based contracting world with the information that has come down from CMS and so forth. For instance, there's been a lot of pushback on the raft scores, on the risk modeling. There was some new announcements that had occurred around the potential health equity indicators that will be part of Medicare Advantage down the road, all of which are really impacting providers and not only our ability to manage according to these contracts or be successful and optimize, , our revenue within the contract, but in particular, what we need our physicians, our providers to do, to move from a retrospective point of care to more of a prospective care model. So, to help us kind of talk through this today, Cliff, welcome to the program.
Cliff Frank:
Thanks, Dan. Happy to be here.
Daniel J. Marino:
So, Cliff, help us make sense of this. What are you seeing in terms of some of these changes? There's been a lot going on just in the last month, month and a half or so.
Cliff Frank:
Well, CMS has been taking a lot of heat from congress and from industry observers that they kind of gave away the store for the last 10 years. So on risk a, on basically uncapped risk adjustment. Now they signaled with some of the ACO products, a willingness to change that in they capped the risk score gain. You could get in a, in M S S P ACOs at 3% over multiple years, whereas it's uncapped in Medicare Advantage until 2024, right? With the new regs, they're signaling that that game is going to end in several ways. First, they're making it harder to actually get risk adjustment. A lot of di they went from ICD nine to I ICD 10 or 10 to 11, I forget which. But anyway, they killed a lot of diagnoses that adjust. There were like 2000 diagnoses, particularly in diabetes. Those are gone. They don't get you more risk points. Then the second thing they did was they said, oh, we're going to really start auditing a lot more closely. And it's not the risk scores have to come in through claims, not through some magical home visit that the plan has orchestrated. So they're really kind of making all that much more difficult, right. At the same time, CMS has signaled a rapidly growing interest in measuring and enticing health plans to tackle health equity. And so as if you kind of think of it as a kind of a teeter-totter, as the health equity side goes up, the risk score side goes down in terms of dollars. So the dollars will still be there, but they'll be there for different reasons, right?
Daniel J. Marino:
So there's really two key things that I've seen. I think it's thinking about how we're positioning ourselves for risk within risk, managing risk, identifying risk within the contracts. That's a big one. And then the health equity piece and where that comes into play. Let's start with the risk piece, because I have a few questions here that I'm kind of working through in my mind. I'm kind of thinking that there's two pieces to this, right? We spent a lot of time as providers talking about the fact that we need to capture HCCs and that HCCs are supporting the RF scores and the raft scores give us a better idea on the, the sickness, if you will, of our population, of which then dollars are tied to that, and a lot of providers who spent a lot of time educating their physicians and monitoring it and almost going back and recalculating that, was that in particular, was it wrong? I mean, did we overstate it? Oh, not at all. Too much focus on this.
Cliff Frank:
That's all good stuff for lots of different reasons. , the first is that, , providers like to compare themselves against each other.
Daniel J. Marino:
You're right,
Cliff Frank:
Yes. And, and so if my per member per month spend is 20% higher than you, of course the first thing I'm, you know, I'm gonna whine about it. Well, my patients are sicker.
Daniel J. Marino:
Yeah. My population's sicker.
Cliff Frank:
Right? So, so the raft scores actually level that, that debate, which then moves us to the next level, which is, well, what are you doing that I'm not doing? What are you not doing that I'm doing? Let's have a conversation about clinical pat use utilization patterns. So you can't have that without some sort of severity adjustment, risk adjustment, population standardization. So regardless of what else happens inside c m s in the deal between the payer and the provider, it's really useful information. Then further to have some indicator as to what's changing in your, in a particular patient, the risk score just jped 30%. Well, there's an indicator for some case management intervention, some care support, some further love and attention from the doctor. , it could be, you know, referral to a specialist, could be any number of things, but it's an early indica, it can be an early indicator of a problem that's common, hard and fast at the member and at, at the, at the provider network,
Daniel J. Marino:
Right?
Cliff Frank:
So, all those things still have plenty of value regardless of what else happens. And then the third is, remember, risk scores can go down. So CMS is isn't saying, oh, we'll insulate you from the down as much as we cap you on the up. You know, if, if you, if you fall asleep on risk scores and suddenly you drop two or three points, guess what you're, and you've got a percent of premi deal, your revenue just went down.
Daniel J. Marino:
You just went down. Yeah. So some of the performance model as well, right? So the performance model still has to be there, right? It still has to be sound, you still have to manage that population around cost of care Yes. Around utilization. Yes. And then you have to accurately identify the risk. I think the key to it though is that you have to be able, you have to connect the dots, right? So if there is, I, if the risk is going up, if the cost of care is going up, and, and even, you know, if it is based on over utilization, as you mentioned, some interventions around care, care, , management has to come into play and you have to show that you're taking some responsibility to, to manage that. I think as we start to think about it, the model has to be clean, but we also have to prepare for some type of audit or some type of realization that this may be questioned, right? So we, we've gotta get back to the data, the model and the clinical performance to be able to show that, hey, what we're doing is, is actually the right thing to be done.
Cliff Frank:
I think all that is true. There's, there are plenty of places for c m s to come look. And, and I mean, it starts with rpm, ccm, telehealth. I mean, lots of new areas that are, have, have been exposed already to some pretty significant frauds. So they're looking, and then, , you have their relationships with the plans, which now cut through to the provider because there's the provider providing the claims information. So they're gonna wanna see the docentation that supports that. Yeah. So if you're just submitting diagnoses with no docentation, good luck. That's gonna be a problem. So
Daniel J. Marino:
Do you think that this is, this is sort of generated from the plans complaining that the risk scores have been going up too much, so they're having to pay back or pay out too much? Or is it that c m s is identifying that, hey, all of a sudden the, the risk severity of the Medicare population has increased? Where is this, where's this come from?
Cliff Frank:
Well, I think it's coming from, from two different directions. One is, yeah, cash out. I mean, the, the, and, and where you see that is the benefit plans that, that, , the, , payers are offering are getting insanely rich.
Daniel J. Marino:
Yeah.
Cliff Frank:
I mean, food gyms , travel clubs, I mean, what whatever you want. Yeah. We'll get and, and a $160 credit on your, on your, premi from
Daniel J. Marino:
Oh yes. Social
Cliff Frank:
Security.
Daniel J. Marino:
I mean, well, in a lot of these premis, I mean, lot and, and a lot of markets, they're not even there. It, there's a $0 premi. They're, it's a
Cliff Frank:
Negative premi. It's a
Daniel J. Marino:
Negative premi. It's a negative. Cause you're,
Cliff Frank:
Cause you're, you actually get a rebate from Social Security. So, , and CMS is looking at this saying, how is this? Right?
Daniel J. Marino:
Right.
Cliff Frank:
So, and the, and, and Congress is looking at us saying, how is this right? When Medicare's going bankrupt and we're, we're kind of paying for all this other, other nice to do stuff. , something's outta whack. And then on top of that, you certainly have the, , the pressure that comes from kind of c m s just being embarrassed.
Daniel J. Marino:
Yeah.
Cliff Frank:
They, they took their, they, they kind of got snookered and they know they got snookered, and so now it's payback.
Daniel J. Marino:
Well, they did. They did. And, you know, it's, it was, there was a lot of pressure around risk. They came up with the, the risk adjustment factor. , and I, I think, you know, they, they sort of connected the dots. Here's how you need to position it. And yeah, they tied a payout to it. So I think initially the incentive was good, but I think it came back to haunt him. Abs. Absolutely. If you're, if you're just tuning in, I'm Daniel Marino and you're listening to Value-Based Care Insights. I'm having a great discussion with Cliff Frank. We're talking about, , value-based contracts and, and really tying that to risk and, and really what's changed over the, the last couple of months. So, cliff, and another question. , how are the payers responding to this? Obviously, there's been a lot of lobbying efforts to Congress to, to change this. You know, we, we, we've read about this. C m s has certainly has responded. How are the payers, how are you seeing the payers responding to the providers?
Cliff Frank:
Well, there is a, an emerging sense of interdependency that did not so much exist before. Providers in 2022 were kind of a necessary evil
Daniel J. Marino:
Mm-hmm.
Cliff Frank:
But now with the data being kind of wholly resting on what providers do and the, and therefore the coding and the, , interventions happening at the physician level, if things don't get better for the member,
Daniel J. Marino:
Right?
Cliff Frank:
They can lose, they can pretty e pretty easily lose the member. I mean, one of the things that's really different is that the old H M O Medicare HMO model of a narrow network focused on a system of care those days, like Kaiser, those days are really hard. Those are hard cells now, right? Most of the product selling are p o go anywhere you want. , as long as it's in, in network and very broad networks. And so, and for zero premi. Yeah. So it's, it's really, , much more member centric. And, and the providers feel that because they're really not in a position to say no, like there's no referral authorization. It's more like they can suggest maybe this orthopod or maybe that facility. But, , if the member wants to go to someplace else, just saw a nice billboard on the freeway, you know, they're going and they may not even tell the primary.
Daniel J. Marino:
Yes.
Cliff Frank:
Well. that's a, that's a different world. And, and frankly, the primaries are, are not up to speed about that.
Daniel J. Marino:
Right. They, they know
Cliff Frank:
Command and control world, and it's not,
Daniel J. Marino:
I had a conversation just a couple weeks ago with, , one of the, the vice president of managed care for this large health system. And, you know, he felt like he was in a really difficult position, vulnerable, if you will, because, you know, they've, , to his, you know, he, he's, he fully admitted, they've not done a good job of creating their models that are prospective. They're, they're mostly retrospective, right? So they're look backs in terms of what had happened and what are some of the trends that have occurred. And, you know, then they're kind of, they're trying to apply that to their contract, and particularly in, in some of the risk-based contracts. And they, you know, they're at risk for 8% premi for some of their contracts. So h he feels extremely vulnerable. And just over the last month and a half, their end of their performance year was a calendar year, the payers came to him and said, here's what your model looks like, right? We're seeing that you overshot your risk levels. We're seeing that, you know, your utilization is higher than what you know, you're reporting that it is. And, and frankly, he admitted he didn't have a good model to begin with. , and they're not making the money that they thought they were going to. And to make matters worth the finance people book some of this ahead of time, <laugh> Oh. Which, which kind of made it a bigger, bigger challenge because, you know, as they were running some of their retrospective models on a quarter by quarter basis, they were playing off the model. Right? Yep. So it, it just, it goes back to show that the data and really moving to a prospective model of risk of care of these care plans, , is gonna be critical to the success going forward.
Cliff Frank:
Well, you just bring up something really interesting that's super important for providers who are in risk deals. You gotta learn how to spell I B N R. Incurred, but not reported. Claims liability and prospective models will help you do that. Retrospective models will leave you blind.
Daniel J. Marino:
Yep. That's what I'm seeing. It can be a 30% swing.
Daniel J. Marino:
Yeah.
Cliff Frank:
And, and you've booked it one way and suddenly you come back and get whacked. Yeah. So, I mean, that can be a real career limiting move for, for a CFO F O or for a, for a, an I B N leader. Yeah.
Daniel J. Marino:
Well, and, and it's really hard.
Daniel J. Marino:
The the point, the question that he had is, you know, where's the truth? Right? It's, it's clearly somewhere in between because he doesn't believe, he doesn't quite believe where the payers are coming in at. And, and certainly he thinks maybe his model was, was off. So clearly it was in between. So there, you know, again, i i, with you, and that's what was my response too, you have to move to a prospective model. It gives you much more, a greater ability to begin to understand what's happening and to influence it, I think is really key.
Cliff Frank:
Well, the other thing is that the payers in this new world are loathed to believe anybody else's data.
Daniel J. Marino:
Well, that is true. Yep. So that is true.
Cliff Frank:
So it almost doesn't matter what our clients think is reality. What is reality to the payer is your r what they think your risk scores are, what they think your expenses are, what they think your I B N R is and all the rest of it. So in a sense, the real effort is you have to, and this is hard. You have to get inside their data better than they do.
Daniel J. Marino:
Yeah, absolutely. Well, and, and our next episode, we're gonna spend some time talking about that. That's the third episode in the series. Because I really feel like if providers are going to be successful, they have to begin to dive into their, their nbers, their data, their models, and create a model that's gonna be prospective one to give them a better idea of what their performance is. But also, you know, in the event that there's an audit, you just have a, you have a lot more capability to be able to respond to around that audit than you do if it's retrospective. , so we're gonna spend some time talking about that. One, one thing that, , one thing that came came to mind, cliff, as you were talking about this, is, , you know, a lot of these models, a lot of the activities of course are, are still wrapped around the primaries. How is this affecting the specialists? Are, are you seeing, , any of the, the, the risk contracts, , impacting the specialists different? Are there things that, you know, the cardiovascular group, , or cardiology or, or some of these other, you know, gi other, these other interventional specialty practices? , anything that they need to do or any impacts that you're seeing there?
Cliff Frank:
Yes. , a lot. , but it starts like three premises up. First of all, we don't have enough specialists. I mean, we already know that we don't have enough primaries, but we've been using nurse practitioners and other urgent cares to kind of plug the gap when it comes time to go see a specialist, it can take four to six months to get a new patient in.
Daniel J. Marino:
I know. And that's outrageous. So
Cliff Frank:
Medical specialist, , neuro, , endocrine, , cardiology. Unless, unless they're, you know, gasping for breath, you know, it's gonna be a problem. Then when they see them, they may, you know, do a lot, may do a little, , they don't really care what the primary wants done. They're just gonna do what they want. Yeah. And if you don't like it as a primary fine, send 'em to someplace else. I got 40 more in the hall waiting to come see me. So the old style of, you know, north American Medical Management where you have a few specialists and a big net of primaries feeding those specialists, and that's all they did, I don't think that model works anymore. No.
Daniel J. Marino:
Agree. I just don't, don't
Cliff Frank:
Think it's very prevalent unless you're Kaiser and you employ them. Right. But short of that, the power dynamic has really flipped. And as a result, oh, and remember, a lot of these specialists are part of private equity deals that are strictly churn and burn.
Daniel J. Marino:
Well, they are. And the integration has to be better. I'll, I'll tell you, it has to be better. , and it has to be, you know, we we're, we keep talking about moving to a prospective risk model that has to guide some of the, the referral activity integration with the specialists, you know, even solvent some of these access issues, because that's gonna come into play certainly as you start to, to think about what the financial performance is going to look like for the network as a whole. And frankly, the payers could care less about, you know, they care from a quality standpoint, I guess, but they don't really care that it takes you 30 days to get into see a specialist. What they really care about is what the cost implications are.
Cliff Frank:
Well, so in Medicare, some of that is diminished because, you know, the Medicare fee schedule is the Medicare fee schedule. Sure. So if you go to the academic medical center, or you go to somewhere down matter street, okay, you may have, you know, , what do you call that? , the, , clinic charges, you know, right. The, the provider based payment problem
Daniel J. Marino:
Cancer charge.
Cliff Frank:
Right. But that gets charged back to your expense. But absent that, , the fees are pretty much similar. So then it's gets to use pattern access and patient initiation. Remember, about half the patient visits to a specialist are patient initiated, not referred by primary care doc. Yeah. These are people who just wake up and they got a sore back, they're going to the orthope right away they go. So, you know, how the heck do you control that kind of utilization if you're the primary care doc?
Daniel J. Marino:
Well, absolutely. Yeah. I mean, and really it's care management. It's that integration piece that has to, has to come into play.
Cliff Frank:
Well, you can't say no. So it's a, a process. I mean, you can't, you can, but you can't make it stick, particularly if the patient's just bypassing you, which is why the care support teams early intervention, , and, and this kind of, right, I don't don't wanna call it disease management because that's not really what it is, but
Daniel J. Marino:
No, there's more
Cliff Frank:
Condition management, there's connectedness to that patient outside of the, the, the doctor's treatment room that keeps that patient coming back again and again, and, and having telephone contact and otherwise informa information seeking so that that relationship can remain vibrant and, , curative. Right. That doesn't happen if it's transactional. No. And if we're paying our primary care doc to be transactional, guess what? We get transactions. We don't get managed care. Right.
Daniel J. Marino:
No, it needs to be managed. It needs to be coordinated. , cliff, we just have a couple minutes left and I wanna get your opinion on, on where some of these contract activities are going. , particularly around what c m s announced. A couple, maybe a, a month or so ago, month and a half when they said, Hey, we're gonna start including health equity indicators as, as part of the contracts real quick, , h how is that coming into play? I mean, health equity, social determinants, everybody talks about it, it's a big driver of, of chronic diseases and so on and so forth. We all get that. But h how are we, how is this this gonna be measured? Any insight you could provide?
Cliff Frank:
Yes. , C D C has come out with a social vulnerability index. C m s has published about 50 measures of health equity from, you know, income and transportation barriers and oth other kinds of, of of things that are, that are, , potential, , , interference with, with access to care. , getting good baseline data is important. The hard part. And, and, and there are companies out there that have big data that can, can do that. Here's the hard part, given that you know that, what's the use case for doing something about it?
Daniel J. Marino:
Well, absolutely.
Cliff Frank:
I'll give you a a an example. Real life last year, big heat wave coming to Philadelphia 115 degrees, we need to know in our A C o, we need to know who's living alone in second story building or higher with no air conditioning, who has C O P D or asthma? Cause they're gonna die,
Daniel J. Marino:
Right? We need
Cliff Frank:
To get and, and we need to get them some fans,
Daniel J. Marino:
Right? So those types of indicators have to be included in the care plan, right? And then as you're prospectively managing that, incorporating that in, so I, which takes
Cliff Frank:
A whole different database, it takes a whole different worldview. And it takes, and that's not something that can come right from the primary care office, really a care management organization, be it a plan, or be it an I P A or an a C o central administration. Somebody's gotta take that view and say, you know what? We need to understand not just the patients, but the whole population and, and apply these various use cases. Right? Now here's the problem. Doctors think from the specific to the general population health, people think from the general to the specific. Yeah. So if you just blop a bunch of stats on the table, the doctor's gonna look down and say, what the hell do I do with this?
Daniel J. Marino:
Right. What does it mean? So,
Cliff Frank:
So really, I think the better way to do it is to take a bunch of use cases like the, like the C O P D patients in a heat wave and work it backwards to some sort of generalized, yeah. This is the kind of information we need. That leap has not been made in the industry. It's wide open.
Daniel J. Marino:
That's a good point. Almost to create pathways around what some of those HE health equity issues are. Well, cliff, , you know, we're, we're at the end of the show. I want to thank you. , you know, I, I think talking about health equity, this, , I, I'd love to have you back and dive into it a little bit further and maybe we can get some data folks in here that have had some experience with, , health equity and social determinant indicators. I think that would be a great discussion. But thanks, cliff, for coming on. As usual. I enjoy it my friend
Cliff Frank:
Time wet fast.
Daniel J. Marino:
It certainly did. And I wanna thank our audience for listening today Until our next insight, I'm Daniel Marino, bringing you 30 minutes of value to your day. Take care.
About Value-Based Care Insights Podcast
Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners
