How Post-Acute Strategies Can Pave the Way for Successful Value-Based Care Integration

With post-acute care, providers face various challenges, ranging from reimbursement struggles to meeting the evolving demands of an aging population. Hal Katz, a partner with Husch Blackwell, lends his expertise to shed light on how post-acute providers can navigate these challenges and advance into value-based care (VBC). Gain insights on transforming post-acute care models, establishing integrated networks and how providers can flourish in the VBC ecosystem.

• As providers transition into value-based care, a primary obstacle is to organize post-acute care providers into collaborative networks that prioritize cooperation and integration.
• Post-acute providers, as they move towards value-based care, must navigate diverse obstacles such as funding, payer reimbursement, employment considerations, and effective patient care management.
• Under private equity, a successful integrated network requires payer contract alignment and firm partnerships with health plans and acute care providers.

LISTEN TO THE EPISODE:

 

Transcript:

Daniel J. Marino: 

Welcome to Value-Based care insights. I'm your host, Daniel Marino. In today's episode I want to spend some time talking about value-based care, as it relates to the post-acute environment, post-acute providers, definitely have been challenged over the last number of years. And I think most of the challenge really comes in in the level of reimbursement. Most acute providers are have contracts with either Medicare or Medicaid. Few of the commercials but they're really challenged. All of them, I think, are under some level of financial pressures. And yet they're such a critical part of the value based care, ecosystem. Especially as we start to see. A number of retiring baby boomers who are who have some level of post-acute needs. And out of that. We're seeing some real changes to the care models. So, for instance, many of the baby boomers really want this at home care. So we're starting to see some of these resources shift to more of a sniff at the At home model, if you will, or a hospital at home or home health, you know, really picking up steam, but all of which has a significant value proposition to it and supports value based care. But the question really comes down to how you structure these arrangements in such a way that it allows the post-acute providers to maybe share in some internal resources to leverage that level of expertise, and just to create more of an integrated model and delivery of care. 

Well, I'm really excited today to have a guest with us. He's been on the program before. A great guy. I've worked with him very closely on a few different client engagements. Hell, cats. Hal is a partner with Husch Blackwell. He leads the healthcare practice, and works with number of organizations around the country very knowledgeable in in this as well as other aspects of Provider Integration Network. So Hal, welcome to the program. 

Hal Katz:

Dan, always great to be with. You, always love the chance to be on your show. and of course, to work with you out in the industry. Thank you. Thank you. Thank you. 

Daniel J. Marino: 

Well, thanks, Hal, for that. I appreciate it. So in in, in working with some of the post, acute providers, you know, and especially as they're giving consideration to moving into value-based care. What are some of the challenges that you're seeing?

Hal Katz:

You set it up nicely, Dan. the points that you laid out are definitely some of the same things that I'm seeing in terms of challenges, be it funding and reimbursement, staffing challenges, complexity of the industry, how that's changing as well as the conditions that patients are experiencing. And then, lastly. patients are becoming very picky. What? Where they want their service, how they want their service. So the it's a very competitive market lots of pressures within the space from payers, health systems and the consumer individual consumer. 

Daniel J. Marino:

Yeah. And it's such a critical component of really the care model. Right? So especially when you see patients who have some level of an acute care visit right? And they're getting discharged. Many of them are being discharged to some level of a post. Acute facility, whether it's skilled nursing, or a senior level facility, or even a rehab facility, so that integration becomes so critical, and I see such a divergence, if you will on the different care models. Right? So there, there's that lack of true, integrated clinical care that that's occurring between the post-acute environment and the hospitals. Are, are you seeing as these networks are starting to be formed? Or maybe this is the reason why these networks are being starting to be formed, to create a little bit more integration, a little more synergy between the post and queue providers and the queue care providers.

Hal Katz:

Dan, I am, for all the reasons we've just laid out. These providers are having to identify the other types of care support needed to get the patient what the patient needs to ensure that there are these smooth transitions of care from a more acute facility to the post-acute setting. They can't do it on their own. Historically, that's what's happened. They've just tried to go out and hire people to provide those services in house and they've looked across the healthcare space, and they've seen this network model. They've seen how ancillary providers it be therapists and other social services have been pulled in through independent contractor types of arrangements, to help manage the needs of the patient and to meet the quality standards that are that are expected for the patient outcomes. And that model has been successful. So now we see the post-acute space experimenting with networks clinically integrated networks. I would say. We're on the earlier stages of that model. But we are quickly seeing markets across the country have more and more activity using that CIN approach.

Daniel J. Marino:

So when and I am a I'm a huge proponent. As I've talked about in this program time and time again huge proponent of integrated provider networks and clinically integrated models. II just think, in my experience I've seen so much value coming out of that when you have the providers come together to really begin to efficiently manage patients. It reduces the cost of care, produces some incredible, incredible outcomes.  

When we look at forming these clinically integrated networks in the post-acute space where are they starting. Is it home health providers coming together to form a home health cin? Is it the skilled nursing facilities coming together to form a cin. Or maybe it's a number of the post-acute providers coming together to find a to almost produce a very longitudinal based cin. Where are you seeing the starting point? 

Hal Katz:

Dan, It's really market specific, I mean you, you know that so well on health care. You see, in one market you've seen one market. It depends on the sophistication of the players in that market, the degree in which they? They have a managed care market, be it Medicare managed care, Medicare advantage specifically. The aco penetration, be it Medicare or otherwise. And what types of value-based arrangements the hospitals are entering into in that market. So it really depends. We can see situations where the hospital, the health system is actually the convener for a cin to a established, fairly sophisticated post-acute care provider leading the way to bring in other post-acute care providers to create the network and identify what other supporting providers should be included as participating providers in the network. 

Daniel J. Marino:

Yeah. Well, you, I mean, you clearly have to have one anchor organization right? That that has the vision and is driving a lot of it. And as you mentioned, I mean, I think you know hospitals are in a unique position to possibly do that. Are you seeing private equity getting involved as the catalyst to creating these networks? Or is it really more of the post to queue providers? Or, you know, maybe the hospitals kind of leading the way?

Hal Katz:

I do have at least one example of private equity helping facilitate a lead agency created network. So the agency, I mean in in this particular situation, there's a lot of alignment with the players. Particularly the a health plan who's very interested. A national health plan that sees the value of a clinically integrated network focused on this sector and then the post-acute care provider having a private equity investor that wants to fund the creating the creation of the network. And in this situation there's only a few post acute care providers that will also be an owner of the cin. But there is that opportunity to invest. There's really 2 opportunities. They can invest and participate as a provider, or just participate as a provider.

Daniel J. Marino:

And that's an interesting, interesting model. Because, you know, as you know, it's expensive to create this right? I mean, you've got to build the infrastructure and the infrastructure supports a network and supports the performance. Many post-acute providers they don't have the funds who invested. They don't have the reserve. So you know, in my mind, having some level of private equity does come with some opportunities. But I think it also comes with some challenges, and that's where I guess the legal component comes into place as you're starting to structure it.

Hal Katz:

For sure. for sure, negotiating those transaction documents. Governance reserve powers becomes the main focus. When structuring that relationship with the investor related for this particular scenario on the capital consideration, it helps. When you have a an eager health plan. You know. Often they will be willing to put up some capital. They will also be willing to pay a per member per month reimbursement rate, so that there is some real revenue that starts to flow immediately into the cin, based on the number of attributed lives in a particular market, so that that helps kind of spread both the risk and the negotiating leverage with the private equity investor. It's not all on them. The cin is also bringing a payer to the table for day, one which you know frankly, is not all always, or even often, the case. Usually you have to build it and hope that they will come in the cin world. But in this particular case, and I think there are other opportunities across the country. You have health plans that are so, They see such value in this sector that they're willing to help facilitate the development of the cin on day one. 

Daniel J. Marino:

If you're just tuning in, I'm Daniel Moreno. You're listening to value-based care insights. I'm here with Hal Katz partner with husch Blackwell. And we are talking about post-acute strategies to advance into value-based care. And I'm going to build on that Hal because I think it's an interesting point that you just brought up. One of the big challenges the cin have is to create some type of a tangible contractual arrangement with a payer, right? So you can start to get some level of dollars and some revenue flowing into the to the cin. I think you're the structure of aligning with the payers become really important. But I think it's also a challenge, right? So as it's sort of the chicken and the egg. Right? Do you build the entity first and create the infrastructure before you have the contract? Or do you create some level of contract that allows you to invest in the infrastructure. Where are you seeing that really come into play?

Hal Katz:

Again, It's market by market. If there is a market where there is a good relationship or an existing relationship with an acute care provider, you know, call it a larger, acute care provider and a health system or not a health system, but a health plan. Starting those conversations. Is there an interest? If we built this, would you, be interested in a relationship? What would that look like? So you have some sense of whether they're going to contract with you if you build it.

Daniel J. Marino:

Yeah, yeah, absolutely. Absolutely. And then II can't help but think, you know. So II feel like that's a great approach, because it aligns the interests of the health plan and then aligns the interests of the post-acute providers, assuming that it's structured right. But I can't help but think that the hospitals would be a little nervous in that regard? Right? Because all of a sudden they're managing that. So how does how do you manage that hospital relationship? Do you create? Then, a separate, almost third contractual relationship with the hospital based on alignment, with maybe their risk-based contracts or some of their performance based contracts? Or do you almost create a single contracting mechanism across all of the lives? 

Hal Katz:

Great question, Dan, in the in the few situations that I've been involved in the acute care network has leaned on the health plans, contracts with the Hospitals. At least in these markets. There, there has been confidence in the care that has been provided and the willingness to coordinate without a more formal or structured arrangement. The cin is impacted based on the performance of the hospital. If hospital costs are higher than what they should have been. they can be impacted. So you know, there, there is some risk there. But so far I have not been  I have not seen those arrangements include a direct contractual relationship between the network and the hospital system.  

Daniel J. Marino:

And there's so much opportunity there for the hospital side, because one of the things that we often see is from the hospital perspective. Their readmission rates, visits to the er, you know. Some of that comes as a result of a lack of clinical efficiencies that occur within the post-acute arena. So by having them collaborate, there is a direct opportunity there. But I guess it really comes down to how you how you create that alignment and who the partners are. 

Hal Katz:

And Dan, if I could just add, I mean there is, you know, almost an equal financial slash, economic opportunity for acute care providers to align with a health system. If that health system has it's own aco, its own value-based care model that's large enough to support this kind of effort. It can have the same kind of financial benefits as what we're talking about with a payer.

Daniel J. Marino:

Yeah, II agree with you. I agree with you. The post acute environment is heavily regulated, are there you know you. And of course, when you build a cin. There are also some regulatory impacts, right related to Ftc requirements and legal aspect around clinical integration and so forth. Do those change? Or are there other things that need to be specifically focused on in the post-acute environment? Given all the regulatory regulations and the regulatory requirements? Or is it pretty much aligned with the general thinking of clinical integration?

Hal Katz:

Great question, Dan. It's pretty much in line with the traditional issues that we face when creating a clinically integrated network. For any other provider type physicians and across the board, and II do want to emphasize that point, especially when it comes to the antitrust considerations and remind people that getting together solely for the purpose of getting better reimbursement rates is seen by the Federal Trade commission as anti-competitive. So I'm even in the early exploratory stage of this kind of business relationship arrangement we strongly advise the parties to avoid using that kind of description. For this effort, providers can definitely or competitors can definitely get together to explore how to create a business that is going to improve care, improve access, improve competition, respond to market demands, market pressures. But we don't want to in incorrectly frame it as a way of increasing reimbursement rates from payers. 

Daniel J. Marino:

Great point. Great point, Hal. Because I think a lot of folks don't take that into consideration, and at the end of the day. The reason why organizations need to do this is they really do need to emphasize, to increase the emphasis on their value. Based performance. Right? So that's managing cost of care, managing quality, managing efficiencies, managing utilization and so forth. I couldn't agree more so in in, in thinking through that, you know, I think, that the key documents, the key legal aspects, is really thinking through. You know. What's the bylaws of the organization, how you're going to structure it. And then I would assume, you know, the participation agreements become really critical, right? Defining sort of the rules of the road? 

Hal Katz:

Exactly, exactly, you know, from the participating provider agreement, as you know, to policies and procedures that are put in place to ensure quality measures are obtained, achieved, and how corrective action is implemented. 

Daniel J. Marino:

Yeah. So when so, I recently had a conversation with a home health organization, they were interested in in sort of forming their home health. CIN. Their challenge was really getting the groups together right. Cause they saw that there were different levels of quality and performance. And plus, you know, it was predominantly in the home health world. 90% of the reimbursement comes from Medicare. Now some of that is changing as ma is occurring, but commercials haven't historically played a large role. What are you seeing? As as some of the other big challenges with moving this forward, as you're as you're starting to have initial discussions with either home health or skilled nursing or other post-acute providers as they start to think about pulling this together?

Hal Katz:

There has to be a need, of course, in a need, an opportunity. So again, back to the market specifics. The providers have to feel the pressure that that we've described as being the motivation for coming together to create a more competitive product. If we don't have that then it's then it's tough to motivate to create this kind of arrangement. But I would say most providers are at least aware of this trend that's happening, even if it's not in their backyard. They know that this is happening across the country. In in traditional Medicare, medicare advantage moving to commercial.

Daniel J. Marino:

Yeah, moving to risk based contracts. I mean all of those, all of those areas. And I, and I think I mean you're spot on. You have to define the need, and they have to define the value proposition. Right? I mean, sort of as we kind of say, define. Why do you wanna do this as it takes work and takes resources.

Hal Katz:

To your, to your point, Dan, just to to emphasize that it takes a lot of work so can't just be an exercise. If if people don't really believe in in the value, the benefits that will come from this hard work. 

Daniel J. Marino:

Yeah, no, that's that's absolutely true. Well, if any of our listeners today, any of our providers in particular are interested in in moving forward with this, and you know what's the one piece of advice maybe you could share with some of our listeners. Where would they start?

Hal Katz:

Great question, Dan. Well, besides hiring someone like you or me, they've got to do their research. So you know one. They have to understand their own organization. How are they doing? What's happening in their market? There, there are great publications out there that have been created by trade associations and advisors like the both of us, that that talk about these issues in more detail, that is the homework, and then, in all seriousness, fi! Finding the right advisor to at least guide them on the options and helping them determine if this makes sense for them. And if so how to get there.

Daniel J. Marino:

Yeah, no, III agree with you. And I think doing the research and really getting the groups together to almost create the vision. I know a lot of times when I when folks come to me and they say, Well, we want to start as clinically integrated network. I often say, Okay, have you done any type of visioning, you know discussions with some of your partners to sort of find why you want to do it. I mean, that's the first thing. And if you don't have that commitment, there's no sense spending the money on anything or going any further. 

Well, this is great. I really II appreciate the time. Great discussion. I know it's a it's an area that is of real importance to many of our listeners. I, if any of our listeners or folks you know, who may be listening in now or down the road. They want to get a hold of you, Can you share your email address, or maybe direct them to your to your website or anything in that regard.  

Hal Katz:

Absolutely. easily found on LinkedIn how cats with Husch, Blackwell. Of course. Huschblackwell.com is our website. You can also find me there. My email address is Hal.Katz@Huschblackwell.com. My phone numbers (512) 703-5715. And I'd love to talk with anybody who's interested in learning more about this type of business arrangement. 

Daniel J. Marino:

Well, Hal, it's great. And I would definitely encourage our listeners to reach out. You know Hal has. He's got a great approach with working with providers and any type of these value-based contracting, and certainly setting up the entities. Hal, thanks again for joining today. I love having you on the program. Just you bring a wealth of knowledge and great conversation. Really appreciate it.

Hal Katz:

Dan, always great to be with you thanks for including me today.

Daniel J. Marino:

And I want to thank everyone today. You, our listeners for tuning in really appreciate it. And until our next insight, I am Daniel Marino, bringing you 30 min 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