BCBSIL Refuses to Negotiate Jointly With “Affiliated” Providers. Now What?

ILACO

Tensions between health plans and care providers have taken an fascinating turn in Chicago. Blue Cross Blue Shield of Illinois (BCBSIL) is refusing to allow care providers “affiliated” through a clinical integration agreement to negotiate contracts jointly.

The ramifications for future network contracts are significant and could play out very differently in other health care markets.

Background

In February 2014 Advocate Health Care and Silver Cross Hospital announced a clinical integration affiliation agreement. Advocate is the state’s largest hospital network and Silver Cross is an independent, suburban hospital. The Chicago Tribune reported on details:

Under terms of the affiliation, which is slated to last a minimum of five years, about 300 doctors who practice at Silver Cross will join Advocate Physician Partners, a 4,400-doctor organization jointly governed by Advocate and the physicians…

Although the hospital will retain its brand, board and balance sheet, it will enter into contracts with insurance companies and government programs under Advocate, and its physicians will fall under Advocate Physician Partners. Advocate will treat the hospital like any of its other 11 facilities financially, assigning pro-rata costs to the Silver Cross in the same way it would Advocate Christ in Oak Lawn or Lutheran General in Park Ridge.

As noted a February article in Crain’s Chicago Business,  the intent of the agreement had been to allow Silver Spring to participate in Advocate’s accountable care organization network and to negotiate contracts jointly:

For New Lenox-based Silver Cross, the deal means participation in programs in which providers and hospitals are paid in part for good outcomes rather than volume. It wouldn’t have been able to launch these on its own due to the hefty investments needed to start from scratch. “It’s a make-or-buy decision,” said Ruth Colby, Silver Cross’ senior vice president of business development and chief strategy officer. “When we saw that we could do an affiliation, we felt we could rapidly get ready for changes in reimbursement.”

However, the state’s dominant health insurer has said “Not so fast”.  The headline of an October 8 article in Crain’s Chicago Business read “Blue Cross delivers blow to small hospitals”

Blue Cross won’t negotiate reimbursement rates with affiliations created by separate health systems that clinically integrate rather than those under common ownership, Dr. Lee Sacks, chief medical officer of Downers Grove-based Advocate, said during a meeting yesterday with the Crain’s Chicago Business editorial board.

So, what we have here is a new slant on an old issue — the fight for market power among health plans and care providers. Health plans will prefer a “divide and conquer” strategy, while providers will prefer a “united we stand” strategy toward pricing and contract negotiation.

Why It Matters

The Illinois scenario is a pretty good prototype of market dynamics in many other markets across the U.S. — a dominant health plan,  a strong regional delivery system, and a smaller independent hospital. Similar affiliation scenarios are likely to play out in markets across the country, but will the results be the same?

A One in a Hundred Whitepaper: “Better to Best” Transcends PCMH, Care Coordination, Access, HIT, and ACO Payment Reform

Let me try to get you in the right frame of mind to read one of the most remarkable white papers in a long time: Better to BEST: Value Driving Elements of the Patient Centered Medical Home and Accountable Care Organizations — released yesterday by the Commonwealth Fund, Dartmouth Institute, and PCPCC.

Having been a debater in high school and then trained as a lawyer, my default mode of thinking is to be critical:

“Hey, Vince, how ya doin’? Great day isn’t it?”

“Well, …err…maybe, maybe not…actually, here’s 14 reasons why not.”

My wife and friends kindly tell me that this personal quality can be insufferable, and if you’ve ever met a lawyer you know what I’m talking about. My internal defense mechanism against my inner-critical brain is simply to turn it off — just go along for the ride and live in the moment.

To the extent that you can connect with what I’m saying, I suggest that before reading this report that you turn off the critical part of your brain.

If you’re a regular reader, chances are you’ve read individual white papers on these topics:

  • PCMH — the Patient Centered Medical Home
  • Care Coordination
  • Access to care for the un and underinsured
  • HIT — health information technology and the HITECH Act
  • Payment reform, especially as it’s been discussed around ACOs (accountable care organizations).

“Better to Best” transcends all these topics — it weaves them together, displays the interrelationships, and describes specific components of what a truly integrated health system could look like.

Walled Gardens vs. the Open Web: A Central Debate in Tech Finally Coming to Healthcare

The September issue of Wired magazine and an article in last Sunday’s New York Times illustrate a central debate in technology circles. The debate is not new — it’s being going on for two decades — but it has newfound vibrancy. The essence of the debate is about competing tech/business models: walled gardens vs. the open world wide web (web).

 Webdead

vs.

 

Weblive

The debate is highly controversial and nuanced. There are “experts” on both sides.

My point today is not to take sides (although I’ll admit my canine partiality to the open web), but rather:

  • to point out that the debate is occurring 
  • to explain what the discussions are about
  • to suggest that competition between walled gardens vs. the open web is creating healthy competition and providing consumers with great choices (e.g., Apple iPhone as a walled garden vs. Google Android OS as a more open approach)
  • to point out that health care has not had much to say in this debate…until very recently.

A while back I started writing a series “Healthcare Crosses the Chasm to the Network Economy” . This essay continues that series.

“Meaningful Use” Criteria as a Unifying Force

by Vince Kuraitis, Steve Adams, and David C. Kibbe MD, MBA

Over the past several years, many diverse initiatives have arisen offering partial solutions to systemic problems in the U.S. health care non-system. 

We see Meaningful Use Criteria recommended by the HIT Policy Committee as a unifying force for these previously disparate initiatives. These initiatives have included:

  • Patient Centered Medical Homes (PCMHs)
  • Regional Health Information Organizations (RHIOs)/Health Information Exchanges (HIEs)
  • Payer Disease/Care Management Programs
  • Personal Health Record Platforms — Google Health, Microsoft HealthVault, Dossia, health banks, more to come
  • State/Regional Chronic Care Programs (e.g., Colorado, Pennsylvania, Improving Performance in Practice)
  • Accountable Care Organizations — the newest model being proposed as part of national reform efforts

Today

While there are some commonalities and overlap, to-date these initiatives have mostly arisen in isolation and are highly fragmented — they’re all over the map. Here’s a graphic representation of the fragmentation that exists today:

MU1

 

Tomorrow

The HIT Policy Committee recently recommended highly detailed Meaningful Use criteria for certified EHRs.  Doctors and hospitals who hope to receive HITECH Act stimulus funds will have to demonstrate that they are meeting these criteria; the criteria are not yet finalized.

The Committee website describes the central role of the Meaningful Use criteria:

The focus on meaningful use is a recognition that better health care does not come solely from the adoption of technology itself, but through the exchange and use of health information to best inform clinical decisions at the point of care.

The HIT Policy Committee also is recognizing that there are multiple routes to achieving Meaningful Use beyond the traditional EMR 1.0, e.g., modular Clinical Groupware software.

While some might view the Meaningful Use criteria as limited to the world of health IT — something happening “over there” — we see much more going on. We believe the Meaningful Use criteria are becoming a powerful unifying force across the health system, with potential to converge previously disparate initiatives.  Here’s our conceptual representation:

Spider Webs of Care Coordination Networks

Spiderweb3

We have learned that coordinating care of patients — particular care of Medicare patients — is complex and time consuming for physicians.

A breakthrough study quantifies just how complex and challenging care coordination really is.  The study is reported in the February 17 issue of Annals of Internal Medicine and is entitled Primary Care Physicians’ Links to Other Physicians Through Medicare Patients: The Scope of Care Coordination :

We found that in a single year for just fee-for-service Medicare patients, the typical primary care physician needs to coordinate care with 229 other physicians working in 117 different practices…. The number of peers was greater for physicians treating patients with higher chronic illness burden, who may benefit the most from coordination.

My mental visualization of these networks is a series of spider webs.

The authors write that “Coordination involves complex activities that require conscious interactions between providers and between providers and patients, including timely transfer of accurate clinical information, effective communication between the involved parties, and shared decision making.”

The estimate of 229 physicians in 117 different practices is conservative:

HealthSpring “Gets” Physician Engagement.

I’ve written a lot recently about Medicare Health Support (MHS).  We are learning a lot from MHS about what DOESN’T work with the frail, elderly Medicare population.

 

But, what DOES work?

 

One key lesson emerging from MHS is the need to integrate and engage physicians and other local care providers…easier said than done.

 

MHS is just one of many experimental approaches being tried by Medicare.  Other approaches include the medical home model, Medicare Advantage plans, Special Needs Plans (SNPs), P4P, and a variety of other Medicare demos and pilot projects.  I’ve been critical of Medicare’s lack of transparency lately, but I applaud their innovation and experimentation.

 

While we definitely don’t have all the answers, I’d like to bring your attention one company that I believe has the right strategy and mindset: HealthSpring.  HealthSpring owns and operates Medicare Advantage plans in Alabama, Florida, Illinois, Mississippi, Tennessee and Texas and also offers a national stand-alone Medicare prescription drug plan. 

  

HealthSpring recently conducted an Investor Day meeting with financial analysts.  You can read the entire transcript of the meeting here — warning, it’s about 35 pages long.  I’ve culled through this presentation to dig out some best practices that HealthSpring is employing. 

The PowerPoint — DM Megatrends 2008

Last week I did the major annual tune-up of my presentation on Disease Management Megatrends for the MCOL Future Care Web Summit

I’m pleased to share a copy of the PowerPoint presentation with you, and I hope you find it useful and provocative.  You can view and/or download a copy here (6MB).  This version contains 77 slides, which would be about the length I’d use for a 3 hour workshop; you’d see a more compact version for a conference keynote, Board summary, or management strategy session.

fyi, the DM Megatrends are:

MAGNITUDE: We are just scratching the surface of chronic disease challenges.
INTEGRATION:  The 50 year tide is shifting toward integration, away from specialization.
MEDICARE: While Medicare has endorsed the need for chronic disease management, disappointing results from recent demo projects make future direction unclear.
PROVIDERS: Care providers have woken up to DM opportunities and threats; they are promoting the medical home and the Chronic Care Model.
MAKE, ASSEMBLE, BUY? Fewer are buying as health management becomes increasingly strategic.
TECHNOLOGY:  DM in your home and your pocket.
BEHAVIOR CHANGE: DM is moving from a medical to a social model; behavior change has become the Holy Grail.
CLINICAL AND ECONOMIC ROI:  Round one is over, DM wins; Round 2 has just begun.
WILDCARDS! (employers, P4P, retail clinics, CDHPs, elections)

Comments are always appreciated.

Last week was a podcast of DM Megatrends…next week — the movie.  Brad has signed, Angelina is waffling.

Hospital Economics Don’t Reward Chronic Disease Management

My colleague and friend Dr. Jaan Sidorov has recently started a blog — Disease Management Care Blog.  Check it out and add it to your RSS feed.  Jaan is eminently qualified to write on the topic — he spent 25 years at Geisinger Health System in Pennsylvania as a practicing physician and as an executive, and he just ended a term on the board of DMAA—the Care Continuum Alliance (formerly Disease Management Association of America).

Jaan’s sense of humor and articulateness shine through in his latest posting “Are Integrated Delivery Systems really all that?” He presents a Top 10 list of “why IDS’ could always remain the health care solution of the future”.

Jaan, it’s worth splitting a hair here. Let’s clarify who we’re talking about when saying “an integrated delivery system” (IDS).

Podcast: The 20 Minute Version of “DM Megatrends”

Over the past week I’ve been doing a major tune-up of my presentation on Disease Management Megatrends for the annual MCOL Future Care Web Summit

More typically, DM Megatrends is 45–90 minute presentation with accompanying PowerPoint slides.

As part of the Web Summit, the good folks at MCOL asked me to do a short podcast on highlights of this presentation. They’re allowing me to share it with you… click here to save or listen to the podcast.

fyi, the DM Megatrends are:

MAGNITUDE: We are just scratching the surface of chronic disease challenges.
INTEGRATION:  The 50 year tide is shifting toward integration,  away from specialization.
MEDICARE: While Medicare has endorsed the need for chronic disease management, disappointing results from recent demo projects make future direction unclear.
PROVIDERS: Care providers have woken up to DM opportunities and threats; they are promoting the medical home and the Chronic Care Model.
MAKE, ASSEMBLE, BUY? Fewer are buying as health management becomes increasingly strategic.
TECHNOLOGY:  DM in your home and your pocket.
BEHAVIOR CHANGE: DM is moving from a medical to a social model; behavior change has become the Holy Grail.
CLINICAL AND ECONOMIC ROI:  Round one is over, DM wins; Round 2 has just begun.
WILDCARDS! (employers, PHRs, P4P, CDHPs)

A Founding Father of DM Astonishingly Declares: “My Kid is Ugly”

Al Lewis, one of the founding fathers of DM, has shaped the face of the DM industry probably more than other any single individual. (This is all fine unless you happen to be the person whose face is being shaped by Al.)

Al has been unabashedly pro-DM.  Until now.  Al writes in a recent article in Managed Healthcare Executive:

Disease management as we now define it may be on its last legs, though no one knows it yet. The Disease Management Purchasing Consortium has noticed that the savings in all but a few diseases doesn’t offset the costs, and nowhere does it generate the level of return on investment (ROI) that some people think they are getting.

But fear not, Al foresees a new DM: