Are You Developing a Market-Driven Chronic Care Strategy?
Chronic care strategy may not be on every health system’s list of top 5 strategic priorities, but it is rapidly gaining the attention of payers, employers and providers as they consider a transition to value-based payment. Consequently, organizations that previously did not study the chronic care landscape in their communities are beginning to take note.
Moves to Value-Based Payment Emphasize Need for Improved Care, Reduced Costs
Much of the new focus on chronic care strategy is due to CMS’s bold plan to move 50% of fee-for-service (FFS) Medicare reimbursement into value-based agreements by 2018. In addition, Medicare Advantage (MA) enrollment has grown to nearly 32% of the Medicare population, and states are ambitiously transitioning to managed Medicaid. Commercial payers see MA and, in some cases, managed Medicaid as an economic opportunity. They are seeking provider partners to manage the cost and quality of care for enrollees and share in the savings.
Now is the time to understand your chronic care population and take inventory of the resources and support required to manage this critical segment. With the highest-cost 5% of the population incurring an average of $40,682 in health care costs per year, compared with $236 for the lowest-cost 50%, the opportunity is clear. Organizations that develop and execute chronic care strategies to improve patient lives and reduce the total cost of care will be leaders as their markets transition to value-based payment.
Rely on Analytics and a Solid Business Model for Your Chronic Care Strategy
When developing a chronic care strategy, getting started may be the hardest point. At Sg2, we believe that all good strategies, including chronic care, start with a strong analytics foundation to uncover opportunity, followed by development of a sound strategic plan supported by a solid business model to sustain the initiative.
Identify the Appropriate Target Population
Effectively segmenting the chronic care population goes well beyond analytics that rely on estimates of incidence for specific chronic diseases. New models combine a patient-centered analytic approach that pinpoints populations at the highest risk with proactive outreach to patients and providers. Identifying chronic populations in a market may seem as difficult as finding a white rabbit in a snowstorm. However, recent Sg2 chronic care research suggests the solution may be as simple as mining clinical data and surveying patients and providers to answer the following questions.
- Which populations have been admitted to the hospital or visited the ED in the past year?
- Which patients were identified by predictive analytics as being high risk for future acute care utilization?
- Which patients have multiple chronic conditions? Such patients are certainly a priority in delivering value-based care, as they tend to be heavy utilizers of high-cost resources such as inpatient stays, ED visits and post-acute care. Those managing value-based agreements may be contemplating scenarios like the following: “We are underwater on these 1,000 high-cost patients in our MA population. If they cost us $200,000 per year and we get it down to $100,000, we’re ahead by $100,000.”
Patient and Provider Surveys
- Which patients have been identified by providers as high risk and in need of additional management?
- Which patients have complex social situations or behavioral health issues that prevent them from adhering to a care plan?
- Which patients have experienced recent declines in health due to inadequate care?
Next Steps: Evaluate Your Assets, Org Structure and Partnerships
Certainly, identifying the appropriate target populations is an essential first step, but to sustain success, it’s key to develop an effective strategy to improve care and outcomes and lower costs.
So where to begin? First evaluate your System of CARE assets, level of integration, organizational structure and community partnerships. If gaps exist, design a strategy that fills the holes and connects the dots on the System of CARE and keeps chronic patients from falling through the cracks. Building partnerships with health plans, post-acute care providers and others with experience managing chronic populations can help close the gaps, enabling effective care delivery. Once initial chronic care pilots have proven their value, consider the organizational structures and technology that will allow you to effectively scale them across broader populations.
Sources: Jacobson G et al. Medicare Advantage 2015 spotlight: enrollment market update. Kaiser Family Foundation. Jun 30, 2015; CMS. Chronic Conditions Among Medicare Beneficiaries, Chartbook, 2012 Edition. Baltimore, MD: 2012; Sg2 Analysis, 2016.