Harness the Power of Data to Master Your Changing Market
Spring is here, and with it comes renewed interest in the continuing transformation of American health care delivery and its confounding payment systems. To date, most providers have built multiyear playbooks that place bets on the impact and rate of change of factors such as coverage expansion, risk contracting, population health management and market-level competitive realignment. So now what?
The short answer is more of everything. More policy changes from CMS, more payer-provider convergence and more transparency into the opaque world of health care delivery. Some of these changes have already started to blossom around you; others are going to take time to take root but are worth your continued attention. With that in mind, let’s take a look at 2 areas—one from Medicare and one from commercial payers—that will both enable and require you to be smarter about your market than ever before.
1. New Payment Models Spring Up Across the System of CARE
While you have been busy setting up your ACOs, wrestling with the 2-midnight rule and avoiding readmission penalties, CMS has been hard at work coming up with new payment approaches (and acronyms) for physician and post-acute services.
MACRA (Medicare Access and CHIP Reauthorization Act), for which CMS just released its proposed final rule on April 27th, may be known to many of your physician leaders as the “SGR fix.” Over the next 6+ years, this new approach to physician payment will gradually move all physicians toward a value-based system that includes a variety of advanced payment models (APMs). These developments are significant since now physician groups and practices of all sizes have a stronger incentive to move more of their patients to risk-based models and manage overall cost and utilization, in addition to clinical outcomes.
IMPACT (Improving Medicare Post-Acute Care Transformation Act) is probably less well known than MACRA, but it may be even more transformative over the next decade. IMPACT will ultimately eliminate different payment models for different post-acute silos and implement a new site-neutral system based on patient characteristics. These changes are aimed squarely at the variation in post-acute care (PAC) costs, which currently account for 73% of total Medicare spend.
The combination of these complex new reimbursement systems with the continued evolution of bundled payment and primary care innovation programs should not be underestimated. While hospital systems may have felt that they were pushing a rock up a hill while trying to drag physicians and PAC providers along, now CMS is incentivizing hospitals’ post-acute and physician partners to take direct action. New metrics and reporting requirements will elucidate provider-level performance and resource consumption. In response, health systems will need to become more nimble and astute in their assembly of clinical integration models and preferred provider networks. While you will continue to add new partners over the next several years, you are also likely to become more selective and cease working with physicians and PAC providers who do not offer the level of quality, cost, access and patient experience that the market demands.
2. Growth in Narrow Networks and Payer-Provider Convergence
Sg2’s Market Evolution Model tracks how the combination of consolidation, consumerism, cohesion and convergence is reshaping local health care delivery across the country. All of these forces will remain in play over the next 5+ years, but we expect payers in particular to be busy designing new insurance products for consumers and working more closely with providers (convergence).
Tiered and narrow networks account for 70% of the lowest-priced plans on the insurance exchanges in 2016. Cobranded (payer-provider) insurance products have doubled since 2014. Provider-led plans are increasingly seeking out low-price positions in their markets. Sg2 members now routinely offer a 10% to 15% discount on their commercial rates to participate in networks that may help them expand their geographic reach and/or take market share from their closest competitors.
Systems with experience participating in these types of arrangements have told us of their growing sophistication in understanding who should participate in their networks, analyzing the claims data to see where patients actually go and tweaking network or benefit design to achieve their market share goals. Contracting leaders have reminded us that your work is never done: you must insist on timely claims and steerage data to see if you actually achieve a positive return on investment.
The Common Link: More, Better and Timelier Data
New payment models from CMS and the continued evolution of payer contracting and pricing strategies put new pressure on health systems to understand their markets in ways they never dreamed possible.
Future success is not simply about expanding into a new geography or building new access points, it’s about finding the right partners, meeting consumers on their terms, closing gaps across the System of CARE and developing a consistently excellent clinical product. To achieve all this, an intimate knowledge of how patients flow through your system and market is critical. You must have a deep understanding of referral connections to visualize where patients actually receive care sequentially across the continuum and track leakage/keepage to identify and manage critical points of service diversion in a multinodal care pathway. This in not a onetime network and pathway analysis, but a new way to actively manage your System of CARE. Systems that are doing this work today have harnessed the power of internal and external data from providers, payers, employers and other stakeholders.
As a partner in much of this work, Sg2 is pleased to announce the launch of our new analytic solution, Sg2 Patient Flow™. Built on our proprietary foundation of comprehensive and longitudinal claims data for over 75 million covered lives, Sg2 Patient Flow allows you to track and visualize actual inpatient and outpatient movement in your market. It’s designed to answer the tough questions about where physicians refer patients, how and when patients move from one care site to another, which webs of networks define your local market, and what variation exists across your System of CARE.
We look forward to telling you more about this amazing tool in the weeks ahead. We believe Sg2 Patient Flow will be instrumental in helping your organization position for the care delivery and payment landscape that will define tomorrow’s marketplace.