As hospitals and payers begin to navigate care under new value-based reimbursement models, quality is more important than ever. Though no provider — or hospital executive — would ever admit that the emphasis on quality is newfound, years of data show that even under the best intentions, certain services, combined with natural human error, are responsible for a significant portion of unnecessary health care spending.
Now that hospitals are facing penalties for letting things like readmissions slide, administrators recognize that commonly costly services require a high level of corrective attention. But in a do-more-with-less environment, even major hospitals are finding they don't have the resources — be they capital or time — to manage the truly expansive variety of issues that affect care quality.
Such an environment bolstered the entrepreneurial arm of Nashville's health care industry, creating a league of support service companies that offer their clients, often insurers, specialized management, backed with the resources and narrowed focus to improve quality while reducing spend. Profiled here, three local companies are partnering with hospitals and insurers to respectively manage their post-acute care, utilization costs and medication therapy.
The notably fragmented post-acute care space has a major impact on hospital quality and increased insurance spending. Under the traditional fee-for-service payment model, the timeline of a health care experience was often shattered, matching the insurer's individual reimbursements. As claims were all paid for separately, there was little incentive for the provider to emphasize coordination between the hospital, skilled nursing facility and home health.
"There was no one who thought about it from the patient's perspective, which is that this is all one episode of care," says Clay Richards, naviHealth CEO.
Working with both hospitals and insurers, naviHealth provides management services for patients after discharge and into the variety of post-acute services. Care managers engage with patients as soon as possible during their hospital stays, and assess medical needs to develop a patient specific care plan. Working with insurers, naviHealth manages 1.5 million Medicaid Advantage patients, and others under Aetna, Kaiser and Cigna HealthSpring plans, but also works directly with hospitals that have taken on risk through accountable care organizations or bundled payment programs with Medicaid and Medicare.
As a risk-based company, naviHealth is paid through a portion of savings it creates for its clients. Citing cost reductions near 25 percent in all lines of business, Richards said guiding patients through the continuum of care has a significant impact on patient compliance and readmission reduction.
"The objective is getting better quality of care,” Richards says. “We're not about reducing utilization. We're about getting patients to the right place at the right time. Frankly, the system needs that coordination as it moves to a value-based payment model."
Cost-containment company MedSolutions also operates in the post-acute space but primarily offers utilization management for imaging and other diagnostic services. Generally hired by insurers or hospitals, MedSolutions employs its decision support tools on the physician level to minimize the over-utilization of services like ultrasounds, radiation therapy and cardiac imaging.
"Between 30 and 50 percent of what's done is inappropriate, unnecessary or otherwise wasteful," says MedSolutions CEO Curt Thorpe. "The unfortunate consequence of this is a cascade of events that cause more health issues and cost more money."
By compiling up-to-date scientific literature and medical consensus, MedSolutions supplies online decision support tools that physicians can use to evaluate the need of diagnostic services.
"Frequently, well-intentioned physicians are just not fully up to speed about the science and use the wrong test to get the information you need about the patient," Thorpe says. "The way this works with us, you have better care for the patients, better outcomes. And as a consequence of that, you save a ton of money."
By analyzing claims data and benchmarking the average usage for a test, MedSolutions can determine whether a provider is in substantial excess. Though Thorpe doesn't like to use the word “fraud” — he prefers to describe over-utilization as “misguided” — malfeasance does happen. But Affordable Care Act incentives are forcing providers to keep a close eye on the number of tests they're ordering, and why.
"In one state, we were working with Medicaid and reimbursements were very low for physician office visits," Thorpe says. "It would appear that, unfortunately, there was a culture of referring patients to high-tech imaging in lieu of a physical exam. We got involved and utilization went down over 30 percent."
While hospital systems and providers seek to manage utilization internally, it would be hard to match the scale that MedSolutions offers. With 1,300 employees managing services for 32 million patients nationwide, the company supports those efforts with sharply focused specialized services.
"Our mission is to prevent medication-related health problems," says Bo Bartholomew, president of PharmMD. "Everything we offer — from our software to our analytics and services — is geared so that we are the best in the world at preventing and resolving those medication-related health problems."
PharmMD services three primary insurance markets — Medicare, dual-eligible payers and the commercial-employer market, with expectations of growing its client base in the future. Through data analysis, the company can isolate patients who have a high risk of medication errors or health problems and resolve issues through a nationwide network of clinical providers and pharmacists.
"Medication problems span a wide spectrum," Bartholomew says. "The broad categories are overuse, underuse and misuse of medication. The whole goal is that people will be on the right medication for their needs, using it the right way at the right time to see improved health outcomes and, ideally, the medication regime is aligned with the lowest cost medication for both the patient and the payer."
Utilizing a large database of claims, pharmacy data, medical records and self-reported personal information like allergies, the company's analytics engine creates a risk stratification process pinpointing high-risk patients. The company works primarily outside of acute care and is paid when health outcomes and results improve.
By capturing data traditionally not available to single providers and working with a proprietary network of pharmacists, PharmMD deploys medication management tools more rapidly and efficiently than clients could do alone, Bartholomew says. With incentives aligned, such specialized service companies are contributing to the trend of value-based reimbursement models.
"We're one of the few companies in the pharmacy industry that actually makes money when patients improve their health," Bartholomew says. "I think that's evidence of where the industry is moving. We remain convinced that companies providing clinical outcomes and real results will ultimately be around in the future."
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