Host of Payment Matters
On this episode of Payment Matters, Jeff is joined by Dave Terry, CEO of Archway Health. Jeff and Dave discuss the bundled payments model and the associated benefits, challenges and risks.
Listen now, or read an excerpt of the episode below.
Jeff Lin: Can you maybe talk about the difference between fee for service and the bundled payment model?
Dave Terry: With fee for service, each individual participant in the process gets paid for what they do. So it’s almost like a piece-work concept. So, a primary care provider is responsible for primary care components and gets paid for that. If one of their patients get sick, they refer them to another provider or facility that specializes in the patient’s needs. The accountability and the responsibility for actually helping the patient get better or back home – whatever that patient’s goals are – does not rest with one single person. It’s pretty disjointed in that way. The bundle payment model is really focused. Patients who are with specialists or are in the middle of some sort of acute event or chronic illness have a single specialist who is an expert in that patient’s particular clinical condition and they’re in charge of your experience from beginning to end. They’re accountable financially and from a quality and outcomes perspective. What I love about that model is now you’ve got one person who is working with you to meet your goals and that doesn’t really exist in fee for service.
Jeff: Does the bundled payments model have any impact on patient payment responsibility?
Dave: I think the theory is still ahead of practice, to be honest. Most of these value-based payment programs, whether it’s Medicare programs or commercial initiatives, are still pretty opaque to the consumer. You know, you won’t see providers advertising or marketing that they’re participating in a bundle or they’re part of an ACO. There’s some activity around reference-based pricing and some markets where that is becoming a little bit more transparent to the consumer. I do think that will change in the not too distant future, but for now, most consumers are still approaching the healthcare system as they always have and kind of paying whatever shows up on the bill that ends up in their mailbox.
Jeff: Are you seeing any financial or positive results for these programs that have been rolled out?
Dave: Yeah, absolutely. So in our experience when we get that specialist in charge of the whole process, really shepherding their patient through the episode, we’re seeing savings ranging from on the low end, six or seven percent per episode, and on the high end up to 18 percent per episode with an average of about 10 percent per episode. So that’s pretty significant. I would say these programs aren’t yet at scale, but what’s great about them is CMS has made a tremendous amount of data available and there are more and more commercial data that are available in the market, and we can use that information to see where there’s variability and where there’s opportunity for improvement. We share that data with clinicians who then can dive in and identify what they’re doing well and what they can do better based on an absolute basis and also a relative basis to benchmark performance in those types of things.
Jeff: What are the headwinds you see in terms of more providers getting on board with these bundled payments?
Dave: I think there are a number of things that are barriers to adoption. For one, change is hard, right? And we’re not just talking about change but changing the way providers get paid. You’re going to tell me you’re going to completely change my incentives and the way I get paid in my next contract and I’ll have to completely reorganize to make all that work. That’s really hard for anybody who’s been running an organization for a long time in a certain way. And then just in terms of the actual blocking and tackling and making, you know, it’s not necessarily the same systems, the same people, or even the same clinicians that are succeeding in the model today that will succeed in the model in the future. Right? So when you think about people, processes and technology, a lot of that will change to be successful in a new model. And that’s scary and it’s hard, and I think a significant barrier.
Jeff: What’s the role of Archway hall in terms of how your company helps in sponsoring and supporting the broader adoption of these value-based initiatives?
Dave: One way is with data. We have a tremendous amount of data that we’ve gotten from Medicare and other commercial payers and some internal operations data from clients that we work with to help them see how they’re performing in specific clinical and specialty areas, what that performance looks like over time, and how that compares to their peers in their markets or across the country. They can also see who within the organization is doing a great job and who is not necessarily doing a great job, and what that means for where they can improve. The second way we help is we have essentially become an insurance company because another component of the bundled payments model is risk. From the provider’s perspective, they’re going from fee for service where they’re going to do some work and they’re going to get paid to the bundled payments model where they’re going to do some work and if they do it well, they could make potentially more money than they could make with fee for service, but if they don’t do it well, they could lose money. So that risk component is very scary. We are now providing essentially stop-loss coverage to providers who are getting into risk arrangements. A lot of what we hear from CFOs and Chief Risk Officers is that they want to be in these programs, but they also can’t be in a position where they’re going to lose their shirt. So, we can provide underwriting capabilities for folks who want to get into any program, whether it’s an ACO or a bundled payment program or a commercial risk contract, etc.
Jeff: Data is hard to get, and you need to have a lot of it. In the healthcare space, I think it’s been a little harder to get perfect data on everyone. How well are we sharing data across the healthcare continuum today?
Dave: Yeah, no doubt. It’s not perfect, but it’s getting much better, right? The way we think about data and risk as we kind of create three different categories. So the first would be programmatic risks or contractual risks. These programs are specific and complicated, and they have specific rules and incentives and biases in them. So we’re very focused on really trying to understand how those programs work, what the incentives are and how they model out to get a sense of where are the opportunities and risks within a particular program. The second component is what we call provider performance risk, and that is trying to get a sense of what the historical performance looks like for an individual provider and then how does that performance compare to the rules of the program? The third area we’ll look at is just pure insurance risk.
Tune in to Payment Matters weekdays at 4:30 AM, 12:30 PM and 8:30 PM ET.
About the Host
Jeff Lin is Senior Vice President of Product Management at InstaMed. As head of Product Management, Jeff leads the ongoing product innovation of InstaMed’s healthcare payment solutions. This includes the exploration, evolution and execution of InstaMed products that further simplify the healthcare payments process. Before joining InstaMed, Jeff was an executive at Accenture, where he led multiple enterprise projects for multiple Fortune 100 companies. Jeff’s experience and expertise include a deep focus in the areas of product management, product strategy, product marketing and developing strategic partnerships. Jeff graduated from UCLA with a Bachelor of Science in Microbiology and Molecular Genetics. In his free time, Jeff enjoys spending time with his wife and sons and traveling and dining around the world. Jeff earned the Eagle Scout ranking as a Boy Scout and is an avid fan of any activities in the California sunshine.