Physician networks—one piece of the puzzle for improving performance

Health Care Current | February 19, 2019

This weekly series explores breaking news and developments in the US health care industry, examines key issues facing life sciences and health care companies, and provides updates and insights on policy, regulatory, and legislative changes.

My Take

Physician networks—one piece of the puzzle for improving performance

By Sarah Thomas, managing director, Deloitte Center for Health Solutions, Deloitte Services LP

I’m someone who likes finding patterns in seemingly complex or hard-to-understand data. My family understands that if they want to keep me out of their hair, they should give me a puzzle (over the holidays I finished a 3,000-piece jigsaw puzzle). I’m equally happy with crosswords, sudoku, and acrostics. I love learning languages, and I enjoy following instructions for knitting, Legos, or even building IKEA furniture. There was a time when I would get lost writing programing code…

My Deloitte colleagues have found order in analyzing the seeming chaos of physician networks—mapping and analyzing patterns of relationships. In this research, instead of trying to complete a puzzle, they set out to learn whether there is a secret ingredient for understanding which relationships led to lower costs. Most physicians belong to formal and informal networks in which they share patients, information, and clinical decisions. Mapping out networks of shared patients using Medicare claims data reveals what at first blush looks like abstract art.

Our researchers found that when physician relationships are tight, health spending is lower. The key to understanding this puzzle is the ability to measure physician centrality. The measure, from network science, captures the degree of coordination between various components of the network. Researchers found that tighter relationships among physicians within a provider network is associated with:

  • A 15 percent ($2,000) lower average episode-of-care cost for hip fractures
  • A 26 percent ($1,050) lower average episode-of-care cost for coronary artery disease

We also found that network concentration is especially important in larger networks, where having central physicians to help coordinate the flow of information and care is strongly associated with lower costs.

Creating better value is one piece of the puzzle

Closer care coordination might be a key factor in value-based care and alternative payment models. As most everyone in our industry knows, commercial and government payers are ramping up pressure on health systems, physicians, and other clinicians to not only improve quality, but also to save money. The US Centers for Medicare and Medicaid (CMS), for example, is pushing Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) to take on more financial risk. Some commercial health plans have announced major initiatives with health systems in their states. Even physicians who have tried to stay on the sidelines of alternative payment models (APMs) will have more of their Medicare payments at risk. In 2019, cost measures will make up 15 percent of the total score used by Medicare to determine payment to physicians, under the Merit-based Incentive Payment System (MIPS).

With those cost measures, the challenge is performance—not reporting—because CMS bases the calculation on claims data. Clinicians and health systems will be paid more if they reduce costs while maintaining a high level of care quality. Understanding the care and utilization patterns of each clinician involved in a patient’s care can be essential for improving performance quality.

It makes sense that network dynamics influence health care costs (the closer the ties and communication among clinicians, the lower the costs). Longstanding research from Dartmouth physician John Wennberg, M.D. and his fellow researchers has shown that health care costs are highest in areas that have the largest supply of medical specialists.1 Moreover, an analysis of hospital-based professional networks found that physicians who have a greater number of connections have higher costs and more intensive care utilization. Even though this was not the focus of our study, other researchers have documented a correlation between better quality outcomes and closer coordination among physicians—particularly when primary care physicians have more central roles. But a specialist physician might be the right quarterback for a patient who has a particular condition. That specialist, however, should have the right communication tools and support system to effectively manage relationships and coordinate care.

What should health systems and health plans do with this information?

Health systems and health plans have opportunities to improve their performances by understanding and influencing care patterns, including referrals. Within each care network, a health system or a health plan can use claims data to identify high-performing and lower-performing networks (this includes all the physicians who are part of the networks). Maps, like the ones our researchers created, can help clinicians identify specialists whose costs are higher compared to other specialists in the same network. Health systems and health plans could share this information with physicians and patients/members to help improve care patterns and referral decisions.

From the health system perspective, this opportunity will likely depend on whether the organization is actively involved in new payment models. Health systems that continue to generate most of their revenue from fee-for-service will likely continue to focus on increasing market share through referrals and higher volume. Health systems that are entering into alternative payment contracts will likely want to consolidate services with the lower-cost physicians. They might also share cost information with other physicians to help them improve their performance. More efficient physicians are likely to use fewer facility services, so another goal for health systems could be to reduce per-member medical expenses and associate themselves with lower-premium insurance products. This strategy could help increase market share by filling excess facility capacity generated by more efficient physician performance.

From the health plan perspective, influencing referral patterns can help them meet their goals of reducing care costs. Tools available to health plans range from product design to patient incentives. And, if they own clinical practices, health plans can use network analysis in the same way that health systems use it. Health plans could use the data to target appropriate clinicians for high-performance networks and condition-specific bundled payment arrangements. They also could identify primary care and specialty physicians to target for high-priority conditions that have the most variation in care. Providing timely and actionable data to providers can help them reduce unwarranted variation. In other words…show physicians how they compare with the best-performers within the same network—the key influencers—and what they can do differently to optimize performance.

I encourage readers to take a look at the mapping of relationships—it might be a key piece to the puzzle of how to do well under new payment systems.

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1 Annals of Internal Medicine, The Implications of Regional Variations in Medicare Spending. Part 1: The Content, Quality, and Accessibility of Care, February 18, 2003.


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In the News

CMS releases proposed rule to improve interoperability, increase EHR access

On February 11, CMS released a proposed rule that includes measures intended to promote interoperability. This proposed rule joins a proposal from the US Department of Health and Human Services (HHS) Office of the National Coordinator for Health IT (ONC) to provide patients and physicians with secure tools that would allow them to access and share electronic health information (see the February 12, 2019 Health Care Current). Measures included in CMS’s proposed rule include:

  • Requiring all health plans health plans sold through public exchanges, Medicare Advantage (MA) plans, Medicaid, and the Children's Health Insurance Program (CHIP) plans, to implement, test, and monitor an openly-published Health Level Seven (HL7®) Fast Healthcare Interoperability Resources (FHIR®)-based application program interface (API) technology. The goal, according to the rule, is making claims and other health information available to patients via third-party applications and developers.
  • Requiring all health plans in government programs to support electronic exchange of data for transitions of care when patients move among different types of plans and requiring hospitals to send electronic patient notifications to physicians when a patient is admitted, discharged, or transferred.
  • Preventing information blocking by informing patients and providers if individual clinicians, hospitals, and critical access hospitals (CAHs) have submitted a “no” response to any of the three attestation statements regarding the prevention of information blocking.
  • Publicly reporting the names and National Provider Identifiers (NPIs) of providers who have not included digital contact information with their entries in the HHS system.

The notice also requested public comment on promoting interoperability in Center for Medicare and Medicaid Innovation (CMMI) models, how to facilitate private sector work on a patient-matching strategy, and how CMS can promote adoption of interoperable IT systems across various health care settings.

(Source: CMS, CMS Advances Interoperability & Patient Access to Health Data through New Proposals, February 8, 2019)

Prices impact health care spending more than utilization, HCCI finds

On February 12, the Health Care Cost Institute (HCCI) released its annual Health Care Cost and Utilization Report for 2017. HCCI found that per-person health care spending grew by 4.2 percent in 2017 while utilization did not change significantly. The increase in spending exceeded per-capita gross domestic product (GDP) growth for the second year in a row. According to the report, average annual spending among individuals with employer-sponsored health insurance was $5,641.

HCCI analyzed four main groups of health care services—professional services, inpatient care, outpatient care, and prescription drug use—from 2013 through 2017, and found that:

  • Professional services spending increased 13 percent. The most rapid rise in spending within this category was for administered drugs, which spiked 45 percent, despite a 12 percent decline in utilization. Also within this category, spending for psychiatry rose 25 percent and utilization increased 18 percent.
  • Inpatient spending grew 10 percent, while utilization dropped 5 percent. According to the study, rising prices for medical and surgical admissions drove inpatient spending. Further, substance-use admissions rose 18 percent, and prices for these inpatient services increased 39 percent.
  • Outpatient services had the highest growth in spending compared to the other categories. According to HCCI, this was driven by outpatient surgeries and emergency-room (ER) visits. While overall utilization declined 4 percent, costs grew 14 percent, and ER visits increased 10 percent while prices for these visits rose 24 percent.
  • Prescription drug spending had a cumulative increase of 29 percent during the period, partially due to continued growth in point-of-sale prices between 2016 and 2017. Utilization increased by 3 percent in 2017 after little change between 2013 and 2016.

Since 2011, HCCI has published an annual report on health care spending, utilization, and costs, using de-identified claims data from patients under age 65 who have employer-sponsored health insurance from one of the four of the largest health plans in the US. These claims represent 26 percent of the total population with employer-sponsored plans. A recent study published in Health Affairs used HCCI data to analyze rising costs for hospital-based care (see the February 12, 2019 Health Care Current).

Medicare, Medicaid have lower rates of health spending growth than commercial plans, study finds

Medicare and Medicaid have lower rates of health care spending, according to new research from the Urban Institute. In the commercial market, average spending per enrollee increased by nearly 4.4 percent per year between 2006 and 2017. By contrast, per-enrollee spending in Medicare was 2.4 percent, and 1.6 percent for Medicaid. Taken as a whole, however, Medicare and Medicaid are growing faster due to increased enrollment in those programs. The study notes that CMS expects Medicare and Medicaid spending growth to accelerate over the next decade.

(Source: Urban Institute, Slow Growth in Medicare and Medicaid Spending per Enrollee Has Implications for Policy Debates, February 11, 2019)

Proposal would create a Medicare buy-in program

On February 13, House and Senate Democrats released a proposal to allow anyone over the age of 50 to buy into the Medicare program. These opt-in beneficiaries would have access to Medicare Parts B, D, and Medicare Advantage (MA), and lower-income individuals could apply the tax credits and cost-sharing subsidies called for by the Affordable Care Act (ACA) to this coverage. The proposal’s leading sponsors in the Senate include Debbie Stabenow (Mich.) and Tammy Baldwin (Wis.). Sponsors in the House include Brian Higgins (NY) and Joe Courtney (Conn).

Those in support of the measure have stated that it would ensure that older Americans, who tend to have more health care needs, have access to affordable care. They also want to make coverage cheaper for younger, healthier people who purchase health coverage through an insurance exchange.

For-profit hospitals have opposed the idea, claiming it would increase financial pressure on facilities that already serve large Medicare populations—and rely on reimbursements from private insurers. In a prepared statement, the trade group America’s Health Insurance Plans (AHIP) said it was unclear if lowering the age for Medicare enrollment would improve or expand coverage for patients over 50, since most of them already have health coverage through an employer. The American Medical Association (AMA) has expressed concern over how this proposal might affect the Medicare Trust Fund, which is set to run out by 2026.

New CMS payment model seeks to overhaul Medicare coverage for emergency services

On February 14, CMS released a five-year initiative to overhaul the way Medicare pays for emergency services that are triggered by 911 calls. The voluntary payment experiment, called ET3, will allow physicians to conduct emergency triage, provide treatment, and determine whether the beneficiary needs to go to the hospital. Under ET3, CMS will pay participating ambulance providers to:

  • Transport patients to hospital emergency departments (EDs)
  • Transport patients to destinations such as urgent care clinics or primary physicians’ offices
  • Provide on-site treatment from a qualified practitioner, either in person or via telehealth services

ET3 will encourage local governments and entities that operate 911 dispatches to establish a medical triage line for low-acuity 911 calls. According to CMS, this will help improve quality and reduce costs by helping to avoid unnecessary ambulance trips and hospitalizations. Medicare now pays for emergency transports to hospitals, skilled nursing facilities (SNFs), and dialysis centers. According to the agency, a recent analysis determined that Medicare could save $560 million per year by transporting beneficiaries to doctors’ offices, rather than hospital EDs.

(Source: CMS, Emergency Triage, Treat, and Transport (ET3) Model, February 14, 2019)

States propose new, limited Medicaid expansion measures

On February 11, Utah Governor Gary Herbert (R) signed legislation to adopt a limited expansion of the state’s Medicaid program. The state will expand Medicaid eligibility to adults who have annual incomes up to the federal poverty level (FPL)—short of the 138 percent FPL threshold set by the ACA. In November 2018, Utah voters passed Proposition 3 to expand the state’s Medicaid program to 138 percent of the FPL. The legislation signed by the governor, however, establishes a limited, “partial expansion” of eligibility. Federal dollars will fund 68 percent of the limited expansion, rather than the 90 percent federal-matching rate called for by the ACA. Utah intends to ask CMS to increase the match rate to 90 percent.

Lawmakers in Georgia introduced legislation on February 13 to partially expand the state’s Medicaid program and seek a federal waiver to overhaul the state’s individual health insurance market. The bill authorizes Georgia’s Medicaid program to extend eligibility to adults earning up to 100 percent of the FPL.

Breaking Boundaries

More hospitals are experimenting with voice assistants for patient care

Many consumers have digital or voice assistants in their homes. The devices allow consumers to ask a simple question (instead of having to type it into a search engine), check the news or weather, or set a timer, to name a few. Some hospitals have started using these tools to help patients order lunch, check medication regimens, or call a nurse. A few hospitals are taking this technology a few steps further and are exploring new uses—offering a glimpse into a future where voice assistants play virtual roles on care teams. Potential uses include monitoring interactions between the patient and clinician, suggesting treatment approaches, and sending alerts to caregivers if they detect variations in voice patterns or changes in routine that could signal an emergency.

Some hospitals are beginning to adopt this technology by allowing patients to connect to their electronic medical records (EMRs) via voice assistant, utilizing these devices to deliver wound care instructions to patients after surgery, and considering whether this technology might diagnose certain conditions. Voice assistants will likely have to comply with privacy laws such as the Health Insurance Portability and Accountability Act (HIPAA). Some technology companies have developed HIPAA-compliant voice software for use with EMRs. For example, some tools capture the conversation between the physician and patient and load the text into the physician’s note within the EMR.

As consumers grow more comfortable with voice assistants in their homes, they are likely to demand similar tools in health care. Findings from Deloitte’s 2018 Survey of US Health Care Consumers shows that digital and voice assistants are popular among people who are interested in tracking their health. About 75 percent of consumers who use technology for health care purposes rely on digital assistants for reminders or alerts about medication, while 72 percent of this group use digital assistants to monitor health.

(Source: Casey Ross, New voices at patients’ bedsides, STAT, February 6, 2019)

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