Atrius Health Makes the Business Case for Risk-Based Payments

Taking the plunge

Providers need to put both feet in the risk pool to realize the financial and clinical benefits of value-based care, according to the Atrius leaders.

“There are tipping points,” Sindell explained. “If risk is only a small part of your business, then it's not part of your daily routine. One of the things that really had us hitting our stride and getting stronger was having an increasing amount of revenue tied to risk.”

Currently, three-quarters of Atrius’ business is under a risk-based arrangement, but the group anticipates close to 90 percent of its revenue this year to be under a risk-based contract.

“It's just the way we do things. We no longer have to do this special thing for one contract. Now, we treat all patients the same regardless of the contract that they're part of because we know that most of them are in full risk arrangements. That creates a very different mindset and allows us to be much more consistent in the processes we use,” she said.

While providers need to assume some of the risk traditionally managed by payers for value-based care success, payers must also shift their business to help their providers reduce the medical cost trend.

“CMS sees value-based care as the appropriate path to improve care and lower costs, and they would like to have people slip into two-sided risk as early as possible. Whether their timeline is long enough or not, I don't know. But if all the payers moved in the same timeframe, it would be easier for physicians to convert because having two different systems - what's referred to as ‘a foot in two canoes’ - is really tough,” Strongwater stated.

Commercial payers have lagged behind Medicare with adopting risk-based products, and providers are noticing. Limited or lack of risk arrangements continues to be one of the top external challenges of assuming financial risk in the commercial space, medical group leaders said in the AMGA survey.

“Getting everybody aligned with risk and managing care in the same way, and I mean not only the physicians but the other providers, including hospitals and extended care facilities, would accelerate the change,” Strongwater emphasized.

Atrius is overcoming the obstacle by collaborating with local payers to change how the group is paid. The group recently partnered with Blue Cross Blue Shield in Massachusetts to convert members from the payer’s popular PPO model to global payments.

“We kept saying, ‘Wait, we are built for risk and you're going in the opposite direction.’ It's not helpful in the long run with the total cost of care trend,” Strongwater explained. “Blue Cross, to their credit, said we could stem that tide by converting our PPO members into a global budget and that is what has allowed us to continue along the path of value-based care.”

“The model with Blue Cross could be a template for other payers and perhaps other providers in different markets to move to value-based care in the commercial space,” he added.

For providers who are not quite ready to develop global budget arrangements themselves, the Atrius leader advised organizations to start with low-risk options.

“Taking on risk depends on your starting point,” Strongwater said. “The way that the federal government tried to go at this was to offer up a low-risk opportunity, meaning upside risk only. Where those opportunities are available, providers would be well served to take advantage of them. It allows you to build the infrastructure and tools at very low risk.”

Developing the capabilities for risk

Starting from the bottom of the risk scale and moving up will help providers develop the capabilities they need to succeed, which starts with interpreting claims data well enough to identify high-cost, high-risk patients and develop tailored interventions.

“In any given population during the course of a year, a person can drift into a high-cost space. You have to find the patients who are going to have a chronic, persistent condition because that five percent of the population drives 50 percent of the costs. And if you can manage that five percent of the population, you can significantly reduce your cost of care,” Strongwater said.

But identifying the patients who are driving the medical cost trend is key.

“You have to be able to interpret the claims data then plan a tailored intervention,” he continued. “So, if you have somebody with heart failure, you can assign a case manager, a nurse practitioner, and maybe a clinical pharmacist to help manage the condition. Then, that patient’s rate of hospitalization goes down and for every hospitalization that you avoid you save thousands of dollars.”

At the same time, providers need to be managing quality metrics to earn shared savings and other bonuses tied to quality performance.

“We spend a great deal of time on both patient experience and clinical outcomes, and we typically do well in terms of scores. We are generally in the 90th percentile for the vast majority of those measures because we're very attentive to systems of care that track prevention and the kinds of interventions patients really need for the management of conditions like hypertension and diabetes,” Strongwater stated.

Building infrastructure, whether internally or with the help of a vendor, is necessary to succeed in risk-based arrangements. But it will take time, the Atrius leaders warned.

“We have built the infrastructure for managing populations over a long period of time. That includes things like data analytics, care and case managers, clinical pharmacists, social workers, behavioral health providers, and we provide that kind of cohesive wraparound care that allows us to be less expensive than our competitors,” Strongwater said.

“It is really hard for a small group to do it on their own. For us, that took probably about three years before we started having a surplus, he added.

But providers should be looking at these investments as an overall business proposition that will pay off in the long-term, the Atrius leaders agreed.