Accountable Care Directory 2016
Sponsor Message

Today's Topic

What is the current state and impact of clinically integrated network initiatives in marketplaces you have observed?

William J. DeMarco
 William J DeMarco MA, CMC

William J DeMarco
Pendulum HealthCare Development Corporation


We are currently working on developing some regional collaborative ACO strategies linking current and/or new ACOs to a larger provider base to increase assignments of beneficiaries as well as spread the administrative costs over a larger population. This gives us a unique perspective as to how the process of integration occurs and, when faced with an opportunity to buy in to an operating ACO, the schedule for integration advances quite quickly.

We see three models. The first is a vestige of the older definition of integration where a lot of contracts between hospitals and physicians are exchanged and the newly formed provider unit attempts to leverage itself with third party managed care organizations to get higher fees. These structures eventually disappoint all concerned as the ability to reduce costs is exclusively tied to discounting fee schedules and not changing utilization patterns.

The second model of Integration starts to get at the real issues of changing financial incentives of hospitals and physicians by creating new pathways for care and new workflows for administrative staff. Within this second model the focus is first on early intake, usually through primary care; the second is tracking and reviewing the physician to hospital admission hand off; and the third is the post discharge planning and return of the patient to a physician manager. Working at perfecting these three phases of care coordination usually produces some results.

We are seeing shared savings contracts now being offered by larger employers as well as larger insurance companies. The only downfall here is lack of consistency because people get distracted by shiny objects. Meaning the big savings through reducing cost of the ESRD patients or a big savings of heading off hospital emergency room expenses overshadows the consistency needed in such areas as reducing unnecessary referrals and generally building a fully operational patient engagement process are set aside because of the big savings that occurs only a couple times in a performance period. To be successful the provider must do a lot of things consistently and we find that sometimes a simple workflow change can save more than all the big ticket items do.

The third model gets at the core principles of not just clinical integration but also tying this to financial integration. This is where the dollars are usually coming in a bundled, global or capitated amount for one or more payers. Using the physician and hospital data they are able to track insurance claims and negotiate with the payer as a fully integrated care system. This last model is the jumping off point to a fully capitated, provider led health plan because it takes into consideration the total cost of care (TCOC) and connects it to select populations with a specific diagnosis. This is more than contracts or mere utilization changes; it is building consistency of incentives for physicians across an aligned set of goals.

The hazard exists when a stage one contracted network attempts to join a risk bearing ACO network or build one on its own. Several large systems have spun their wheels, eventually calling in help to move them to stage three in a hurry so they could get their arms around all the pieces of the delivery system both inside and outside the four walls of the hospital or clinic to create a medical neighborhood with unified goals and guidelines. The collaboration model works because those early sponsored ACO can share their experiences and opportunity for change with less developed delivery systems.
What has been missing all along is this definition of not just clinical integration but also financial integration. People have shied away from this, saying they do not want to take the risk. With all the new MACRA rules in effect and the hospitals being forced to follow Medicare instituted sanctions and incentives, the fact is that risk is here to stay and it's moving more quickly than anyone had anticipated. The new model of the ACO is a shared risk and incentive plan that can be adopted across Medicare and commercial beneficiaries.

Peter Kongstvedt
 Peter Kongstvedt

Peter R. Kongstvedt
Principal, P.R. Kongstvedt Company, LLC

While scientists are in general agreement about how evolution works, there are several somewhat different theories for exactly how it proceeds. One theory put forth by the late Stephen Jay Gould is called "Punctuated Equilibrium," and it essentially means that evolutionary changes proceed rather slowly in stable environments, disrupted - or punctuated - by bursts of massive changes in response to substantial environmental changes. Mutations that could not thrive in the earlier environment do so in the new one, though some prove more long-lasting than others. That's what we're seeing right now as the federal government changes the healthcare environment.

Clinically integrated networks initiatives are mutating all over the place, as are private payer organizations. Each showing some similar features, but each having its own distinctive forms and functions, partly in response to the external environment, both local and national, and partly in response to their existing capabilities and cultures. Examples of differing factors include such things as health system employed physicians vs. independent physicians or groups; rewarding health system executives for making high margins and high utilization vs. rewarding for reducing costs; private payers creating reward-based payment models vs. reward and risk-based; health systems competing with payers vs. partnering with them vs. contracting with them; health system regional dominance vs. regional competition; and so forth. In reality, none of these are actually "vs." situations; they are more of a balance between such factors.

If the environment has an impact on health system clinical integration, there is also a feedback loop just as in biologic evolution: as they evolve, they have an impact on their environments as well. We are seeing that as well, but it remains far too early to describe it in any way that will not be different within a year or two. Mutation: the engine that powers change. Gotta love it.

Cyndy Nayer
 Cyndy Nayer

Cyndy Nayer
Founder/CEO of Center of Health Engagement

Whether reading the national business and health care journals, scoping the Facebook posts from patients and health execs, or watching the nearby hospitals and health care providers here in Florida, the simple answer to this question ranges from "Gee, that's an interesting merger" to "Nothing integrated when the numbers of poor health keep rising." In short, integrated networks are still not operating past the beginner levels, with a few exceptions.

As a quick refresher, the concept of integrated networks emerged mid-1980s to offset the exploding costs of delivering care. These early trials were built on cost cutting and efficiencies of scale in purchasing, not on patient or community outcomes. Merger begat merger, through managed care, health system purchases, and physician acquisition. Each tailored "network" promised lower prices and better outcomes, but big promises became small deliveries.

Fast-forward 20 years and the new networks are growing larger, particularly in the physician-owned and/or driven acquisitions, with the hopeful goal of reorganizing payment based on outcomes. While some pockets of ACO-PPO-HMO-HDHP overlap are testing the payment models, we have still not seen sustainable, replicable, and predictable outcomes, even in more forward networks such as those in the Northeast and West coasts.

The current state is flummoxed because of the lack of interoperability and delivery of full data to patients, complicated by the jet-propelled rise of drug costs and treatments. There are three opportunities for true integration that can include the patients in the patterns of care while managing the appropriate treatments and delivery of efficiencies.

1. Government. In order to achieve patient compliance and patient-provider trust for getting to goal, treatments and services must be transparently priced. The major stumbling block is the government's inability to negotiate Medicare drug prices, aggravated by separate system of validation and pricing of devices. When complicated cases are present, the patient expects to be treated by the best treatment and physician recommendations. Trust is broken when clinicians do not know pricing or are paid bonuses for using brand/generic/device that the payer prefers, regardless of patient impact. When the patient-provider trust is impugned, goals are not achieved, more services are required, and costs go up. Medicare drug management is the key to making rapid strides in trust, compliance, outcomes, and value.

2. Government. (No, this is not a typo) The government-as-employer should, by dollar definition, be able to set the leadership for other employers and payers in an area. Yet, the integration of the DOD and VA health records is still a shambles, despite the US being the richest container of tech savvy. The remarkable revelations of inappropriate data outcomes from the CDC, FDA, and other "health" agencies demonstrates the confusion in the system that first proposes "Big Data" as the cure to integration and interoperability, and then stumbles on the timeliness and consistency of the measures. The integration of health networks will accelerate and progress when the standards for measures AND communication to the various stakeholders is functioning appropriately, demonstrating the relationships of costs, communication, and compliance for various populations in the US and beyond.

3. Government. The insanity of providing geographically-bound medical plans is an overwhelming problem in the US. A good example is a Kansas City patient, obviously on the Missouri-Kansas border, using clinicians for treatment on both sides of the border and having to manage the requirements not only of her health plan but also the out-of-network care, eligibility to receive care, and so forth. Deductibles, copays, out-of-pocket expense, physician/system choice are all compromised. Imagine what happens when people travel to out-of-state care for cancer. Imagine what happens when one network has to intersect with another- integration of any kind, even sharing patient-level data, is more often missing-in-action.

The bully pulpit of the US health experts, US tech experts, and US patients must be the placed as the core of data-design-delivery in order for integration in health care to occur. Anything less will continue to be networks-for-optimum-billing, which is not at all focused on patient or system outcomes, nor on building a healthier US.

Mark Lutes
 Mark Lutes

Mark E. Lutes
Chair, Board of Directors / Member of the Firm,
Epstein Becker Green


CINs - "The State of the Union":  In most markets, CINs are today more aspirational than anyone likes. By "anyone" I mean the policy makers who would like them deployed to help realize value based purchasing goals, hospitals that would like them ready as vehicles to develop and enforce care paths, independent physicians who would like them to be shelter from the pressures to accept hospital system or other employment, employers who would like local experienced value based contracting vehicles -- to name a few.

Most CINs are probably stalled over insufficient bonus money at the ready (or plausible) to get their participants' attention/change practice patterns. Payors are not waking up every morning wanting to contract with a CIN. Face it, its work. There are special contracts to write, there are reports to be created and run, reconciliations to be negotiate, compliance can be more difficult, and the likelihood of medical management success is uncertain. Can they reasonably be expected to prioritize this spend within a 15% of the premium that already seems stretched by expenses?

Is "help on the way"? The optimists should point to the opportunity of the "alternative payment methodology" under MACRA as a driver. They might also cite other pressures to create the infrastructure-needs for structures to handle current and future episode payment needs and platforms to fight inappropriate readmissions among others.

The pessimists would argue that even the above do not aggregate to a "tipping point". They would argue that until new incentives are created among the buyers (e.g., mandates to commercial, MA and Medicaid plans) plans will not invest enough into building CIN relationships for them to take off. Similarly, self-funded plans lack the incentives to spend their assets to build the chassis for local population health management.

However, this is an election year...ideas will be hatched and will gain currency. Some of those incentives to stimulate the payor market to seek out and facilitate CIN development are within the legislature's reach. dream.

Henry Loubet
 Henry Loubet

Henry Loubet
Chief Strategy Officer


California arguably has the most robust clinical integration activity in the nation with at least 67 ACOs serving about 1.3 million people. According to the Berkeley Healthcare Forum at the University of California - Berkeley School of Public Health, the state is well on its way of achieving the goal of 60% of the population under integrated care by 2022. Medical groups under ACO contracts are beginning to show higher quality metrics in several areas of condition management (cancer, diabetes, pediatric care and Chlamydia) as well as patient service categories versus groups that are not participating in ACO models. (Shortell and Scheffler, Health Affairs Blog, 6/2/2015) These programs are delivering results and, if these trends continue, clinically integrated care will be the most significant factor in improving population health and decreasing medical costs.
Success will depend largely on making progress on both the technological aspects of integrated care along with the human/cultural dimensions. Strides in the interoperability of Health Care IT, Electronic Health Records and patient portals must be coupled with the ability of provider staff, patients and families to effectively interact with the technology. The value of systems will only be as great as the willingness of people to use them to enhance the flow of current, relevant patient information when and where it is needed.
This is especially true for the consumer engagement of patients and their families as fully participating partners in the delivery of health care. Movement must continue in the direction of making the patient interface not just easier to access, but actually engaging and useful to them. Widespread availability of smart phones and tablets is an opportunity we can seize to help close this part of the loop. The patient engagement must not only prompt communication about illness and injury but emphasize wellness and fitness also. In addition to the basic functionality of patient-system interaction, consideration for language and cultural preferences among different segments of the population is essential.

The goal of clinical integration has often been stated: "to maximize the value of services delivered." Measurement of this goal must recognize both the technological and human challenges of achieving it. Inherent in the word "value" is also an understanding of the cost-benefit relationship. Reaching the goal of clinical integration will require continuous measurable improvement along all of these dimensions.

Vince Kuraitis
 Vince Kutaitis

Vince Kuraitis
Better Health Technologies, LLC


The question around the state and impact of CINs is one of HUGE importance. That said, my short answer is "We really don't know." The CIN movement has been stealthier than the development of B1 bombers.

The promulgation of CINs was initiated and promoted by the Federal Trade Commission guidance in the mid-1990s. The CIN construct was the government's response to the industry's spawning of "financially" Integrated Delivery Systems in the early 1990s. The intent was to provide antitrust guidance by allowing clinically beneficial integration initiatives across provider organizations while discouraging veiled anti-competitive practices.

As of 2008 there were only a handful of CIN initiatives in the US; by 2013 the Advisory Board reported that there were some 500 CINs in existence. Who/what are they? Don't know -- I've never actually seen a list of CIN initiatives.

Contrast the dearth of information about CINs with the plethora of information and discussions around ACOs. ACOs have been widely reported on in excruciating detail. I'd imagine there's a fair amount of overlap between a list of ACOs and a list of CINs -- but that's conjecture. A few CINs have been above the radar -- Advocate in Chicago is the poster child example of a visible, successful, aggressive CIN.

The structure of CINs has been highly regulated. Ideally, CINs would be driven primarily by clinicians seeking to promote integrated patient care and secondarily by business executives focused on creating effective partnerships and alliances. Yet, the creation and guidance of CINs has been driven and controlled by lawyers and compliance officers.

Upcoming Webinars

There is No Crying in Bundles: Making Your Worst Failure Your Greatest Success, March 15, 2016
Growing a Health System with Market Intelligence: Transitioning to Value-Based Networks, March 16, 2016
Value of ACA Coding Improvement: Market Share and Market Effects, April 6, 2016
2016 Population Health Web Summit, May 19, 2016
2016 Predictive Modeling Web Summit, September 15, 2016


MCOL - Positioning you for change in health care
1101 Standiford Ave., Suite C-3
Modesto, CA 95350


MCOL respects your privacy.
Please read our online Privacy Policy.