Newtown, CT – May 17, 2013
Alamosa is a small community nestled in the San Luis Valley, surrounded by the Rockies, in Colorado. It's also the site of an operational implementation of chronic care bundles and offers lessons for the rest of the country. The total population of the San Luis Valley is less than 50,000, and the San Luis Valley HMO has a portion of that population under management. In other words, it's a small plan. However, a few years ago, under the auspices of a Colorado Health Foundation grant, we started working with Cindy Palmer, the HMO's CEO, to implement a bundled payment program focused on chronic conditions. The ivory tower dwellers would likely scoff at the notion…after all, isn't it already an ACO/HMO? Why not stick to total patient cost management? The reason is simple – total per member per year costs mean nothing to the line clinician managing a patient with multiple chronic illness. It means even less to the sole hospital in the valley protecting its occupancy rate. Bundles, however, with their transparent pricing and actionable information on avoidable complications are very meaningful to both clinicians and hospitals, let alone consumers. And so Cindy decided to invest in the needed infrastructure to break down the pmpy into meaningful units of inference and analysis, and to start creating incentives for primary care physicians to reduce a staggering level of avoidable complications. Today, the SLV HMO has a fully operational "engine" that consumes fee-for-service claims and converts them into chronic care bundles (not micro disease-specific episodes). The "engine" then continuously compares the paid actual amounts with the budgets and produces actionable reports back to the clinicians. They know, almost real time, which patients are incurring avoidable complications, for what, and the corresponding costs. They work with nurse case managers to focus on the more complex co-morbid patients, and focus on getting them under control. It's certainly not a perfect model, but it's working.
What this means to you – The two poles of health care cost accounting, individual services and total cost per member, are pretty useless, and yet that's what's in use today by almost all of the health plans in the country. Some have recognized that they need to shift away from that accounting to something more meaningful and have made the courageous decision to invest in the transformative IT platforms that will give them the new management tools so desperately needed. The early adopters will have these systems on line in the next 12 months. For others it might be several years. And for those who have yet to make a decision, you're looking at a decade. That means, for the most part, that only these early adopters will be able to move away from the FFS game to clinically nuanced payment and benefit design models. The others will talk the game, but they can't deliver. And the game is working, not just in Alamosa, but elsewhere. The importance of Alamosa, of course, is that it shows how even in a rural, one hospital region with a small health plan, these bundled payment programs are essential to the positive transformation of the delivery system and the improvement of care for patients. So if SLV HMO can do it, everyone else can, and hence the lesson for the country.
Francois de Brantes
Health Care Incentives Improvement Institute, Inc.