The new normal: Partners execs explain operating fee-for-service and value-based world

Partners HealthCare Vice President Revenue Cycle Operations Rosemary Sheehan, left, and Lynne Eickholt, chief strategy officer. (Ralph Morang Photography)

Boston-based Partners Healthcare, anchored by renowned academic medical centers Massachusetts General Hospital and Brigham and Women's, collects about $6 billion in cash a year and processes millions in transactions.

But while the volume of the transactions is not a major challenge, according to vice president, Revenue Cycle Operations Rosemary Sheehan, the work of processing payments for both fee-for-service and value-based arrangements presents a new reality that is wrought with issues.

"It's the distraction of being in both worlds," Sheehan said. "The fact that we're doing both and focused on both in revenue cycle is our biggest challenge."

Partners operates on a fee-for-service chassey in part because its two academic medical centers are affiliated with Harvard Medical School. Commercial referral business from other primary care physicians to Mass. General and Brigham and Women's are fee-for-service preferred provider organizations because employers are going self-insured and choose a PPO when they do that.

[Also: Physicians generate nearly $1.6 million each for hospitals in fee-for-service annually]

Whether these will shift to risk in the future is still a strategy question for Partners. For now, large academic medical centers will have referral business that operates on fee-for-service, according to Sheehan.

Even accountable care organization contracts within the organization are reconciled against fee-for-service in a 25-page quarterly report on all of Partners risk contracts, according to Chief Strategy Officer Lynne Eickholt. At the end of the period, the contracts are tallied and evaluated as either under or over budget.

Even if Partners had decided to get paid by capitation, or even partial capitation, it would probably have to report the underlying data so CMS would know the real cost.

"We could have said we don't want to be paid fee-for-service anymore, we want to be paid capitated," Eickholt said. "I imagine the feds would require us to report the underlying fee-for-service."

Healthcare is moving towards value, and many providers support that change for the outcomes it will have on the quality of care systems provide. But that transition comes with a ton of requirements tied to reporting and analytics, which can be a drain on resources.

"The transition to value may provide better clinical outcomes and a better understanding of what it takes to care for the health of a patient," Sheehan said. "But I think from an administrative perspective, it's really just complicated a lot of what we do."

More work on top of work

Partners already had a full plate when it came to service-line reporting. But when value reporting started to be mandated, the organization just had to make room for the added burden.

"What isn't well understood by the government is that all these programs are great, but they just add a lot of cost to hospitals and providers, because you just have to figure out how to report and deal with this new way of doing work, but your old way of doing work hasn't gone away," Sheehan said.

Partners is even adding more value-based work in January, when it joins the Next Generation accountable care organization model run by CMS. The system has already been part of the Pioneer ACO model for a several years.

[Also: Hospitals to get $1.8 billion in 2017 bonuses for value-based purchasing]

In Next Generation, participants pay or take 80 percent of the ACO's deficit or surplus. It's hard work to achieve the savings necessary to get there, according to Eickholt.

"On the Pioneer ACO we gained," Eickholt said. "We were near break-even for two years and then we got a decent surplus for two years."

One of the best ways to cut expenses is by focusing on older, high-risk patients because they drive so much of the dollars, she said. Partners had practice doing this even prior to joining Pioneer by taking part in a high-risk demonstration model at Massachusetts General Hospital.

The commercial side is harder because patients there are not as sick, Eickholt said. The cost of pharmaceuticals is driving prices.

Also, behavioral health needs to be addressed if costs are to be lowered, she said. Partners offers behavioral health, mostly through virtual consults with psychiatrists or psychologists.

Bullish on value

Rather than go into bundled payments, Partners has chosen to  focus on total medical expense value-based contracts. It has three major commercial value-based contracts. Also, 20 percent of the system's commercial business, and 30 percent of its government contracts are value-based.

Partners also has Medicare Advantage contracts in some of its practices, a Medicaid risk contract as well as a commercial risk contract with its own health plan. In January, it will have a Medicaid ACO for its Medicaid patients who are not already in a risk contract, as part of a state pilot program. The state's Medicaid program, MassHealth, is launching the pilot ACO at the end of December.

"The important part of our value proposition is understanding our cost," Sheehan said. "Having a good process for capturing those services."

A big part of that is technology, Sheehan said. Partners is transitioning to the Epic electronic health records platform to manage its risk contracts, giving it a single source for managing data and for managing patients clinically.

Partners is live on Epic with the larger hospitals and is transitioning to eight more next year.

Eickholt's team of 90 mine the data to predict better outcomes, readmissions risk, and increasingly for population health. Machine learning  through artificial neural networks associates patterns and puts together characteristics of other patients for the best course of treatment.

"Most of our risk contract patients get care through our own facilities that goes through Rose's shop," Eickholt said. "We have a claims database from the payers that's broader than that."

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Clinical information flows from physicians capturing services and documenting correctly.

"What we try to do is talk about the need to clinically document for care and accurately depict the patient," Sheehan said. "We really try to steer clear of the word billing and coding because if you focus on that with physicians, they tune you out."

Eickholt has been with Partners since it formed in 1994 as way to integrate insurer relations, contracting and all critical back office functions. Employees were formerly located in several offices in Boston and in the spring, consolidated in a new building in Somerville, Massachusetts.

In terms of dollars, 99 percent of revenue cycle functions are done out of the new office, though some of the smaller hospitals, including those on the islands, have decentralized functions. Partners includes hospitals on Nantucket and Martha's Vineyard.

"Lynne and I really work together to help support Partners," said Sheehan, who leads all revenue cycle functions for six acute hospitals, five specialty hospitals, home health services and employed physicians. "I do tactical kind of ground warfare kind of stuff to get our transitions process, all really in an effort to, A, collect the revenue we should but, B, provide really good data that Lynne's teams can then use to do all sorts of analytics including all of our contract analysis, all of our value-based analysis that happens both at the hospitals' population base management and in Lynne's area."

But while Partners has made significant investments value-based reimbursement, the election of Donald Trump, who has said he would repeal and replace Obamacare, could upend that.

However, Sheehan said she believes CMS will continue to move forward with value, and that the quality goals set by Partners will remain unchanged.

"I don't think the election changes the experimentation happening in CMS," Sheehan said. "(CMS) will continue to try new things to control cost and we will remain flexible and will respond accordingly. The goals are still the same; provide the highest quality care at the lowest cost."

Twitter: @SusanJMorse