Apr 10 2018 | Industry News | By

Lumeris Seeks to Drive Value-Based Shift With Payers, Providers

Reprinted with AIS Health’s permission from the April 5, 2018, issue of Radar on Medicare Advantage

As the health care landscape transitions to value-based care and Medicare Advantage enrollment reaches new highs, providers are increasingly becoming sponsors of MA plans through a variety of arrangements. And well in advance of marketing for the 2019 Annual Election Period, new joint ventures are already popping up as providers, traditional insurers and other new entrants position themselves to launch MA products for next year.

Lumeris, which describes itself as a “long-term operating partner to organizations with a focus on value-based care,” aims to be one of the catalysts behind the transition away from fee for service (FFS). As a subsidiary of Essence Group Holding Corp., the company also operates highly rated MA plans under the Essence Healthcare brand, which has a strong physician engagement component that serves as the foundation for the Lumeris model, according to Corporate Chief Medical Officer Debbie Zimmerman, M.D.

“Our mission is to try to change health care across the country, and what we do at Lumeris is take our learnings from our own health plan and then work with health systems, providers and payers who are trying to make this transformation from the FFS world to the value-based world,” Zimmerman tells AIS Health. “Essence Healthcare is our reference model, it’s also our learning lab, and it certainly adds to our credibility, but it’s really where we begin to develop our model, test our model and then we take that out to others.”

A new strategic partnership with BayCare Health System is one example of the type of value-based pact Lumeris reaches with customers. The new relationship, unveiled by the companies on March 27, will enable the Tampa Bay area not-for-profit health system to offer an MA plan in four Florida counties, pending CMS approval. The BayCare system includes 15 hospitals and hundreds of other locations serving the Tampa Bay and central Florida regions, employs about 450 physicians, and operates an accountable care organization (ACO). The MA plan’s network will include not just BayCare physicians and facilities, although it is the dominant provider in the region, and the partners are currently in the process of building out the network to meet CMS adequacy standards.

Ross Armstrong, head of markets for Lumeris, explains that in addition to providing day-to-day operations for the “collaborative payer,” the company will be “deploying its provider engagement model across the entire network, providing clear and transparent data that’s showing where opportunities for engagement are…and making sure that they know what to do differently in order to capture on those opportunities.” Zimmerman adds that Lumeris has defined 22 core competencies for customers to choose from that it believes are required for any system to provide value-based care, but physician engagement is “part of every solution we put in place.”

“We intend this to be a primary care-driven model….We are not setting it up to drive volume to our facilities,” explains Jim Beermann, president of BayCare unit BayCare Select Health Plans. “What Lumeris brings to us is the ability to empower primary care physicians through easier access to information so that they can do as much as possible in the office as opposed to referring to 10 different specialists.”

Beermann, a former health insurance executive, says BayCare hired him for the “express purpose of getting into the health insurance business” and that when the health system initially issued a request for proposals from interested partners, it heard from about 300 different potential companies. Lumeris, however, stood out for its “proven track record of high quality health services through the Essence health plan and was very convincing in its ability to help our employed physicians convert from traditional fee for service to being able to manage in a value-based environment.”

Incentives Must Drive Behavior Change

Lumeris works with customers to ensure that incentives are aligned between the payer and the provider organization and that total cost of care incentives are balanced with quality and access, explains Zimmerman. “But just as important as having the contract in place between the payer and the provider organization is internal physician compensation.”

She continues, “One of the things that we’ve learned is that if we don’t change the way the physicians are paid, they won’t change their behavior. The money has to come from those value-based contracts, but then it gets distributed among the physicians, and that can vary.” And while it is critical to get the incentives right, providers need additional tools, information and governance to change the way care is delivered, she adds. To that end, Lumeris combines multiple sources of data to identify physician engagement opportunities at the primary care level and develops a “role-based playbook” that addresses what each member of an “accountable care team” can do to drive results in a value-based environment.

Meanwhile, Lumeris earlier this year unveiled a strategic partnership with Mutual of Omaha to enable that insurer to enter the MA market in 2019, pending CMS approvals. Mutual of Omaha offers supplemental Medicare plans in addition to life, long-term care, disability and annuity policies, and now plans to offer an MA plan with prescription drug coverage in select markets. The partners said their multiyear pact will create MA plans across the country under the Mutual of Omaha brand name.

How Lumeris’ relationships are structured in terms of risk and ownership depends on the partner, but the models generally operate around “aligned incentives,” explains Zimmerman. “We certainly have some fixed fees, but we believe that we should be incentivized for the same thing they are. So whether it’s a health system starting a payer, a payer that’s bringing up an MA plan or a health system that has multiple value-based contracts, a significant part of our payments comes out of aligned value.”

Rockford, Ill.-based Pendulum HealthCare Development Corp. (PHDC) has seen more activity than ever in the past five years of providers starting their own plans instead of partnering with an insurer. And Bill DeMarco, a PHDC principal who has been working with physician-owned plans since 1973, suggests that model is better in the long term. “You’re not really fully integrated unless you have the money going in the same direction as the clinical outcomes,” he tells AIS Health.

Provider Sponsors Pursue Joint Models

One of the new trends he’s seeing is successful, provider-sponsored health plans looking to partner with other provider organizations that want to form their own health plan but lack the resources and knowledge base to launch on their own. “It’s a joint venture model where they’re sharing risk but they’re also sharing reward,” he explains. “The old idea where the providers become the subcontractors to the insurer [and receive a portion of the premium at the end of the year] is kind of going away…because they see that value-based contracting is the future. They know that’s where Medicare is going, they know that’s where employers are going, and providers are willing to be held accountable if they can be rewarded for providing consistent, quality outcomes.” That reward, he says, is typically in the form of a bonus on top of a globally capitated payment.

For those provider groups that aren’t ready to fully manage their own health plan, PHDC recommends that some clients, especially those in rural and secondary markets, partner with third-party administrators (TPAs) and outsource claims for direct employer contracting. Another method in Medicare is a “percentage of premium-only type arrangement.” In other words, providers take a percentage of the premium paid by Medicare to the health plan and offer to provide all services within this global fee, explains DeMarco. “If providers can come in under this benchmark they make a margin; if not, they lose. The health plan makes its portion for administrating the Medicare Advantage plan and delegates risk to the health system for all or a portion of medical services.” Partnering with a firm that gathers and evaluates data that can better inform clinical practice is also key, and this is one of the services PHDC offers its provider clients.

Another recent example is a new joint venture between Tufts Health Plan and health system Hartford HealthCare to offer MA plans in Connecticut. The new company, CarePartners of Connecticut, Inc., aims to improve quality and care coordination through collaboration between physicians, hospitals and the plan, according to a Feb. 28 press release. Tufts Health Plan serves more than 1.1 million members in Massachusetts, New Hampshire and Rhode Island and operates the largest MA plan in Massachusetts.

More ACOs Look to Transition to Full MA

DeMarco adds that he is now working with three accountable care organizations (ACO) that want to set up their own MA plans. One is finalizing its capital over the next couple months, one already has that set and is applying for a Medicare Shared Savings Program (MSSP) ACO Track 1+ application at the same time, and the third “didn’t make any money on the [MSSP Track 1] ACO program” but believes the benchmark wasn’t set correctly for its particular network. But the third rented its network to a large local employer and saved that employer 18%, so it is pursuing a commercial license and eventually an MA plan, he adds.

“There are several other ACOs that we’ve talked with that are feeling the [MSSP] benchmark was set so low, they’ve tried their best in terms of utilization and they just aren’t going to be able to lower it enough to really make that margin with a Track 1 ACO,” he adds. “So they’re saying, ‘What do we do with this $2 million or $3 million investment that we put into the operations to manage this product?’ Well, you can develop a full risk product, start direct contracts with the employers or go to a plus 1,” which was introduced for 2018 and involves slightly less downside risk than a Track 2 or 3 ACO.

The majority of Medicare ACOs participate in Track 1, which involves no downside risk and does not require participants to pay back CMS for spending above their target. This may explain why the MSSP increased federal spending by $384 million between 2013 and 2016, despite initial projections that the program would result in $1.7 billion in net savings during that time period, according to new research from Avalere.

by Lauren Flynn Kelly


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