Preparing for the Fast-Approaching Inflection Point in Value-Based Care: Q&A with Dr. CJ Stimson of Vanderbilt University Medical Center
Dr. CJ Stimson is the SVP for Value Transformation with Vanderbilt University Medical Center. He is a practicing cancer surgeon who has led bundled payment policy and program development at Medicare and at Vanderbilt University Medical Center. During his tenure with VUMC, he has been the physician lead of a team responsible for designing bundled programs for specific episodes including maternity, cochlear implants, total joint replacement, spine surgery, and surgical weight loss. In his current role, he drives innovation across the health system’s value based care initiatives.
You believe we are approaching an inflection point in value-based care. Can you elaborate?
There are two strong signals coming out of the value based care world right now. One is coming from the government and Medicare. Under the Trump administration, we saw a continued push toward value based initiatives, including a transition within the Bundled Payments for Care Improvement Initiative, which is currently migrating from being a voluntary model to a mandatory model. Medicare is absolutely changing the way they pay for healthcare. It’s pretty clear that the Biden administration will only propel this further. Value based care is no longer a partisan issue. People recognize the shortcomings of the current payment model and know we need to do things differently.
The second signal is COVID-related. The pandemic clearly demonstrated that a model built on utilization and fee-for-service can be quite fragile in a world where supply and demand can be interrupted by invisible forces. We are seeing serious conversations and movement on the provider side because of COVID and the threats to margins and bottom lines. There is a growing understanding that providers need a more reliable source of income in times when utilization is upended or interrupted in a meaningful way.
The end result of these two signals makes one thing clear. We are on the cusp of an inflection point. We definitely won’t be backtracking on this. The only way is forward.
Is there an early-mover advantage to be had among providers who more quickly adopt value-driven models?
A lot of providers have had to make some tough decisions the last few years. Do they participate in the voluntary programs offered by Medicare, even if the math doesn’t fully work in their favor? Or do they wait to see if it becomes mandatory at some point and then scramble to respond to it. I think the smart decision has been to approach the voluntary programs as an investment, understanding that at some point all providers will need to be prepared to deliver value based care.
Early adopters in the value based care space are going to outlay cash to build their capabilities and gain market advantage. Those who choose to wait and see will likely be forced to comply eventually and lose market share in the meantime.
Who should be financing the shift to value-based care, providers or payers?
Asking providers to successfully move toward value based care is sort of like asking a fox to go vegetarian. This is a complete shift. It’s expensive to transition to value based care. Finding the expertise, sourcing the right technology, redesigning key processes, the overall investment is significant.
The unspoken assumption in some payer circles is that providers are flush with cash from fee-for-service billings and should use some of those funds to invest in the transformation required for value-based care. On the provider side, I think the same narrative is playing out. They believe the plans are in a better position to fund this. As a result, you have everyone looking at each other asking who has the deepest pockets.
There have been models, such as the oncology care model, where Medicare has provided extra payments on top of fee-for-service to compensate providers for important activities that are not specifically billable. Providers receive a management fee on top of their regular billings, and that is rolled into the overall spend they are being held accountable for that year. Not all commercial payers are going to feel this generous. I do think there is an appetite to try and extract transformation costs out of the waste that is already in the system. If you believe that number is 30 percent as many reports suggest, we should be able to reduce waste, make the investments necessary for value based care and still come out ahead on costs.
In value based care, the degree to which providers are able to monitor and manage patients is like nothing you saw in fee-for-service. There was just no business case or incentive for investing in those types of capabilities. But this is what you want your health system to be doing. You want clinicians to pay close attention to their patients’ care experience.
Your team has developed several employer-focused care bundles, including maternity. What impact have you seen?
The early indication from our maternity bundle is that it works. Our provider network has gained market share, and we are bringing in new revenue. Providers are able to do things with their practices that they couldn’t before. Providers want a great experience for their patients, and value is an enabler of that goal. It takes the handcuffs off clinicians and allows them to do exactly what’s necessary for their patients. Our employer partners see clear benefit. They are sharing risk with the health system and receiving detailed reporting on how their spend is being managed. They aren’t accustomed to having this type of data available through their providers.
But the biggest impact from the bundle is on patients. The way we arranged our program, there is no out of pocket cost for employees. We are saving working families thousands of dollars, and especially in the economic environment we’re experiencing currently, this has made a dramatic difference. The stories we hear about families and what this has meant to them is enough to get you excited for work every day.
From there, you layer on the extra services that previously couldn’t be billed for, such a patient navigator and telehealth appointments, and you have a winning formula for patients. We’ve seen incredibly positive feedback on the patient navigation support specifically. Patients love having someone they can easily reach out to, who is responsible and accountable for them as a patient, and is there to help them navigate the system.
Employers are more frequently working directly with providers to develop bundles or other value-based approaches. Does the payer still play a critical role in these scenarios?
It’s up to payers to decide their role. If a payer wants to be involved and play a significant role in value based care, it will happen. We’ve seen this happen in various markets across the country. Furthermore, employers generally prefer not to carve out portions of their overall benefits. They would rather have their payer involved. It’s easier on the employer to do it that way, and quite frankly it’s part of what they want health plans to do for them.
Understanding our local market and where the appetite was initially, VUMC started our bundle programs by working directly with several large self-insured employer groups who were raising their hands and wanting to test this.
It’s obvious that providers and payers have to work well together for value-based care to be successful. But who leads and who follows?
There are two keys to value: attributed lives and high-performing providers to manage those lives. Payers are at an advantage to lead this shift because managing attributed lives is at the core of what they have always done. Providers have not historically focused on growing attributed lives or structuring their delivery models around value. As a result, the burden of value transformation is greater for providers than it is for payers.
Regardless of how the burden is currently distributed, value transformation is expensive for all involved. This means that payers and providers will each be highly motivated to achieve a return on their value investments. I have seen this dynamic play out in our market, where providers and payers struggle to find the balance between preserving the ROI for their own transformational activities while leveraging the activities of other value stakeholders. Ultimately, this balance of who actually leads the dance when it comes to value based care will be struck. The question is whether it will be driven by the market or regulation.
Will value-based care be for everyone? What about independent and smaller practices?
One challenge with value based care is the tyranny of small numbers. If you are an independent practice with a small patient population, it may not be rational for you to participate in value based care. You need an actuarily sound population to execute value well and not be crushed by the random and uncontrollable things that happen in healthcare.
For smaller practices, it could go a number of directions. Contracts could offer value exemptions or develop very narrow risk corridors to protect them, or all providers might get pushed into the same pool and be forced to consolidate. Who makes that call? Is it driven by regulation or by the marketplace. A lot of the smaller practices I talk to say that this feels very far away from where they live. They can’t even imagine practicing value based care. At some point, they probably felt the same way about EMR technology, but over time, EMRs have trickled down to smaller groups.
Another avenue for independent practices is finding help from the classic convener role that has worked in various healthcare scenarios. If risk can be aggregated across multiple practices and a third party can be partially on the hook for equipping a network of independent providers and supporting high quality outcomes, it would likely be an effective model.
For more insights from this interview series, as well as additional tools and best practices to accelerate your journey in virtual and value-based care, please visit www..valuebasedobcare.com.