The Power of Partnership in Achieving Payment Reform Sustainability

02 Dec 2013

It's not easy getting an idea, let alone a project, off the ground. It's even harder keeping it afloat. The Aligning Forces for Quality New Mexico Alliance, and its partnership with New Mexico's state Medicaid office as well as other state leaders, provides an interesting example of how the public and private sector worked together to test an innovative payment reform model that may serve as an example to other states seeking to boost administrative efficiency.

Launching a new model of health care payment while adapting to a changing health care landscape takes time and hard work, but what made the process smoother for the New Mexico Alliance was a foundation of strong relationships with the state Medicaid office, regional health plans, providers, community leaders, and other stakeholders.

"We built this model from scratch and were able to tap into existing relationships to build this project and test this approach," said Patricia Montoya, director, New Mexico Coalition for Healthcare Quality at HealthInsight New Mexico (formerly the New Mexico Medical Review Association), an AF4Q Alliance. "New Mexico has a reputation for being fiscally responsible and well managed because we're not a wealthy state and much of our population is low-income, so we are used to making resources stretch. I think that certainly helped position us to pursue this project. Health care is constantly evolving, and our state needed new approaches to align all of the different payers and create a more seamless payment model that emphasized quality and reflected the state of health care today."

Less Paperwork, Better Quality

Historically, providers have relied on the fee-for-service model of care in which separate payments are made to individual providers for individual services. This approach is associated with more fragmented care. Now, the New Mexico Alliance, New Mexico Medicaid, payers, and community leaders have been gearing up to test what's called a bundled payment approach that will officially kick off in 2014.

To gear up, in January 2012, the New Mexico Alliance and stakeholders held a two-day "Payment Reform Summit" attended by more than 70 stakeholders including employers, health plans, medical group executives, consumer advocates, and hospital leaders. Then, in February 2012, the New Mexico Alliance hosted a "Consumer-to-Consumer" Summit to share with residents the Alliance's projects and goals, as well as learn ways to better incorporate the consumer perspective into its projects. "Everyone has a stake in this, so we wanted as much feedback as possible," said Montoya.

Bundled payment has been cited by health experts and the federal government as an approach that stands to improve the quality of care for patients, particularly those with chronic conditions, such as diabetes, heart disease, and asthma, and to emphasize better preventive care to reduce the risk of both acute and chronic illness. Bundled payment links financial and performance accountability that results in a single payment reflecting different services delivered by two or more health care providers during an episode of care or a defined time period. Episodes of care are codified, according to the Centers for Medicare and Medicaid Services, so that participating providers in the new payment model follow the same protocols.

With many hospitals and providers leaning toward accountable care, bundled payments mean one entity (for example, a hospital) receives a bundled payment and then divvies payment among its participating physicians and other providers. The overarching purpose of bundled payment is to keep health care costs in check, reduce administrative overlap and inefficiencies, and elevate quality. Bundled payment also can align incentives for hospitals and physician practices by integrating inpatient and outpatient care and encouraging specialists to work together across all the different care settings, from admission to home care.

To date, three health plans have agreed to participate in the New Mexico Alliance's 2015 payment reform pilot project, with two committed to moving forward: Presbyterian Health Plan and Molina Healthcare of New Mexico. At the same time, the New Mexico Medicaid office is moving toward bundled payment, a move that will further align efforts among Medicaid, the state's individual private health plans, and the nonprofit health care sector, such as regional hospitals.

How did the New Mexico Alliance get to this point when only one in four organizations manage to sustain success, another third are still viable but struggling, and another third are in decline? Those less-than-promising statistics come from Peter York, senior partner and chief research and learning officer of the TCC Group, a New York-based consulting firm that advises organizations on how to grow and sustain success. York emphasizes that true sustainability produces results that can be replicated because they have structure. Several factors contributed to the New Mexico Alliance moving toward sustainability: Medicaid's strong presence throughout the state, which created an environment conducive to exchanging ideas about how to move forward; close-knit relationships among various stakeholders in both public and private sectors; low turnover of leadership; and a shared commitment to efficiency in a state with minimal resources.

The Role of Medicaid

New Mexico is a rural state with a population of slightly more than two million; most people live in the Albuquerque region. Nearly one in five residents live below the poverty line. As of 2010, 673,856 or approximately 31 percent of the state's residents were enrolled in Medicaid, the Unites States’ largest health coverage program, with 60 million beneficiaries nationwide. In New Mexico, children account for 58 percent of Medicaid enrollees, followed by 24 percent non-disabled adults, 11 percent of non-elderly disabled, and 7 percent elderly. Given those numbers, it was important Medicaid had a voice in the ongoing statewide discussion about payment reform.
"Medicaid in this state is a major player, so from the start, they have been at our table," said Montoya. "When Medicaid says something here, health plans listen. Sustainability isn't always about money. For us, it's been about building relationships and working together to be more efficient. "

Montoya credits New Mexico Alliance's success in public reporting, cultivating a statewide culture of transparency, and bringing diverse stakeholders together, including medical groups and health plans, for further strengthening the state's relationship with Medicaid. This initiative, she said, laid the groundwork. "We have the type of expertise and experience Medicaid is looking for and seeks to share with its colleagues at the national level," added Montoya. "We're in a position to help inform how health care can function in this country."
Sandra Chavez, the Quality Bureau chief who served in Medicaid's Medical Assistance Division from the beginning of the New Mexico Alliance's work, offered a practical point of view on why the relationship between Medicaid, state leadership, and the New Mexico Alliance remains successful.

"New Mexico has a shortage of primary care physicians, dentists, and specialists, so the Medicaid office was certainly interested in cultivating alignment among the providers who are here," Chavez explained. "Medicaid and state leadership wanted to reduce the administrative burden that had existed among the multiple providers who were working with multiple payers. Providers don't have a lot of resources to devote to multiple initiatives being introduced by multiple payers. Aligning in this way can increase administrative efficiency while also enhancing the quality of care."

Engaging Different Partners

Medicaid was one of several partners, and partnership, said York, is critical to any project’s sustainability. Different points of view, different expertise, and different experiences and access to resources can strengthen a project and position it to be more sustainable. Key partners, York says, include government officials, partners who can provide financial support, and enforcers, whether community leaders or groups that share in the mission, who can reward or punish systems that work or don't work, respectively.

One of the New Mexico Alliance partners is Molina Healthcare of New Mexico, a subsidiary of Molina Healthcare, Inc., a Fortune 500 managed care company with licensed health plans in 10 states, including New Mexico. Molina Healthcare of New Mexico currently serves Medicaid beneficiaries and is participating in the pilot. Irene Krokos, MD, chief medical officer of Molina Healthcare in New Mexico, was a key partner with the New Mexico Alliance and Medicaid."Managing care and the administrative processes around care is really about managing population health and public health," said Dr. Krokos. "Quality isn't about checking off boxes but ensuring the right interventions are happening at the right place."

Sustainability, says York, is also about letting others know you're fulfilling a need. The New Mexico Alliance has already participated in public reporting of outcomes in its communities and will continue to build on its own data tracking and reporting to communicate to stakeholders and consumers how well medical needs are being met.

New Mexico's core measures, often indicators of common medical needs, include asthma, diabetes, congestive heart failure, and heart attack—chronic conditions that burden a significant number of New Mexico residents. Practices in New Mexico are either already following or moving toward a patient-centered medical home model of care, which supports greater care coordination and data tracking around these care measures. The payment alignment advocated by the New Mexico Alliance and its partners further supports these endeavors by incentivizing practices to meet their core measure goals.

"The work with AF4Q allowed New Mexico to take an innovative approach and evaluate which model of payment reform and patient care best fit together, best leveraged our state's resources, best emphasized quality, and could be sustained," said Dr. Krokos. "We wanted to steer away from the fee-for-service model because what if you pay for a medical service and didn't have a good outcome? Outside of medicine you can ask for a refund, but in medicine, what do you do? Bundling care and bundling payments puts the emphasis back on the patient. It's the right thing to do because you will see improvements in clinical outcomes and improvements in patient satisfaction. And good medical care means greater stability for communities."

Growing Leadership

When York spoke about achieving sustainability at the session at the AF4Q National Meeting in May 2013, he emphasized the importance of leadership and leaders who understood the methods, processes, and products and how to best sustainably resource these areas. York also stressed that effective leadership comes from leaders who learn, ask for data, and can make decisions based on feedback so that methods, processes, and products can be improved. Allison Kozeliski, MSN, RN, clinical quality improvement manager and regional TCAB leader for New Mexico Coalition for Healthcare Quality, says New Mexico benefits from an intimate relationship with its state leadership.

"Many of us grew up here, and there's a strong sense of citizenship here with an innate sense of trust," said Kozeliski. "We know most of our local and state legislators. In fact, many of them are our neighbors, and that kind of close relationship definitely impacts how things get done in this state. We're able to keep things moving because of these relationships, so perhaps we experience less bottlenecking than other regions. Would this model fit elsewhere? I don't know. New Mexico is a rural state with a small population, and we use that to our advantage to better serve the residents of this state."

Chavez echoed that sentiment. "The previous governor of New Mexico, Bill Richardson, was approached by the Robert Wood Johnson Foundation, and health care had been a priority of his. This has now carried through to the current administration of Governor Susanna Martinez," she said. "State leadership valued making health care more efficient."

Montoya acknowledged that she has served as director of the Alliance since its inception and was a former state secretary of health, with other partners in this payment reform project having similar, longstanding professional ties in New Mexico. As a result, people have developed a familiarity with their colleagues' leadership style. However, she notes the state may eventually face a gap as current leaders retire and a need for growing the next generation of leaders becomes greater.

"That's a challenge area for us and will be key in our sustainability," she said. "We need to groom our future leaders and get them engaged now. We're brainstorming ways to get out in the medical and nursing schools and clinics and share our work, but we don't have a focused strategy on that piece yet. This pilot project coming up in the new year is just a starting point."