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One Path to Value-Based Care for Academic Health Systems

Article · September 12, 2016

Academic medical centers (AMCs), perhaps more than any other health care organizations, are feeling the tension between fee-for-service and value-based care. Given their three-part mission (teaching, research, and patient care) and their role as tertiary referral centers for complex patients, AMCs may be at a structural disadvantage under alternative payment models. Nevertheless, many AMCs are affiliated with integrated delivery networks that have large primary-care and multispecialty-group practice footprints — networks that may thrive under value-based payment.

As many AMCs experiment with alternative payment models that have an underlying fee-for-service architecture, Georgia-based Emory Healthcare decided in August 2014 to move toward population-based payment by partnering with Anthem-owned CareMore Health System, a network-model health maintenance organization that operates Medicare Advantage plans and delivery sites across several states. The goal: Leverage Medicare Advantage’s unique payment mechanisms to help Emory Healthcare edge closer to value-based care delivery.

Under the partnership, called Emory Healthcare Network Advantage, Emory assumes full responsibility for the care of Atlanta-area seniors who are enrolled in several Medicare Advantage plans. CareMore works with Emory to redesign clinical and care-coordination services for this population — specifically, to develop Emory Coordinated Care Centers, train and integrate “extensivist physicians” (who care for patients with multiple complex conditions), and adopt innovative technologies — modeled on CareMore’s efforts in southern California. Reimbursement is structured as a population-based, sub-capitation model: Medicare Advantage plan operators make a risk-adjusted, per-member, per-month payment to Emory Healthcare for beneficiaries who are enrolled in the Emory Healthcare Network Advantage shared-savings program.

Cataloguing the Advantages

Emory chose to leverage Medicare Advantage’s payment features for several reasons:

Financial flexibility. Most alternative payment models are incremental by design. With some exceptions, Medicare and commercial payers continue to pay physicians on a fee-for-service basis, with year-end bonuses (or penalties) for performance on cost and quality targets. Although these structures shield physicians from the full financial risk of capitation, they also limit the capacity for innovation. Despite the promise of downstream savings, substantial up-front investments in care-management capabilities and digital infrastructure are required. Population-based payments in Medicare Advantage afford greater financial resources (given the 100% shared risk) and more freedom (related to prepayment) to invest in new clinical capabilities and experiment with new strategies, such as building care centers and hiring extensivist physicians.

A focus on high-risk patients. Emory Healthcare Network Advantage was designed to focus specifically on older adults who have, or are at risk for, chronic conditions such as diabetes, congestive heart failure (CHF), and chronic obstructive pulmonary disease (COPD). Medicare Advantage is well suited as a delivery and payment model for older high-risk patients, given the ability of special-needs plans (SNPs) to provide high-risk elders with benefits and clinical services specifically tailored to their clinical conditions (e.g., CHF, COPD). Both prepayment and 100% shared risk also allow a provider to invest in comprehensive clinical services and coordinate inpatient and outpatient care for the most vulnerable patients, such as the care that Emory Coordinated Care Centers provide. Finally, risk-adjustment methodology for Medicare Advantage payments does not penalize providers for focusing on high-risk, high-cost patients.

Alignment across payers. Unlike fee-for-service Medicare, Medicare Advantage afforded the opportunity to experiment with a single delivery model and then engage multiple payers in the greater Atlanta market. Although CareMore has experience operating Medicare Advantage plans, Emory deliberately decided not to offer its services through its own health plan and, instead, created a payer-agnostic delivery system in the Atlanta area. Emory Healthcare Network Advantage is now being offered to Medicare Advantage enrollees by the three largest commercial payers in the region — Humana, Cigna Healthspring, and Blue Cross Blue Shield — and, likely, by another two insurers soon. These relationships are expected to streamline efforts to develop alternative-payment contracts for traditional commercial populations that these health plans serve. Specifically, the organizations are developing shared expectations about payment reform and making preliminary agreements regarding quality-measure benchmarks. Reflecting these benefits, Emory Healthcare has already signed an alternative-payment contract with Blue Cross Blue Shield.

Future positioning. As experiences with alternative payment models evolve, the most progressive approaches will move away from fee-for-service and toward population-based payment. Within Medicare, for example, current regulations suggest that population-based and capitated payments will become commonplace among Pioneer and Next Generation ACOs in three to five years. As this transition occurs, risk-adjustment and reimbursement structures will more closely resemble Medicare Advantage’s structures than those of contemporary ACOs.

Tallying the Early Results

As of March 1, 2016, we have enrolled 13,511 patients under shared-savings contracts with Humana, Cigna Healthspring, and Blue Cross Blue Shield. Although Medicare Advantage currently represents only 14% of Emory’s total business, we will gradually move more patients into managed Medicare products and expand the Medicare Advantage component. Medicare currently represents about 40% of our payer mix, and the Medicare Advantage share is growing.

Here are some of our notable results:

  • Having a single operating model for all Medicare patients, rather than unique models for each Medicare Advantage payer and for traditional Medicare, has simplified processes for our primary- and specialty-care physicians.
  • Emory Healthcare’s primary-care capacity has increased because our PCP practices have fewer administrative responsibilities, making more time available for patients’ acute visits to PCPs.
  • For our shared-savings contract with Humana, signed in October 2015, our Emory-specific Medicare Star rating has risen from 3.18 to 3.54.
  • Our hospital readmission rate for patients who are enrolled in the shared-savings plan and have been seen by an extensivist physician is 8.9%.

Facing the Challenges

Despite the strategic and operational advantages, using Medicare Advantage to edge close to value-based care poses challenges.

Member enrollment and communication. Many commercial and Medicare ACOs attribute patients to physician organizations and health systems on the basis of historical claims data, but members must proactively enroll in Medicare Advantage plans. The practice of engaging potential members and communicating the benefits of clinical program offerings is unfamiliar to most health systems, especially AMCs. Given that the Emory Healthcare Network Advantage program is offered across several payers, Emory has been able to draw on each payer’s sales and marketing expertise. Even health systems engaged with only a single Medicare Advantage payer partners will be able to leverage this expertise.

Physician discomfort and organizational tensions. Bypassing modified fee-for-service comes with growing pains, as most physicians are still more comfortable with the fee-for-service system. Furthermore, the CareMore model’s focus on team-based primary care and extensivist physicians for managing high-risk older patients may not align completely with the structure of, or strategies for, clinical service delivery at other health care systems. For example, the use of care centers and extensivist physicians reduced the frequency of patient visits to specialists at Emory. This very real challenge during the implementation of Emory Healthcare Network Advantage required — and continues to require — frequent, consistent messaging from senior leaders to lay out the vision and communicate benefits in terms that matter to doctors (e.g., improved patient outcomes). We are making real progress and expect to make more.


To be sure, Medicare Advantage is not the only payment model AMCs and other delivery systems can draw on to move toward value-based care. Nevertheless, it may be attractive to physician organizations and health systems that wish to expand their capacity for risk-based contracting, as we at Emory Healthcare Network Advantage have done.


We gratefully acknowledge the contributions of Leeba Lessin, Brian Powers, Sangita Vatave, and Anthony Nguyen.

Disclosure: Michael Johns was the Interim Executive Vice President for Health Affairs at Emory University from September 2015 – January 2016. The views expressed in this article are those of the authors and not necessarily the views or policies of their respective affiliated institutions.


This article originally appeared in NEJM Catalyst on April 28, 2016.

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