The Transformation of Healthcare and Movement Towards Value-Based Care

Our vision screening & diagnostics team had the chance to sit down with Jim Schafer, President, and CEO of Southwest Medical Centers of Arizona, to discuss the transformation of healthcare and movement towards value-based care when treating patients living with diabetes.

Jim has been an advocate for improving the quality of healthcare for more than 20 years. With a unique blend of clinical, operational, financial and leadership skills, he has one mission: to improve the quality and experience of healthcare by successfully navigating risk adjustment, quality, contract negotiations, interoperability and social determinants of health.

Question 1: Why does risk adjustment play a significant role in value-based care?
Jim Schafer: In general, Medicare risk adjustment forecasting (RAF) depends on clinicians painting an accurate clinical picture of each patient. RAF is based on Hierarchical Condition Categories (HCCs), which rely on ICD-10 coding to assign risk scores to patients. Each HCC is mapped to an ICD-10 code. Along with demographic factors such as age and gender, insurance companies use HCC coding to assign patients a risk adjustment factor (RAF) score. ICD-10 is the International Classification of Diseases and we are in the 10th revision. It is used in all healthcare settings in the United States and is a medical classification list by the World Health Organization (WHO).

Question 2: How are RAF scores calculated?
Jim Schafer: Risk adjustment has been around since 1997, slowly became adopted around 2007-2008 and was really set into motion in 2015 with the Affordable Care Act and MACRA (Medicare Access and CHIP Reauthorization Act). Risk adjustment is calculated by assigning a numerical value to a certain set of diagnoses. There are more than 10,000 diagnoses that the Centers for Medicaid and Medicare Services puts out there. Each diagnosis has a numerical value attached to it. You have your base demographic RAF and that is based on your age, gender and location in the country, and that information will set your base risk adjustment.

For example, if you are a 78-year-old female living in Georgia or a 65-year-old male living in Arizona, you will have a demographic RAF. This forecasts the cost of care based on your demographics. In addition, there is a disability RAF and you will have an additive amount if you are disabled and on Medicaid and Medicare.

There is also the Hierarchical Condition Category, a risk adjustment model that is used to calculate risk scores to predict future healthcare costs. There is one other risk adjustment factor and it’s known as disease interaction RAF. If you have congestive heart failure and diabetes, then you have an interaction RAF and that is an additive value.

It is not like one plus one equals two. If you have congestive heart failure and diabetes, you are going to have an interaction RAF on top of RAF forecasting for congestive heart failure and diabetes. That helps predict the total cost of your care for the next year.

Question 4: How does RAF affect ACO (Accountable Care Organizations), Medicare Advantage and Commercial risk contracts differently?
Jim Schafer: This helps allocate dollars. In an old model, you would have a set dollar amount for each member in that pool of patients. To have an accurate dollar value and RAF calculated, you can allocate the dollars and resources to take care of the patient within that plan, whether that is a managed care plan or part of an ACO or commercial contract. You can distribute the proper amount of dollars for the patient to manage your care throughout the year.

For example, if you have a healthy 65-year-old male with no underlying health conditions, he is going to cost less to take care of than a diabetic with an elevated BMI or cancer diagnosis. You are going to need more dollars and resources allocated to take care of that patient.

Question 5: How has the COVID-19 pandemic affected risk models and the relevance of value-based care?
Jim Schafer: There was a big push at the beginning of the year to risk adjust or accurately re-diagnose and recapture. If you do it early in the year, you can manage those disease conditions throughout the year. I want to be very clear; you cannot just diagnose something. You want to support the integrity of the diagnosis by using the MEAT model to monitor, evaluate, assess and treat.

If you do not have MEAT attached to an HCC diagnosis, then it is not going to be a valued diagnosis. In terms of the COVID-19 pandemic, January 2020 was moving along really well. Providers were capturing and recapturing and finding risks in their patients early in the year.

When COVID-19 hit around March 2020, there was a significant decrease in risk adjustment.

Then you had telemetry, where people had to rapidly shift and adjust to telehealth visits. When you did that, there were a lot of rules. Before that, there were not a lot of rules around if you could document an HCC or risk adjustment code on a telehealth visit. Medicare did not allow it early on.

Telehealth visits typically were not reimbursed and if they were, they were reimbursed around 12 to 24 dollars. Some locations were reimbursed better in some rural parts, and that was a part of your federal program so you could get paid much better.

In an average urban environment, you were paid 11 to 12 dollars at best for a telehealth visit. The only organizations that took advantage of it were value-based programs. There was added supplement value to interact on a frequent basis with a patient who may have multiple chronic disease conditions. While the 11 dollars does not add a whole lot of value, if the patient had gone to the emergency room with multiple chronic conditions, you would have a $20,000 work up. It does not take much to see you can control the total medical loss ratio if you engage with that patient.

When Medicare allowed for fee-for-service reimbursement for telehealth visits, people jumped on board and started to do telehealth visits and engage their patients. However, many were very episodic in nature. It was not an opportunity to recapture or identify multiple disease conditions.

Historically, the annual wellness visit was key because it helped providers get to know their patients before something happened. When you have an exacerbation of COPD (Chronic Obstructive Pulmonary Disease) or CHF (Congestive Heart Failure), or your diabetes is out of control because you put on weight or have swelling in your feet, those episodic visits focus on that problem at that time. But your annual wellness visit allows time for you to talk to your provider. It is so critical in value-based care and risk adjustment to help doctors get to know patients and give them an opportunity to talk.

When patients have an annual wellness visit, it is more enjoyable for them because they get to talk and interact with their doctor. That is also when providers can recapture and document all medications and bring that data into the patient’s EHR (electronic health records). Along with capturing outside information, hospital visits and outpatient services, it allows the doctor to understand what is really going on with the patient.

Question 6: If diabetic retinopathy is not a quality measure that is part of a provider’s value-based care contract with payors/ACOs, is there a benefit to still do the exam and improve the quality metric?
Jim Schafer: Absolutely, if you are examining for diabetic retinopathy early on, there is a definite benefit. Whether or not you are getting value from a quality measure threshold, you are doing a preventive screening, similar to a mammogram.

Question 7: Why did you invest in the RetinaVue care delivery model and how has it met your expectations?
Jim Schafer: I was looking at where we needed to move the needle the most and I noticed no one was anywhere near three to five stars on the diabetic retinal exam.

I thought, you know what, we are going to start with one HEDIS^® (Healthcare Effectiveness Data and Information Set) metric. Where can we make the biggest impact? I had just heard about the RetinaVue^® care delivery model and decided to focus on the diabetic retinal exam and diagnosing diabetic retinopathy. We were the fifth or sixth practice in Arizona to get a RetinaVue Imager.

We trained our staff and they were so excited to use something new. What we really had to do was create a process and I worked closely with our medical director to make the diabetic retinal exam a standing order. Now, if someone is diabetic and they fall into a certain age group, they need a diabetic retinal exam done with RetinaVue. By creating a standing order, it took the exam out of the providers' hands and put it into the medical assistants’ hands. If someone living with diabetes comes in for their annual wellness visit, along with having their height, weight and blood pressure measured, they have their eyes examined too.

I wanted the data in our system so we could share it with the plan or hospital and decide what is going on with the patient and the level of their diabetic retinopathy. It took some time and did not happen overnight but when we first started getting the reports back, the medical assistants enjoyed it.

Also, if someone does not have a complication where they need to see a specialist and you can provide this exam at their annual visit and save them $50, especially if they are on a fixed income, they will thank you. And, if they have other social determinants of health, it becomes difficult for them to add another trip to a specialist.

Here is where I knew we made a difference. We had gone from two stars to five stars within a year. It was the greatest feeling getting a call from the payers asking how we did it. Where the real value came in was moving the needle and examining it on a mass scale and helping provide better care for patients living with diabetes. I knew we made a difference when the plans started calling us. We were immensely proud because we were the only ones in the country to reach five stars at our scale of patients! It was a proud badge our staff could wear.