Central Peninsula Hospital and insurance company Moda Health are developing an alternate health care model meant to change the way care is provided and paid for.
If it becomes reality, a Kenai Peninsula coordinated care organization would provide global health care payments first for the peninsula’s Medicaid population, and later for other insurees.
The hospital’s prospective care organization is similar to one in eastern Oregon that Moda helped create in 2012. Central Peninsula Hospital Government and External Affairs Manager Bruce Richards said the financial difficulties that prompted Alaska and Oregon to impose conditions allowing Moda to remain in the individual insurance markets would not endanger the CCO plan, although “it’s entirely possible that it may get pushed back, given what they (Moda) have to deal with.”
Moda Health did not return calls for comment.
The current model of medical payment, the fee-for-service model, pays doctors for each specific claim a patient incurs.
The CCO would use its budget — supplied by Alaska Medicaid and managed by Moda — to pay its provider members a fixed amount for keeping the population of Medicaid users healthy.
“Moda would act as basically the financial intermediary, or the third-party administrator,” said Rick Davis, CEO of Central Peninsula Hospital. “They have the expertise to manage claims and pay claims and that kind of stuff. … In the model we’re looking at, basically Medicaid would go out of the hands-on Medicaid business, and they would essentially just contract out to the coordinated organization to provide care for their members.”
Davis, who estimated he had been working on the CCO concept for about two years, said by giving doctors a fixed amount rather than paying them for each specific procedure on a specific patient, the CCO will provide better health care with less waste.
One measure of medical waste spending is hospital readmissions, in which a patient returns to a hospital within 30 days of being discharged, possibly because of an ineffective procedure or one that developed complications.
The national Center for Medicare & Medicaid Services fines hospitals for exceeding a certain number of readmissions. Since July 2015, CPH has paid $85,500 in fines for readmitting joint replacement patients.
In the fiscal year between June 30, 2014 and July 1, 2015, the hospital paid $117,700 in readmission fees, Davis said.
Hospitals benefit from more readmissions under the fee-for-service model — the more times a patient comes back, the more times they are paid.
Under a CCO’s global payment system, providers would not gain additional compensation from a readmission.
Preventative care would be incentivized because providers would lose potential savings by treating patients multiple times for the same problem.
Richards said receiving one payment instead of a per-procedure payment would also allow doctors to do things that may help patients but wouldn’t be considered compensable care under traditional Medicaid. Richards gave the example of a diabetic patient losing insulin — which spoils if not kept cool — because of a broken refrigerator.
If the patient’s doctor receives an up-front annual payment for the general goal of maintaining the patient’s health, the doctor could justify using Medicaid money to buy the patient an insulin refrigerator, which wouldn’t normally be covered.
Davis and Richards described CPH’s plan for a CCO as a demonstration project that, if successful, would eventually expand beyond Medicaid patients and beyond the peninsula.
“Our plan is to pilot this as a Medicaid CCO, then to expand it to other payers,” Davis said. “Our own employees, perhaps the Kenai Peninsula Borough employees, school district employees, state employees. Basically once we get the infrastructure in place and the process is developed, hopefully we’d bring in other payers besides just Medicaid. Because frankly, most physicians are not all that excited about taking Medicaid patients anyway. It’s just a good population to learn how to do it with.”
Davis said if the CCO program is successful on the peninsula, he would like to see it expanded geographically as well.
He mentioned Juneau and Fairbanks as places he thinks the model could be used.
The CCO remains a speculative venture.
Davis said CPH has yet to approach other area health providers about joining the CCO, and no local physicians, beyond those employed by the hospital, have been asked to commit to the plan.
A lot of data collection and analysis also has to be done before the concept has a shot at materializing, Richards said. He is uncertain of how many peninsula residents would be eligible for service from the CCO, but estimated between 9,000 and 13,000.
The cost of the program will depend on the size of the population it will serve. Richards said necessary information has been hard to get because it is in the state’s Medicaid Management Information System — a database of Medicaid claims and payments created by state contractor Xerox, which is the subject of lawsuits between Xerox, the state, and three local medical providers alleging the database is faulty.
Because Medicaid is funded partially by the state government and partially by the federal government, pursuing the CCO plan with federal Medicaid money will require a federal waiver.
“(The Medicaid waiver) basically allows you to have demonstration projects for alternative payment methods,” Richards said. “And you basically have to go to them and get permission because they pay for a significant portion of that population.”
Richards said he is unsure of whether or not these waivers would require action from the legislature, but said several of the Medicaid reform bills currently in the legislature contain language that could enable the project, should state permission be necessary.
Governor Bill Walker’s SB 78 requires the Alaska Department of Health & Social Services to investigate “obtaining waivers to the Medicaid program to address choice, statewide compatibility, or other core Medicaid requirements.”
Representative Paul Seaton’s HB 227 contains an identical passage.
Senator Pete Kelly’s SB 74 requires the department to institute “bundled payments for specific episodes of care” and “global payments for contracted payers, primary care managers, and case managers for a recipient or for care related to a specific diagnosis.”
Reach Ben Boettger at firstname.lastname@example.org.