Top Employer Strategies for Implementing Episodes of Care Models

January 19, 2022 - In order to best leverage episodes of care models, employers have to take more ownership of their own data and partnerships.

When Kevin Lembo, former comptroller of the state of Connecticut, took on the role in 2010, the State of Connecticut Health Plan was trusting a third-party administrator to oversee the data analytics and establish best practice. 

“We were relying on the payer to do all those things for us as an employer, trusting their judgment. We always assumed that, because of their size, all we needed to do was draft behind them, and they would always negotiate the best price and they would know what was best in the market to manage diabetic patients,” Lembo shared with HealthPayerIntelligence.

However, when Lembo took a closer look at the state’s two third-party contracts, he found that many of the payers’ decisions were not in the employer’s—the state’s—best interests nor were they necessarily protecting the interests of the 220,000 lives covered under the State of Connecticut Health Plan.

“When we looked under the hood early on in my tenure, we realized that that's not always the case,” Lembo explained. “Sometimes negotiations go sideways. Sometimes there are other issues, parallel issues, that drive higher rates in areas that we care about, that have nothing to do with us or even utilization or underlying cost.”

So the State of Connecticut Health Plan began to change the way it operated. Elsewhere in the industry, employers were placing members in small networks, but the networks were built around cheapness, not quality, Lembo said.

According to Lembo, Connecticut chose to go against the flow of employer-sponsored health insurance for the last decade. 

As early as 2011 when the state started its value-based insurance design, the primary value-based approach was to reduce copays and drive consumer behavior toward preventive services, instead of implementing high deductibles and small networks to force employees to have more stake in finding appropriate care.

Instead of narrowing networks and applying a higher deductible, the state as an employer chose to waive cost-sharing and copays for high-value care, using benefits and cost-sharing levers to direct members away from low-value care.

Nearly ten years later in October 2020, the state initiated its Episodes of Care program. The program focuses on employing an episodes of care model among specialists. 

In its chronic care model, the Episodes of Care program allows providers in cardiac health, behavioral health, orthopedics, endocrinology, gastroenterology, and pulmonology to engage in a bundled payment model. 

A chronic care event with a provider in one of these areas will kick off a year-long episode. Unlike 30-day episodes of care payment models for treatments such as a joint replacement, the State of Connecticut’s Episodes of Care program for chronic diseases renews each year. 

By October 2021—only a year after implementation—the Episodes of Care program had expanded to include 1,400 providers. It also earned the distinction of being an Other Payer Advanced Alternative Payment Model (APM) from CMS—the first state health plan to receive this recognition. 

As an Other Payer Advanced APM, eligible providers who join the State of Connecticut Health Plan’s episodes of care program can receive a five percent incentive payment from Medicare. They also do not have to participate in the Merit-based Incentive Payment System (MIPS).

Through this process of gaining more control over health plan decisions using an episodes of care model, Lembo came across a couple of key takeaways that he highlighted for employers following in Connecticut’s footsteps.

Own the data

Long before the State of Connecticut Health Plan began its episodes of care program, Lembo and his team did all of the heavy lifting to ensure that the state plan had full control over and access to its own data.

Payers may seek to keep ownership of employer data and restrict employers’ direct contracting negotiations. But Lembo urged employers to take control of their data.

He recommended that employers identify their medical spending patterns. Lembo stressed that employers should not try to take on every healthcare spending item at once. Instead, they should isolate areas of low-value care associated with high healthcare spending. Then, the employers can bring the quality and spending data to their payer partners to tackle.

Even if bringing up the data and asking questions about it does not pan out into a more tangible strategy, it alerts payers to the fact that this is something they need to address now or in the future.

“Own the data. Mine the data. Take a piece, a chunk at a time. Hire the right partners. Be not afraid,” Lembo encouraged employers.

This approach may require some trial and error. For example, when one payer partner told Lembo that he needed to sign a non-disclosure agreement in order to access the health plan’s data, he had to rework the payer’s contract to make sure that the State of Connecticut Health Plan had more ownership.

Employers can use public quality metrics in order to ensure that they are assessing and gathering the right kind of data. The State of Connecticut Health Plan tracks metrics such as hospitalization rates, number of bed days, and the share of patients that exceed pharmacy cost thresholds.

Engage in direct contracting with the right partners

The first partners with which the State of Connecticut Health Plan directly contracted were mostly middle-tier hospitals and smaller healthcare providers.

“The mid-tier had a combination of high quality, great practice, good evidence and lower cost of care, and they always felt like they were being leaned on by the big system that had vertically integrated and sort of shadowed over them,” Lembo explained.

Larger organizations tend to be concerned about national strategy. But smaller and midsized provider groups have the agility to join in on episodes of care models.

“Tell me what you're good at,” Lembo told his provider partners.

“To a system, they all had something they were good at,” he said. “They were proud of it, and they wanted to show it to us, and then they wanted to sell it to us. They wanted to drive more people to it. So that's how it began.”

Through gaining ground with smaller providers—from obstetricians and gynecologists to cardiologists and gastroenterologists—Lembo disrupted larger hospitals’ case mixes and grabbed their attention.

But providers were hesitant to engage in a bundled payment model, Lembo found. The health plan is still working toward engaging the state’s larger health systems in the APM.

Not only were providers reluctant, but payer partners were resistant or outright opposed to the State of Connecticut Health Plan directly contracting with providers. 

When Lembo and his team started down this path, one payer did not allow employer clients to negotiate their own contracts and embed those contracts into the payer’s system. As a result, the payer dropped the State of Connecticut Health Plan.

Having the right team of actuaries, pharmacy benefits managers, and technology vendors aligned around the goals of direct contracting and employer-owned data makes it possible to weather such losses.

“There's going to be a reaction. There's going to be a reaction. And you got to lean in. You can't get spooked. You have to be prepared, know it's coming, and keep working through it,” Lembo advised.