EP410: The Imperative and a 201-Level Financial How-To for Payers and Provider Organizations to Collaborate to Help CKD Patients and Others With Chronic Conditions, With Dan Serrano
You can listen to the episode here.
[00:00:00] Stacey Richter: Episode 410, "The Imperative and a 201 Level Financial How-to For Payers and Provider Organizations to Collaborate to Help CKD Patients and Others With Chronic Conditions". Today, I speak with Dan Serrano.
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Today, I am talking with Dan Serrano, and we're talking about payer slash provider collaboration, blocking and tackling, I'm going to say, from primarily a financial and revenue point of view, I'd classify this as, say, a 201 level discussion, i.e. not entry level, but it's also not super deep in the weeds.
We mainly cover the ins and outs of why a provider organization should probably be looking to get paid to better take care of patients with chronic disease and drive better patient outcomes at lower downstream costs. And to some degree also why payers should be helping provider organizations in their local communities to do so by providing some help and shelter on the journey from here to a capitated payment.
The focus today is really, I'd have to say, on the messy middle where a provider organization does not have capitated contracts nor access to any premium dollars, which by all accounts is the holy grail here. The premium is where it's at and provider organizations might want to be aiming to get a piece of that action.
The why for this get the premium dollar prime directive is pretty self evident when you look at the big bucks rolling around in the coffers of those who are collecting said premium dollars so, this, get the premium.
Endgame is for sure a big piece of the why why if I am a provider organization, I might want to take the time and energy and spend the money to embark on a path that might lead me to be able to get compensated for the stuff that patients really want and need to do better, which includes Transcribed All of the things that I spoke about with Eric Gallagher Dr. Vivek Garg and Dr. Amy Scanlon spoiler alert! It's not easy.
Now, I asked Dan Serrano, as aforementioned my guest today, to offer up his advice here in the context of CKD, chronic kidney disease patients. Why did I ask Dan to use the chronic kidney disease, the CKD case study as a touchstone?
First of all, talking about this topic in totally theoretical terms is not ideal. We need an actual example for a lot of this to kind of make sense. Combined with the first step for most outcomes improvement programs is to study your data and pick a patient population to focus on where the data suggests that you can have a big impact.
And speaking of impact, did you know that an underlying reason why heart failure patients get hospitalized and re hospitalized is because of CKD? So, impact in the short term and longer term, which I'll get to in a sec. Another reason is, and I'm quoting Dr. John Rodas here, who is the independent medical director of QC Health, Dr. Rodas said the other day, I sure as heck hope I don't get CKD, because if I do, chances are I'm not going to be diagnosed, and even if I am diagnosed, I won't be treated properly. So there's that, and I can see why he's saying that. Two out of five patients with ESRD, end stage renal disease, don't even know they have kidney disease at all.
And the number of patients with progressing CKD on any kind of evidence based treatment plan is stunningly low. But also, here's another reason I asked Dan Serrano to talk about CKD patient populations specifically as his example. I and Dr. Rodas and the team at QC Health are not the only ones who have figured out that CKD patients are notoriously expensive and way underdiagnosed.
You know who else has figured this out? Payers. Also private equity. In fact, I was in a meeting with a payer recently, they stated they had to get CKD patients into point solutions. This payer, and I've heard of others too, None of these entities are waiting around, and I guess fair enough if you look at some of the population health data that I'm sure these payers and others are looking at.
But if you work for a payer What I would say, okay, with the point solutions, one that you have carefully vetted, of course, because we have patients suffering right now . But I also would submit that those point solutions will perform a whole lot better if we are all gunning for synergies, PCPs and traditional FFS, fee for service models, in this country need your help. The payment models and admin burden are decimating. Payers certainly are a group with some culpability here. Sorry to be saying the quiet part out loud. Instead of foregoing them, please help PCPs. Am I saying be altruistic?
Actually, no. Listen to episode 409 with Larry Bauer or 391 with Dr. Scott Conard or an upcoming show with Jodilyn Owens, and what you will hear is the amazing ability for clinicians rooted in the community to actually drive change in their local markets. In fact, I'd hypothesize that these community rooted organizations probably have a better track record for actually moving the needle on patient outcomes than any snazzy tech that I have seen, although I am sure that there are one or two very effective snazzy techs out there, the exception proves the rule and all that.
Bottom line, as I do so often, I am advocating for payers and provider organizations within communities to collaborate, regardless of whether there's a third party also in the mix. I am reporting all of this in the spirit of being helpful, but also with some degree of urgency for any care delivery organization, because I mean really, forget about the holy grail of trying to capture a percentage of the premium if the money is already going elsewhere to too many point solutions who are already capturing a portion of the premium. IRL, this is what's already going on out there. But where there's a challenge, there is also opportunity. As I have said pretty repeatedly for the past four minutes, because the bar is so low, and because CKD patient outcomes are bad news in general from a lot of angles, CKD is actually a great place for providers to work hard to improve care and quality from a financial standpoint.
I think there's also a great business case for payers to help provider organizations do so. Doing better than the local standard of care is not hard, sadly. And what that means is that there's so much money that's possible to save due to the expense of this condition. And if you're a payer, even a payer with a third party CKD solution, if you can help local PCPs and others level up their care, Then either you don't have to pay for the third party point solution for patients who can be managed successfully locally, and or there's a more frictionless path for those patients to be identified and get into the point solutions that are available to them.
Let's all keep in mind that patients at rising risk are falling through a lot of cracks. You can have the best point solution in the world, but if If patients aren't making it there, then yeah, no outcomes will improve. No costs will be reduced. Everything I just went through are also all of the reasons why we picked CKD as our focus for a national groundswell movement that the benefit corp I am co-president of is kicking off to improve CKD patient outcomes.
If you are also thinking about improving CKD patient outcomes, for sure, hit me up.
Let's hear from Dan Serrano, who is a consultant with COPE Health Solutions, where he works to help clients figure out the best way to make investments that drive better outcomes in a more cost efficient way.
My name is Stacey RIchter. This podcast is sponsored by Aventria Health Group.
Dan Serrano, welcome to Relentless Health Value.
[00:07:54] Dan Serrano: Thank you for having me.
[00:07:55] Stacey Richter: A lot of your work has been trying to figure out the finances so that a healthcare organization can provide higher quality care while at the same time managing to not blow their risk based deals in the process.
[00:08:11] Dan Serrano: Absolutely. I think about the different perspectives of moving towards value based care. I very early on learned the power and the importance of payer and provider partnerships, where they're able to focus on diversion away from higher cost sites of care, able to use that savings dollars that they're earning to invest in assets further up in the delivery system so that they have a more comprehensive ability to provide care for their patients.
And then I also learned the importance of enabling delivery systems to remove work out of their systems where they're losing money and focus on taking care of those individuals in lower cost sites of care, preventative care, all these things that reduce cost, improve quality, while Then replacing the work that is done inside their facilities with work that actually enables them to operate and grow profitably.
[00:09:13] Stacey Richter: To recap your point there, provider organizations for sure have a very keen self interest to connect and collaborate with local payers and leverage payer capabilities to help their community. Thank you. Patients, payers who are looking to live up to their mission statements should be helping providers do the things that they need to do to improve quality, providing them the shelter in order to pull that off.
Plus, I was talking to Josh Berlin in an upcoming show and he mentioned a really serious need for payers to grow their market share in relationships with patients. So there's also that from a payer perspective.
What's some advice that you might have for a provider organization who is upside only risk at this time, maybe in an MSSP, a shared savings arrangement.
Like, do you look at all of the different contracts that organization... might have and try to find quality bonuses that they could get or some of these payers will do things like say, okay, we're going to withhold a certain percentage of your fee for service reimbursement, and then we'll give it back to you if you can come up with a quality program.
[00:10:18] Dan Serrano: When we talk about the middle ground, there's definitely paying for metric attainment. If you pick a particular set of metrics and you lay that out for positions and say, okay, if you're going to do A, B or C, we'll compensate you in this way. That provides a middle ground. However, unfortunately, those are often self funded.
And so it's proving to a system or to a provider group that they could actually go out and do the work against more confidence building. Oftentimes when you think about some of the shared savings agreements, they contain care coordination fees that you can use to fund pools. To pay those type of programs, even if they don't have a specific quality bonus around what is important in your particular population.
I think that's typically we see that where you'll have a number of programs where you're getting paid to achieve metrics, and then you'll graduate into that shared savings. Then you'll go to that shared risk. But again. The premise is that you really have to be out there building that operational capability in order to continue to progress in those things.
And so the ability to track, to understand the efficacy of those efforts, and then to monitor them going forward. Those are kind of parallel tracks in this progression.
[00:11:36] Stacey Richter: So if we're thinking about the MSSP, Shared Savings, this sort of starting point, the delivery organization should be picking quality metrics to achieve, they got to look at their data. They got to figure out. Which metrics probably are most applicable and then also most attainable, then go after those metrics, self funding the operations that it's going to take to achieve those metrics, and then overriding that maybe there's some care coordination fees that I'm assuming are FFSE in nature that could get picked up along the journey.
I just kind of want to circle back to the selecting of the metrics. If I'm thinking through the ultimate end game here, I would want to pick probably patient population that would have the most likelihood that lots of dollars could be saved.
Because from a payer's standpoint, if you're dealing with high risk patients, there's the most dollars to be saved there. Therefore, there's probably more willingness to spend more to, to manage those patient populations.
[00:12:45] Dan Serrano: Absolutely.
That's one of the things that I always look at or talk to folks about when. They're looking at who's driving cost and what that means in a value based context. Unfortunately, a small number of people drive a ton of the cost in the system. However, a lot of that is very acute and it's not really something you could do a ton about.
It's happening. It's emergent. It's all you just got to handle it. And those oftentimes are expensive. There's always exposure to really high dollar claims, et cetera. But you know, that's why you use stop loss and other effective financial methodologies to protect yourself from that. When we think about more broadly about chronic condition management and lowering the average cost across all of these conditions so that there's high quality care that reduces utilization, because we're implementing preventative measures. We're doing all the right stuff. We have good, healthy lifestyle support. We have medication adherence. We have all these other things. Lowering those is definitely at the crux of being effective at population health. Obviously I'm not a physician, but there's plenty of documentation around lowering the average cost of taking care of a patient in these specific things is really the way that we think about performing inside these value based contracts.
[00:14:09] Stacey Richter: Just kind of circling back as our touchstone to the CKD example, to kind of keep us centered here.
[00:14:14] Dan Serrano: CKD represents a condition that approximately 37 million adults, roughly 15% of the adult population in the U.S. are afflicted with. And so as I look at my data set, which is a couple million lives that we have across various clients in the country, the ratio looks relatively similar. I think that CKD is one of those. We often talk about chronic heart failure and how to handle those patients. But CKD is another condition where we have the opportunity to focus on early intervention and adherence.
Thank you. And really drive better outcomes and lower cost of care for these patients. Many times we think about ESRD and that's a very difficult population to manage because where they are in terms of disease progression. However, there's EKD and CKD, early and chronic, and the opportunity to work with these patients in a team based care delivery model.
And there's a meaningful delta in between the average cost of a CKD patient that is highly engaged and adherent versus patients who are Not identified who all of a sudden really progressed to a much later stage in the disease without having any of these interventions from a physician or a care team.
[00:15:40] Stacey Richter: Highlighting some of the points that you made there, there's a meaningful delta between CKD patients who are well managed and well controlled versus those who maybe haven't even been identified yet or are not well controlled. In fact, a lot of people don't realize that one of the main reasons why heart failure patients get admitted or readmitted is because of chronic kidney disease that underlies that.
What I'm hearing you say is if the kidney disease is identified and controlled, There becomes a value story there. Any patient that's been put on dialysis or needs a kidney transplant, it's terrible, especially when it may have been avoidable. But I'm understanding you say that there's also a big financial story here for a provider organization who has effectively navigated the getting paid for value.
Did I get that right?
[00:16:38] Dan Serrano: Yeah, absolutely. Absolutely. So when we think about understanding, let's say, what's going on in the baseline population that a physician has attributed to them. You're spending, I think, on average, let's say, $30,000 a year on a CKD patient. The ability... to test some of these individuals who would score higher on a risk scale for the progression of CKD.
Obviously, medication management, diet counseling, smoking cessation, exercise programs, all of these things that can be supported in a patient. And then when you think about different situations that patients are in, whether they live in a rural setting, whether they have food insecurity, different things that affect their ability to be adherent.
Increasing access to telemedicine, remote patient monitoring, all of these can help to slow the disease and then also reduce downstream utilizations and hospitalization. When you're talking about a patient base that has. Roughly, you know, $25,000 to $30,000 a year in cost, there's opportunity to provide those preventative care opportunities and then reduce that downstream utilization so you could reduce the average cost for a person who's not in some of the later stages of the disease to drive a much more efficient financial outcome with a higher quality result, right?
You're increasing patient satisfaction, you're providing a better patient care because they're not ending up in the hospital. But they do need support and a lot of care coordination and a team based approach.
[00:18:20] Stacey Richter: You said a number of things there. First of all, let's just talk about that $25 to $30k for an average CKD patient annually.
And I'm assuming that what we're talking about there is someone who is in the end stage renal disease category or is headed there on the quick, right?
[00:18:38] Dan Serrano: I think that's more broad, right? So this would include the cost of medication, laboratory tests, office visits. And then dialysis and transplantation. So that's the overall average for the entire patient base.
[00:18:50] Stacey Richter: One thing I think that has been fairly underappreciated is how expensive these patients are. And one reason is just a rampant lack of diagnosis and accurate. Risk staging, uncontrolled CKD will progress way faster than controlled CKD and at every stage of CKD progression, the cost of care increases and it quadruples when the patient hits dialysis.
But here's what I want to know. Could you talk about how as a provider organization you can manage to get paid enough for value over a long enough time horizon if the actuaries determine that the time horizon that they're looking at is one year?
Like you're not going to prevent a ton in one year, right?
[00:19:31] Dan Serrano: No, absolutely not. I definitely think about time horizons in a completely different way. I'm much more akin to the three to five years because of what it takes to. A, get into one of these arrangements where you truly understand your population, you have the ability to build the apparatus to actually take control of them, you have the ability to demonstrate if you think about the continuum of value based care contracts and you move from shared savings to shared risk to full risk.
In order to do most of these programs and put these resources in place you really need greater access to the premium dollar. You need to be able to earn more. So if you're saving dollars year one, but you're only able to get access to, you know, 35% of the shared savings, it's unlikely that's going to be enough to pay for all these investments you have to make, but what it does do is build trust between you and your payer partners that you are committed to reducing costs, you are committed to driving quality, you are committed to making the investments and so from a financial standpoint, as I start to model out different contracts, I try to understand all of these different populations, not just CKD, but all these different chronic conditions and where we might have opportunities to step in and really leverage preventative care in order to reduce downstream hospitalizations.
Drive patient satisfaction, all these elements that help perform inside these value based care contracts. And so once you're performing inside that shared savings environment, you should feel better about taking incremental risk. It's very difficult for an organization that has never taken risk to step immediately into something like full risk.
While the opportunity to earn the money is there, the opportunity to lose money is also there, and most, most systems can't afford that, even if they're reinsuring it or whatever, like, that's not the path forward, because the operational side of the equation, you need to really effectively build out teams.
It's often a new thing for An organization to operate that way and they need to really hone the interventions, understand what works in their population.
[00:21:43] Stacey Richter: So again, just recapping here, it's pretty common knowledge that the best path forward to moving toward risk based contracting or taking full risk. is to start in a shared savings place, because as you just said, the opportunity is there, but there's also the opportunity to lose a lot of money.
So kind of dipping a toe in the water and making sure that the systems are all a go is kind of vital. Get an MSSP contract, where even though at best you're going to get access to. 35% of the shared savings there. It's still worth going through these early steps because it's a thing to change physician and clinician culture so that there is attention paid to outcomes and data and the ability to work together as a team.
For inspiration or maybe a bigger why for anybody who is inching up the path. We have Dr. Will Shrank coming on the pod in the fall. Who, for one, is saying that any provider organization is currently not thinking this way. And he includes specialists and subspecialists also in this mix.
Anybody not worrying about the consequences, on patient health from doing stuff to patients yeah, he kind of doubled down in our conversation that this is not a great long term strategic decision on a number of fronts. All right. So if we're thinking about CKD patients, and obviously as the disease progresses, these patients become more and more expensive.
And we're thinking about this strictly from the financial standpoint, I think the first question that I would ask you is financially. What's the goal? Like, what are we trying to do with these patients that potentially have or are going to have CKD?
Like how are we achieving a sustainable financial model?
[00:23:28] Dan Serrano: That's multi pronged. The important part is ensuring that you're documenting. the burden of illness correctly so that reimbursement rates are appropriate for these patients.
And then when you think about all the things that need to be done in managing, let's say, a patient that's already been tagged as having CKD, you look at all these different sites of service where If folks are coming in to get work done, is it possible to do that work in a lower cost side of care? Is it possible to use telemedicine, remote monitoring, all these other programs, at home testing, etc.?
that afford you the opportunity to maintain contact with your patients, make sure that they're doing all the right things from a patient standpoint to slow the progress.
[00:24:26] Stacey Richter: Okay, , what you just said there is that there's two bits to this. You need to make sure that the reimbursement rates are correct.
So the whole idea of risk capture, like ensure that these, the patients are being coded. at the severity of disease that they actually have. So like, that's the revenue side of the equation. And then from a cost side of the equation, let's have operational excellence here. Like, let's make sure that we are in the most efficient way possible providing the services and the care that these patients need.
[00:24:57] Dan Serrano: Part of that is, it seems a little counterintuitive because Utilization of care is actually higher. It's not in the same form that it was previously. Like, so you don't just blow out, have an episode and end up in an emergency room or an inpatient setting. You're having smaller interactions with your care team.
More often you would get certain testing, certain screenings that would enable folks to understand like, Oh, you're doing well. You're on track or things are off track. We need to find another intervention to try and help maintain your current quality of life, slow progression of disease.
[00:25:34] Stacey Richter: Give me some downsides here.
Let's just say that you have a patient who is out there in the patient population. Maybe they've had blood tests. So everybody should know that this patient has CKD, but. They have been coded with a general like diabetes with complications, right? Like the diagnostic codes that have been used in reference to this patient do not specifically identify and stage the progression of the disease and where the patient is in that continuum.
Let's say that happens across the board. What happens?
[00:26:07] Dan Serrano: Yeah, well, I think two things happen. One, you're not going to get reimbursed at the appropriate level, and then you also run the risk. of not prescribing these folks the appropriate level of care and then they do have this episode that ends up either in an emergency room or something more severe.
And so now, you know, you have these like really high cost encounters that could have been avoided.
[00:26:32] Stacey Richter: I understand how a high cost encounter that could have been avoided is a nasty bad thing if you have a full risk or any kind of capitation type agreement. But if we're talking about an MSSP ACO that is still FFS at its chassis, is it really a circumstance that's worth putting a lot of time into avoiding?
[00:26:53] Dan Serrano: So this, I think, aligns to our conversation earlier about the progress into risk. And so in the short run, no, you're, you have a limited downside purely by the nature of the agreement. But if you don't develop that operational excellence, that inherent organizational muscle that says, Oh, when we have CKD patients, our CKD patients run at a materially lower cost level.
Then a market average, well, then your opportunity to leverage that care model to take care of those patients to outperform benchmarks and perform inside risk contracts is not there. So you can't progress into those greater levels of risk.
[00:27:39] Stacey Richter: You said something super interesting there. What the goal is for an MSSP ACO is to be able to state.
That ACO can provide care that outperforms a market benchmark. And if you can say that, then you can start moving into greater levels of risk because the delta between how that particular ACO is doing and that market benchmark, like that's the opportunity that you would start negotiating around because those are the dollars that are on the table it sounds like.
[00:28:10] Dan Serrano: And in the short run, when let's say you're only, you only have access to 35% of the savings vs. a hundred percent full risk. Well, yeah, you're partnering with the payer that they're providing you shelter from that risk while you learn how to drive that operational excellence for these particular patients with these particular conditions.
And so you use that opportunity while you're sheltered from that to say like, okay, we're going to try these different interventions. We're going to do this. We're going to track our progress. And then once you know that, Oh. If I had these folks inside my population, I can get them under management and reduce their cost.
So one of the things about taking risk early and up front is that, oh, they're under, patients come in undercoded, undermanaged, and if you get too many of them, if you're not capitalized correctly, it could swamp your balance sheet. Being on the trajectory where you take shared savings, shared risk, full risk, it gives you the opportunity to really understand what those cost levels are like and what you need to do from getting a patient who is unmanaged to be managed and what the delta is there from a financial perspective so that you understand, okay, in my baseline, I have 15% of these people at a thousand dollars PMPM.
And now they're, I know once they're managed that I could do this for 600 PMPM, those are obviously illustrative numbers, but there's a delta there that you can understand and say, okay, I'm going to be OK as I move further into risk contracts.
[00:29:44] Stacey Richter: And when you say swamp the balance sheet, if these patients are chronically undercoded, , i. e. their risk level is underestimated, they're going to cost what they're going to cost. These are patients with rising risk, an average patient with CKD is going to cost more than a patient that doesn't have CKD or any chronic condition. The PMPM is going to wind up being too low. And if you have enough patients where the PMPM is too low.
[00:30:10] Dan Serrano: Yeah, your revenue is too low. Your cost is too high. The requirements for being able to sustain operations. You need to fund that. And so if you don't have. The capital to sustain operating losses and or or provide reserve requirements or like that would inhibit your ability to operate. You want to make sure that as fast as patients are coming in, you're putting them in a care model that starts to help improve not only their outcomes but their aggregate cost of care as well as fast as possible.
[00:30:43] Stacey Richter: Got it. Okay. So now if we're talking about CKD, which is how we started this conversation, obviously there's tons of chronic conditions out there. I guess, sadly, we've got cardiovascular, we've got COPD, we've got muscular skeletal. What would be a reason that you might offer up for a healthcare delivery organization to specifically put eyes on CKD?
Because obviously you put something on your to do list, you're also putting something on your to not do list. Is there any reason why you'd elevate CKD as a condition to focus on?
[00:31:17] Dan Serrano: Yeah, I think that the level of expense that's associated with these patients and then the speed at which a patient can go from undiagnosed to diagnosed and expensive is very high.
So having a comprehensive care model that that really looks at patients with a number of known risk factors, diabetes, hypertension, family history, and then getting those into a risk stratification model. that says these folks are likely to be early CKD or undiagnosed and then having the ability to start to implement some of these plans that facilitate slowing down disease progression ultimately will save you reduced trend going forward.
These are all components of increased healthcare cost trend. There's some portion of the population that always advances into this disease state. So having a good program. That is focused on not only taking care of, as we mentioned, members who have been tagged as CKD members, but folks who are rising risk and likely to end up there comprehensively, that's what you're trying to do when you talk about trend reductions and clinical interventions that help this entire population have better outcomes at lower cost.
[00:32:32] Stacey Richter: Dan, is there anything that I neglected to ask you?
[00:32:35] Dan Serrano: I think just the importance of really paying attention to that portion of the population who is likely to be in that CKD bucket. I think that's really important. And so expanding some of those more preventative and diagnostic type activities to really help understand Who's out there and the progression of their potential disease, I think, for me, is one of the keys about really driving better outcomes and better health amongst that population.
[00:33:04] Stacey Richter: Dan Serrano, if someone is interested in your work, where would you direct them for more information?
[00:33:09] Dan Serrano: They can reach out to me at COPE Health Solutions, my email address. is D S E R A N O at copehealthsolutions. com.
[00:33:20] Stacey Richter: Dan Serrano, thank you so much for being on Relentless Health Value today.
[00:33:22] Dan Serrano: Thank you for having me.
[00:33:24] Stacey Richter: On to a few thank yous. Thank you so much to Carl Hansen, MD, a direct primary care physician, for a really generous tip in our tip jar. Also, thanks so much to Keith Passwater, who is CEO of Havarti Risk Services and PASCO Advisors, for a really nice donation to the cause over here.
It was such an honor and a pleasure to moderate a panel at the Society of Actuaries latest meeting at Keith's invitation. Also, additionally, may I extend thanks to DFFDGG, RKC2023 and The Healthy Economist for super nice iTunes reviews. The shout outs are amazing, especially when public like this. Also, much appreciated how you have shared Relentless Health Value with your colleagues. Thanks so much for listening.