News of growing health disparities between rural and urban Americans prompted Transforming Care to focus on what’s happening in rural health care today. What we found was surprising: While there is much to worry about—including a greater risk of dying from preventable causes and worse access to care—there are also many signs of innovation, including bold experiments in organizing and financing care delivery, making services more accessible, and addressing the social determinants of poor health. This issue focuses on these bright spots—places where policymakers, providers, and community organizers are seeking to transform their health care systems to better serve residents.

By Martha Hostetter and Sarah Klein

Forty-six million Americans—some 15 percent of the U.S. population—live in rural areas of the country.¹  Data from the Centers for Disease Control and Prevention show they are more likely to die from the five leading causes of death—heart disease, cancer, unintentional injuries, chronic lower respiratory disease, and stroke—than residents in urban regions and that a greater percentage of rural deaths may be preventable.²  Gains in life expectancy among urban and rural Americans, which once tracked fairly closely, began to diverge in the 1990s. By 2009, the life span of residents of large cities was 2.4 years longer; for poor and black rural residents, life expectancy was what urban rich and urban whites enjoyed four decades earlier.³

“Rural America is a unique health care delivery environment,” says Alan Morgan, CEO of the National Rural Health Association, a nonpartisan organization with more than 21,000 members. “You have an elderly population, you have a sicker population, and you have a low-income population. Yet you have the fewest options available when it comes to seeking care. It’s a perfect storm.”

But for all these challenges, Morgan and other experts say some rural communities have begun to innovate, adopting new care delivery and payment models to address long-standing workforce shortages and population health needs.⁴

Strategies to Shore Up Critical Access Hospitals

A key area of focus has been shoring up critical access hospitals—facilities with no more than 25 beds that offer acute care in communities where the next hospital is generally more than 35 miles away.⁵  There are roughly 1,300 of these federally designated hospitals nationwide, nearly all in rural communities. They receive cost-based reimbursement to reduce their financial vulnerability and keep essential services, including 24/7 emergency care, in rural communities. But despite this support, 80 rural hospitals have closed since 2010 for a slew of reasons: financial losses from declining inpatient volume, changes to federal and state reimbursement, difficulty in recruiting physicians, inability to keep up with new technologies, reductions in disproportionate share payments, or some combination of these forces.⁶

Rusk County Memorial Hospital, a critical access hospital in Ladysmith, Wis., in the northwestern part of the state, lost six physicians between 2010 and 2013—over half of its primary care workforce—in part due to competition from a major medical group that opened its own hospital 47 miles away.

Using Global Payments to Enable Transformation

Pennsylvania is implementing an entirely new payment model for its 30 rural hospitals, half of which are struggling from loss of inpatient revenue, according to Karen Murphy, the state’s Secretary of Health. To help them succeed in an environment in which payers are trying to reduce acute care, Pennsylvania is launching a global payment model under which critical access and other rural hospitals will receive a set budget for all inpatient and hospital-based outpatient services delivered for patients covered by Medicare, Medicaid, and some private payers. The first six hospitals will pilot the model next year.

The amount of the global payments will be based on each hospital’s revenue from the previous year. The hospitals will share in any savings they achieve from reducing spending on potentially avoidable utilization.⁸  The goal, according to Murphy, is to create incentives for hospitals to control costs through better coordination of patient care and use the savings to address population health issues. “We know our health outcomes are lower in rural communities and want to develop systems that really support chronic disease management, behavioral health, and efforts to help with the opioid crisis,” she says.

The Centers for Medicare and Medicaid Services (CMS) is providing waiver authority to enable this experiment, as well as a $25 million Center for Medicare and Medicaid Innovation grant to fund a rural health redesign center to provide hospitals with data analytics and other support.

At least three large private payers have signed on, Murphy says, though it took some convincing to persuade them they will not be paying for the same hospital admissions twice but rather for the health of the community. “We are shifting the conversation from utilization to health,” she says.⁹

Banding Together to Pursue Value-Based Care

In 2015, Eastern Maine Healthcare Systems, an integrated delivery system based in Brewer, Maine, helped launch the Beacon Rural Health ACO, an accountable care organization made up of five critical access hospitals, including three from its own system and two independent community hospitals. The five hospitals used the advance payments they received from CMS under the Shared Savings Program to create a translational information technology (IT) system to share data. Each month, they evaluate their performance and discuss improvement approaches including redesigning workflows to increase health screenings and immunizations, says Mike Murnik, M.D., chief medical officer of Blue Hill Memorial Hospital, one of the five ACO participants. “It’s allowed us to shake out what works best and spread that among practices,” Murnik says. With the ACO funding, Blue Hill has also hired nurse care managers to assist with care transitions for high-risk patients, including those with heart failure and chronic obstructive pulmonary disease. Medical assistants screen patients for issues like food insecurity and refer them to community nonprofits for help.

On a national basis, small, physician-led and rural ACOs have achieved greater success than other organizations participating in Medicare’s Shared Savings Program. The 35 ACOs that participated in its Advance Payment track—which provided upfront funds for such providers to invest in IT and other systems needed to function as an ACO—achieved 21 percent of all savings in the Shared Savings Program, even though their patients represented only 5 percent of beneficiary years.¹⁰  “The strength in rural communities is primary care—and the ACO model works best from a primary base,” says Keith Mueller, head of the Department of Health Management and Policy at the University of Iowa and director of its Center for Rural Health Policy Analysis.

Lynn Barr, CEO of Caravan Health, a management services company based in Kansas City, Mo., that provides guidance and technical assistance to rural health care organizations that want to enter into value-based reimbursement arrangements, says part of these organizations’ success is attributable to the fact that many rural providers have longstanding relationships with their patients, making it easier to engage them. “They are doing care coordination at the supermarket and at the soccer field,” Barr says.

Caravan supports 159 rural health providers—both hospitals and clinics—that in 2015 organized themselves into 23 ACOs in Medicare’s Shared Savings Program.¹¹  It takes an unusual approach to the problem of small numbers in rural communities: to form what Caravan deems to be a sufficient ACO cohort (about 10,000 patients), it aggregates patients from across unaffiliated providers, sometimes in different states. One of its most successful ACOs includes patients from Mississippi and the state of Washington. Caravan then offers the providers coaching, technical assistance, software, and data analytics. The providers must hire a nurse care coordinator to implement new approaches, which focus on wellness visits, chronic care management, integration of behavioral health into primary care, improving dementia care, and ensuring safe care transitions. Half of the ACO participants have been able to reduce costs within nine months, Barr says. Some of the gains are from picking low-hanging fruit—for example, helping patients who use the ED every week because of anxiety or who have out-of-control diabetes, she says. “The other part is they are really nimble and able to adapt very quickly to get the whole health system around the table.”

Addressing the Social Determinants of Poor Health

Rural health providers are also partnering with community leaders to improve residents’ health by addressing the effects of poverty, isolation, and addiction. But it can be a challenge to convince rural residents to accept help, says Pam Guthman, clinical assistant professor of community/public health nursing at the University of Wisconsin and the former head of a community action agency in Ladysmith, Wis.¹²  “Rural communities tend to draw an invisible line around themselves because they view themselves as self-sufficient,” she says. This isolation can obscure problems that are endemic, such as homelessness, drug and alcohol abuse, poor nutrition, and deteriorating housing, she notes.

To make headway, some communities have involved the leaders of schools, churches, and other community institutions to make them aware of problems and have invested in finding solutions. One example is Project Lazarus, a nonprofit based in Moravian Falls, N.C., that has developed a community-based approach to reducing opioid abuse (see our Q&A with Fred Wells Brason II, president and CEO of Project Lazarus).

Helping High-Need Patients

The Southeast Health Group, a community behavioral health clinic, tapped health navigators to reach out to high-needs patients in its rural and frontier corner of Colorado, near the Oklahoma and Kansas panhandle.¹³  The clinic serves nearly 47,000 people across 10,000 square miles, providing both behavioral health and physical health care services. The clinic’s providers found such patients often needed hands-on support to help them manage their conditions and stabilize their lives. To provide this, Southeast Health Group applied for and won a $1.4 million grant from the Center for Medicare and Medicaid Innovation to hire navigators to help patients who accrued $10,000 or more in Medicaid services in a year, accepting referrals from its own providers and from Medicaid, a local FQHC, and the ED at the local hospital.¹⁴

“We gave the navigators carte blanche to do anything they needed to do to help the patient succeed,” says Nancy King, Southeast’s development director. Transportation proved to be a major hurdle for many patients. “Our navigators drove over a million miles over the three-year project,” taking patients to their regular clinic visits or specialist appointments in Pueblo (120 miles away) or Denver (175 miles away) and to pick up prescriptions and healthy food, using the time to get to know patients and offer them advice and coaching.

Health navigators served 639 patients over three years. Along with driving and coaching, they secured mental health treatment and housing for homeless patients, helped those with unmanaged diabetes create health journals, and convinced a patient who had experienced multiple rapes to overcome her fears of the hospital environment and pursue a necessary operation, among other activities. Among those receiving such support, there was a nearly 20 percent reduction in average per capita emergency department visits, from a baseline of 0.56 visits per person in 2012 to 0.46 visits per person in 2015. While per capita Medicaid costs dropped among all the high users tracked during this period, savings were much greater among those receiving services from the navigators.

Channeling Savings into Community Health

In Central Oregon, a region that’s home to college students, ranchers, and Native Americans, efforts to improve community health are funded by savings achieved from better coordinating care for Medicaid beneficiaries. Based on a joint agreement, the region’s coordinated care organization—a network of medical, dental, and other providers that collaborates to care for Medicaid beneficiaries—agreed to take only 2 percent annual profit and distribute the rest to its governing body, the Central Oregon Health Council, to be used for communitywide health improvement efforts (i.e., not just those that benefit Medicaid beneficiaries).¹⁵  To carry out this agreement, the council convenes health systems leaders, providers, consumer advocates, representatives from local schools and nonprofits, and others to determine how to spend the funds to address substance abuse, high rates of diabetes, tobacco use, and other problems identified through its Regional Health Assessment. For example, one project aims to reduce the incidence of low–birth-weight babies by coordinating prenatal care and support services for high-risk pregnant women.

Pursuing Economic Health and Physical Health Simultaneously

A public–private partnership in Eastern Kentucky known as SOAR (Shaping Our Appalachian Region) seeks to strengthen the local economy, diversifying away from its historic dependence on coal by retraining displaced workers, investing in broadband networks, encouraging tourism, and promoting health.¹⁶  Appalachian residents are among the sickest in the nation, with diabetes, obesity, and substance abuse endemic. William Hacker, M.D., the former state health commissioner and chair of SOAR’s Community Health Advisory Council, says the region’s health problems are exacerbated by its mountainous terrain and a history of boom-and-bust cycles. “We have food deserts, we have a lack of convenient walking areas and trails, and so the infrastructure works against good health habits,” he says. “And there’s a segment of the population who are fatalistic about their health—who would like to do better but who find the day-to-day challenges of living overwhelming.”

With the help of two public health officers from the Centers for Disease Control and Prevention, counties across the Appalachian region are encouraging healthy eating habits and physical activity and helping people identify and manage diabetes. In one effort, SOAR hosted a Health Hack-a-Thon to develop solutions.¹⁷  A team of Pikeville High School students won in the obesity category for its Simple Health 5-5-5 prototype app, which would encourage people to drink five glasses of water, eat five servings of fruits and vegetables, and walk five minutes every day.

Looking Forward

These experiments in expanding rural workforce capacity, leveraging value-based payment, and addressing the social determinants of poor health in rural communities are still nascent, and the needs are daunting. Local champions and collaboration, as well as support from state and federal governments, have enabled these efforts. To build on them, it will be important to learn from promising approaches and to secure stable investments in the health of rural America.

Descriptions of products and services in Transforming Care are based on publicly available information and self-reported data provided by the institution(s) featured. Their inclusion should not be construed as an endorsement by The Commonwealth Fund.

Telemedicine has proven to be a crucial lifeline in some rural communities, helping to address workforce shortages and reducing the burden on patients who might otherwise have to travel long distances for specialty care. In addition to enabling patients to have remote consults with specialists (particularly for psychiatrists or other providers who are mostly absent in rural communities), telemedicine allows rural hospitals to outsource diagnostic or other services and can help reduce providers’ sense of isolation.¹

Some rural health systems have invested heavily in telehealth — seeing it not just as a way to fill gaps in services but to enable team care delivery using a hub-and-spoke model. The integrated delivery system Avera Health is one of the leaders, providing telemedicine services to a network of more than 130 rural clients from a virtual hospital based in Sioux Falls, S.D.

Despite the potential, a 2013 review found that two-thirds of rural hospitals did not use any telemedicine services, in part because of lack of access to broadband.² And some rural providers remain skeptical that technology will solve their problems.

Avera Health: Reaching into Rural Communities from a Virtual Hospital

Avera Health, an integrated delivery system based in Sioux Falls, S.D., ventured into telemedicine 25 years ago to offer patients in rural parts of the state access to specialists. Over the next two decades, the health system has vastly expanded the services it provides remotely — supporting not just its own facilities but small and rural hospitals in 13 states, enabling these hospitals to leverage the expertise of clinicians gathered in a virtual hospital at the health system’s Sioux Falls headquarters.

Avera Health’s eCARE hub offers rural hospitals access to emergency and critical care physicians as well as a range of other specialists. Photo credit: Avera Health

From the 30,000-square-foot facility and outposts in Michigan and New Hampshire, a wide range of specialists — including critical care and emergency medicine physicians and pharmacists — are available at all hours to provide support via video and telephone to facilities that might not otherwise be able to recruit or retain such providers.

More than 130 rural hospitals use its “eEmergency” service, allowing them to handle complex cases including trauma that may arise only a few times a year. Having this support permits many to lean on nurse practitioners and physician assistants for overnight shifts, improving the call schedule for area physicians, which in turn helps with recruitment.

“People can have careers that are more like what they would have in urban settings,” says Deanna Larson, CEO of Avera’s eCARE division. It also helps build the confidence and competency of local staff. “One of our physicians helped a nurse practitioner in a very remote area insert a chest tube in a young girl who had been in an ATV accident — guiding the intubation using a camera to see airway. Those kinds of procedures are very scary for people working in isolation. People begin to doubt themselves.”

Staff at Avera’s eCARE hub are available around-the-clock and typically respond to requests in 45 seconds. Photo credit: Avera Health.

Roughly 75 rural hospitals have signed up for Avera’s “ePharmacy” service, through which pharmacists with access to each of the hospital’s electronic medical record systems review medication orders, provide discharge instructions, and alert staff to changes that may be needed based on lab results. Pharmacists can then send orders that unlock dispensing units on site. “A lot of these hospitals don’t have a pharmacist 24/7,” Larson says.³

Avera charges hospitals a flat rate for its eEmergency service — roughly equivalent to a nurse’s salary — which Larson says facilities are able to recoup by keeping patients in their communities rather than transferring them to tertiary care centers in large cities for some procedures. This also keeps jobs in the communities, she says. One study found the potential for savings for rural hospitals is greatest for those relying on physician assistants in the emergency department, because this reduces the need for locum tenens, and keeps patients, including the commercially insured, in the community.⁴

Avera Health reduces the need for hospital transfers from long-term care facilities by providing access to geriatricians, social workers, pharmacists, behavioral health counselors, and advanced practice nurses. Photo credit: Avera Health

The process of establishing programs can be protracted, however, because of the credentialing required to provide services remotely, changes needed to hospital bylaws, and the time it takes to build the broadband capacity to get imaging back and forth. Some hospitals get support for initial investment in equipment and fees from the Leona M. and Harry B. Helmsley Charitable Trust, which provides funding for rural hospitals in Iowa, Montana, Nebraska, North and South Dakota, and Wyoming.

There’s also an adjustment period for hospital staff. “People feel at first as though someone is looking over their shoulder, but after one or two good interactions, they’re glad to have that partner in the room,” Larson says. Sioux Falls clinicians attend staff meetings at the hospitals they serve via video or teleconference.

Patients also seem to like it, she says. “They want to support their local hospital to ensure access and viability. They also get attached to the providers via video and want to meet them in person, we find.”

 

Staff at Avera Prince of Peace Retirement Community communicate with staff at the hub. Photo credit: Avera Health

Avera is now expanding into other settings that have difficulty recruiting providers, including prisons, schools, and long-term care facilities. For the latter, it relies on a geriatrician-led team that includes a social worker, pharmacist, behavioral health counselor, and advanced practice nurse. They respond to urgent care needs, help oversee care transitions and medication management, and train nursing home staff to identify health issues before they become more acute.

Avera tested the model in more than 30 nursing homes across four states, with funding from the Center for Medicare and Medicaid Innovation. Preliminary data show it reduced unplanned transfers to hospitals and emergency departments from 2.84 per 1,000 resident days in March 2015 to 1.73 in December 2016, a decline of nearly 40 percent, according to the health system.

Descriptions of products and services in Transforming Care are based on publicly available information and self-reported data provided by the institution(s) featured. Their inclusion should not be construed as an endorsement by The Commonwealth Fund.

Notes

A community-based effort to reduce prescription opioid misuse and abuse in Wilkes County, N.C., became a model for other cities in the U.S. after it lowered the overdose rate by nearly three-quarters over three years. Transforming Care spoke to Fred Wells Brason II, one of its founders, about how the organization approached the problem and what lessons it holds for other rural communities grappling with the issue.

While overdoses from prescription opioids are a national problem, they disproportionately affect rural communities, where emergency services are more limited, addiction treatment options are sparser, and higher rates of poverty and unemployment contribute to drug diversion and abuse.¹  In 2007, one of the hardest hit areas in the U.S. was Wilkes County, N.C. Once dubbed the Moonshine Capital of the World, the county on the eastern slope of the Blue Ridge Mountains had fewer than 70,000 residents but the third-highest prescription opioid overdose rate in the nation.²  A community-based effort to reduce opioid misuse and abuse, known as Project Lazarus, cut the overdose rate by 72 percent over three years, bringing the rate close to that in the state overall. The Project Lazarus model, which has spread to more than 20 states, encourages cross-sector collaboration to address the problem, promotes public and provider education, and focuses on increasing access to treatment for chronic pain and substance abuse disorder.

Components of the Project Lazarus model include:

 

A 2015 study of ambulance calls in 42 states found death rates from drug overdoses were 45 percent higher in rural communities than urban ones.³

Transforming Care: You’ve been instrumental in the development of the Project Lazarus model despite not having a background in substance abuse treatment, public health, or community organizing. How did you become an advocate for this cause?

Brason: I’ve been in home health for most of my adult career. When I became the director and chaplain of our local hospice, I really started to see the problem. I was getting calls from doctors telling me they couldn’t prescribe pain medication for patients as long as they were living at home because family members were either sharing the medication or stealing it. I’d never seen anything like it. We tried hiding the medications and locking them up, and we couldn’t contain the problem. We had one patient who was selling some of her medication to leave her grandchildren some money. Another was concerned someone would hear about their condition and rob them of medications in their home. That’s when it hit me in the face.

Transforming Care: Why was the problem in Wilkes County so much worse than in other parts of the state?

Brason: Here, as in other communities, it’s a combination of social factors—poverty, trauma, depression, unemployment, and just general hopelessness. The economy plays a big role. The Pew Charitable Trusts did a study of income changes in U.S. counties between 2000 and 2014 and found Wilkes County was number two in terms of lost income.⁴  It started when Lowe’s Corp., which opened its first hardware store here, moved its headquarters in 2003. What was left were jobs in cattle and chicken farming and haying. Drugs became an underground economy, which wasn’t entirely new for this area. I sarcastically say we have the marvelous “M”s. We started with moonshine, then marijuana, then methamphetamine, and then medication—opioids and benzodiazepines.

Transforming Care: How did you rally the community to address the issue?

Brason: I started by asking questions, which was a bit of rabbit hole because there weren’t a lot of answers back in 2004 and 2005. Most people were not aware of the problem. The sheriff saw it and the chief of the staff in the ED saw it. But everyone else was like, “What problem?” I realized we needed to build awareness among people who weren’t directly affected but could have an influence—teachers, parents, pastors, and counselors. Awareness required connecting the dots for each to realize how they were actually affected by the problem. This we addressed by answering three key questions for each community sector: Why am I needed? What do I need to know? What needs to be done?

We used data to demonstrate the problem. Around 2007 the state’s Medicaid program started to see changes in utilization in this area—including dramatic increases in the number of prescriptions, emergency department visits, and deaths. They reached out to the public health department, and that’s how I got connected. Together with two epidemiologists—Kay Sanford, M.S.P.H., and Nabarun Dasgupta, M.P.H, Ph.D.—and Susan Albert, M.D., from the Wilkes County Public Health Department, we created a workgroup to develop an evidence-based toolkit for primary care providers, who provide the majority of care in rural communities and are managing chronic pain, which may be more common in rural areas where people are working in labor-intensive careers. We’d do lunch-and-learn sessions about appropriate opioid prescribing and encouraged use of the state’s reporting system to track patients receiving these medications. We started in 2008, and within two years every provider in the county had been trained to use the toolkit.

We also focused on linking everyone together, not only to identify people who might be diverting medication, but also to ensure that patients who needed pain treatment got it. We put a nurse case manager in the emergency department to follow the high utilizers and set up referral mechanisms that linked behavioral health providers, primary care physicians, the emergency department, and dental clinics. If a patient showed up in the ED with a toothache, they could get an immediate appointment at the dental clinic. And if a patient sought help in ED for chronic rather than acute pain, they’d get a referral. We also kept running lists of providers who were taking new patients. We didn’t see how much impact we were having until Wake Forest School of Medicine came out to evaluate the first three years of the program. We couldn’t see the forest for the trees when we were in the middle of it.

Transforming Care: What did the evaluation show?

Brason: One of the surprising things was that patient satisfaction was better, even though patients were having to submit to urine screenings, pill counts, and treatment agreements. We thought it would be the opposite. But patients were encouraged by the fact that someone was taking their pain seriously and that they were being engaged. That showed the prescribing community there was a way to safely and responsibly escalate treatment if a patient needed stronger medication. Data from North Carolina’s Office of the Chief Medical Examiner showed the overdose rate dropped from 46.6 per 100,000—four times the state average in 2009—to 11 in 2011. Where we still struggled was in getting patients into treatment for substance abuse disorder. We just didn’t have any treatment options—no walk-in clinic, no medication-assisted treatment. You could call the behavioral health helpline and get an appointment with a counselor in 21 days.

Transforming Care: What did you do to address this lack of access?

Brason: That took extensive education of the general public and physician community about the science of addiction because there was such a bias against people with substance abuse disorder and a lack of motivation to help. There was the view it’s a moral or behavioral issue—that people shouldn’t be taking or doing anything and the only treatment is abstinence. We set up a panel to talk about medication-assisted treatment but, when I brought up the word methadone, everyone’s demeanor changed. It was nasty. People said, “That’s a drug for a drug,” and, “Not in my town.” The one methadone clinic that was considering coming said, “No way, no how. We’re done here.” We were eventually able to get a provider from Asheville, which is about 100 miles to the west, to set up a satellite clinic for prescribing buprenorphine, which is used to treat opioid addiction. That was more palatable to the community because it’s prescription medication. With more education about the science of addiction and evidence-based treatment, we were able to bring methadone to the same clinic two years later. And now we have a full-fledged opioid treatment program that serves more than 500 patients. They just moved into a new facility where they can accommodate 1,000. It’s not economically viable for every community to have a methadone clinic. Office-based treatment may be the best-case scenario because these offices already exist. But physicians need training, mentoring, and support to do it.

Transforming Care: While overdose rates from prescription opioids have come down dramatically in the early years, the rate went up in North Carolina in 2015, according to Centers for Disease Control and Prevention.⁵  Are you seeing the same trends locally, and what’s behind the uptick?

Brason: Yes. The rate goes down some years and up others. If we look over a five-year period, the number of overdoses has gone down by about 50 percent from the all-time high. So, we’ve made great headway, but we are still not out of the woods because the social determinants of substance abuse still exist, and there is still an underground economy. We know they are not getting it locally, but people are selling. When the sheriff’s office does undercover work, they are arresting 35 and 50 people. We had one roundup of 75 people. It’s a tough issue. There’s lots of trauma and depression. How do you change that? And how do you convince a business to come to your community when they can’t hire people because no one can pass the drug tests? This is where we are at this juncture.⁶

Transforming Care: What advice do you give communities that seek your help?

Brason: I learned early on to encourage community leaders to get their staffs involved. I tell them I want your police officers, your hospital personnel, your school teachers. Churches are also an ally. It can’t be owned by anyone. It has to be owned by the community. I find a lot of communities get frustrated because they can’t get everyone on board at first. I tell them not to try that. To begin the process, you need to work where the energy is. It will grow and they will come to you eventually. I’ve also learned time and time again if you give people the right tools and they feel they can make a difference, they will put the energy into it.

Notes

ACOs Serving Racial and Ethnic Minorities Lag in Quality
Using data from Medicare and a national survey of accountable care organizations (ACOs), researchers found having a higher proportion of minority patients was associated with worse scores on 25 of 33 quality performance measures, two disease composite measures, and an overall quality composite measure. These ACOs were similar to others in most observable characteristics and capabilities, including provider composition, services, and clinical capabilities. Because ACOs with a high share of minority patients may struggle with quality performance under ACO contracts, particularly in the early years of participation, the authors recommend policymakers consider refining ACO programs to encourage participation by providers serving minority populations and reward performance appropriately. V. A. Lewis, T. Fraze, E. S. Fisher et al., “ACOs Serving High Proportions of Racial and Ethnic Minorities Lag in Quality Performance,” Health Affairs, Jan. 2017 36(1):57–66. 

Alternative Quality Contract Improves Quality in Lower- and Higher-Income Areas
To study how quality and spending differs in areas of lower and higher socioeconomic status, researchers examined the performance of providers in Massachusetts before and after they entered into the Alternative Quality Contract, a value-based payment model launched by Blue Cross Blue Shield of Massachusetts. The model rewards physicians for improving quality while holding them accountable for medical spending. Comparing changes in process measures, outcome measures, and spending from 2006 to 2012, they found quality improved for all enrollees in the Alternative Quality Contract after their provider organizations entered into the contract. Process measures improved 1.2 percentage points per year more among enrollees in areas with lower socioeconomic status than among those in areas with higher socioeconomic status. Outcome measure improvement and spending were no different between the subgroups. The results suggest that pay-for-performance incentives could focus providers on improving quality for more disadvantaged populations, the researchers say. Z. Song, S. Rose, M. E. Chernew et al., “Lower- Versus Higher-Income Populations in the Alternative Quality Contract: Improved Quality and Similar Spending,” Health Affairs, Jan. 2017 36(1):74–82. 

Mobile Health Apps Not Benefiting High-Need, High-Cost Populations
Researchers who evaluated 137 apps highly rated by consumers and recommended by experts for helping high-need, high-cost patients manage their health found that few addressed the needs of high-cost patients. They also found that consumers’ ratings were poor indications of clinical utility or usability and that most apps did not respond appropriately when a user entered potentially dangerous health information. They noted that data privacy and security will continue to be major concerns in the dissemination of mobile health apps. K. Singh, K. Drouin, L. P. Newmark et al., “Many Mobile Health Apps Target High-Need, High-Cost Populations, But Gaps Remain," Health Affairs, Dec. 2016 35(12):2310–8. 

At One Health System, High-Cost Patients Cluster Into Five Distinct Groups
Using data on patients who use the Cleveland Clinic Health System for nearly all of their care, researchers found those in the highest decile of spending accounted for 60 percent of total costs. These patients clustered into five groups: 1) those who were ambulatory and had no hospital admissions (cancer diagnoses were prevalent in this group); 2) patients who had a median of two surgeries (care complications from surgery were common); 3) critically ill patients who spent a median of four days in the intensive care unit (cardiac diseases were prevalent); 4) patients who used the health system frequently and had a median of two admissions, three emergency department visits, and 29 outpatients visits (psychiatric disorders were common); and 5) a mixed utilization group with a median of one hospital admission and one ED visit. The majority of patients (55%) were in the frequent care cluster. Given the heterogeneity of high-cost patients, the authors suggest that interventions designed to reduce costs go beyond targeting those with frequent hospital admissions. N. S. Lee, N. Whitman, N. Vakharia et al., “High-Cost Patients: Hot-Spotters Don’t Explain the Half of It,” Journal of General Internal Medicine, Jan. 2017 32(1):28–34. 

More Refined Approach to Assessing Impact of Social Determinants Needed
In a commentary, an author argues for a more nuanced approach to assessing the influence on health of social determinants such as income, education, and housing. Sorting through the relative effect of social, biological, and medical care factors on health depends on the variation being explained and the time period studied, he says. Social factors may offer an explanation for geographic or racial differences in health outcomes at a single point in time, while variation over time may be linked to advances in medical science and technology. In addition, many social variables are correlated with one another making it difficult to determine the best allocation of scarce resources to achieve the greatest benefit. V. R. Fuchs, “Social Determinants of Health: Caveats and Nuances,” Journal of the American Medical Association, Jan. 2017 317(1):25–6. 

Safety-Net Hospitals Face Barriers But Employ Fewer Strategies to Reduce Readmissions
Researchers found that despite reporting more barriers to reducing readmissions, safety-net hospitals were less likely to use readmission-reduction strategies, which may explain why they have higher rates of readmissions and penalties under the Hospital Readmissions Reduction Program. Compared with other hospitals, safety-net hospitals were more likely to report patient-related barriers, including lack of transportation and homelessness. Yet they were less likely to use electronic tools to share discharge summaries or verbally communicate with outpatient providers, track readmissions by race and ethnicity, or enroll patients in post-discharge programs. The researchers also found high-performing safety-net hospitals were more likely to use several readmission strategies. J. F. Figueroa, K. E. Joynt, and X. Zhou, “Safety-Net Hospitals Face More Barriers Yet Use Fewer Strategies to Reduce Readmissions,” Medical Care, March 2017 55(3):229–35. 

Longitudinal Modeling May Enhance Efforts to Predict Spending
Researchers found using trajectory modeling to predict changes in patients’ health care spending over time was superior to more conventional methods including defining high-cost patients as those in the top fifth percentile of spending. The latter collapses an entire year’s spending into a single static variable and may include patients who have extremely high, but short-lived, health care spending. The group-based trajectory approach identifies patients with similar longitudinal patterns using a variety of information, such as socioeconomic and clinical characteristics, utilization data, and prescription records. The predictive value of using this data was only slightly inferior to using the proprietary Johns Hopkins ACG methodology, a tool for identifying high-risk patients, the researchers found. Because trajectory modeling identified more potentially high-cost patients (31% vs. 5%), it may be important to identify subgroups that have modifiable costs, they say. J. C. Lauffenburger, J. M. Franklin, A. A. Krumme et al., “Longitudinal Patterns of Spending Enhance the Ability to Predict Costly Patients: A Novel Approach to Identify Patients for Cost Containment,” Medical Care, Jan. 2017 55(1):64–73.  

Systematic Approaches Needed to Reduce Wasteful Spending
The authors of this commentary argue that focusing on improving care for high-need, high-cost patients may be less effective at reducing wasteful spending than systematically discouraging low-value services for all patients and encouraging more efficient use of specialty care resources. A narrow focus on high-need, high-cost patients may also entrench the status quo by supporting provider structures developed under fee-for-service incentives. They outline three approaches for incentivizing systems-focused strategies to limit wasteful care: bundled payment programs that place episodes of care under budgets; allowing provider consolidation to the point that a single organization provides the bulk of care in each market; or ensuring that small providers can participate in accountable care contracts for the majority of their patients, as physician groups have demonstrated an aptitude for reducing spending in several categories. They caution that advancement of the first two approaches may quash the latter in its infancy. J. M. McWilliams and A. L. Schwartz, “Focusing on High-Cost Patients—The Key to Addressing High Costs?” New England Journal of Medicine, March 2017, 376(9):807–9. 

Potential Benefits and Pitfalls of the Merit-Based Incentive Payment System Outlined
In a commentary, Commonwealth Fund–affiliated authors highlight potential intended and unintended consequences of the Merit-Based Incentive Payment System (MIPS), which links physician reimbursement to performance. It may encourage physicians to choose the combinations of measures and improvement activities that produce the most beneficial payment adjustments, producing little actual quality improvement. The variety of options available to providers for reporting their performance data may also make it difficult to compare providers. Evaluating MIPS solely on the basis of measured quality, payment adjustments, and financial effects may be insufficient, the authors say. To ensure the program’s success, they suggest CMS monitor the system’s effects on access to care, clinician morale, patient experience, practice consolidation, migration to advanced alternative payment models, and progress toward innovative care models and team-based care. E. C. Schneider and C. J. Hall, “Improve Quality, Control Spending, Maintain Access—Can the Merit-Based Incentive Payment System Deliver?” New England Journal of Medicine, published online Jan. 18, 2017. 

Risk Adjustment Should Factor in Variation in Diagnostic Practices
To enhance the accuracy of risk adjustment and ensure that payments to providers and insurers reflect the health of patients and not the regional differences in providers’ diagnostic practices, the authors of this commentary recommend adjusting risk scores to account for providers who tend to diagnose more aggressively. To develop such an approach, they examined changes in the measured health of Medicare beneficiaries who moved between different areas of the country and found 50 percent of geographic variation in reported health status was due to place-specific differences in diagnostic practices. The authors suggest using place-specific adjustment factors. A. Finkelstein, M. Gentzkow, P. Hull et al., “Adjusting Risk Adjustment—Accounting for Variation in Diagnostic Intensity,” New England Journal of Medicine, Feb. 2017 376(7):608–10. 

Strategies for Introducing Social Risk Factors to Value-Based Payment Models
The authors of this commentary recommend three strategies for ensuring that Medicare’s value-based purchasing programs take patients’ social risk factors into account, as these may make it harder for providers to achieve high performance on quality metrics and adversely affect providers who disproportionately care for at-risk populations. The strategies include measuring and reporting quality of care for beneficiaries with social risk factors; setting high, fair quality standards for the care of all beneficiaries; and rewarding and supporting better outcomes for all beneficiaries with social risk factors. K. E. Joynt, N. De Lew, S. H. Sheingold et al., “Should Medicare Value-Based Purchasing Take Social Risk Into Account,” New England Journal of Medicine, Feb. 2017, 376(6):510–3. 

ACO-Affiliated Hospitals Achieved Greater Reductions in Rehospitalizations from Skilled Nursing Facilities
Researchers found hospitals affiliated with accountable care organizations (ACOs) were able to reduce rehospitalizations from skilled nursing facilities more quickly than other hospitals. They say the reductions suggest that ACO-affiliated hospitals are either discharging to the nursing facilities more effectively compared with other hospitals, targeting at-risk patients better, or enhancing information sharing and communication between hospitals and skilled nursing facilities. They recommend further research to investigate the precise mechanisms that underlie the reductions. U. Winblad, V. Mor, J. P. McHugh et al., “ACO-Affiliated Hospitals Reduced Rehospitalizations from Skilled Nursing Facilities Faster Than Other Hospitals,” Health Affairs, Jan. 2017 36(1):67–73. 

Special thanks to Editorial Advisory Board member Mark Zezza for his help with this issue.

Eric Coleman, M.D., M.P.H., professor of medicine, University of Colorado

Mike Chernew, Ph.D., professor of health policy, Harvard Medical School

Marshall Chin, M.D., M.P.H., professor of healthcare ethics, University of Chicago

Don Goldmann, M.D., chief medical and scientific officer, Institute for Healthcare Improvement

Laura Gottlieb, M.D., M.P.H., assistant professor of family and community medicine, University of California, San Francisco, School of Medicine

Carole Roan Gresenz, Ph.D., senior economist, Rand Corp.

Thomas Hartman, vice president, IPRO

Clemens Hong, M.D., M.P.H., medical director of community health improvement, Los Angeles County Department of Health Services

Lauren Murray, director of consumer engagement and community outreach, National Partnership for Women & Families

Kathleen Nolan, managing principal, Health Management Associates

J. Nwando Olayiwola, M.D., M.P.H., associate professor of family and community medicine, UCSF School of Medicine

James Pelegano, M.D., M.S., assistant professor of healthcare quality and safety, Thomas Jefferson University

Harold Pincus, M.D., professor of psychiatry, Columbia University

Chris Queram, M.A., president and CEO, Wisconsin Collaborative for Healthcare Quality

Sara Rosenbaum, J.D., professor of health policy, George Washington University

Michael Rothman, director of quality and operations support, The Permanente Medical Group

Stephen Somers, Ph.D., president and CEO of Center for Health Care Strategies

Mark A. Zezza, vice president, Lewin Group