Managing Health Initiatives

If you had a $20 million a year business, you would obviously have a full-time team managing and growing it. With approximately 4% of healthcare systems revenue tied to performance-based and care management payments, many lack the dedicated focus to manage and perform successful. If they are generating $500M per year, they likely have $20M per year in “managing health” revenue with an opportunity to grow it by 200% in just 2 years. While many healthcare systems lack the operating margins to support a dedicated “managing health” team, a successful “managing health” operating plan can fix that. With a comprehensive approach to “managing health” funding, healthcare system can grow their overall revenue by a 5% to 15%.

Care Management Revenue Codes

These revenue codes were established by Medicare beginning in 2011 help physicians secure payment for their Care Management activities. It can represent more than $200K of additional revenue per PCP without adding one patient visit. Most commercial payers also reimburse for these codes enabling practices to establish one consistent workflow. In 2016, Medicare added Advanced Care Planning code.  The proposed 2017 Physician Fee Schedule is expected to add even more. This revenue is used to fund the new competencies requires to be successful with the other funding sources for “managing health”.

  • Annual Wellness Visit (AWV) – this is an annual patient visit that helps providers understand the patient’s health, as well as other behavior, social, socioeconomic or environmental determinants of health. This began in 2011.
  • Transitional Care Management (TCM) – this is a comprehensive approach to treating patients within the critical 30 day period following a hospital stay. As many as 20% of Medicare patients return to the hospital within 30 days of discharge. This began in 2013.
  • Chronic Care Management (CCM) – this is for patient care management for patients with two or more chronic conditions. As many as 80% of Medicare patients would qualify for this monthly service. This began in 2015.

Medicare Advantage Incentives

Healthcare systems and medical practices have contracts with Medicare Advantage health plans with incentives. These incentive can represent $100 to $500 per attributed patient that is in addition to the the Care Management Revenue Codes described above. Medicare Advantage health plan may reward high performing PCPs with additional incentives or by narrowing their network to increase their number of patients.  Medicare Advantage incentives may include some or all of the following:

  • Patient Assessments – The number, percentage and timing of completing Patient Assessment Forms. This helps health plans improve their revenue with accurate Risk-Adjustment Factor (RAF) coding.
  • HEDIS/Star Rating – achieving these quality indicators helps heath plans improve their star rating which enables them to offer additional services to their members.
  • Care Management Fees – Some health plans offer per-member-per-month care management fees based on RAF.
  • Shared Savings – Some help plans offer overall member cost savings either via an upside only or with downside risks.


Medicare has mandatory and optional performance incentives with separate programs for hospitals and physicians.  The mandatory programs are more about protecting existing revenue rather than growing it. The hospital mandatory incentives (or penalties) include readmission penalties, value-based purchasing, hospital acquired infections penalties and the Electronic Medical Record (EMR) Meaningful Use programs. The physician mandatory incentives (or penalties) include quality, value-based payment modifier and the EMR Meaningful Use program. The mandatory physician incentives will be replaced beginning in 2019 with MACRA, which will have a up to a 9% payment difference between the choices of the MIPS and APM programs. Medicare offers many optional performance programs through the CMS Innovation Center such as the Comprehensive Primary Care Plus program.

Alternative Payment Models (APMs) & Clinically Integrated Networks (CINs)

U.S. Health and Human Services Secretary Sylvia Burwell announced in January the goal of tying 30 percent of Medicare spending to alternative payment models by 2016 and 50 percent by 2018. The primary alternative payment models are Accountable Care Organizations (ACOs):

Commercial health plans and some state Medicaid programs contract with healthcare systems and physician practices for ACOs and CINs.

Bundled Payments

Medicare has three different bundled payment programs. Commercial health plans and employers also offer bundled payment programs to the members and employees for planned surgeries at centers of excellence’s. These models are tied to the overall cost of a patient over 90 days beginning with a hospital admission through 90 days after leaving the hospital.

Commericial Health Plans

Commercial health plans offer performance based contracts from small incentives to fully capitated per-member-per-month payments.  They offer a version of virtually each of the performance-based payment models described on this page.


Each state Medicaid program has various “managing health” performance based payments. They include care management payments to PCMH certified Medical Homes, Medicaid Managed Care, Medicaid Redesign (i.e., DSRIP) and Medicaid Expansion programs. Each represent opportunities for healthcare systems and physicians to participate with their state, health plans or contracting entities (i.e., PPS for DSRIP).

Self Insured

Healthcare systems that are self-insured have a chance to “manage health” of their employees that improves their satisfaction, improves outcomes and reduces overall cost. This service can be offer to other local self-insured employers to achieve the same desired outcomes. It can also be offered through commercial health plans that are providing Administrative Only Services (ASO) to self-insured employers.

Patient Loyalty

With performance based payments and managing health, the most important competencies for success is knowing your patients and keeping them happy. “Managing Health” programs to manage patient loyalty is critical to growing and maintaining attributed populations. The reasons patient’s are no longer attributed needs to be clearly understood and may even need to be contacted to potential change their mind.


Participation in ACOs and CINs provide the opportunity to understand and manage leakage within your healthcare system and PCP attributed populations. ACOs have found that as much as 50% of their patients receive acute care services from hospitals outside the ACO or CIN. Patient convenience such as same day office visits and coordinated care can improve the patient experience and healthcare system revenue.