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ACOs

Farzad MostashariSeveral of the provisions included within the Affordable Care Act in 2011 designate Accountable Care Organizations (ACOs) as formal, contractual entities.

However, in the real world ACOs come in a variety of shapes and sizes.

When compared to larger, hospital-sponsored ACOs, rural and small physician-led ACOs face a tough challenge, because despite limited resources they need to come up with substantial upfront capital and infrastructure investment to establish a strong ACO foundation.

To help ease this burden, 35 ACOs were selected to participate in the Advanced Payment Model ACO demonstration through a grant program from the Center for Medicare and Medicaid Innovation (CMMI). The grants provided a portion of upfront capital to determine whether or not this financial assistance would help ease the startup burden for smaller ACOs, and increase their success rate.

One of those 35 organizations includes the central Florida-based Physicians Collaborative Trust ACO, LLC (PCT-ACO). They are participants in the January 2013 Medicare Shared Savings Program (MSSP) ACO cohort, along with 106 other ACOs.

Larry Jones, PCT-ACO’s CEO, describes his personal mission as an effort to “preserve and protect the independent practice of medicine.” For over 25 years he has been advocating for physicians through their efforts to organize, negotiate with health plans, and other challenges.

Continue reading “What a Physician-Led ACO Can Teach Us about Getting It Right”

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Farzad Mostashari’s  post last week provoked a heated (to put it mildly) discussion between supporters and critics of the ACO model.

Farzad writes:

Commenters have raised several points regarding the early results of the Medicare Shared Savings Program that bear further discussion and clarification:

-The need for more details on the participants by name, along with their characteristics, actions, and outcomes.

I agree. We strongly encourage CMS to release more detailed information about the results of the program to date. As someone who’s been on the other side, I can attest however, that lack of transparency can occur despite the intentions of leadership, and even when there’s nothing to hide. CMS has taken great steps towards open data in recent years- unparalleled in its history (or in comparison to private sector payors and most states), but there is more work to be done to overcome institutional inertia, and concerns regarding the “privacy of providers”.

How is the MSSP different from an HMO?
A major similarity between managed care and “shared savings” programs is that physicians that make decisions about treatment, diagnostic, and referral options do have an incentive to reduce cost. I was trained in an era where we were not supposed to think about (or even be aware of) the cost implications of our care recommendations. I now believe that we need physician engagement in addressing the truly unsustainable rise in healthcare costs that threaten to bankrupt our nation.

However, policymakers have learned a few lessons from the backlash against managed care:

Quality Matters
Reducing cost cannot be the only outcome. In the MSSP, in the first year only can you qualify for savings simply by reporting quality measures. In future years, ACOs will have to not only reduce total cost but also perform well on measures of patient satisfaction, clinical quality, and utilization (such as ambulatory care sensitive admissions) to collect shared savings payments.

What about patient choice?
If the patient doesn’t like the care they’re getting, they can get care elsewhere. This is a sore point for many ACOs, especially those that have been successful in managed care arrangements, but the current regulations in no way limit patients’ ability to seek care elsewhere. MSSPs are required to notify patients that they have formed an ACO, and patients have the option of opting out of the sharing of their claims data with the ACO.

Shared Savings versus capitation
Finally, the MSSP program is indeed layered on top of fee-for-service payments (versus prospective payments/ capitation), and most MSSPs have opted for the “upside only” track for the first three years. We acknowledge that where the ACO includes a hospital sponsor, they must contend with “demand destruction” on their fee-for-service lines of business if they reduce procedures, admissions and emergency department visits. However, physician-led ACOs are not similarly encumbered, and this model provides them with a “safe” transitional path towards taking risk. It is also worth noting that “one-sided risk” during the riskiest early transition period would tend to reduce the likelihood of a physician having to choose between limiting needed care and going bankrupt.

Continue reading “The ACO Hypothesis: Farzad Mostashari Responds”

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In 1980, while working at the University of Chicago Pritzker School of Medicine, I wrote an article for the Harvard Business Review entitled “The Health Care Market: Can Hospitals Survive?”. This article, and the book which followed, argued that hospitals faced a tripartite existential threat:

1)  ambulatory technologies that would enable physicians to compete successfully with hospitals at lower cost in their offices or freestanding settings, 2)  post-acute technologies that would enable presently hospitalized patients to be managed at home and 3) rapidly growing managed care plans that would “ration” inpatient care and bargain aggressively to pay less for the care actually provided.

I predicted a significant decline in inpatient care in the future, and urged hospitals to diversify aggressively into ambulatory and post acute services.   Many did so.  A smaller number, led by organizations like Henry Ford Health System of Detroit and Utah’s Intermountain Health Care, also sponsored health insurance plans and became what are called today “Integrated Delivery Networks” (IDN’s).

In the ensuing thirty years, US hospital inpatient census fell more than 30%, despite ninety million more Americans.   However, hospitals’ ambulatory services volume more than tripled, more than offsetting the inpatient losses; the hospital industry’s total revenues grew almost ten fold.

Ironically, this ambulatory care explosion is now the main reason why healthcare in the US costs so much more than in other countries.  We use far fewer days of inpatient care than any other country in the world.  But as the McKinsey Global Institute showed in 2008 ambulatory spending accounts for two thirds of the difference between what the US spends on healthcare and what other countries spend, far outstripping the contribution of higher drug prices or our multi-payer health financing system.

Continue reading “Can Hospitals Survive? Part II”

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Last month, the Center for Medicare and Medicaid Services (CMS) reported first-year results from the Medicare Shared Saving Accountable Care Organization Program (MSSP).

As noted in a previous post, shifting to an accountable care model is a long-term, multi-year transition that requires major overhauls to care delivery processes, technology systems, operations, and governance, as well as coordinating efforts with new partners and payers.

Participants in the MSSP program are also taking much more responsibility and risk when it comes to the effectiveness and quality of care delivered.

Given these complexities, it is no surprise that MSSP’s first year results (released January 30, 2014) were mixed. The good news? Of the 114 ACOs in the program, 54 of the ACOs saved money and 29 saved enough money to receive bonus payments.

The 54 ACOs that saved money produced shared net savings of $126 million, while Medicare will see $128 million in total trust fund savings.

At the time, CMS did not provide additional information about the ACOs with savings versus those without.

While a more complete understanding of their characteristics and actions will be necessary to understand what drives ACO success, the recent disclosure of the 29 ACOs that received bonus payments allows us to offer some preliminary interpretations.

Continue reading “The ACO Hypothesis: What We’re Learning”

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Since CMS’s Center for Medicare and Medicaid Innovation launched three years ago, its staff have been frequently hailed for undertaking an ambitious research agenda.

But a New York Times story this week was eye-catching for a different reason: author Gina Kolata mostly assailed Medicare’s researchers for how they’re choosing to do that research.

“Experts say the center is now squandering a crucial opportunity,” Kolata wrote in a front-page article. ”Many researchers and economists are disturbed that [CMMI] is not using randomized clinical trials, the rigorous method that is widely considered the gold standard in medical and social science research.”

But many researchers and economists that I talked to at this week’s Academy Health conference say that’s not the case at all. (And some were disturbed to learn that they were supposed to be disturbed.)

“RCTs are helpful in answering narrowly tailored questions,” Harvard’s Ashish Jha told me. “Something like—does aspirin reduce 30-day mortality rates for heart attack patients.”

“However, for many interventions, RCTs may be either not feasible or practical.”

“While RCTs may be the gold standard for testing some hypotheses, it is not necessarily the most effective or desirable model for testing all hypotheses,” agrees Piper Su, the Advisory Board’s vice president of health policy.

CMMI’s ambitious goals

On its surface, Kolata’s article is built around a reasonable conclusion: RCTs offer plenty of value in health care, and we’d benefit from more of them.

  • As Jha alludes to, think of a double-blinded pharmaceutical study where half the participants randomly get a new drug and the other half get a placebo; that’s an RCT.
  • The famous RAND study that found having health insurance changes patients’ behavior: An RCT.
  • The ongoing Oregon Health Insurance Experiment: Also, an RCT.

And it’s fair to examine how CMMI is pursuing its research, too.

Continue reading “What the New York Times Got Wrong about Medicare’s Innovation Center”

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More than 55 percent of the U.S. population now lives in a local area with an accountable care organization (ACO), in which a group of providers is held accountable by a payer for the total cost and quality of care for a defined set of patients. The spread of ACOs, however, by no means ensures their success.

Significant questions remain about whether the goals of the model—better care at lower costs—will be achieved.

There are some signs that the ACO model—by rewarding provider organizations for implementing high quality mechanisms for care delivery that lower overall costs—is driving innovation in the marketplace. For example, the Montefiore ACO in New York City is using special scales in the homes of patients with congestive heart failure to monitor for changes in weight that could indicate trouble.

Walgreens has formed three ACOs and is using its retail pharmacies as low-cost care centers. In addition, the Beth Israel Deaconess Care Organization created a high-touch care management system in which nurse practitioners visit the ACO’s sickest patients at home to reduce the number of hospital readmissions.

Yet, there are also challenges inherent in the adoption and implementation of the ACO model. There have been several wide-ranging proposals on how to enhance accountable care, especially in Medicare, but we believe that developing policies to standardize measurement is an important first step.

First, we need to promote adoption of a core set of effective measures across payers. Current measures, such as screening for high blood pressure, are limited in scope and fail to incorporate important dimensions, including health outcomes meaningful to patients and the total cost of care for those within the ACO. Proposals for more advanced measures have been developed but not yet adopted, in part because of provider concerns about being held accountable for aspects of performance they do not fully control.

These issues could be addressed by operationalizing the concept of “shared accountability” through patient engagement and partnerships, as with local, multistakeholder community health coalitions, and embracing a core set of more challenging and meaningful metrics, such as functional health and total costs per capita.

Continue reading “Measuring What Matters for ACOs”

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As he ascends to the Chair of the Senate Finance Committee, Senator Ron Wyden’s recent proposal to reform Medicare by improving care for the chronically ill has garnered significant attention and support. Its topline goal of incentivizing integration of care for high-risk patients is resonating with stakeholders across the health care continuum.

In light of its momentum and Senator Wyden’s imminently expanding authority over Federal healthcare programs, we thought it wise to take a closer look at his plan – the “Better Care, Lower Cost Act” (BCLA). What we found is more interesting, ambitious and – potentially - complex than the headlines suggest.

In essence, the BCLA would allow providers (and health plans) to form new entities – labeled Better Care Programs (BCPs) – that receive capitated payments for all Medicare-covered services delivered to their enrollees. The initiative would initially focus on regions of the country with disproportionately high rates of chronic illness and only medically complex patients would be allowed to enroll.

There are a variety of medical protocols that BCPs would be required to adopt, including development of personalized chronic care plans for each enrollee.

If you are hearing echoes of the Accountable Care “movement,” then you are in the right concert hall but listening to a very different symphony. While BCPs share some characteristics with ACOs, they would differ in important ways. A limited number of ACOs in Medicare currently take full(ish) financial risk, but all BCPs would do so, with some risk corridors instituted in the first few years.

Unlike most ACO programs, control groups would be established for purposes of measuring BCP performance. Also - and this is pivotal - BCPs would be required to proactively enroll Medicare beneficiaries, while patients are typically passively attributed to ACOs.

By taking a giant step down the shared savings path, which it travels alongside ACO programs, the BCLA further blurs the line between traditional fee for service and managed care. BCPs would actually be compensated in the same manner as Medicare Advantage plans, the private insurance option in Medicare.

Continue reading “Unpacking the Wyden Chronic Care Bill”

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With the beginning of 2014 comes another year of the great accountable care organization (ACO) debate.

Is it a model to deliver high-quality, cost-effective care and improve population health management (PHM)? Or, just a passing fad, similar to the HMOs of decades ago?

Many opinions exist, and they’ll continue to be debated, especially during an election year. One thing most of us can agree on about ACOs is they are a work in progress.

We can say with some certainty that ACOs are taking hold; look no further than their growth, which now exceeds 600 public and private ACOs nationwide with the recent addition of 123 ACOs to the Medicare Shared Savings Program. But they still beg more questions than answers. What types and sizes of hospitals are forming ACOs, and where are they located? What does the pipeline of emerging ACOs look like, and how long will their journey take? And what capabilities, investments and partnerships are essential to ACO participation? What is the longer term performance?

Who better to ask than the decision makers running the organizations that participate in an ACO?

In August of 2013 we surveyed 115 C-suite executives– primarily CEOs (43.5%), chief financial officers (17.4%) and chief operating officers (16.5%) – across 35 states to collect data on their perspectives on ACO and PHM.

Survey results support the increase in ACO popularity. According to respondents, ACO participation has almost quadrupled since spring 2012: More than 18% say their hospitals currently participate in an ACO, up from 4.8% in spring 2012. This growth is projected to accelerate, with about 50% of respondents suggesting their hospitals will participate in an ACO by the end of 2014. Overall, 3 out of 4 senior executives surveyed say their hospitals have ACO participation plans.

Since survey respondents also represent hospitals of different locations, sizes and types, we are able to obtain a broader look at current and future ACO participation and found that:

  • Non-rural hospitals (82.1%) are most likely to participate in an ACO overall, followed by hospitals in an integrated delivery network (81.1%).
  • The lowest rates of projected participation are among rural hospitals (70.7%) and standalone hospitals (72.6%).
  • Large hospitals are moving more quickly, as 30.8% said they’d be part of an ACO by the end of 2013.
  • And though they’re equally as likely as large hospitals to ultimately participate in an ACO, small hospitals say they require additional time, with 48.6% planning to join in 2014 or 2015.

But some providers have been more deliberate and cautious about when they start their ACO journey. The pace of ACO adoption has been slower than originally anticipated 18 months ago, when more than half of executives predicted their systems would create or join an ACO by the end of 2013. Current survey results show that about 1 out of 4 will meet that projection.

Continue reading “The Great ACO Debate: 2014 Edition”

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I first posed the question, “Could Mobile Health Become Addictive?” on August 20th.  Since then I’ve done more thinking and I’m warming to the concept.

To start with, addiction is a word laden with negative meaning.  When we hear the word, we think of opiates, street drugs, cigarettes, or possibly gambling.  In fact, Wikipedia defines addiction as, “the continued repetition of a behavior despite adverse consequences.”  So, with that definition as backdrop, is there any way health can really be addictive?  Probably not.

What I’m really talking about is the juxtaposition of motivational health messaging with some other addictive behavior, specifically checking your smartphone.

New evidence shows that people are in love with these devices, checking them more than 100 times per day!  I’ve heard people are tapping in 110, even 150 times a day. Of course this varies, but let’s face it, we check our smartphones a lot and it’s hard to stop.  A somewhat disturbing video makes the case well.  It’s easy to build a case that smartphones are addictive.

Recent research shows that checking your phone results in a small release of the neurochemical dopamine.  Dopamine release has long been associated with ingestion of addictive substances such as heroin and tobacco.  In fact, once the pattern of ingestion and dopamine release is established, even thinking about the ingestion triggers the dopamine release, the biochemical explanation for cravings.

For this post and a series to follow, I choose not to question whether this compulsive relationship with smartphones is good or bad, but simply to acknowledge that it is common, almost universal among smartphone users and to ask if we can exploit it as tool to improve your health.

Continue reading “Making Health Addictive”

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On July 16, the CMS Innovation Center reported the first-year results for the Pioneer Accountable Care Organization program:  13 Pioneers, or about 40 percent of the participants, earned bonuses. The program saved Medicare a gross $87.6 million before bonus distributions, cutting the rate of growth in Medicare spending by 0.5 percent, from 0.8 percent to 0.3 percent annually.

However, nine of the 32 members dropped out and press reports hinted at a contentious relationship between the Pioneers and a well meaning but green and overtaxed CMS staff.  It was not an auspicious beginning for a program whose advocates believed would eventually replace regular Medicare’s present payment model. There immediately followed a blizzard of spin control from ACO “movement” advocates stressing the need for patience and highlighting first year achievements.

What was irritating about the Pioneer spin is it treated the ACO as if it were a brand new idea with growing pains. This studiously ignores a burned out Conestoga wagon pushed to the side of the trail: the Physician Group Practice demonstration CMS conducted from 2005-2010. The PGP demo tested essentially the same idea — provider bonuses for meeting spending reduction and quality improvement targets for attributed Medicare patients.  The pattern of arrow holes and burn marks on the PGP wagon closely resemble those from the Pioneer’s first year, strongly suggesting more troubles ahead for the hardy, surviving Pioneers.

The PGP Precedent. Like the Pioneers, PGP participants were not ordinary community hospitals or freshly formed physician groups or IPA’s.  Rather, most were “high functioning” organized clinical enterprises, some with decades of global risk contracting or health plan operating experience.  Particularly in light of the degree of clinical integration and care management experience of its participants, the PGP results were extremely disappointing; only two of the ten participants were able to generate bonuses in each of the program’s five years, and one, Marshfield Clinic, earned half the total bonuses.  Managed care veterans like Geisinger Clinic and Park Nicollet earned bonuses in only three of their ten program years. Two other high-quality multi-specialty clinics had even rougher sledding, with Everett Clinic getting one year of bonus ($126,000) and Billings Clinic completely shut out.

The pattern in the first Pioneer year is remarkably similar.   While thirteen of the Pioneers earned bonuses, it appears from press reports that four of them generated 2/3 of the savings.   It is likely not coincidental that three of those four participants (Massachusetts General, Beth Israel Deaconess’ physician organization, and New York’s Montefiore) either run or practice at some of the most expensive hospitals in the country, in two of the country’s highest per capita Medicare spending markets.  Orchards full of low hanging fruit (e.g. very high levels of previously unexamined Medicare spending) appear to be an essential precondition of ACO success.

Continue reading “Pioneer ACO’s Disappointing First Year”

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