THCB

The ACO Hypothesis: Farzad Mostashari Responds

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.

Intentions and Actions of the ACOs
I have interviewed dozens of physician-led ACOs, and am working with a smaller group to learn together how to succeed in this movement. What these ACOs are trying to do is better chronic disease management, identifying and better serving at-risk patients, improving care transitions, communicating better with patients, and coordinating care better with specialists and other providers. We have better tools today to perform these tasks than we could have dreamed about 20 years ago, and there are plenty of savings to be wrought without stinting on needed care.

There are many valid concerns about any new payment and delivery model, but I believe that we are obligated to measure them not against a platonic ideal, but against the current “do-more, bill-more” perverse incentives and the perverse responses that they have in turn induced(bureaucratic barriers, price controls). The Medicare Shared Savings Program is only one of a number of ways in which CMS is moving “from volume towards value”, but it is an important step in the right direction, particularly for primary care networks that are able to deliver higher value through population health management.

If you have a workable alternative, or suggestions for improving the Medicare Shared Savings Program, please email me at fmostashari@brookings.edu.

 

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@BobbyGvegasGranpappy YokumseweinbergPeter1Doug Recent comment authors
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Granpappy Yokum
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Granpappy Yokum

” As a consumer of healthcare, I do not ever want to be concerned that my physician is compensated in any way based upon whether or not he orders an extra CAT scan or blood test to keep me healthy”

Good post.

I’m still looking for an answer: does Medicare inform patients when they have been “enrolled” in an ACO, and does Medicare provide them with a list of doctors in the ACO?

seweinberg
Guest

The results of this CMS study is very early and the project is only in its infancy. Prior CMS demonstration projects have not demonstrated savings over a 5 year period. Rather than attempt to scientifically try to determine a better method of cost savings and improvement in quality, the CMS has dramatically expanded the scope of the experiment. As a practicing physician who has been involved with numerous gain-sharing programs over the course of 10 years, I believe these programs can be effective to a point. Certainly, standardizing procedures, purchasing a limited number of brands of devices and drugs to… Read more »

@BobbyGvegas
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Great stuff.

“with shrinking healthcare dollars, and I can assure you that much of this will not be detected by statistical measures of quality. The individual patient will be at risk.”
__

My concern precisely.

@BobbyGvegas
Guest

“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.” ___ Clinical quality. Pt. satisfaction. Yes. “Clinical quality,” to me means, outcomes. Healing. Active problem(s) resolved; dubious meds successfully discontinued; full range of motion restored; injection fraction restored to normal; labs all back in normal ranges; progress… Read more »

Peter1
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Peter1

“Our ACO was stuck with patients for up to 16 months after the practice of their physicians was purchased by a hospital.”

Any attempt at cost reduction will be stymied hospital expansion to reduce competition. Until hospitals are brought under a single-pay funding mechanism with hard budgets cost cutting won’t work.

Here’s an untried solution for hospital administrators – make your budget or get fired.

Doug
Guest

A major problem with the Medicare Shared Savings Program for ACOs is that ACOs are stuck with the Medicare patients of ACO Participants who may have their practices purchased by a hospital or group and drop out of the ACO. How can an ACO manage the care and risk for thousands of ACO members when their physicians are not even in the ACO anymore? Our ACO was stuck with patients for up to 16 months after the practice of their physicians was purchased by a hospital.

@BobbyGvegas
Guest

Thnaks, Farzad. I will respond on my REC Blog.