Tag: Accountable Care Organizations

Are Patients and Interoperability Finally Coming to the Fore of Health IT?

Mar 25, 2011• 4

By ADRIAN GROPPER, MD

In recent weeks, I’ve witnessed a huge change among my practicing colleagues. For the first time, the true cost of vendor-proprietary records is seen as an existential issue for practices that may need to join an Accountable Care Organization to survive.

To a doctor in the good old days, IT meant practice management as a tool to get paid. As the days of fee-for-service give way to ACOs and global payments, doctors are starting to realize the direct link between payment, health records and patient engagement.

In a recent essay titled “Show Me the Money” in Patient Safety and Quality Healthcare, Barry Chaiken, MD summarizes:

“Regular assessment of quality performance will identify those providers who might be withholding care or over-utilizing care, helping to balance the equation between clinical and financial objectives. Entities such as ACOs and patient-centered medical homes will either take on the financial risk and therefore share in the savings generated by their transformed care delivery processes or receive added payments, along the lines of current pay-for-performance schemes, for delivering predetermined clinical and financial outcomes.”Continue reading…

The Quest for the “Not For Comfort” Healthcare Organization

Mar 18, 2011• 8

By JOE FLOWER

The current reorganization of health care could make it better and cheaper for everyone, harnessing real creative and competitive energies to build the “next health care”—or it could lead to local monopolies, higher prices and less real competition where it matters. The many and various moves toward accountability, competition and transparency could defeat themselves.

The theme of the reorganization is clear: new types of cooperation between physicians, hospitals and other providers that cut down on duplication and unnecessary procedures and tests; that make the system accountable both for processes and outcomes; and that share economic risk among the providers. This new and strange cooperation comes in many types, typically labeled “accountable care organizations” (ACOs), “bundling,” “patient-centered medical homes” (PCMHs) and “co-management.”

All these concepts require new structures: complex organizational, contractual, reporting, liability and payment structures that in one way or another stretch across specialties and providers throughout whole regions. What could these new structures (particularly ACOs) look like if they were to turn evil? They could look like monopolies, like regional health care cartels, capable of forcing other providers into disadvantaged relationships and jacking up prices to health plans and employers.Continue reading…

The Inspector General Observes

Mar 17, 2011• 5

By PAUL LEVY

A recent report by the Massachusetts Inspector General raises a thoughtful concern about the implementation of global payments in the state.

In the effort to contain health care costs, much discourse has centered on moving from a predominantly fee-for-service system to one based mainly on global payments to providers organized as Accountable Care Organizations (“ACO”). There is little doubt that fee-for-service reimbursements create incentives for providers to increase utilization of health care services, with obvious inflationary consequences. But moving to an ACO global payment system, if not done properly, also has the potential to inflate health care costs dramatically.

There is nothing inherent in the current marketplace that would cause an ACO-based global payment system to contain health care costs. The evidence, in fact, suggests the opposite conclusion. For the past two years, the primary experiment with global payments in the private insurance market in Massachusetts has been the Alternative Quality Contract (“AQC”) popularized by Blue Cross Blue Shield of Massachusetts (“Blue Cross”). The payments to providers under this contract are made on a global capitated basis. The capitated amounts are determined by starting with the previous year’s experience of the population of lives covered by the specific AQC. That entire amount becomes the base year from which all future payments are derived. Therefore, the AQC embraces and adopts any excessive or wasteful payments in that base year, including all overutilization resulting from over a decade’s worth of fee-for-service provider contracts. Implicitly, the premium increases of that decade, which overall were well in excess of 100%, are made a permanent part of our health care system’s cost structure.Continue reading…

The HMO in Your Future

Feb 28, 2011• 12

By JOHN GOODMAN

I have not been able to determine how you pronounce the acronym for Accountable Care Organization (ACO). Is it ā´ ko? Or ā´ so? Or ăh so´, as in Charlie Chan movies? What about ĕ´ ko, as in a canyon? Or simply ick, with a silent o?

Anyway, this is not a trivial matter because you are likely to be in an ACO at some point in the future and it’s probably going to happen sooner than you think.

In Massachusetts, stakeholders are already meeting to develop a plan to push everyone with commercial insurance into an ACO. [Can you guess who doesn’t count as a “stakeholder?” If you live in Massachusetts and you weren’t invited to the meeting, that’s a clue.] Nationwide, Medicare will start paying fees to ACOs, beginning next year. Eventually, the Obama administration would like to see everyone in an ACO.

But if no one had any previous interest in forming ACOs, let alone joining them, what is going to cause us all to change our minds? Money. Insurers won’t be able to get premium increases unless they adopt ACO plans. Doctors and hospitals will be paid less if they don’t join. Eventually doctors will find they are ineligible to treat Medicare patients or patients insured in the newly-created health insurance exchanges if they are not practicing in ACOs. As for the patients, there won’t be any plans to join other than ACO plans.Continue reading…

AQC to ACO: As Goes Massachusetts, So Goes the Nation?

Feb 14, 2011

By DAVID HARLOW

About four years ago here in Beantown, survivors of the last big ill-conceived or poorly-executed (depends who you ask) wave of health care management and finance innovation were kicking around for a new approach to aligning payor and provider incentives, focusing on quality and cost containment. To hear Andrew Dreyfus, CEO of Blue Cross Blue Shield of Massachusetts, tell the story, the Blues wanted to address both quality and cost, and therefore (after looking in vain for a model elsewhere that could be transplanted to Massachusetts) developed the Alternative Quality Contract, or AQC, which features a global payment model hybridized with substantial performance incentives, plus design features intended to lower the cost of care over time.

Many of the features put in place under the AQC will allow participating provider networks in Massachsuetts to make the leap to ACO (once the beast is defined by the federales), despite the difference in payment methodology (global cap for AQC vs. FFS for ACO).

I was invited to hear Andrew present the AQC story this week together with Gene Lindsey, CEO of Atrius Health, a Massachusetts multispecialty physician network of some 700 physicians that participates in the AQC. (Atrius’ largest group is Harvard Vanguard Medical Associates, whose docs used to be employed by Harvard Community Health Plan, the pioneering staff model HMO ’round these parts.)Continue reading…

2011 Predictions: MU Goes Tactical, ACO Strategic

Feb 3, 2011• 4

By JOHN MOORE

In the Healthcare IT (HIT) market, 2010 was the year of meaningful use (MU). Healthcare organizations (HCOs) of all sizes developed plans, began making IT modifications and began adopting the technology they needed to meet Stage One MU requirements and subsequently receive incentive payments, some of which began being disbursed in late 2010. As we move into 2011, we will continue to see an extreme amount of activity and turmoil in the HIT market with the biggest elephant in the room being what will actually happen to the healthcare reform bill that was passed at the beginning of 2010.

Against this backdrop, we once again have prepared our annual top ten (actually we have 11 for after all it is 2011) predictions for 2011 which are as follows:

1) MU Initiatives Move to Tactical. Meaningful use is no longer of great concern to the executive suite, well except for maybe the CIO and his counterpart, CMIO. It has moved to the tactical implementation stage for enterprises insuring that systems are in place, clinicians trained and MU requirements met to reap incentive payments.

2) C-Suite Strategy Focuses on New Payment Models. Despite the turmoil swirling around healthcare reform, one thing that is unlikely to change is the move to bundled payment models and the migration to Accountable Care Organizations (ACOs). The train has already left the station on this one and this train does not have reverse. The repercussions of these new payment models have the potential to make or break a HCO and the C-suite knows this thus are focusing all of their attention on what is the most appropriate strategy for their organization. Strategy service firms such as CSC, Dell, Deloitte, PWC, etc. are going to make out like bandits.

ACOs and Community Hubs of Wellness & Health

Jan 23, 2011• 18

By KENT BOTTLES, MD

Hospitals are going to change. What worked in the past will not work in the future. The passage of the federal health care reform law and the inevitable transition from fee for service to global payments is changing the rules of the hospital game. Hospitals will have to make do with less financial support from both government and private payers and at the same time deliver higher quality health care with measurably better outcomes. Hospitals will take care of fewer and fewer patients as care continues to migrate to the outpatient setting, the home, and wherever citizens live carrying their smart phones. The development of Accountable Care Organizations (ACOs) to receive and distribute these global payments will affect hospitals whether they decide to take a leadership role or a wait and see attitude. There will be winners and losers among hospitals; there will be fewer hospitals in America in ten years than there are today in 2011.

Hospitals that survive this transformation of the health care delivery and payment system will become the community hub of wellness and health (CHWH) that citizens turn to in a time of rapid and chaotic change. Becoming a CHWH will require hospitals to expand their services and expertise well beyond the traditional role of an acute care facility. It will also require hospitals to embrace social media and disruptive digital tools that are now available to help care for a defined population living in the community. Hospitals will have to forge a new culture or their ACOs will fail, no matter how sophisticated and expensive their legal structures and physician integration plans become.

Hospital leadership seems ill prepared for this transformation in mission. Robert Naldi, the CFO of Maimonides Hospital in Borough Park, Brooklyn, is not alone when he says, “I don’t spend a lot of time thinking about global issues. When I hear Medicare is being cut six billion dollars over the next ten years, Medicaid cut four billion dollars the next, that ten billion dollars doesn’t change what I do on a Thursday morning…. I don’t spend any energy forecasting the next three or four years, because I don’t think anyone can do that. We’re lucky if we forecast the next six months, things change so rapidly. I just don’t waste time on it.” (http://ow.ly/3Dlxp)

Putting the Patient First, Literally

Jan 18, 2011• 3

By ADRIAN GROPPER, MD

Interoperability is front and center, again. Stage 1 of HITECH was about health records for doctors. Stage 2 is about interoperability. The President’s Council of Advisors on Science and Technology (PCAST) report is all about interoperability. At a recent state medical society meeting, the most animated questions by physicians to Dr. Blumenthal were about the lack of interoperability in electronic health records.

While HITECH is designed to regulate the behavior of technology vendors, it is struggling to encourage doctors to accept the result. Growing interest in ACOs may, at last, drive doctors to demand effective interoperability, and using the patient as a principal or intermediary can jump-start the clinical integration they seek.

For more than 5 years, interoperability has been approached from the perspective of doctors and hospitals. The results speak for themselves. As we process the innovations proposed by PCAST and consider the specifics of Stage 2 regulations, it’s time to put patients first and technology second by giving patients (and their designated agents) convenient access to their health records in their choice of electronic formats including Blue Button, CCR and CDA. Market forces will take care of the rest. Experience with Blue Button and the Direct Project shows that patient-centered and secure, directed exchange avoid the privacy and policy issues that delay technological approaches to interoperability.

The Grinch that Stole Obamacare

Dec 15, 2010• 10

By DAVID DRANOVE, PhD

Article 1, Section 8, Clause 3 of the Constitution, better known as the Commerce Clause, states that Congress has the power to “regulate Commerce…among the several States.” To supporters of health reform, the Commerce Clause is the Grinch that stole Obamacare. To opponents, the Commerce Clause might seem like a Sanity Clause (apologies to the Marx Brothers.) One thing now seems certain. Obamacare is on the fast track to the Supreme Court, where a ruling on the Commerce Clause could have far reaching implications for health reform and, frankly, for many other federal interventions into economic activity.

Virginia officials cited the Commerce Clause in arguing that the individual mandate was beyond the power of Congress. U.S. District Judge Henry Hudson agreed with the centrality of the Commerce Clause:

While this case raises a host of complex constitutional issues, all seem to distill to the single question of whether or not Congress has the power to regulate and tax a citizen’s decision to participate in interstate commerce.

Judge Hudson sided with Virginia, stating that “no specifically articulated constitutional authority exists to mandate the purchase of health insurance.”

Judge Hudson does not reject health reform in its entirety. Although he speculates as to whether the bill would have been enacted without the exchange, he notes that the record in the case is insufficient for a final determination and thus he “severs (the individual mandate) with circumspection,” leaving the rest of the bill intact. In doing so he provides a road map to others attempting to strike down the entire legislation, provided they can find some evidence that votes hinged on the inclusion of the exchange.

Analysis: Aetna Jumps into HIE Market Acquiring Medicity

Dec 9, 2010• 2

By JOHN MOORE

First it was United Health Group’s (UHG) Ingenix Division’s acquisition of leading HIE vendor (and top competitor to Medicity) Axolotl. Then this morning Aetna counters by acquiring Medicity. In just a few short months these two payers have completely changed the landscape of the HIE market by acquiring the two leading HIE vendors in the market today. Now that both of these vendors are in the hands of payers what are the implications both to the HIE market and more broadly the healthcare sector? Following is our assessment based on our continuing research of the HIE market and a number of interviews today, not only with the Aetna and Medicity, but also several other active participants in the HIE market.

The Deal:
Aetna acquired Medicity for a King’s ransom of $500M, a handsome multiple of Medicity’s 2010 gross revenue. Medicity will operate as a separate entity under the Aetna brand maintaining its current headquarters in Utah. According to Medicity, initial conversations began in late October/early November and quickly accelerated to the deal announced today. Aetna plans to close the deal before the end of year. As part of the deal, the senior management team of Medicity has agreed to stay in place for the next few years.

The Motivation:
While some may argue that Aetna was simply looking to counter the move by UHG or Aetna’s new CEO was looking to make a mark, Chilmark sees a more thoughtful and strategic move at play here which in the end may justify the price paid.