Guest post by Ken Perez, VP of healthcare policy, Omnicell, Inc.
Ken Perez
Quality expert W. Edwards Deming was famous for many concepts, including the Deming Wheel or Deming Cycle, more formally known as the PDSA (Plan-Do-Study-Act) Cycle. It is a systematic series of steps for gaining valuable learning and knowledge for the continual improvement of a product or process.
The Centers for Medicare and Medicaid Services’ August 25 release of 2015 quality and financial performance results for Medicare accountable care organizations (ACOs) reflected the application of the PDSA Cycle by the participating organizations as well as CMS in its continued development and refining of its ACO programs.
At a high level, in 2015, the 404 reporting ACOs—392 in the Medicare Shared Savings Program (MSSP) and 12 in the Pioneer ACO Model—achieved $466 million in savings. A bit more than half of the ACOs (210 or 52 percent) held costs below their benchmark, and slightly less than a third (125 or 31 percent) generated savings above a minimum savings rate (MSR) and met quality performance standards, thus meriting shared savings.
As is common with most statistics and especially any material news coming out of Washington, D.C. nowadays, there were widely divergent interpretations of these results.
On the cheery side, CMS chief medical officer Patrick Conway, M.D., rhapsodized, “Accountable Care Organization initiatives in Medicare continue to grow and achieve positive results in providing better care and health outcomes while spending taxpayer dollars more wisely.”
In contrast, Clif Gaus, CEO of the National Association of ACOs, in an email message to FierceHealthcare, struck a negative tone in his appraisal of the results, sharing that his organization “was disappointed not to find stronger financial results that reflect the extensive financial and personal contributions invested by ACOs” and he also said that CMS and Congress must “take swift and decisive action to solidify the foundation of the Medicare ACO program.”
Despite these obviously divergent views, certainly neither Conway nor Gaus would disagree with the idea that the ability to learn is a critical success factor in ACO performance.
A deeper analysis of the data bears this out. As noted by CMS, more-experienced ACOs were more likely to generate savings above their MSR. In performance year 2015, 42 percent of ACOs that started in 2012 generated savings above their MSR. This compares with 37 percent for ACOs starting in 2013, 22 percent for 2014 starters, and 21 percent for 2015 starters.
The value of learning from experience was also reflected in the quality results. MSSP ACOs that reported quality measures in both 2014 and 2015 improved on 84 percent of the measures common to both years.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell, Inc.
Ken Perez
The Patient Protection and Affordable Care Act (ACA) mandated five major healthcare delivery reforms that collectively aim to improve care quality and slow the growth of healthcare spending. In the five years since passage of the ACA, each of these delivery reforms has been implemented, revised and broadened.
What is the outlook for these changes? Clearly, the long-term strategic intent of the Obama administration is to shift Medicare payments from fee for service to fee for value. On Jan. 26, 2015, Health and Human Services Secretary Sylvia Burwell set forth quantified goals and an aggressive timeline for directing an increasing share of Medicare payments through alternative payment models (APMs) such as accountable care organizations (ACOs) and bundled payments, from 20 percent in 2014 to 50 percent in 2018. Let’s consider each of the major healthcare delivery reforms.
Accountable Care Organizations
On January 11, the Centers for Medicare & Medicaid Services (CMS) announced that 477 organizations are participating in one of Medicare’s four accountable care programs.
With 434 current participants, the Medicare Shared Savings Program (MSSP) accounts for the vast majority (91 percent) of the total. Although the total number of MSSP ACOs has grown steadily each year since the program’s inception in 2012, cumulatively about 100 ACOs (19 percent) have dropped out of the program.
Medicare’s first ACO program, the higher-risk, higher-reward Pioneer ACO Model, suffered numerous departures during the second half of 2015, as the number of Pioneers has dropped from 32 original participants announced in December 2011 to a current total of nine, a 72 percent decline. However, some of the departing Pioneers have transferred to the MSSP or the even higher-risk, higher-reward Next Generation ACO Model, which was launched in March 2015.
CMS also disclosed that 21 organizations are participating in the Next Generation ACO Model, including five former Pioneers. The remaining 13 of the 477 ACOs are the initial participants in the first disease-specific Medicare ACO program, the Comprehensive ESRD Care Model, which was announced in October 2015.
Despite these seemingly impressive numbers, to achieve the aforementioned goal of flowing half of Medicare payments through APMs by 2018, CMS needs even more growth in the number of Medicare ACOs coming onboard in the next couple of years, perhaps 150-200 net new ACOs per year in 2017 and 2018.
Bundled Payments
In 2013, CMS launched the Bundled Payments for Care Improvement Initiative (BPCI), a voluntary program which offers providers four episode-based payment models. In three of the models, implementation is divided into two phases. During Phase 1, “the preparation period,” CMS shares data and helps the participating providers learn in preparation for Phase 2, “risk-bearing implementation,” in which the providers begin bearing financial risk with CMS for some or all of their episodes. CMS required all participants to transition at least one episode (e.g., Acute Myocardial Infarction) into Phase 2 by July 1, 2015, to continue participating in the BPCI.
Guest post by Thomas J. Van Gilder, MD, JD, MPH, chief medical officer and vice president of informatics and analytics, Transcend Insights.
Thomas Van Gilder
Population health has become a puzzle of processes and technologies to improve health outcomes, enhance the physician-patient experience, and reduce costs. Although the healthcare industry is making great strides toward achieving these goals, a necessary step—the integration of clinical, claims and wellness data—has just begun.
Today, many medical business decisions are based on claims data; yet, robust insights into clinical quality require clinical data. Furthermore, information that is not typically found in healthcare information systems, such as that from wearable devices, and from those who may have little to no contact with the health care system, needs to be incorporated into population health management systems.
Accessibility to clinical, claims and wellness data can provide physicians and care teams with a more complete view of the care delivery system journey and an integrated view of a patient’s data as he or she has engaged the healthcare system. With a broader view of a population’s health and various opportunities to proactively address an individual’s care, a physician or care team can help prevent adverse events or future disease to ultimately improve the health and well-being of the individuals they serve.
As we embark on this journey to complete the population health puzzle, it is important that healthcare systems, physicians and care teams optimize the value of integrating clinical, claims and wellness data by considering the five questions I have outlined below.
Do you have a reliable, complete and manageable way to access clinical, claims and wellness data?
Clinical data, in its current state, requires an “interoperable platform” to be able to present a single, comprehensive view of a patient’s or population’s health data at the point of care. An interoperable platform connects disparate electronic health record (EHR) systems across a community to collect and provide access to information in a secure and confidential way.
Claims data, traditionally aggregated from health insurers, and now from Accountable Care Organizations, needs to be integrated as well to create a more complete picture of an individual’s or population’s health. Not only does claims data yield rich insights that may not be present in clinical information alone—for example, completed pharmacy transactions—but it can also display health-related activity that occurs outside of any given health system. This could pertain to the use of a non-network urgent care facility or activity that might not be captured in an EHR, such as retail pharmacy vaccinations.
Wellness data generated from things such as immunization campaigns, wellness fairs or wearable health technologies, which seem to be on the rise, can help provide a broader record of an individual’s health so that a physician or care team does not have to rely only on sick encounters. Wellness data can help physicians and care teams identify opportunities in the course of an individual’s health, to intervene earlier and try to prevent some of the complications, or even some of the illnesses, from occurring in the first place.
Therefore, ensuring all of this valuable health information is accounted for to generate a more complete picture of a given patient’s or population’s health, requires accessibility to the data, achieved through community-wide interoperability, and a thoughtful plan for using the data to drive quality improvement, care experience enhancements, and reduced health care costs and utilization—the “Triple Aim.”
Do you have a way to normalize your data and corroborate your inferences?
Transitioning from data access to achieving the Triple Aim requires that clinical, claims and wellness data make sense together, across various systems and coding schema. In other words, the data must be normalized, duplicate and time-decayed information removed, and data gaps filled in by interpretation or clinical corroboration with other information.
Normalization requires a platform and an approach that first recognizes that clinical, claims and wellness data may conflict or overlap, and provides a systematic way to address these issues. This all requires solid quality assurance activities, software, and staff with sufficient data science skills to be able to bring clinical, claims, and wellness data together and use the integrated data set to provide actionable health intelligence.
Additionally, as standards are becoming more broadly adopted and health systems are becoming more sophisticated in their use of information technology, data normalization will become more seamless. Until then, I believe it will remain a critical issue.
Guest post by Timothy “Dutch” Dwight, vice president of business development, Medullan, Inc.
Timothy “Dutch” Dwight
Will today’s pioneer ACOs share the same demise as the HMOs of the 80s and 90s? It’s certainly starting to look that way.
Like HMOs, ACOs (Accountable Care Organizations) were created to reign in excessive fee-for-service arrangements and provide an incentive for capitating costs. The premise was that under the umbrella of an ACO, providers and payers would share in the responsibility for quality, cost and coordinated care for a defined population of patients.
If an ACO saved money for the payer without compromising quality, providers — defined as physician practices, hospitals, group practices, physician-hospital alliances and networks -–would share in the savings. And the savings were projected to be significant. Early forecasts from the Congressional Budget Office estimated that the 32 pioneer ACOs could save more than $1.1 billion in the first five years. On the other hand, if the ACO failed to meet capitation limits while providing care, the group shared in the losses.
To offset the risk and encourage membership, the early ACOs were supposed to receive multi-year compensation. However, that financial support disappeared after the first year and most provider groups did not have the business margins to carry them through a long-term investment approach. In addition, the ACO model requires a draw on scant resources from all parties to create another layer of program oversight – further cutting in to margin.
So where does the ACO model stand today? Nineteen of the 32 pioneer ACOs have left the program over the last two years, resulting in considerable wasted taxpayer dollars. As CMS moves towards the Next Generation program, can it succeed?
What will it take to save the ACO?
I believe ACOs can be saved, but significant changes must be enacted.
The fundamental problem with the pioneer ACO is that it manages the care of an unhealthy population without having sufficient oversight of that population. This leads a risk-adverse industry to hold their cash and cling to old processes.
Two years ago, Clayton Christensen rightly pointed out that the provider community must make major process and procedural changes in order for the ACO model to work. “No dent in costs is possible until the structure of healthcare is fundamentally changed.” I couldn’t agree more.
To survive, ACOs need to align with the Patient Centered Medical Home (PCMH) model, which is continuing to thrive and grow. PCMH is designed to align more holistic care management with a consumer incentive to prevent high-spend patients from seeking services from the more costly care centers such as emergency rooms. The payer, or insurance company, rewards the consumer for making smart choices by reducing deductibles and other fees if they use lower cost service centers such as primary care physicians, nurse practitioners, and urgent care centers. PCMH models use a combination of fee-for-service, value based payments to providers and align consumer incentives to reduce the cost of care. Comparatively, the ACOs capitated, “value based” payment model, intends only to lower the cost of care without having the proper procedures, tools and feedback loops in place to account how that care is provided. In other words, a visit to a PCP or ER makes no difference in the ACO model. On their own, ACOs do not have enough process control(s) and sufficient incentives to change patient behavior.
However, in combining the ACOs and PCMH model, the healthcare industry stands a much greater likelihood of meeting its goals — to improve the quality of care while containing or lowering the costs.
What needs to happen?
It starts with patient education – consumers need to be educated about their options and when and how to best use them. The next step is employing financial incentives. In short, money talks and will be key in changing old habits. When there is financial reward for going to one’s PCP or an urgent care center instead of an ER, consumers will make smarter choices. And ACOs will have an easier time capitating costs.
The Centers for Medicare & Medicaid Services (CMS) announces the availability of a new initiative for Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program. The new ACO Investment Model is designed to bring these efforts to to rural and underserved areas by providing up to $114 million in upfront investments to up to 75 ACOs across the country.
The ACO Investment Model will give Medicare Accountable Care Organizations more flexibility in setting quality and financial goals, while giving them greater accountability for delivering quality care efficiently, said CMS administrator Marilyn Tavenner.
“We are working with these organizations to make necessary investments that encourage doctors, hospitals and other health care providers to work together to better coordinate care and keep people healthy,” Tavennaer said.
Through its Innovation Center, CMS will provide up front investments in infrastructure and redesigned care process to help eligible ACOs continue to provide higher quality care. This will help increase the number of beneficiaries – regardless of geographic location – that can benefit from lower costs and improved health care through Medicare ACOs.
The Affordable Care Act supports healthcare providers in reducing costs and improving efficiency while delivering quality care. Accountable care organizations (ACOs) achieve these goals by enabling physicians, hospitals and other healthcare providers to create networks and share responsibility to deliver care to Medicare and other patients.
At the heart of the ACO model are three core principles:
ACOs are provider-led organizations with a strong primary care base, and collective responsibility for quality and per capita costs.
ACO payments are linked to improvements in quality that also reduce costs.
Performance measures that support improvement are sophisticated and reliable, and demonstrate that savings are achieved through improvements in care.
Joining an ACO is voluntary, but the federal government encourages participation to reduce unnecessary or duplicated services, prevent errors and keep patients healthier. When providers successfully coordinate services to meet a long list of quality measures, they become eligible for bonuses.
The Current Environmment
Medicare offers several ACO programs, including the Medicare Shared Savings Program, the Advance Payment ACO Model and the Pioneer ACO Model, but many other public and private models exist. Some are sponsored by physicians groups, while nonprofit organizations, hospital systems and health insurers sponsor others. The Pioneer Model was designed for early adopters of coordinated care, and is no longer accepting new members.
To date, more than 600 public and private ACOs have formed; in 2012, the first year of the program, they generated $87.6 million in gross savings. Government support is spurring considerable growth, and ACOs could well become the dominant model in healthcare.
Representatives Diane Black (R-TN) and Peter Welch (D-VT) introduced bipartisan legislation to build upon the progress of Accountable Care Organizations (ACOs) in shifting the reimbursement of health care providers away from the traditional “fee for service” model to a focus on improving the health outcomes of patients. The ACO Improvement Act (H.R. 5558) will improve the ACO model by providing additional incentives focused on health outcomes, increasing collaboration between patients and doctors, and providing ACOs with additional tools.
“As a nurse of over forty years, I know firsthand the challenges facing health care professionals as they seek to provide their patients with the best care possible,” said Congressman Black. “It is unfortunate that the current fee for service payment system does little to encourage and incentivize providers and patients to use the most appropriate and effective health care options. By incentivizing providers to focus on improving health care outcomes instead of increasing the quantity of services provided, this legislation will help improve care coordination, increase efficiency, and mostly importantly, ensure the patient receives the best care possible.”
Rep. Peter Welch
“If we are going to reduce health care costs and increase quality, the incentives built into the provider payment system need to be changed. In short, we need to reward value, not volume,” said Rep. Welch. “Paying health care providers based on improvements in patient health rather than the number of procedures they perform is the way of the future. Our legislation will advance these payment reforms and is based on the experience of ACOs in Vermont and around the country.”
An ACO is a collaborative of health care providers working together to improve the quality and efficiency of patient care, rather than increase the number and type of services performed. The goal of ACOs is to drive down health care costs and improve patient health outcomes by creating financial incentives to provide better, more cost-effective care. Rep. Welch is the author of a provision in the Affordable Care Act that created a nationwide Medicare ACO program.
Guest post by Ken Perez, vice president of healthcare policy,Omnicell.
Accountable care organizations (ACOs) are primarily associated with Medicare or commercial payer-led arrangements. However, the Affordable Care Act (ACA) also authorized limited demonstrations that allow states to test Pediatric ACOs from 2012-2016. In addition, the Centers for Medicare and Medicaid Services (CMS) has provided guidance letters to several state Medicaid directors on how to implement integrated care models, which may include ACOs, in their Medicaid programs.
With this encouragement from CMS and the need to rein in Medicaid spending—which is generally increasing due to the ACA and is shared by the federal government and states—it is estimated that about half of the states are at some stage of planning Medicaid ACOs.
This emerging trend runs counter to a couple of the conventional caveats about ACOs—they won’t scale to handle large populations, and they won’t work with patients who are economically disadvantaged.
However, these caveats are being challenged by the experiences of Colorado, Utah and Oregon, respectively, as well as the plans for North Carolina’s Medicaid ACO program.
Colorado’s Accountable Care Collaborative (ACC) has been in existence since 2011 and today has more than 350,000 members, almost half of the state’s Medicaid population. The ACC has focused on connecting members with their primary care physicians, using care coordinators, and leveraging analytics extensively.
According to the report on the ACC’s most recent fiscal year, which ended in June 2013, the program generated gross savings of $44 million, returning $6 million to the state after expenses. It accomplished this in part by reducing hospital re-admissions by between 15 percent and 20 percent and decreasing the use of high-cost imaging services by 25 percent versus a comparison population prior to implementation of the program. In addition, relative to clients not enrolled in the ACC program, it slowed the growth of emergency department utilization, lowered rates of exacerbated chronic health conditions (e.g., hypertension by 5 percent and diabetes by 9 percent), and reduced hospital admissions for chronic obstructive pulmonary disease patients by 22 percent. Most importantly, Colorado has seen improved health for the ACC member population.
