Vetting the ACA’s Impact on Health Insurance Operators

by Gregg A. Masters, MPH

Milliman Health 2013 Briefing Paper ACA ResultsIn contrast to the comprehensive ‘go live’ implementation of ‘RomeyCare’ in the Commonwealth of Massachusetts, the phased (and some would say diluted if not ‘fatally’ compromised) implementation of the Affordable Care Act (ACA) has been muted via a staggered on-boarding schedule of its various component parts and further selectively waived or delayed provisions primarily for political considerations.

Yet, we’re now some 3 1/2 years since enactment of the spirit of the ACA in March of 2010. One of the arguably principal accountability players to advise, measure, and report on the success or failure of the Act’s specific provisions are the good folks at Milliman Health – principal ‘actuaries to the stars’ of sorts.

Milliman often consults on the front end of risk assumption, mitigation – if not avoidance – in the shift from volume-to-value. They also measure and monitor the aggregate performance of the law based on their access to propriety client derived data sets, those residing in the public domain as well as tapping secondary sources in the market place as proxies.

Recently Milliman issued the Briefing Paper: ‘2013 Commercial Health Insurance – Overview of Financial Results’ wherein the report notes:

‘With the Patient Protection and Affordable Care Act (ACA) enactment in March of 2010, health insurers have had to comply with minimum loss ratio requirements, more stringent rate reviews, removal of annual benefit limits, first dollar coverage of preventive care, and other requirements. The insurer experience for 2013 reflects the third year insurers have been required to comply with minimum loss ratio requirements. Additionally, 2013 marks the final year that medical underwriting was not prohibited for new business in the individual and small group comprehensive health insurance markets in many states. Therefore, 2013 commercial health insurance can be used to both evaluate the impact of ACA reforms that were implemented prior to 2013, as well as serve as a benchmark to evaluate insurer financial results moving forward’.

Suffice it to say, there is more meat in the report sourced from various indicia of market performance, but witness the Milliman general conclusion noting:

Milliman  Health Breifing Paper on ACA Results 2010 - 2013

The report provides ‘an overview of health insurer financial results in 2013 and evaluated changes in the health insurance industry’s expense structure and profitability from 2010 to 2013, including changes in the medical loss ratio.’ 

The report’s conclusions are rather instructive and a testimonial of how imposing ‘order’ (or some degree of plan standards and thus comparability to an arguably cowboy market – primarily the individual insurance domain) – has impacted the operations of market participants.

Basically, Milliman is saying some patterns can be more clearly discerned (in group market) while in truth there are too many moving parts and it’s perhaps to early to tell at least in the individual market.

For complete report access click here.

Comment

It remains to be seen how the political theater if not continuing litigious climate will impact the future performance of this initially proffered conservative health policy ideology muscled only into law via straight party line voting. The complexity of our healthcare system is such that any material effort to arrest, mitigate and redirect its underlying healthcare economics will be met with special interest agenda driven resistance if not outright mass public deception.

So in the spirit of the 70s rock band Kansas viaCarry on my wayward son‘, lets be mindful of the timeless advice of Mr. Rogers offered during times of deep national tragedy:

Look for the helpers. You will always find people who are helping.’ ~ Frederick “Fred” McFeely Rogers

 

ACO Alignment Summit

by Gregg A. Masters, MPH

Day one of the ACO Alignment Summit kicked off in Alexandria, Virginia with excellent presentations from Diwen Chen, Executive Director, Payment Innovation and Accountable Care, Dignity Health, and Michael Donahue, MBA, Vice President, Network Development and ACO Activities for Eastern Maine Healthcare System (EMHS).Dignity Health

Dignity Health a hospital system founded in 1986 with 38 hospitals is the fifth (5) largest hospital provider in the nation and the largest non-profit health system in California. Dignity Health operates 32 facilities in California, with three (3) in Arizona and three (3) in Nevada. The Dignity Health system medical staff boasts 9,000 affiliated physicians, and 500,000 members via four sponsored health plans.

EMHS Eastern Main Healthcare System (EMHS) is a regional integrated delivery system serving all of central, eastern, and northern Maine. Beacon Health, LLC is the organizational model which supports EMHS’ designation as a Pioneer Accountable Care Organization.

Beacon Health, LLC is one of the remaining 19 Pioneer ACOs piloting a program designed to improve the coordination, efficiency, effectiveness, quality, and cost of healthcare.

[NOTE: For more information see: EMHS Beacon Health Pioneer Accountable Care Organization.]

ACOs are key drivers implementing the ‘triple aim’ vision of the Affordable Care Act.  At core the intention is to improve the care delivered to Medicare patients, while transforming the overall healthcare delivery system from volume to value. EMHS deploys approximately 8,000 people in this transformative commitment to accountable care.

According to CMS Beacon Health, LLC experienced the following since admission to the program:

Performance Year 1 (2012): Gross Savings  5.0%

Performance Year 1 (2012): Gross Savings $4.05 Mil

Performance Year 1 (2012): Earned Shared Savings Payments $2.03 Mil

Performance Year 2 (2013): Gross Savings 5.6%

Performance Year 2 (2013): Gross Losses  $-6.26 Mil 

Performance Year 2 (2013): Earned Shared Savings Losses3 $-2.89 Mil 

A limited recap of the day’s presentation highlights is below:

The twitter transcript is herethe updated analytics report here and dashboard here. Reach analytics for Day 1 are pasted below:

Analytics Day 1 ACO Alignment Summit

Your Comment is in Moderation: ‘Why ACO Savings Aren’t About Location.’

By Gregg A. Masters, MPH

We’re having an interesting exchange over at The Healthcare Blog where Health Care Policy Lead at Aledade, Inc. Travis Broome posted a piece titled: ‘Why ACO Savings Aren’t About Location.’

I chimed in with some ‘contextually pro’ ACO thoughts with some significant push back by industry veteran, author, consultant, economist and President of HealthFutures, Jeff Goldsmith fka ‘tcoyote’.

Thanks Jeff… lovin’ the exchange! Just sayin’ metrics, metrics. depends on lens….
Bottom-line is we still live on a production driven healthcare ecosystem – ‘capitation’ (PMPM) still a fraction of total contract spend (even if you include ‘lite versions’ ie, bundled payment, DRGs, or ambulatory case rates, or OWA’s [other weird arrangements]).
Share of GDP has been and continues to disproportionately claim an obscene allocation of the U.S. (public, private) spend and growing; all while a grand COST SHIFTING CHARADE proceeds under the convenient ‘consumer directed/skin in the game’ brand play by payors/health plans/or more aptly put ‘benefits solutions providers’.
There are no more ‘health insurers’ per se. they’ve collectively failed to manage clinical risk. PERIOD. They are ‘transaction processors’ increasingly living off of ‘fees’ and investment returns as ‘banks’, with the great hope that ‘technology plays’ (mhealth, digital health, tech-enabled patient engagement), etc… can cure the beast.
So yes, today and in the near term, clever (and well paid) managers’ are subject to production incented growth or share objectives (even amidst declining units primarily due to the slowing (and cost shift) economy and reduced discretionary spending for elective services).
The handful of creative ‘comp plans’ that scaled the transformative shift from volume to value remain a fraction of total [see my piece ‘Eating Glass’ http://acowatch.me/2014/08/14/eating-glass-a-davita-healthcare-partners-hiccup-or-physician-integration-implosion/ about Craig Samitt’s abrupt departure from DaVita/Healthcare Partners ] are at least on the table given the ACO triple aim sustainability mission. If units decline, skilled managers find ways to drive UP price. Consolidations are precisely that, no?
I remember when per diems and case rates were first introduced back in the 80s. The CFO calculus was pretty simple: budget revenue requirements divided by projected units of service and voila, you got your case-mix adjusted average basis for both service tiered or global per diem contracting. Pretty simpleton, but true!
When shift to ambulatory from inpatient began, Outpatient surgery/procedure case rates were benchmarked to historical inpatient revenue yield. Only growth of physician owned ASC’s forced some competitive restraint to price [ and that theme remains alive today via OIG report: http://www.beckershospitalreview.com/finance/oig-says-bring-down-hopd-rates-for-surgery-to-asc-rates-cms-disagrees-11-things-to-know.html ]. That the aggregate trend UP is rather obvious, no? It has not abated from a total cost of care perspective – the only measure that really matters.
Thanks for sharing Jeff. I am not an economist, just a grunt in the c-suite who negotiated a fair amount for global (hospital, physician, ancillary and pharma) full risk downloads (from licensed entity to risk bearing delivery system) via multiple health plans in different states.
Things don’t seem to change much in the ‘healthcare borg.’

Please consider offering your thoughts as well! The original blog post is here.

 

ACO Onramp: Reading the Pioneer [Exit] Tea Leaves

By Gregg A. Masters, MPH

Whenever someone buys a stock for the most part they make a decision that weighs available public (and sometimes ‘non public’) information and concludes that the company’s value exceeds (currently or shortly will) that which is expressed in the bid/offer price points the day the purchase is executed. Yet, there is always a seller who may more often than not hold the opposite opinion. After all why is he/she selling if the stock price undervalues the company’s enterprise fundamentals?buy sell

Absent the expressed manipulation of a third party intermediary (broker dealer, hedge fund, etc.) this buy vs. sell ‘call’ can reasonably and accurately reflect the aggregate market based ‘tug of war’ between the public perception and actual fundamentals of a company – at least as reflected in it’s stock price or ‘market cap’.

This same tug of war might equally apply to the battle for the ACO narrative at least as it relates to interpreting the reported ‘signals’ of movement inside the accountable care space.  However, instead of stock prices we’re looking at certain metrics including the number of players entering or conversely exiting the accountable care theatre as a proxy for the underlying health or efficacy of the Affordable Care Act – or at least that piece allocated to the provision in the Act specific to ‘accountable care’.ACO growth medicare vs non medicare

Of late the headlines have predictably served up a mixture of news for public consumption and therefore fodder for the talking heads to spin in the media and the ‘credible’ blogosphere writ large to explain to their audience.

If only healthcare where as simple as buy/sell equity transactions on public exchanges (lets not get into ‘dark pools’) mostly immune from ideological spin as to the broader significance of a move up or down in standing, valuation or growth vs. contraction. Unfortunately the health reform space is littered with agenda driven spin to drive an ideological outcome in one way or the other. And we know who the usual suspects are…

Meanwhile, several headline examples meriting interpretation including original source links are posted below. Further, since the launch of Aledade and several other entrepreneurial players (Privia Health) to bolster the vision, leadership, capacity and management infrastructure including the healthIT spine that supports independent physician led participation in the ACO initiatives, we include a recent Commonwealth Fund deep dive titled Profile: Rio Grande Valley ACO Health Providers’ exploring a physician led ACO effort in the Rio Grande Valley of Texas.

Context for the ACO pulse check narrative is perhaps best framed via a JAMA piece titled: The Pioneer Accountable Care Organization Model Improving Quality and Lowering Costs which is instructive on the significance of select Pioneer exits, while a deeper dive into the weeds of ‘Shared Savings in Accountable Care Organizations: How to Determine Fair Distributions (abstract only) addresses a problem most ACOs would aspire to have, i.e., a formula to distribute actual savings generated. 

The later abstract notes:

Accountable care organizations (ACOs) are playing a major role in health care reform. In the last 2 years alone, Medicare ACOs have proliferated to cover more than 5 million Medicare beneficiaries in more than 360 organizations nationwide.1 In ACOs, individual clinicians (including physicians, physician assistants, and nurse practitioners, among others), group practices, and, in some cases, hospitals contract with payers to be jointly accountable for the health outcomes and expenditures of a defined patient population. By meeting specified quality measures while keeping expenditures below defined benchmarks, ACOs share in the monetary savings generated.

Over at Modern Healthcare, Melanie Evans notes in ‘Medicare’s Pioneer program down to 19 ACOs after three more exit‘: 

Franciscan Alliance in Indianapolis, Genesys PHO in Flint, Mich., and Renaissance Health Network in Wayne, Pa., have exited the program, which is now in its third year.

For further discussion into quality performance measurements checkout ‘Medicare gives first glimpse of ACO quality performance’.

Perhaps the biggest piece of news was wrapped into the announcement of the launch of Vivity Health, see: ‘Reform Update: Will Anthem’s Vivity gain traction among large employers?‘.

This ambitious announcement by Wellpoint spawned the following two tweets today:

.’s ambitious ‘Vivity’ alliance [a response to ] will make merger look like a walk in the park!

Although saw light when it green-lighted as chassis to build out/express MA care delivery innovation.

Finally until job descriptions change reflecting better deployment of professionals working at the ‘top of their license’, as well as non clinical or administrative staff support re-engineered workflows, we’re probably not witnessing the movement of the needle towards the triple aim. In ‘ACOs, other delivery reforms shift job roles at hospitals’ we learn a little more about this continued labor pool tweaking.

Tom Scully Tutorial & Diagnosis of Medicare Program

By Gregg A. Masters, MPH

washington journal scully on medicareAn excellent ‘tutorial’ of sorts on the Medicare program is provided by Tom Scully, former Bush era (2001-2004) administrator of the Centers for Medicare and Medicaid Services, who opines on the Medicare and Medicaid Acts of 1965.

He discusses President Lyndon Bain Johnson’s vision of the bill and looks at the present state of the program including his preference for ‘means testing’, the role of Medicare Advantage and issues associated with the expansion of Medicaid via the Affordable Care Act.

Scully also fires a shot over the bow of the The National Committee to Preserve Social Security and Medicare claim via ‘Top 10 Reasons Americans Love Medicare‘ questioning the relative ‘efficiency’ of the program compared to it’s commercial equivalents or fee-for-service (‘traditional’) Medicare.

7.  Medicare is efficient. Only 1% of traditional Medicare’s spending is overhead compared to 9% for private insurance and 6% for privatized Medicare (aka Medicare Advantage plans).

Scully notes:

Yeah, I think that’s completely and totally wrong… I’m trying not to be partisan and be objective on this. But look  Medicare is a wonderful program. It’s incredibly efficient….but basically what Medicare is it’s a single payer system where the Government pays every doctor in Toledo and every hospital the same thing. So the problem is as you have in any system – in the history of any economy in the world – when you fix prices, is volume…. so what you get is competition over volume….which is what they are incentivized to do…  

Regarding CMS, on the ‘efficiency’ claim Scully notes, perhaps in a moment of hyperbole:

I love CMS. The employees are great. They have no clue what’s going on in the healthcare system…it’s just by design that they don’t.

The video segment is courtesy of Washington Journal with original source link here. For a chronology of Medicare see: ‘Medicare Turns 48‘ courtesy of AARP.

For additional Scully insights see: ‘Care Innovation Summit: A Very Sober Assessment!

NOTE: If only Scully type rationality were native to the ‘don’t confuse me with facts’ oppositional Republican mindset of some these days, we’d be more about fixing problems than blame – just saying.

‘Eating Glass?': A DaVita Healthcare Partners Hiccup or Impending Physician Integration Implosion?

By Gregg A. Masters, MPH

 

When Modern Healthcare somewhat ‘matter of factually’ and rather tersely reported the sudden [unexpected?] change in C-suite leadership at the DaVita acquired foray into physician global medical risk management (i.e., Healthcare Partners) of Craig Samitt, MD, I wondered what back-story this announcement might portend? samitt to leave healthcare partners

DaVita the market leader in End Stage Renal Disease (ESRD) care and its articulate CEO Kent Thiry has been publically outspoken about having ‘overpaid’ for Healthcare Partners and rather aggressively warranting analysts on conference calls of no more hiccups in execution, i.e., those that were responsible are no longer with us (paraphrased).

This article appeared on July 18th, 2014. Twelve days later Modern Healthcare then reported ‘DaVita again lowers earnings projections for HealthCare Partners despite Q2 improvement‘, listen here.

Samitt has been a long term and visible player in risk savvy medical group culture as a thought leader and modeller of best practices at The Dean Clinic, see:How Dean Clinic Redesigned Primary Care‘, with previous stints at Fallon Clinic,  Harvard Pilgrim Healthcare and (Atrius Health founding member) Harvard Vanguard Medical Associates. In other words his ‘street cred’ in the integrated delivery system space was/is – well – impeccable.ACO Summit

I last saw Samitt at the ACO Summit in DC 2013 where he gave an excellent presentation on how Dean was bridging that elusive volume-to-value divide via incremental though progressive blended shifts in physician compensation from production to outcomes based incentives – including the underlying though mission critical enabling cultural shifts. Brilliant I thought! Just the ticket many will need to vision and implement the broad tenets of the Affordable Care Act, especially the likes of DaVita a best in Craig Samitt ACO Summit 2013class though single specialty services provider.

So when this abrupt and (short lived tenure) departure was announced, I found myself wondering what could possibly be wrong with this marriage? It just fits too well….

We shall see as more is revealed over time. I invite any of you with inside information to share what you know. Better yet, Craig can you willingly provide any perspective here?