The State of Accountable Care: Evidence to Date and Next Steps

by Gregg A. Masters, MPH

Brookings Med: ACOfuture

So I registered for the webcast version of this Brookings event titled: ‘The State of Accountable Care: Evidence to Date and Next Steps‘ which noted at 9AM start time. My assumption was Pacific time, so when I dialed in (really logged onto twitter to monitor the webcast hashtag #ACOfuture), the first tweet I saw was thanking everyone for a great program. Yup, the start time was 9AM Eastern, so I missed the live stream. The good news is this event was recorded and is now available for archived replay.

The full program agenda is here and principal deck here.

The line up is impressive and well worth watching for continuing insights into the accountable care theater. What’s working, what’s not, and why?

Enjoy this timely event!

Farzad Mostashari MD Unbundles the ‘Healthcare Borg’ at Engage

By Gregg A. Masters, MPH

I have been following the career of Dr. Mostshari since his tenure at ONC as Director of the Office of the National Coordinator for Health Information Technology.

Upon learning of his launch of the startup ACO management company Aledade, we posted some thoughts here and here.

Yesterday at MedCity Media’s ‘ENGAGE’ conference in Bethesda, Maryland he literally tutored the in-person audience as well as many others following the feed via Google Hangouts, or the twitter stream tagged #mcENGAGE. Mostashari illuminated both the burning platform nature of the ‘business as usual’ through a prism of ‘good for doc’, ‘good for patient’, ‘good for society’, as well as probable indicia of the likely solutions. This is a masterful performance by a physician executive turned entrepreneur worthy of widespread distribution. Apparently there’s quite a bit more to Mostshari than EHR adoption and the national e-connectivity backbone.

Enjoy!

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.

Changing the Mythology of Hospital Led Value Based Purchasing

By William De Marco

William J. DeMarco | Pendulum HealthHospitals whose only product is acute care will have a difficult time managing in the post reform environment. Many hospitals have ventured into outpatient services competing with physicians. This has proven to be a mistake long term when seeking collaboration with physicians. Many hospitals do not understand how ACOs actually make money and have been so confused about managed care controlling their utilization and revenue that they believe this is the same strategy, yet it is not.

There are successful collaborations between hospitals and physicians such as Geisinger, Baylor (now Baylor Scott and White Heath) and Intermountain. There are also several new PHOs emerging as underlying structures to contract with the ACO. However, there are still traditional scenarios where the hospital runs it all and then the PHO becomes the HPO.

When starting an ACO there needs to be a separate corporation with physicians as major leaders, yet often times the hospital foots the bill for the startup and ends up feeling it is a disadvantaged partner because it is going to have its length of stay and admissions restricted. When the hospital pays for all the startup cost there is an expectation that these costs will be recovered when savings are created. This expectation can wipe out any bonus monies and if there is no bonus money earned the hospital is carrying this debt forward.

Both overspending a bonus or not earning a bonus will create major long lasting conflict for both parties and the finger pointing may last for years. This finger pointing is not just between the hospital and the physicians but sometimes between the physicians themselves, primary versus specialty, older doctor versus younger doctor, etc. If the hospital does not head this off immediately, the collaboration will be in trouble. Suddenly it is all about the bonus, but not really; it’s about how the physician feels he/she has been treated by the hospital. A fire begins burning that may never be quenched. Sometimes new managers being brought to hospitals report that the doctors do not trust them even though they never did anything to them.

The essential point being missed here is that when no one is held accountable, everyone can blame each other without consequence.

Using the joint venture organizational structure and a strategy that fits the marketplace there is a better chance to build a foundation for open cooperation and accountability and this does several things.

  1. Structure provides limits in terms of what powers or authority hospitals have over physicians in the relationship. This is reflected in the participation agreements and the board make up. There is an understanding that the hospitals will have the “physicians enforce physicians” rule and the hospital will run its own departments in accordance with the clinical guidelines that formulate part of the essential strategy to manage results that earn savings against the benchmark.
  2. Committees (several) hold the organization accountable for clinical guideline creation and enforcement. Non-compliant physicians may still practice at the hospital but they do not share the bonus unless they successfully correct their utilization issues. Several committees are required but we would add management, technology assessment, finance, and reimbursement committees to support the organization.
  3. While this list of committees can go on, I am constantly amazed when asking ACO executives what kind of bonus they are expecting under optimal conditions and I get a blank look.
  4. If no feasibility study has been done, two things will fall apart – the vision is tarnished because no one can articulate why they are doing this and the reimbursement sharing (if any) is left out until there is money on the table. And then the fight begins. Like a big family when a relative with money dies, it can be nasty. Those who put more money into the early investment (the hospital) want their cut.

If part of ownership by the physician included some money up front, with the hospital matching this amount with the understanding more dollars will come that, after expenses, can be divided in accordance with a schedule, this may be a start to fixing this problem. But nothing is simple here. It will get the physician’s attention to come to meetings if he/she want a return on investment and hospitals will reduce their risk by having to match what’s put up instead of putting all the money up. Perhaps a commercial loan for any additional money could be used to share the risk further. This may sound simple, but to not discuss the ins and outs of capital before getting started often leaves one partner holding the bag if the ACO should fail to produce savings.

Unifying the structure at the top and pushing down the accountability throughout the organization with delegated committee responsibilities and then supporting this with a capital plan to launch and divide rewards as earned avoids the PHO from becoming a HPO and unifies the medical and hospital staff around a common set of goals and vision that will likely lead to other joint ventures. Hospitals can form successful ACOs but must find that simple but effective way to form a true collaboration.

William DeMarco is President and CEO of DeMarco & Associates, Inc.  Mr. DeMarco created the firm based upon 20 years experience in health plan development and management, earning his credentials working with several community based health plans in the competitive St. Paul /Minneapolis marketplace. For more information see Pendulum Healthcare and follow on Twitter via @WJDeMarco

Meet Redwood Community Care Coalition: A Health Center Nested ACO

By Gregg A. Masters, MPH

Wrapped in the ‘population health’ angle but clearly a unique play in the ACO space – at least from the participation point of view of Federally Qualified Health Centers (FQHC), former CEO Steve Ramsland (a 10% allocated FTE) addresses the audience about their market, approach to ACOs and the deployed healthIT spine (they use cClinical Works CCMR).

More information on Redwood Community Health is available here and via 2012 Annual Report. The ACO is an interesting construction of member entities up to and including ‘a doc in private practice’.Redwood Community Care Coalition ACO HealthIT

In the article noticing the Ramsland resignation – which is interesting on it’s face in terms of back-story if any, the service area for the FQHC includes:

…health centers in Marin, Sonoma, Napa and Yolo counties, including some of the largest FQHCs such as Petaluma Health Center, Marin Community Clinics, Clinic Ole in Napa and West County Health Centers in Sonoma County, among others.

The Redwood Community Care Coalition ACO is NOT aligned with a hospital partner, it is solely sponsored by its founding members.

Atul Gawande Opines on Post ACA Agenda

By Gregg A. Masters, MPH

‘The debate about whether to provide coverage for healthcare is over…’ Atul Gawande

I had a front row seat for this one at the 5th Annual (and last) ‘Health Datapalooza‘, a label affectionately coined by the former ‘athenista’ though always energetic and singularly determined Todd Park, U.S. Chief Technology Officer and Assistant to the President. Some pretty amazing insights from this public health sensitized and Harvard trained surgeon who’s simple proscription for checklists in hospital surgical suites has no doubt served the interests of many patients who may have otherwise been subject to an unacceptable pool of recurrent adverse hospital events, see: The Checklist Manifesto’.  

‘Fear and Trembling’ or Simply ‘Lonely in’ Seattle?

By Gregg A. Masters, MPH

The old is new again…

I’ve been writing and tweeting about this theme for some time now. It was aptly offered as contextual insight via Nicole Bradberry of MZI Healthcare /Orange Solutions and CEO of the Florida Association of ACOs.

Many have similarly echoed this ‘deja vu’ theme when discussing the roll-out of ACOs including functional similarities and key differentiators with HMOs and previous managed care initiatives circa the 1980 – 2000 vintage.

One such old is new again effort is ‘direct contracting’, where the employer deals directly with the provider community without a health plan as third party intermediary. An army of TPAs (third party administrators) stepped up to offer ‘administrative services only’ (ASO) typically to larger employers who self fund their benefit plans to carve out the middleman, i.e., Aetna, United, the Blues, etc., and exercise greater flexibility with their provider community. Seeing the handwriting on the wall, many traditional insurance carriers promptly positioned themselves to compete in the TPA space via acquisition or internal accommodations.

I suppose the novelty and efficacy of direct contracting (vs. traditionally orchestrated health plan based managed care) was somewhat muted by the overall failure of the managed care industry writ large to effectively restrain the rapacious appetite of a volume fueled delivery system; see: ‘Direct Contracting: Why It Hasn’t Grown’.   

Fast forward a decade plus and we read about innovation in the Seattle market where competing health systems have internally launched ACOs and in turn are direct contracting with Boeing, see: ‘Seattle Health Systems Launch New Accountable Care Organizations for Employer’.

While the cited ‘InterStudy’ report (the think tank founded by progenitor of the ‘SuperMed’ concept and the acknowledged father of HMOs Paul Ellwood, MD) is behind a pay-wall, the report highlights are as follows [Note: for details on Boeing direct contracting see: 'Narrow Networks in Today’s Health Care Climate]:

  • Aviation giant Boeing is the first large employer in the market to sign on for both ACO networks, which will be offered to non-union members and select unionized employees. Other employers are expected to contract with the health systems prior to January 2015.
  • The UW Medicine Accountable Care Network features a mix of hospitals within the Seattle market and in surrounding communities. The network includes Seattle Children’s Hospital and Seattle Cancer Care Alliance, both of which were left off the networks for most health insurance exchange policies.
  • The state’s exchange plans prominently featured narrow networks. After outcry from affected stakeholders, state Insurance Commissioner Mike Kreidler introduced new regulations requiring the submission of provider networks for approval, and the networks must include adequate access to specialists and community care providers. Insurers warn the regulations could lead to higher premiums, while hospitals argue that the new rule does not goes far enough to protect consumers.

Comments from report author include:

  • “The introduction of direct-contract ACOs in the Seattle market is surprising, as the market has only begun fully embracing ACOs in the last year. Traditionally, Seattle health systems have shied away from bearing risk, so the market is now entering into a more advanced model of care. Franciscan Health, which was not included in a direct-contract ACO network, may feel pressure to form one to remain competitive in the market.”
  • “Boeing’s willingness to offer the new ACOs, as well as its traditional health plans, allows employees to select the coverage and network they prefer. UW Medicine may have a bigger draw as its ACO network includes providers that have been excluded from insurance networks.”

Meanwhile, per ‘Employer Direct Contracting‘ via Knowledge Source:

According to a recent National Business Group on Health survey, 11% of the large employers are using direct contracting with designated surgical centers of excellence or patient-centered medical homes. Such direct contracting is likely to increase because another roughly 20% of such employers are considering such provider agreements.

Large employers are using reference pricing, where self-insured companies offer to pay only the median price in certain geographic areas for some medical services and require employees to pay the difference at more expensive providers.

So yes, the old is new again. The question is: will it or can it be different this time? Or will we witness another round of ‘me too’ cookie cutter strategies followed by a risk push-back bloodbath, and ‘return to core operations’ by health systems who can’t manage risk, or the acquired physician practices they are so busy swallowing or health plans who can’t manage delivery systems.

Perhaps more on point with the headline of the post is: Will the health plan and institutional health system communities and their advocacy partners respond in kind to another Søren Kierkegaard ‘fear and trembling’ moment with wisdom and clarity? Or will the collective industry ignore the lessons learned from prior well intended but misguided strategic initiative?  

Times have indeed changed, and the horse is out of the barn. Healthcare reform and its required re-engineering is no longer contained behind the closed doors of board rooms of health systems or health plans. Achieving the triple aim is a ‘all hands on deck’ responsibility of all stakeholders in the healthcare ecosystem. But people are people, so we shall see!