Value Based Care: what we can learn from those who succeeded (and failed) in Year 1 of the Medicare Shared Savings Program?

By Randall Williams, MD*

“The definition of insanity is doing the same thing over and over again and expecting different results.” — Albert Einstein

einsteinIf you want to lead your organization to success with value based care, I’d like to help you avoid the mistake of committing organizational insanity. As I’ve written before, all value based contracting will require a different and diligent focus on reducing cost. In order to win, you need a model that will help you do that. But first, there’s a lot to learn from those who succeeded (and failed) in the first year results of the Medicare Shared Savings Program (“MSSP”).

The first year impact of MSSP has received lots of attention in the media. To sum it up:

Only ¼ of all MSSP organizations achieved ANY financial success, as measured by receiving shared savings.

cms_logoThat statistic is concerning and has caused hand-wringing inside and outside the Beltway, but it is not surprising. Why? It’s simple really — most ACOs are still working on basic organizational issues like:

  • integrating their doctors
  • getting CMS claims data into a format that can be analyzed
  • documenting and reporting quality performance metrics

While that work is necessary, it is not at all sufficient. It won’t generate the cost savings required to get to the shared savings bonus opportunity. MSSP organizations, depending a bit on their size, must reduce the total beneficiary cost (Medicare Part A and Part B) by at least 2.5 – 3.5%. Yet few are focusing on doing things differently when it comes to managing their population’s utilization and costs.

Imagine the following scenario:

The average beneficiary in your ACO spends $9,000 per year.

You have 10,000 beneficiaries.

Your savings threshold is 2.8%.

In order to get into the bonus category, you will need to avoid at least $2.5 million a year in medical expenditures. That doesn’t just happen on its own.

Sounds like tough work, you say. Maybe we can’t get there, you say. But some of your peers actually accomplished that in their first year.

Were they simply lucky, perhaps having the “good” fortune of a high starting point to work from? Or might their success be a result of the Medicare reconciliation “Black Box”? Evidence and analysis elsewhere suggests these aren’t the explanations. So what is?

Medicare’s own analysis of the Year One winners (those who got bonuses) gives some important insights to the real answer. From that data, we can see that:

  • Winners saved about 6% per beneficiary overall
  • Winners reduced hospitalizations by 52%, ER visits by 41%, and inpatient costs by 69%
  • Winners achieved a 40% decrease in admissions for heart failure patients and a 25% decrease in admissions for COPD patients
  • Winners dropped hospital readmission rates by 26%

What does this mean to organizational leaders looking to achieve savings bonuses?

  • Get your organization focused on avoidable admissions and readmissions to the hospital
  • Eliminate enough admissions to drive down overall costs by >5%
  • Establish a monthly goal of averted admissions that you can measure and manage over the course of each performance year
  • And whatever else you decide to do, don’t simply assume that doing what you’ve always done will get you different results!

For other useful analysis of MSSP results, I recommend reading insights from the Brookings InstituteMedicare ACOs Continue to Improve Quality, Some Reducing Costs‘. Please feel free to share your thoughts about winning with value based care in the comment section.

***********************

Dr. Williams is the founding Chief Executive Officer of Pharos Innovations. He is responsible for setting the vision and overseeing the execution of Pharos’ mission to transform healthcare through patient engagement in self-care. He has 16 years of executive experience developing chronic care monitoring programs.

The above is a guest post originally published here.

Former ONC Director Farzad Mostashari, MD Launches @AledadeACO

By Gregg A. Masters, MPH

Aledade ACOOn July 8th 2011 I penned a blog post titled: Waiting for ACOcor? pondering the question of whether this time will be different in the managed competition positioning dynamics we’re likely to witness post roll-out of the Affordable Care Act. Afterall, the ‘chassis’ on which to graft if not build an ACO can be found in iterations of prior physician led vehicles including IPAs, medical group Medicare Advantage contractors and even PHOs (Physician Hospital Organizations) where the ‘institutional partner’ (ie, the ‘H’ hospital) serves as a limited partner to the medical group or IPA which operated the PHO as ‘the general’.

Today we learned that the former Director of the Office of the National Coordinator for Health Information Technology, Farzard Mostashari, MD has launched – with an infusion of $4.5 of investment capital from Venrock and Bob Kocher, MD taking the lead – an ‘ACOcor’ of sorts tagged ‘Aledade‘.

Mostahari outlines his rationale and reasoning pathway to this ACO consulting and turnkey management company as follows:

Today, I’m launching a new company, called Aledade.

Aledade partners with independent primary care physicians to make it easy and inexpensive for them to form and join Accountable Care Organizations (ACO) in which doctors are paid to deliver the best care, not the most care.

This is good for patients who will find that their trusted primary care doctors are more available and better informed than ever before. It’s good for doctors who want to practice the best medicine possible, the way they always wanted to. It’s good for businesses and health plans looking for healthcare partners that deliver the highest possible value and outcomes. And it’s good for the country as higher quality, lower cost care will help lessen the strain on our budget and our economy.

The world of start-ups may not be the usual path for those leaving a senior federal post, but it’s the right decision.

For me, Health IT was never the “ends,” but a “means” to better health and better care, and I continue to believe that better data and technology is the key to a successful transformation of health care. And it is why the attempts to do so now can succeed, where they have failed before.

Empowering doctors on the frontlines of medicine with cutting edge technology that helps them understand and improve the health of all their patients- that is the mission of our new company, and one that has animated my entire career.

During the seven years I spent working for Tom Frieden and Mike Bloomberg in NYC, it was exhilarating to be able to push the frontier in what was possible — to innovate at the edge.

Working with my team, we were able to: invent new statistical methods for outbreak detection , develop new data visualization methods, create visibility into population health down to the neighborhood level, bring decision support and rapid diagnostics to the point of care, automate electronic quality measurement, and implement novel financial incentives and hands-on technical assistance to support care transformation in small independent primary care practices. It was exhilarating.

When I moved to HHS in 2009, the transition to federal service also meant a change in perspective.

As the National Coordinator for Health IT, my key responsibility was now to ensure a minimum national “floor.” We had to push the country as a whole towards a common core set of data and capabilities. We applied creativity and grit to do what needed to be done, using the best tools available to us: encouraging the private sector; organizing and scaling state and local efforts like the inspiring work of the regional extension centers; and — yes — through the blunt instrument of regulations too.

I’m extremely proud of the work we did, and the foundation we put in place. The country is in a massively different place, and the age of data has finally come to healthcare. But in that role, I was also acutely aware of the compromises and incremental half-steps that have to be taken when the goal is to move an entire nation. I was inspired by those that pursued improvement not “compliance” and did not mistake the floor for a ceiling.

I’ve had the good fortune for the past nine months to be ensconced among some truly great thinkers at the Brookings Institution, and to go on a “walkabout” – talking to and visiting with leading practitioners throughout healthcare. I have come away with a rare stereoscopic view of the changes sweeping through health care — the anxiety of those with “one foot on their old business model’s grave and the other foot on their new business model’s banana peel”, mingled with the excitement of those who would disrupt the status quo.

And during this process, I have also found my cause.

It’s to help independent primary care doctors re-design their practices, and re-imagine their future. It’s to put primary care back in control of health care, with 21st century data analytics and technology tools. It’s to support them with people who will stand beside them, with no interests other than theirs in mind. It’s to promote new partnerships built on mutual respect, and business arrangements that will truly reward them for the value that they uniquely can bring- in better care coordination, management of chronic diseases, and preventing disease and suffering. It’s to achieve lower cost through better care and better health.

I believe in this. And this is the mission of our new company. And to realize it, we will be back at the vanguard, helping to lead this transformation in health care that has been underway for years but is quickening and coming faster than ever before.

This is clearly an idea who’s time has come – in fact, it’s been here a while. Yet the white water of health[care] ecosystem reform remains, witness: Universal American: A Sign of Things to Come?  The key strategic question is: can Aledade build upon and leverage the collective experience and insights of the past in the development of independent physician networks (IPAs) or their management companies (MSOs) to put physicians back in control via risk assumption at the population health level? In other words, can they succeed in tapping if not channeling the vital community physician leadership to deliver on the culture as well as the mission critical objectives (i.e., the triple aim) of the ACA levied principally on the ACO community writ large?

Clearly Mostashari’s work in building out the HealthIT infrastructure and population health connectivity that enables the vision if not spine of any ACO or accountable care initiative (better care, better outcomes & lower per capita costs) is mission critical insight. Improvements in healthIT and reach of REC’s (Regional Extension Centers) is one big difference since the ambitious if not technologically ‘pre-mature’ launch of Healtheon and the associated rise and collapse of the PPMC (physician practice management company) industry. [Editor’s Note: For additional PPMC context, see ‘The ‘Medical Aggregators’: Are We Entering Round Deux?’]

This one is worth watching very closely!

 

 

 

 

 

An ACO ‘Deck-o-Topia’ at HiMSS14

By Gregg A. Masters, MPH

This is the fourth year in  row that I have participated in the largest annual gathering of parties in interest to the health informatics ecosystem. From payor to provider to regulator to vendor to the patient and/or consumer of healthcare services, there is always much flare to consider, discard or assimilate. HIMSS14

This year’s gathering is expected to attract somewhere between 30 to 35 thousand attendees. Second only to CES the HiMSS sea of humanity is a distinct strain of conversation to experience.

From one of the tracks that directly appeals to readers of this blog is the track devoted to accountable care and/or ACOs in particular. More later with an individual dive into the more interesting presentations, but the entire decks can be accessed via: Transitioning to Fee-for-Value through ACOs, Care Coordination and Clinical Integration.

Accountable Care, mhealth and the Triple Aim

By Gregg A. Masters, MPH

For those of you following this blog you know I write about ACOs and the emerging accountable care zeitgeist. My lens has been forged by decades of experience in the ‘managed competition’ experiment. For an earlier piece see: Some Context and Perspective on Standing Up the ACO.’ HCFA masthead

The managed competition industry – perhaps more widely known as ‘managed [though more accurately mangled] care’ – can be traced back to it’s regulatory oversight origins via an office in the predecessor agency to CMS, the Health Care Financing Administration (HCFA) titled the ‘Office of Alternative Delivery Systems’ (OADS).

The mission of the OADS was to monitor the then emerging (‘disruptive’) players in the HMO domain but also this little known but ‘HMO lite’ mutation dubbed ‘preferred provider organizations’ (PPOs). The alternative delivery system domain was typically populated by those operators who compensated their contracted network of physicians, hospitals and ancillary providers via other than routine fee for services based payment. Alternative compensation ranged from mere discounts of standard fee schedules to full or partial capitation for physician or even hospital services, thus ADS operators could be arrayed across a continuum of risk assumption.

It is interesting to note that what was then considered ‘alternative’ to prevailing or normalized healthcare financing and delivery is now the new ‘normal’. Yet, we hear more reference to ‘alternative delivery systems’ today as representative by such new age/zeigeist disruptors the likes of certain ACOs, medical homes or even the tapestry of direct, membership, retainer or even ‘concierge’ models of delivery – including hybrids (OneMedical).

So in a way, the first phase of the ‘integration 1.0′ cycle is complete and we’re now embarking on ‘integration 2.0′ using the same terms albeit applied to different vehicles. Instead of HMOs or PPOs, we’re talking about ACOs, medical homes or other care delivery innovations.

Clearly technology – both enterprise and consumer facing – are central to the complex deliverable of the sustainable healthcare ecosystem, yet the preferred ‘chassis’ onto which to stitch if not graft the organizational, governance and operational best practices remain somewhat elusive.  To many digital or mhealth enabled solutions seems to represent a fair amount of rational promise to emerging ACOs.

At the 5th Annual mhealth Summit in a session titled: ‘Mobile Enabling the ACO‘ we’ll here from:

…on the state of the merger between promising digital health technologies and ACO operational fulfillment of certain ACA performance requirements .

The session description and schedule is pasted below:

mobile enabling of ACO

So What’s with the [ACO] Bundled Payment Thing?

By Gregg A. Masters, MPH

It’s interesting to note the more ‘things change’, the more they ‘[seem] to stay the same?’ Let me explain….

In a recent observation by Rob Lazerow featured in the post ‘How Are ACOs Doing‘ the Advisory Board Senior Consultant dubs 2013 as the ‘year of accountable care’. He then goes on to highlight the ‘bundled payment’ program as the center of gravity in ACO market movement since:

It has nearly twice as many provider organizations compared to those participating in the shared savings program. It represents a big spike in experimentation.

Yet, Rob’s newfound gestalt may seem like a bit of back tracking from his previous sentiment as noted earlier via ‘Bundled Payment: A Gateway to Accountable Care? where I engaged him on the subject and value proposition of bundled payment to the ACO movement and holy grail of the triple aim.

So the ‘stay the same’ angle here is more about the herd movement into or out of popular thinking (perhaps even superficial) around ACO strategic issues vs. the granular basing of what we know works, and their real world impediments to local market implementation.

For instance, quite some time ago I penned the following provocative title: ‘Bundled Payment? Lets Start with the ‘RAPERs!’ Unfortunately, I was dead serious then and remain so today, however this bit of granular insight was a tad more than the market wanted to consider then. It received little if any attention and/or discussion, yet it goes to the fundamentals of our ‘healthcare cost conundrum‘. Might it’s reception be different today? Are we really ready to tackle the issues, or will we be content to just keep talking and meeting, with little to nothing changing? We shall see.

HiMSS 2013 Accountable Care Organization RoundUp: Monday March 3rd

By Gregg A. Masters, MPH

Himss 13 LFTF Masthead

We’re only 8 days out from the HiMSS bash in the ‘big easy’ aka ‘NOLA’. We’ve been so engaged in planning the Health Innovation Broadcast Consortium aka @HIBCtv coverage it’s been a challenge to stay on top and share the more worthwhile developments in the ACO space.

So lets detail some of the events that have caught my eye and we’re likely to cover in some fashion. First up and from the ‘specialty program’ department from the Delivering on Value – The Handshake Between Cost & Quality  I’m intrigued by the following trilogy as all address fundamental issues in standing up a viable ACO:

The ‘ACO Encounter: Physician-Lead Perspective

Description: The fastest growth in accountable care organizations is in physician-led ACOs. Gain insights from the experiences of knowledgeable physician-led accountable care initiatives who work with multiple small and medium size practices. **Each ACO Encounter presentation will be provided three times between 1:45 p.m. and 4:45 p.m. Attendees will have the opportunity to rotate though all three encounters during that time frame. Please refer to the attached PDF program for more details.

Speaker: Michael Griffis

Obtaining Quality through New Care Models: Challenge and Promise of ACOs

Description: Hear how to identify and better manage high-risk, high-cost patients, while exploring different care models, such as accountable care organizations, and incentive programs, such as value-based purchasing, to optimize patient care management.

Speaker: Blair Childs

ACO Encounter: Payer Perspective 

Description: Commercial health plans are partnering with providers to build successful accountable care collaborations with their expertise and analytic capabilities. Hear from leading health plans about innovations and strategies around reporting, care coordination, payment models, and analytic tools including risk identification and predictive modeling.

Speaker: Charles D. Kennedy, MD

Note: While much of the attention in ‘ACO-dom’ has rightfully centered around CMS certification of participating entities in the Medicare Shared Savings Program (MSSP), and via the Centers for Medicare and Medicaid Innovation (CMMI) the Pioneer and Advanced Payment model programs, there is a frenetic pace of activity in the commercial markets stoked in part by Aetna, Cigna, United et al, under the banner of ‘accountable care collaborations’ et sequelae. Dr. Kennedy is a principal architect of Aetna’s accountable care solutions group.

We spoke with in ever so briefly here, and look forward to spending some time with him up close and personal in NOLA.

JP Morgan Healthcare Conference 2013

By Gregg A. Masters, MPH

We’re here in the ‘city by the bay’ for the 31st annual assembly of biotech and pharma peeps and the money they seek from the venture capital world. Not exactly my tribe, but my interest was sparked by the generous ‘non profit track’ with many nameplate integrated delivery systems in the strategy and market management conversation.JP Morgan Healthcare Conference

For details, links and some humor on the event including ‘twit’ offered by conference attendees see: JP Morgan Healthcare Conference TweetUp or JP Morgan 31st Annual Healthcare Conference.

Major kudos as JP Morgan is livestreaming portions of the event. This is public but you will need to register on their site.

More later….