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.

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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.

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.

The 5th Annual ACO Summit

By Gregg A. Masters, MPH

Can’t make the annual gathering in DC? Why not follow the conference via Twitter?

ACO Summit 5th Annual MeetingIn years past, I registered the ACO Summit as a conference with the healthcare hashtags registrar @Symplur.

While the dashboard has not been updated with current information (the program description dates back to 2012), the conference hashtag remains #ACOsummit.

So check out the twitter stream, pull real time analytics including ‘reach’, impressions’ and tweet frequency here.

 

Care Innovation Summit: A Very Sober Assessment!

By Gregg A. Masters, MPH

This session is well worth the time invested. Two veteran healthcare wonks weigh in on the fundamentals of healthcare transformation and where we stand in the glide-path towards sustainability or fulfillment of the ‘triple aim’.

Former CMS Administrator and healthcare attorney turned investor Tom Scully (Bush I Administration, see Wikipedia profile) and Peter Orszag (former CBO and OMB Director respectively, with tenures in both Obama & Clinton Administrations) reflect on health reform and more.

[NOTE: Their session begins at the 1:45:00 mark.]

Just some amazing and hard hitting reflections on where we are, where we need to go and just what we might be aiming for business model-wise. Spoiler alert: It starts with a ‘C’.

Also, earlier is a worthwhile session from Patrick Conway, MD, Chief Medical Officer, CMS and the Director of the Center for Medicare and Medicaid Innovation (CMMI). Dr. Conway touches on quite a bit including a deeper dives into the many moving parts of the CMMI innovation mission.

CMS Innovation Portfolio

 

Conway also iterates on the status of ACOs, including what may be generalized from the ‘lessons learned’ via Pioneer ACOS that may be infused in the MSSP class via statute or national ‘scaling.’ [Note: watch for insightful comment about press and question asked by one reporter in audience].

Accountable Care Organization Update

This may be one of the best and candid discussions I’ve heard to date on the ACA, ACOs and where and how we’re going to transform the rapacious appetite of the ‘healthcare borg’. Scully is a brother from another mother, referring to MedPartners and PhyCor in the same breath.

Who says there is no value to institutional memory or grey hair per se! Some of us have been to this dance before!

 

 

 

 

My Chat with Nicole Bradberry

This Week in Accountable Care Meet Nicole BradberryOn the anniversary of the launch of the Florida Association of ACOs and the vital role of MSOs in supporting the operations of disruptive business models chasing the sustainable healthcare ecosystem I had a round two conversation with Nicole Bradberry, President and Chief Operating Officer of Orange Health Solutions and CEO of the Florida Association of ACOs.

Listen as we learn more about the accountable care market one year later, including insights on the investment by Great Point Partners in Orange Health Solutions enabling the acquisition of MZI Healthcare including it’s suite of products built on the EZCAP chassis.

 

 

The Medicare Shared Savings Program: Class of 2015

By Gregg A. Masters, MPH

The clock is ticking and the CMS continues its community outreach via their series of National Provider Calls on the application process for ACOs interested in submitting for the Medicare Shared Savings Program.Medicare Shared Savings Program

The deadline for the class of 2015 is approaching with the next call scheduled for Tuesday, April 22nd 2014 from 1;30 – 3PM Eastern.

You can register for this call here.

Space is limited and demand for these calls often exceed available slots, so get your registration in early.

Meanwhile, the description of the program is as follows:

During this MLN Connects™ National Provider Call, CMS subject matter experts cover helpful tips on completing a successful application, including information on how to submit an acceptable ACO Participant List, Sample ACO Participant Agreement, Executed ACO Participant Agreements, and Governing Body Template for the Medicare Shared Savings Program application. A question and answer session follow the presentation.

The Shared Savings Program Application web page has important information, dates, and materials on the application process. Call participants are encouraged to review the application and other materials found on this web page prior to the call.

Target Audience

Potential 2015 ACO Applicants

Presentation

The presentation for this call will be posted at least one day in advance of the call on the MLN Connects™ National Provider Calls and Events web page. Select the call date and scroll to the “Call Materials” section to locate the slide presentation. A link to the audio recording and written transcript of this call will be posted under the “Calls Materials” section in approximately 2 weeks following the call.

Registration will close at 12:00 p.m. ET on the day of the call or when available space has been filled.

123 ACOs Join the Shared Savings Dance Card

By Gregg A. Masters, MPH

CMS has announced another round of certified ACOs participating in the Medicare Shared Savings Program effective for January 1, 2014. The complete list is available here.

One observation I’ll make is Universal American (UAM) seems to remain active in building a national footprint of managed ACO collaborations. Their risk sharing model was previously addressed here. Yet, all is not well in ‘dodge’ as Zack’s recently downgraded UAM to ‘strong sell.’ For the complete Zacks piece, see: ‘Universal American Slips to Strong Sell.’

Per their reasoning (and this doesn’t bode well for the UAM business model – at least yet). Earlier in the 90s there was a similar ‘roll up’ i.e, venture backed top line fueled growth by American Healthcare Services, Inc. (AHI) that seems somewhat of a similar glide-path – we shall see.

Why the Downgrade?

Universal American witnessed downward estimate revisions following weak third-quarter 2013 results, which included a negative surprise of 214.3%. Shares of this life-insurer lost nearly 5.2% since the company reported soft results on Nov 7 and given its expected negative earnings growth rates in the upcoming quarters, we feel it has more downside left.

Meanwhile, per the CMS press release on December 23rd, 2013, here are the details and preferred narrative on ACO growth:

More partnerships between doctors and hospitals strengthen coordinated care for Medicare beneficiaries  

123 New Accountable Care Organizations Join Program to Improve Care for  Medicare beneficiaries

Doctors, hospitals and other health care providers have formed 123 new Accountable Care Organizations (ACOs) in Medicare, providing approximately 1.5 million more Medicare beneficiaries with access to high-quality coordinated care across the United States, Health and Human Services Secretary Kathleen Sebelius announced today.

CMS App ClippedDoctors, hospitals and health care providers establish ACOs in order to work together to provide higher-quality coordinated care to their patients, while helping to slow health care cost growth. Since passage of the Affordable Care Act, more than 360 ACOs have been established, serving over 5.3 million Americans with Medicare.  Beneficiaries seeing health care providers in ACOs always have the freedom to choose doctors inside or outside of the ACO. ACOs share with Medicare any savings generated from lowering the growth in health care costs when they meet standards for high quality care.

“Accountable Care Organizations are delivering higher-quality care to Medicare beneficiaries and are using Medicare dollars more efficiently,” Secretary Sebelius said.   “This is a great example of the Affordable Care Act rewarding hospitals and doctors that work together to help our beneficiaries get the best possible care.”

“This program puts the control in the hands of physicians and allows them to take the lead in an innovative way to deliver the right care to the right patient at the right time,” said Kelly A. Conroy, executive director of the Palm Beach ACO and South Florida ACO.  “We are honored to be a Medicare Shared Savings Program Accountable Care Organization, and after 18 months in the program, can proudly say that we have seen measurable success.  We are so impressed with our participating physicians’ enthusiasm towards the cultural shift, and it demonstrates that physicians are primed for the future of medicine.”

The ACOs must meet quality standards to ensure that savings are achieved through improving care coordination and providing care that is appropriate, safe, and timely. The Centers for Medicare & Medicaid Services (CMS) evaluates ACO quality performance using 33 quality measures on patient and caregiver experience of care, care coordination and patient safety, appropriate use of preventive health services, and improved care for at-risk populations.

The new ACOs include a diverse cross-section of health care providers across the country, including providers delivering care in underserved areas. More than half of ACOs are physician-led organizations that serve fewer than 10,000 beneficiaries. Approximately 1 in 5 ACOs include community health centers, rural health clinics, and critical access hospitals that serve low-income and rural communities.

Affordable Care Act provisions have a substantial effect on reducing the growth rate of Medicare spending.  Growth in Medicare spending per beneficiary hit historic lows during the 2010-2012 period, and this trend has continued into 2013. Projections by both the Office of the Actuary at CMS and the Congressional Budget Office estimate that Medicare spending per beneficiary will grow at approximately the rate of growth of the economy for the next decade, breaking a decades-old pattern of spending growth outstripping economic growth.

The next application period for organizations interested in participating in the Shared Savings Program beginning January 2015 will be in summer 2014.

More information about the Shared Savings Program, including previously announced ACOs, is available at:http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/News.html.

For a list of the 123 new ACOs announced today, visit: http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/sharedsavingsprogram/Downloads/2014-ACO-Contacts-Directory.pdf.
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