Health Care ‘Texas Style’: A Model for the Nation?

By Gregg A. Masters, MPH

This a re-post of an article written in October 2009 following Atul Gawande‘s article in the New Yorker on the cost conundrum‘ which launched his presence and eventual celebrity on the national stage. Gawande was calling attention to the regional variations (small area analysis) in the Medicare spend and associated health disparities that can be found in the United States while generally adjusting for comparable characteristics of each community. The comparison of Medicare costs in El Paso vs. McAllen caught and retained my attention as many years later the discrepancy remains largely unresolved.

One might ask why?

Having just returned from the Medical Group Management Association’s (MGMA) annual conference in New Orleans, I was struck by and tweeted out the following observation reported by the largest for-profit hospital operator in the U.S.:

Some 10 years later this 5% ‘share’ of risk business is evidence that the healthcare landscape (at least at the hospital or health system level and especially so for the for-profit sector) remains a risk averse, “heads in beds“, fee for services economy with pockets of innovation demonstrating value, while for the remainder of the cohort there’s little appetite for risk assumption beyond toe in the water shared savings or bundled payment commitments.

Unfortunately, ‘value based healthcare‘ often a proxy for capitation (full or partial), all in population based payments or downside risk assumption remains mostly ‘ad copy‘.

For more information on the dubious claims of health system horizontal and select vertical mergers, listen to ‘BS in Healthcare‘ interview with Layton R. Burns, PhD, Professor and Director, Wharton Center for Health Management and Economics, at the Wharton School.

Original post:

In the aftermath of Atul Gawande’s landmark piece ‘The Cost Conundrum‘ and the selective emergence of the ‘Mayo v. McAllen‘ mantra, I’ve been tweeting of late on the ‘irony’ of certain Texas health markets, particularly given the concentration of hospital assets in non profit health systems, and the timely question of whether such consolidations produce the ‘community benefits’ proffered by their leadership. The recently published Commonwealth Fund study ‘Aiming Higher: Results from a State Scorecard on Health System Performance, 2009‘ has supplied certain metrics to further contextualize the conversation.

First some background: I spent 13 years in the Lone Star state, initially advising a major national proprietary hospital management company’s implementation of its managed care strategy in the Houston market, followed by implementation physician networks for a 140,000 member global risk Medical Group, and finally managing payor and provider contracts for a joint venture ‘Super PHO’ affiliated with a dominant faith based hospital system in Dallas/Fort Worth.

Now mind you, everything in Texas is big – especially its delivery system players who have literally architected quite beautiful (and very expensive) ’cathedrals of medicine’. Examples include: the Texas Medical Center (an NIH like cluster of some 12+ competing institutions), Memorial Hermann Health System, Baylor Health Care System and Texas Health Resources to name a few of the trophy properties. Yet, years after the roll out of the strategic plans of these health systems, and the fulfillment of their market share objectives, certain of the state’s health care indicators look quite grim when contrasted to other parts of the country.

One might wonder why? Afterall, the typical pre-merger or alliance argument in favor of consolidation, acquisition or market expansion, was typically framed as follows, it will:

  • Improve quality
  • Improve access
  • Increase operating efficiencies; and
  • Lower costs

Yet according to the Commonwealth Fund study, and now years after these consolidations, here’s how Texas ranks on key metrics of health status compared to all 50 states, and the District of Columbia.

  • Overall: 46
  • Access to care: 51
  • Prevention & Treatment: 43
  • Avoidable Hospital Use & Costs: 42
  • Equality between rich and poor: 50
  • Equality between non-Hispanic white and minority: 48
  • Healthy lives: 21
  • Children with medical and dental check-ups in past year: 40
  • Adults with a regular doctor: 49
  • Medicare reimbursements: 46
  • Infant mortality: 19
  • Breast-cancer deaths: 18
  • Colorectal cancer deaths: 15
  • Adults who smoke: 17
  • Overweight or obese children: 32

Not exactly ‘best in class’. So why not ask, where is the ostensible and promised ‘community benefits’ and not just those codified in IRS code, to justify the tax exempt status for most of the entities above? How is this ‘return’ (to the community) being measured; (is it via Medicare or Medicaid ‘shortfalls‘, or charity and bad debt write-offs; or some tangible real world contribution); or is it even accurately measured? The IRS 990 filings are somewhat ‘fluid’ on the specific reporting of activities that count towards community benefit.

Most, if not all, of these institutions are primarily ‘non profit’ (with some affiliate JV exceptions) yet they are aggressively managed to generate a surplus of revenue over expenses; after all ‘no margin, no mission’. While they do not have stock holders or investors per se, they do have bonds that require adequate debt service coverage in order to maintain favorable credit ratings and competitive access to capital.

This is where the ’story’ for the consolidations and, for some, the unspoken truth of the matter emerge, IMO. While perhaps stated in the vision for some, most of the benefits of consolidation are to be found in the pricing leverage that comes from asset concentration. Hospitals want higher rates, and payors (health plans and insurance companies) can tell you how difficult it was, and likely remains today, to extract material discounts from these massive institutions given their scale and market dominance.

So the question remains open: have they delivered, or are they just plain ‘doin’ it wrong’? Is the promised value proposition a reality today for the Texas residents they purport to serve? Based on these, and other metrics, many would say no. Rather than more of these Texas sized giants, why not refocus the Lone Star state on their one home grown version of a ‘Mayo Clinic’ model domiciled in Temple, Texas aka ‘Scott and White‘.

In the next blog post, i’ll touch on the physician role in the Texas market, and the historical rise and fall of physician driven integrated delivery systems in particular.

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ACOs and Value Based Care: The Best of Times Or The Worst of Times? It Depends!

By Fred Goldstein, MS and Gregg Masters, MPH

This past year has seen major changes to the Medicare Shared Savings Program (MSSP) that launched the huge growth in Accountable Care Organizations (ACOs) a principal workhorse in the transformational copy of the Affordable Care Act (ACA).  It seems that the Center for Medicare and Medicaid Services (CMS) and the industry had a difference of opinion as to how successful ACO’s were under the original model, and of course CMS won.

The argument had to do with just how well the ACOs involved in the Medicare Shared Savings Program Track one participants were doing.  For those new to this, the Track 1 model were the least risky model, with most ACOs choosing this upside risk or shared savings only track which had a term of six years before they had to begin taking on two sided risk.

CMS looked at the 2016 data and was seeing limited savings particularly with the overwhelming majority of participating ACOs enrolled in this track. In May of 2018 Seema Verma (CMS Administrator) hinted at a new approach pointing to a study by Avalere that ACOs not only did not save money, but they have increased federal spending by $384 million, versus a projected $1.7 billion in net savings from 2013 to 2016. Couple this concern with the ongoing debate on whether Medicare Advantage Plans (MAs) are still costing the Treasury (via over funding or “up-coding”) vs. advancing the needle on the Triple Aim (better experience of care, better outcomes at lower per capita costs).

Of course, the industry, led by the National Association of ACOs (NAACOs), were completely against this decision and stated that the ACOs had indeed saved money when they reviewed the 2017 results, which indeed showed net savings of $314 million dollars. NAACOS also stated that if these changes were made many ACOs would quit , pointing to a survey they had conducted showing that 71% of the ACOs in track 1 would quit if they had to take on 2 sided risk.

But by then it was too late and in last December CMS announced their new Pathways to Success models with the following by Seema Verma:

…the presence of an “upside-only” track may be encouraging consolidation in the marketplace, reducing competition and choice for Medicare FFS beneficiaries. While we understand that systems need time to adjust, Medicare cannot afford to continue with models that are not producing desired results.

The key changes were as follows:

    • Only 2 years before ACO must accept down-side risk
    • Beneficiaries notification of ACO participation at 1st primary care visit
    • Payment for tele-health services
    • Incorporates regional spending into ACO targets
    • Authorizes termination of ACOs with multiple years of poor financial performance
    • Could potentially save $2.2 billion in Medicare costs during the next 10 years

The new tracks and their “glide path” are as follows:

 

So what does this mean for ACOs?

What better place to figure this out than the Florida Association of ACOs annual meeting. Florida has been leading the way in ACO participation and performance and while this conference is in beautiful Orlando Florida in the fall, the attendees and speakers are national so one can get a full view of the impact and what’s working.

For an update on market conditions including an overview of the annual conference from FLAACOS CEO Nicole Bradberry, listen here.

Florida Association of ACOs

Attending the 2019 FLAACOs annual conference you’ll hear from Aneesh Chopra, President, Care Journey and former CTO of the United States opening the conference, followed by, you guessed it, a panel on MSSP ACO and Pathways to Success with Sheila Fusé, Vice President, Policy and Payment Models Navvis Healthcare, Kelly Conroy, Executive Director Holy Cross Physician Partners ACO, Travis Broome, Vice President for Policy and ACO Administration, Aledade a technology enable physician practice management company who recently reported some rather impressive results for 2018 from their network of clients ACOs.

The conference will then dig deeper exploring such topics as the new CMS primary care contracting models, Social Determinants of Health (SDoH), Direct employer contracting 2.0 and mental/behavioral health from a rather packed agenda.

So, join us November 7th – 8th in Orlando Florida to network and learn from those getting it done in the ACO world.

For registration details, click here.

This post is sponsored by the Florida Association of Accountable Care Organizations (FLAACOs)

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U.S. Department of Health and Human Services Office of Inspector General: ACOs’ Strategies for Transitioning to Value-Based Care – Lessons From the Medicare Shared Savings Program

by Gregg A. Masters, MPH

Many have suggested ACOs would not make a dent in restraining the growth of the U.S. healthcare spend, nor have a meaningful impact on elevating the quality of care provided to covered members or beneficiaries (patients).

From ‘HMO-lite‘ criticism to a range of ‘tepid’ to no patient channeling mechanisms, recent efforts to structure ACOs closer to more traditional gatekeeper model HMOs notwithstanding, ACOs are not likely to disappear anytime soon. In fact, the A/C/O – as an operating entity – is codified in U.S. healthcare lexicon just as are PPOs, HMOs, IPAs, etc. In other words, I doubt we’ll ever return to an unbridled fee-for-services model or adopt an ‘un-accountable care’ world view. The ‘genie’ is out of the bottle!

While the jury is still out and the ACO program from MSSP to Advanced Alernative Payment Models (AAPMs) continue to evolve, The Office of the Inspector General released in July 2019 ‘ACOs’ Strategies for Transitioning to Value-Based Care: Lessons From the Medicare Shared Savings Program’.

To access the full report, click here.

 

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APG: Overview of CMMI New Models – Primary Care First and Direct Contracting

by Gregg A. Masters, MPH

The future is already here, it’s just unevenly distributed – Attributed to William Gibson

As a soldier mainstreaming both HMOs and (‘attorney in fact‘ vs. messenger model) 2nd generation PPOs (that re-priced claims to contract rates) into ‘mainstream medicine‘ in California vs. the then prevailing 2nd or 3rd tier physician/provider networks during the 1980s, and then migrated these alternative payment business models into Texas, Colorado and the U.S. writ large, I will attest to these ‘pockets of innovation‘.

We learned in California particularly via physician owned and governed global risk bearing primary care or select multi-specialty medical groups, who aggressively contracted with hospitals, specialists, and ancillary providers including lab and imaging services on a ‘most favored nation’s basis‘, that a minimum of 25% savings of the prevailing spend was in evidence and routinely operationally demonstrated.

When ‘OSHPD’ (the California Office of Statewide Health Planning and Development) published their ‘efficiency rankings’ of hospital performance, they found the Kaiser Permanente Foundation Hospitals as a group operated at 75% of the statewide average cost basis. In other words, had all patients in the State of California received their care from the KP system, the aggregate spend would have been 25% less of a then very large, and today, still growing number.

While only an opinion, I suspect absent C-suite motivations (the undeniable allure of bonus and incentive compensation even in the so-called ‘non-profit’ 501c3 space) to ‘sand bag‘ and ‘shadow price‘ in an increasingly competitive 3rd party payor or health plan environment, we might have seen even more of these ‘efficiencies‘ (cost reductions at the population level) infused into the performance results of the ‘managed care organization‘ (MCO) cohort competing in the space.

I mention KP as they are the quintessentially integrated delivery system (IDS) model, ie, from a legal, operational and 3rd party finance point of view. Their results produced by a combination of mature culture, infrastructure and leadership that embraces risk assumption (vs. the risk aversion of health systems who practice the prevailing ‘heads in beds‘ philosophy) could be exported to similarly motivated and aligned ‘value based‘ (alternative payment) operators.

Fast forward a few decades for CMS (Centers for Medicare and Medicaid Services) latest salvo to tame the rapacious appetite of a fee-for-services driven, health system revenue center optimized business model.

The webinar featured in this post was sponsored and curated by America’s Physician Groups (APG) formerly operating as CAPG (the California Association of Physician Groups), it unbundles CMMI’s (the Center for Medicare and Medicaid Innovation) “New Models: Primary Care First and Direct Contracting”.

The complete deck is available here, and the webinar is available here.

Enjoy!

 

 

Venrock’s 2019 Healthcare Prognosis

by Gregg A. Masters, MPH

Received this embargoed report earlier this week. Venrock has formally released the report this morning.

One reason I am fond of their work is I’ve been following Bob Kocher, one of Venrock’s principals, since the turbulent introduction of the ACA by the Obama administration.

More recently perhaps due to Venrock’s ‘brave’ investment in a unique business model at Aledade – a ‘hybrid‘ tech enabled ACO practice management company and associated network of participating entities, run by former National Coordinator for HealthIT Farzad Mostashari, MD.

I say ‘unique’ as when contrasted to previous models of MSOs (management services organizations) or ‘PPMC’s” (physician practice management companies), Aledade’s calculus is based on a ‘no outcome, no income‘ skin in the game basis. In other words, if member ACOs don’t achieve savings above the benchmarks or risk model thresholds no fee is paid to Aledade (at least this was there original formula).

So the report is available here. There’s a wide swath covered in this survey, which according to MedCity News:

shows optimism for companies continues to grow, but challenges remain

An understatement?

Enjoy!

 

 

Population Health, Precision Medicine and the Triple Aim

By Fred Goldstein, MS and Gregg Masters, MPH*

The field of population health continues to grow and create new areas of exploration and integration.  Population health practitioners are called upon to play a central role as health systems, health plans or healthcare organizations work to implement their strategies designed to improve health care quality, access, outcomes and cost while weaning the US Healthcare system away from its fee-for-service reimbursement paradigm.

From the emerging recognition that Precision Medicine is not antithetical to population health, to the development of unique approaches to address the social determinants of health, it’s an exciting time.

This year’s agenda for the Population Health Colloquium reflects the dynamic nature of the field, featuring leading healthcare experts from academia, healthcare systems, health plans, data and analytics companies, population health companies, regulators, innovators and entrepreneurs. To add to the excitement, the $100,000 Hearst Health Prize will be awarded to one of three deserving finalists: the University of Arkansas Arkansas SAVES program; the Mental Health Outreach for Mothers (MOMS) Program; and the Sharp Transitions Program.

A range of value-based care and alternative payment models are being implemented across the U.S. healthcare landscape, and will be covered in depth at the Colloquium with presentations on ‘Are Alternative Payment Models Working?’ presented by Lawton R. Burns, PhD, MBA, Director of the Wharton Center for Healthcare Management and Economics and the James Joo-Jin Kim Professor of Health Care Management, Wharton School, University of Pennsylvania, and François de Brantes, MBA, Senior Vice President of Commercial Business Development, Remedy Partners. There will also be a number of ‘mini-summits‘ addressing value-based care and alternative payment models in different contexts and settings (orthopedic bundle, collaborative care, chronic conditions, patient engagement, and elder care).

The move to alternative sites of care will be covered in ‘Evolving Care Outside the Hospital to Meet Consumers Where They Are’, presented by Niki Buchanan, MA, PHM, General Manager, Philips PHM, and Shauna Coyne, Director of Innovations, New York-Presbyterian Hospital.

A Special Dinner Program (Tuesday, March 19), download brochure here.

Cells Are the New Cure: Advances in Precision Medicine‘ will focus on innovations, science, technology and medicine and explore the advances in precision medicine that are providing pathways to cures using human cells. The Panel will include, Richard M. Cohen Journalist, News Producer, “Dr. Max” Gomez, PhD, an Emmy-Award Winning Medical Correspondent, Robin L. Smith, MD, MBA, President and Chairman, Cura Foundation, and Meredith Vieira, Emmy Award-winning TV Journalist; Host, Executive Producer and Anchor.  Attendees at this event will each receive a copy of ‘Cells are the New Cure’ by Robin Smith, MD, MBA and “Dr. Max” Gomez, PhD and ‘Chasing Hope’ by Richard M. Cohen.

Join us on PopHealth Week, Wednesday, March 6th, as we chat with co-authors Max Gomez, PhD, and Robin L. Smith, MD, MBA to preview the principal message featured in their book including implications for population health management.

A major focus of the final day will be looking at the healthcare system itself, discussing what’s wrong and how we (including healthcare consumers) can fix it. Presentations will be given by Robert Pearl, MD, Contributor, Forbes; Professor, Stanford University School of Medicine, author of ‘Mistreated: Why We Think We’re Getting Good Health Care — and Why We’re Usually Wrong, Elisabeth Rosenthal, MD, Editor-in-Chief, Kaiser Health News, author of ‘An American Sickness: How Healthcare Became Big Business and How You Can Take It Back and Archelle Georgiou, MD, President, Georgiou Consulting; Author and Consumer Advocate, author of ‘Healthcare Choices: 5 Steps to Getting the Medical Care You Want and Need.

To conclude the Colloquium, the ever popular Health Leaders Panel will be moderated by Dr. Nash. This year’s line-up includes Mandy Mangat, MD, MPH, Chief Medical Officer, Navvis Healthcare; David Nace, MD, Chief Medical Officer, Innovaccer; Rita Numerof, PhD, President, Numerof & Associates, Inc.; and Gary A. Puckrein, PhD, President and Chief Executive Officer of the National Minority Quality Forum.

And that’s only a peek at some of the timely presentations, panels and mini-summits at this year’s Colloquium. If you haven’t registered yet, (more information here), there’s still time to block your schedule, secure your travel arrangements and come to the best Population Health Conference of the year,  March 18-20th at the Loews Philadelphia Hotel, in the City of Brotherly Love.

Still on the fence?, check out this invitation to the Colloquium via David B. Nash, MD, MBA, Dean, Jefferson College of Population Health, and our last chat with Dr. Nash, in ‘Accelerating toward “Value Based Care”…or, “No Outcome, No Income”.’

We hope to see you there!

 

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* Post sponsored by the Jefferson College of Population Health

On Lessons NOT Learned from Managed Healthcare v1.0 and Beyond

by Gregg A. Masters, MPH

First in a series of lessons NOT learned tweets to be enhanced and re-posted to @ACOwatch.

In the 80s Sanford C. Bernstein analyst Kenneth Abramowitz predicted for-profit hospital systems would dominate the market by 2000. One of the strategy ‘diversification arrows‘ in the quiver of hospital system executives was to enter the insurance market via managed care strategies of various strains. During this consideration phase, my then employer American Medical International (AMI) elected (against my counsel) to build its own insurance company dubbed ‘AMICARE’ vs. creatively ‘parter’ with the insurance sector. /1

Editors Note: See: ‘SuperMeds Hoping to Reshape System‘ by colleague Michael Millenson.

/2 Context: Abramowitz predicted the relative competitive under-performance of 501c3 hospitals & thus their parents. Too clunky and with the wrong governance structure they’d be swarmed by their more nimble for profit operators with easier access to the capital markets required to support a full range of acute care services.

/3 Hospital Corporation of America (HCA) (follow @HCAhealthcare), National Medical Enterprises (NME)  & AMI (merged into @tenethealth) dominated the emerging for-profit sector. Humana was actively repositioning itself from a hospital owner/operator into a health insurance company with a robust portfolio of managed care products.

From major academic medical centers (see: ‘Corporate Takeover of Teaching Hospitals‘) to regional non-profits, c-suite strategists were aggressively courting their engagement given bond debt service coverage requirement concerns amidst an uncertain future.

/4 While all major systems where looking into ‘integration model 1.0’ (recently and cleverly rebranded as ‘pay-vidor’) the mission critical decision in board rooms was: ‘do we make, buy or lease’ the infrastructure? Some sensibly chose the ‘payor neutral’ route, while others built brands.

/5 As then ‘director health system development’ @ AMI California, and previously serving as founding member of Preferred Health Network (PHN) now portfolio company @UnitedHealthGrp post Pacificare acquisition, I counseled AMI to NOT build AMICARE, but partner with the ecosystem as a payor neutral aligned, managed delivery system.

/6 The theory was don’t compete with insurance companies but learn to partner and co-brand local market products from PPO to HMO to POS and ‘OWAs’ (other weird arrangements). Furthermore hospital operations & insurance company cultures were ‘oil and water’ and would not mix. More later (think pre @texashealth formation where Presbyterian Healthcare and Harris Methodist Health Services merged and the health plan leadership where shown the door while DFW market dominant Harris Methodist Health plan was shopped to Pacificare).

/7 Rather than ‘risk’ the payor neutral, lack of vertical integration control (the lessons forged at PHN) and what I advocated at AMI, most majors’ (including 501c3s) with some local market (operations & branding) variations chose to ‘build’ vs. partner. #wrong #move 

/8 I digress. On the branding thing (another wrongly reasoned corporate brand extension decision), what’s wrong with the pictures above? At AMI I advocated that the product/service is the local market asset (a co-branded insurance product) and NOT an extension of corporate nameplate!

/9 I reasoned hospitals serve as ‘hubs’ of community trust (not too mention economic engines and potential integrators of the then dominant independent practice of medicine) & thus the assets to brand & market locally. A sensibly if not delicately calibrated blending of corporate vs. local market identity is more likely to create the goodwill & trust to build upon. Again I was over-ruled by corporate marketing gurus shopping a corporate branded nameplate. For example, all AMI hospital names were preceded by AMI, e.g., AMI Tarzana Regional Medical Center, AMI Irvine Medical Center, etc. 

/10 There’s much more to the story here. This is just an install in the hospital/insurance dance we’ve witnessed in the 80s-00’s playing out today and in some respects completely oblivious to painful lessons of the past (think NorthWell Health’s strategic entry and rapid exit from provider sponsored health plan ownership due to massive losses).There’s a similar story on hospital/health system side (both branding and strategy), to be elaborated in a separate post. 

/11 Concluding thread as follows. So what happened to those systems who elected the ‘build’ option? Massive losses & write-downs were reported with d/c operations posted to the balance sheets of public companies’. The gamble of assuming ‘insurance risk‘ was repelled as if the plague. Health plan or health insurance division employees were looked upon with suspicion. Welcome to FFS maximization era which reigned supreme until the recent round of re-engagement with managing the burden of the total costs of care (think triple aim) envisioned by various risk transfer provisions in the Affordable Care Act (ACA), where Accountable Care Organizations (ACOs) serve as the principal – but not exclusive – workhorse.

Comments:

Hey @VinceKuraitis, please checkout thread 1 – 11 below. Would love your thoughts and commentary. c #ACOchat #phychat #hcldr #JPM19 @jpenso1 @DonCrane @Farzad_MD @bobkocher @DrShlain @sgschade @davidmuntz @RejuvalifeBH @NACOMSO @NicoleBradberry @drnic1

Gregg Masters MPH @2healthguru

Replying to @2healthguru @jpenso1 and 10 others 

Vince Kuraitis @VinceKuraitis

Nice thread. On point.

IMO the jury is back — high probability of failure/$$ loss. (Most) hospitals do not have expertise, culture, patience, scale to become successful health plans.

Newer model of hospital/health plan JV MUCH more promising, e.g., Aetna + Inova.

John Moore @john_chilmark

Replying to @VinceKuraitis @2healthguru and 11 others

It may be promising Vince but we’ve been studying this for several years and still dumbfounded by the shear amount of distrust between provider and payer.

Requires a degree of transparency that few are willing to abide

 

From HMOs and PPOs to ACOs and DPCs: What’s Next?

by Gregg A. Masters, MPH

It may come to a surprise for some  that ‘healthcare innovation‘ has been in play for quite some time albeit not fueled by a culture of hacking or disrupting legacy operations principally via technology. Unfortunately a veritable acronym soup of mostly failed initiatives under varying degrees of public, private partnership (PPP) collaborations have been largely unsuccessful albeit with momentary pauses to the growth rate of healthcare or its underlying medical care cost (MCC) inflation.

When I started in the space national healthcare spend represented 6% of GDP (today, last reported at 17.9%) and many of the same stakeholders were then complaining about its unsustainable trajectory, un-affordable health insurance premiums, wide variations in quality and the uneven access created by a confusing universe of often conflicting payor class (or ‘book of business’) driven reimbursement requirements.

Back then, we witnessed the launch of professional standards review organizations (PSROs) who’s mission was to develop what many referred to as ‘cookbook’ medicine guidelines for purposes of utilization review and medical necessity determinations that health maintenance organizations (HMOs), and to a lesser degree preferred provider organizations (PPOs), deployed via a range of products introduced as ‘managed healthcare’.

HMOs were seen as ‘closed loop‘ systems principally built upon ‘staff models’ where physicians were health plan employees (think Kaiser Permanente, though technically a ‘group’ vs. staff model), Cleveland Clinic, or Geisinger Health plan and thus had not penetrated either mainstream medicine nor commercial market customers (employers, coalitions, multiple employer trusts or purchasing cooperatives, etc.) that Aetna, Cigna, United and Blue plans designed, underwrote and marketed a range of self funded and fully insured insurance products. Both Medicare and Medicaid remained untapped ‘managed markets’ as well. Thus the lion’s share of both public and private markets were in traditional domain of unbridled fee-for-services medicine based on usual and customary pricing or payment schedules tied to conversion factors associated with resource based relative value units (RBRVU).

This began to change with the introduction of independent practice associations (IPA) supported by a competent management services organization (MSO) or physician practice management company (PPMC) providing back office support needed for private physicians in independent practices to contractually engage with health plans. This pivot began an era shifting risk from the health plan to the contracted provider network via a range of reimbursement models.

From modest withholds on negotiated fee-for-services schedules, to global or service tiered per diem’s, case rates or in the most aggressive arrangements an outright delegation of global (including hospital) or partial (professional services only) risk. The latter typically involved mature multi-specialty or primary care group practices with professional management, supporting culture and the associated infrastructure to bear the risk burden.

The aggregate impact of the frenzy that followed by huge market share gains in the HMO space and a correspondingly similar growth in the PPO market was a medical trend reduction and at one point temporary negative decline in healthcare and medical cost inflation indices relative to GDP the late 80s to mid 90s.

Yet, the cultural flash point was perhaps best captured by a scene in the movie ‘As Good As It Gets’ when actress Helen Hunt weighed in on her ‘piece of sh*t HMO‘ denying her access to covered services. As I recall, the entire audience laughed identifying with her animus towards HMOs.

This moment in popular culture represented the public’s push back to ‘gatekeeper model‘ HMOs where primary care physicians ran interference between a member and his or her referral to a specialist consult or hospital admission.

To meet rising consumer frustration and the employer sponsors the plans growing concerns. right around this time (circa mid to late 90s), United Healthcare introduced PPO plans and ‘direct access’ HMO versions as well that permitted specialist referrals without the consent of the primary care gatekeeper.

What soon followed was an era of risk push-back particularly as more consumers rebelled against gatekeeper HMOs, and a lot of red ink for risk bearing IPAs, medical groups or even PHOs (physician/hospital organizations) who took on health plan risk, incurring massive operating losses. While premium increases were restrained to declining, the per member per month (PMPM) or percentage of premium contract dollars passed to participating risk bearing providers represented declining baselines for payment of covered services.

Back to the Future: ‘Deja Vu’ Again?

With the passage of the Affordable Care Act (ACA) principally designed to increase access, reduce the rate of uninsured Americans’ and lay the seeds of cost containment innovation principally via Accountable Care Organizations (ACOs) – the majority participating in upside gain share only in the Medicare Shared Savings Program (MSSP) – but also encouraging pilots and demonstration efforts at the Center for Medicare and Medicaid Innovation (CMMI) we’ve re-entered another era of measured risk transfer 2.0 with the provider community (i.e., hospitals, physicians and allied health practitioners).

As the principal workhorse in the ‘innovation lab‘, six years in ACOs have been a net disappointment in terms of producing the expected savings – though their quality performance metrics are a different story – initially envisioned leading up to the law’s passage. Yet amidst contentious and shifting sands of both federal and state health policy guidance in the transition from the Obama to the Trump administration, one goal remains intact with seemingly solid bi-partisan support: the continued investment in and active pursuit of a value based (vs. production fueled fee-for-services) healthcare economy. Whether via top down federal policy or the granular baking of innovation from the grassroots up, we’ve returned to the drawing board of finding a delivery and financing system that can deliver on the promise of the triple aim – better care, better outcomes at lower per capita costs.

Enter Direct Primary Care aka ‘DPC’

In 1913 Dr. Charles Mayo one of the three founding brothers of the Mayo Clinic weighed in rather optimistically on the future of medicine delivered primary via seamless, team based healthcare. Yet, some 100 plus years later, are we there yet? I think the answer is a resounding no. But why the glacial pace of progress in a seemingly transformation resistant healthcare industry?

With layers of failed generational innovation and the inherent complexity grafted on each wave of the transformational impulse, we as an industry of stakeholders writ large (i.e., hospitals, physicians, regulators, payors, brokers, underwriters, investors and a litany of too numerous to mention suppliers and vendors at the trough) have co-created an incoherent, inefficient, costly and burdensome ‘provider centric’ healthcare economy with conflicted incentives, and little to no alignment with the mission towards building a quality, affordable healthcare economy that works for us al

In 2018 this de-facto ‘non-system‘ aggregate is at risk of imploding on itself. No-one is happy. From frustrated patients, to disillusioned clinicians, to disaffected employers and a somewhat drifting [see: ‘Rethinking The Physician-Focused Payment Model Technical Advisory Committee (PTAC)’ which addresses the ‘rising tensions’ between PTAC, and HHS] federal government are all scrambling to find solutions that deliver value.

A novel model launched in the late 90s by Garrison Bliss, MD introduced ‘direct primary care‘ (DPC) initially via Seattle Medical Associates which then re-tooled into the Qliance brand. Qliance created a fair amount of buzz and spawned considerable competition while advancing the standing of DPC. Yet, a ten year run promptly came to an end when Qliance ceased operations in June of 2017.

Dr Bliss’s legacy contributions live on as he cleared the path for DPC in the state of Washington via enabling statute. DPCs are required to register and report annually (2017 report, here) to the Department of Insurance (definition of DPC, here) a basic data set including: fees charged, enrollment, participating physicians and practice locations. He also presided over the inclusion of DPCs in Qualified Health Plan offerings listed on ACA exchanges. See below:

Treatment of Direct Primary Care Medical Home, 76 Fed. Reg. 41900 (July 15, 2011) (amending section 1301(a)(3) of the Affordable Care Act) 

A “Direct Primary Care Medical Home” plan is defined as “an arrangement where a fee is paid by an individual, or on behalf of an individual, directly to a medical home for primary care services, consistent with the program established in Washington.” (Federal Register Citation)

Meanwhile, the data since reporting began in 2007 is instructive on the limited appeal and slow uptake to date of the DPC model in the population at large, and in my view represents a bellwether for the rest of the nation, see HintHealth 2017 survey here, further documenting the very limited penetration of DPCs into the mainstream market.

Thus, Washington state became the first state to define and regulate direct primary care practices and to prohibit direct practice providers from billing insurance companies for services provided to patients under direct practice agreements.

  • Ten years later, DPC enrollment totaled 14,790 direct practice patients out of 6.7 million Washington state residents, a 0.22 percent share of the population
  • Overall patient participation increased 31%, from the fiscal year 2016 total of 11, 272 participants to 14,790 (an increase of 3,518 participants)

Under the Hood of a DPC: Is it ‘HMO Lite’?

First up, let’s examine one definition proffered by a visionary DPC advocate and practitioner who is also a practicing attorney, Phil Eskew, DO, JD:

For the practice to qualify as a direct primary care practice, the practice must:

  • Charge a periodic fee
  • Not bill any third parties on a fee for services basis; and
  • Any per visit charge must be less than the monthly equivalent of the periodic fee

At it’s core a DPC looks like and to some degree models a ‘lite’ version of a PCP gatekeeper HMO. This includes monthly global prepayment, a defined set of covered services, an assigned patient (member) panel (albeit considerably smaller than a participating PCP in an HMO), and since compensation is budget driven and prospectively paid – little if any of the billing and coding complexity associated with the traditional billing and collections model of FFS based PCP practices.

Unlike an HMO a DPC is not a risk bearing concern other than the sponsoring physicians who go at risk for their professional services. In fact most DPCs are strongly encouraged to operate in a safe harbor of what might otherwise be deemed to be operating in the business of insurance as unlicensed and thus illegal entity.

While not a risk bearing operation per se, DPC models operate in the wild west, where if you’ve seen one practice’s footprint, you’ve seen one DPC operation. There are no standards and there are no compare and contrast opportunities. DPCs are in no way a homogeneous group, rather they are the byproduct of a patchwork of state laws, and the goals, competencies and intentions of the owner physicians.

DPCs must refer out all hospitalizations, outpatient surgeries, costly imaging or lab testing, and specialist consults, etc. Thus DPC practices will optimally work only when layered into ‘wrap around’, catastrophic or prevailing high deductible or rebranded ‘consumer directed’ health plans – though some DPC models, i.e., My MD Connect and others, are designing products for brokers and stop loss carriers offering health plan options for self insured employers built on a network of participating DPC practices.

Some DPCs will negotiate with select preferred specialists, routine lab testing and for certain imaging services. But each practice will have a different menu of primary care services and what may be included in referred care.

Market Results

In a recently published article at the Journal fo the American Board of Family Medicine titled: Direct Primary Care: Applying Theory to Potential Changes in Delivery and Outcomes, the author concludes as follows [emphasis bolded mine]:

The need for rigorous research on the DPC model is great. The American College of Physicians has made such a call, beginning with the most basic descriptive patient and provider variables.41 Information on participating patient demographics before and after DPC adoption is required to understand the population that is served by DPC and the broader implications for excluded patients. Research on the patterns of DPC location and socioeconomic context would also provide a better understanding of DPC’s niche. Following these descriptive analyses, the focus must shift toward outcomes and the attainment of the 4 attributes of primary care, with comparisons between DPCs and other models of primary care. Although this research will encounter obstacles, such as the absence of claims data for DPC practices, it is essential to guide providers, patients, and policy makers toward high-quality primary care.

Meanwhile, theoretic application informed by years of research on primary care provides insight as to what changes to expect and to monitor as practices consider DPC adoption. By applying Starfield’s conceptual model, an understanding of the potential changes to structures, processes, and outcomes for the patient population can be achieved while policy makers and providers await rigorous research on DPC. Evidence exists to support DPC as a theoretically sound approach to attaining the attributes of first contact care and longitudinality for participating patients. DPC uses changes to financing and the population eligible to trigger these potential improvements. At the health system level, DPC has low-construct validity to support a positive impact on the potentially eligible population. By limiting access to those willing and able to pay the membership fee, a vulnerable population will almost certainly be excluded. A model that does not meet the needs of a vulnerable population is unlikely to have a significant impact on the overall costs and outcomes of the US health care system. Other policies and models to address primary care financing and accessibility that do not exclude groups of patients exist and may or may not be superior to DPC. DPC’s distinguishing characteristic from these other models is that the control rests with the PCP and is not dependent on financing from third-party payers.

Complete article: Direct Primary Care: Applying Theory to Potential Changes in Delivery and Outcomes

The Road Ahead

For DPCs to scale and make a systemic impact beyond the local community in which their owners/sponsors operate and become more than a lifestyle, ethical decision or political statement giving the finger to ‘the man’, they’ll need to somehow get their arms around ‘downstream’ network risk and define certain minimum operating requirements or standards which apply to all DPCs equally.

Though therein lies part of the problem. The safe harbor contours mentioned earlier is not iron clad and is more or less protected by variable states statutes exempting DPCs from being in the business of insurance. Any argument that can validly be made that the DPC is assuming ‘risk’ beyond the primary care services in the contract between the DPC practice and its members is one more arrow in the quiver of state department of insurance commissioners’ tasked with the protection of patients purchasing health insurance.

Two groups have organized to harmonize and advance the practice of DPC including the Direct Primary Care Coalition and DPC Alliance, the former chaired by Garrison Bliss, MD (see leadership here) and the latter Ryan Neuhofel, DO, MPH. Both proactive and visionary physician leaders committed to supporting and leveraging the business model of DPC given the heterogeneity of its member practices.

ACO and DPC Synergies?

While I do not have a business plan or model for a hybrid version or combination ACO/DPC derivative, it seems a venn diagram can identify characteristics common to both operating footprints mentioned above. Since we’re all still looking for ways to tame the rapacious appetite of a seemingly insatiable and predominantly fee-for-services fueled healthcare delivery and financing ecosystem, what do we have to lose?

Let’s think out of the box! We can do this!

 

 

 

 

The Evolution of ACOs

by Gregg A. Masters, MPH


Recently the accountable care industry’s leading ‘skin in the game‘ PPMC 2.0 aka ACOcor equivalent (think PhyCor, MedPartners, FPA Medical, et al) of our time – though Aledade’s model is anything like the pyramid scheme of the PPMC (physician practice management companies) of the 1990s, reviewed the Center for Medicare and Medicaid Services (CMS) recent Notice of Proposed Rule Making (NPRM): CMS Proposes “Pathways to Success,” an Overhaul of Medicare’s ACO Program‘. 

Below are key take-aways from the presentation. The entire webinar is accessible free upon registration here

I will post the Q & A thread that Farzad Mostashari, MD, CEO and Travis Broome, VP, Health Policy, respectively Aledade shared on twitter as well.

Meanwhile, here’s the gist of their analysis and message:

National ACO Association Weighs In On Sector Performance

by Gregg A. Masters, MPH Amidst the aggressive assault on the Affordable Care Act (ACA) via an unrelenting but unsuccessful ‘repeal and replace‘ agenda, much conversation and debate in the health reform theater since Donald Trump was elected the 45th President of the United States has witnessed considerable speculation about the probable directional vector(s) of reform. The initial source of these speculative insights have been from available ‘tea leaves‘ interpretation associated with key Trump administration appointments to craft and seed a ‘TrumpCare‘ alternative. Trump’s first appointment to serve as Secretary Health and Human Services (HHS) was Tom Price, MD, a conservative Republican Congressman and orthopedic surgeon from Georgia. Tom Price’s credentials as a warrior against legacy Medicare and Medicaid regulations and incentives is well known, as is his advocacy for a ‘putting patients first‘ narrative. Trump also tagged Seema Verma, MPH as Administrator of CMS who’s credentials included advocacy for and implementation of Healthy Indiana, a waiver enabled block grant to the State of Indiana, intended to introduce both flexibility and opportunities for ‘innovation‘ in their Medicaid program. While a sexy and somewhat logical idea, ie, delegate block (capped) funding to the state and let it innovate on the delivery and financing side, the results of block grants nationally including Indiana’s have been admittedly mixed. With Price’s controversial tenure and the successor appointment of Secretary Alex Azar to lead HHS, Seema Verma remains at the helm of the Centers for Medicare and Medicaid Services and is advocating for and introduced a number of reforms to both CMS and the Center for Medicare and Medicaid Innovation (CMMI) operations. Amidst the leadership deck shuffling and shifting sands of policy initiatives offered via the a series of related Notice of Proposed Rule Making (NPRM) processes, many in the ACO space have been heads down but mindful of how amended Federal policy would affect the operations and viability of ACOs active in the Medicare Shared Savings Program (MSSP) and sequelae, ie, Next Generation ACO models and now the offered NPRM ‘CMS Proposes “Pathways to Success,” an Overhaul of Medicare’s ACO Program‘.  EDITOR’s NOTE: For additional reflection see summary via Evolent Health: ‘CMS’ New MSSP Proposal: The Five “So What’s” Every ACO Exec Should Know.’ Meanwhile, ACOs are reporting results and the community is weighing in on the efficacy of the ACO model with respect to its intended deliverables, see: Farzad Mostashari, MD, CEO of Aledade recent unbundling of results on twitter, here and a recent New England Journal of Medicine piece Medicare Spending after 3 Years of the Medicare Shared Savings Program‘.  Perhaps the most comprehensive take on the state of the industry is to be found in a recent study commissioned by the National Association of ACOs. The introduction to its Executive Summary is pasted below:
Introduction The stated goal of the Medicare Shared Savings Program (MSSP) is to lower the rate of growth in healthcare spending while improving patient access to quality care. (12) MSSP Accountable Care Organization (ACO) progress toward this goal of achieving savings or reducing expenditure growth has proven controversial, in part because there are a variety of ways to measure savings that may generate different results. In this report, we describe the Dobson | DaVanzo team approach13 to measuring MSSP savings and contrast this with reported findings from CMS. We also compare our results to other published work. Dobson | DaVanzo & Associates was commissioned by the National Association of Accountable Care Organizations (NAACOS) to conduct an independent evaluation of MSSP ACO cost savings. The CMS method of measuring ACO performance is based on an administrative formula that creates spending targets constructed with ACOs’ historical expenditures that are used to determine whether they will receive bonus payments. It is problematic when this financial target setting approach is used as if it were a program evaluation. Indeed, when independently evaluating both the Pioneer ACO and Next Generation ACO programs, CMS contractors used a difference-in-differences regression approach to estimate savings rather than the CMS benchmarking methodology used to set financial targets and calculate bonuses or penalties. (14,15).  The CMS benchmarking methodology addresses the question “How has ACO spending changed compared to prior years’ spending?” While this may be an appropriate way to set performance benchmarks, it produces a biased estimate of program savings when compared to what may have occurred in the Medicare Fee-for-Service market had the ACO program not been in place. Instead, evaluation of program savings should incorporate a carefully designed comparison group or counterfactual to account for prevailing trends in order to address the question: “How have ACOs changed expenditures compared to other providers not participating in the ACO program?” Read the complete report from National Association of ACOs, here Florida Association of ACOs - FLAACOS
Given the release of the NPRM and the October 16th deadline for comments with an expected ‘go live’ date in early 2019, the Florida Association of ACOs (FlaACOs) upcoming annual meeting in Orlando is a timely event to compare notes and process the impact of CMS’ proposed changes with your peers. For those of you in the Southeast with an interest in ACOs or valued based healthcare models and their performance in the greater Florida market, take note the Florida Association of ACOs (FlaACOsconvenes in Orlando, October 18th and 19th for their fourth annual meeting. This year’s impressive faculty line-up and agenda include a keynote presentation by former Health and Human Services Chief Technology Officer Todd Park For the 5th year in a row, Health Innovation Media, publisher of ACO Watch, including Fred Goldstein, President, Accountable Health, LLC and me will be onsite interviewing keynote faculty and select participants at the FlaACOs conference. A video recap of last year’s gathering is here, as are two recent interviews with Farzad Mostashari, MD, CEO Aledade, and David Bjork, CEO, Commonwealth Health Advisors. Wednesday, September 12th at 3PM Eastern, 12 Noon Pacific, we chat with FlaACOs CEO and founder Nicole Bradberry on PopHealth Week. Join us! ==##==