Hospitals Back in Insurance Biz: Good News or Bad News?

By Gregg A. Masters, MPH

I awoke this morning to read the following headline:

Hospitals Look To Become Insurers, As Well As Providers Of Care

To wit, I ‘tweeted’:

OK, it’s reallly ‘deja vu’ all over again! ‘Hospitals Look To Become Insurers, As Well As Providers Of Care’

For complete original article, click here.

Mind you this is both a context and content appropriate knee jerk thought for those with an event horizon beyond the 24 hours ‘news’ cycle. Yet, upon further consideration, it may not be that simple.

Let me explain. Some of us battle weary ‘pioneers’ (you know, per Elliott Fisher, MD at ACO Summit 2012: ‘pioneers take the arrows, but settlers get the land’ types) who executed the business models associated with HMO, IPA, PPO, POS, and eventually PHO rollouts (including their management companies/MSOs) beginning in earnest in the 80s, morphing into the 90s before crashing at or about the millenium, have seen this dance before.

BREAKING: It failed, and failed miserably, with some exceptions. Lets put aside the mature integrated delivery systems who walked the talk then and continue to model best in class integrated or more recently dubbed ‘accountable care’ for the rest of us and just focus on mainstream medicine and the typical community hospital as epicenter.

Back then the ‘big four’ proprietary (vs. voluntary) hospital systems where: Hospital Corporation of America (HCA), National Medicare Enterprises (NME), and American Medical International (AMI), and Humana. Not to be left out, the nonprofit hospital braintrust eyeing the competitive threat these amassing for profit systems represented, turned to their leading trade group, the Voluntary Hospitals of America (VHA).

Thus, all four drank the strategic ‘kool-aid’ fed in part to them by the best and brightest consultants and entered the insurance space. HCA joint ventured with The Equitable to form ‘Equicor’, NME fielded ‘AVmed’, while AMI really stretched the boundaries of creative thought by branding ‘AMICARE’, while Humana fielded Humana Health Plans. [NOTE: I advised AMI NOT to enter the insurance business with their own branded product, later joining the company once they divested (a $350 million charge to discontinued operations) their ill advised misadventure as Regional Director of Managed Care for 21 California Hospitals.] While VHA partnered with Aetna to form “Partners National Health Plans’ aka ‘PARTNERS’.

Thus, the race was on. Senior hospital executives rarely able to deliver on the upside promise of scale in the hospital business, i.e., better care, lower overhead cost, best management practices via ‘corporate colleges’, group purchasing, reduced clinical variation, and greater accessibility to the populations served, chose to up the ante and leap the grand canyon of the hospital business (one they had yet to materially improve) and enter the unfamiliar and potentially cannibalizing business of insurance.

The record is clear. The group as a whole failed, and failed miserably. What’s changed? And how might we view this ‘extravasation‘ differently? I will explore what might be different this time, and perhaps present another way of framing the value proposition of bridging these two very different different businesses in the next post.

More on the RyanCare v. Affordable Care Act ‘Conversation’

By Gregg A. Masters, MPH

Well Avik Roy, aka @aviksroy, who describes himself as:

a Senior Fellow at the Manhattan Institute. Healthcare policy writer for Forbes & National Review. Romney advisor. Independent healthcare investment analyst.

and the Manhattan Institute, which describes itself as:

a free market thinktank dedicated to developing/disseminating new ideas that foster greater economic choice and individual responsibility

that I have encountered most recently with respect to the disciplined work they’ve done on consumer facing healthcare initiatives including emerging ‘mhealth’ technologies, stimulated some further discussion on the blog post ‘Yes, Obamacare Cuts Medicare More Than President Romney Would.’

Judging from the page views and growing list of comments, associated replies, and ‘callouts’, Mr. Roy et al (?), may have stepped into the proverbial ‘cow patty’, which may have been his/their media intent.

As one who’s been through a few iterations to tame the healthcare beast, I can say with some experience, and associated battle fatigue that I’ve been to this public/private dance and see how these things play out both in Washington and Topeka where the ‘rubber’ always meets the road. Just remember we are witnessing 3 decades of failure to correct the dysfunction, yet there has been no lack of ‘equity extraction’ (v. sustainable community benefit) by enterprising parties, some of whom are no doubt back at the public trough for another round of wealth enhancement.

Yet, in the crossfire of the marketplace of ideas and ultimately the movement of public opinion, as the election grows near, the advantage will accrue to the party that can claim and steward the most compelling narrative. Unfortunately the end game here favors politics and the ‘virality of emotive enabled’ anger v. the calm assimilation of facts to arrive at a reasoned ‘just the facts ma’am’ conclusion.

Ergo, with the posting of the Romney/RyanCare propaganda ‘Paid In‘ video on the blog, a rather disingenuous bit of red meat served up to the foreclosed mind, we are witnessing another round of comments, and replies.

My updated comment is pasted below:

Actually, Daniel is right on while your apparent lack of understanding of the healthcare market is rather apparent. The Government overfunds the Medicare Advantage (MA) program (a private version of Medicare) to the tune of 109% to 114% compared to the standard Medicare program. The fact that various MA operators may offer more benefits than standard Medicare is no surprise given the excess funding. The Act sensibly redeploys this fiscal largesse. Private initiative should not come at a premium, but direct savings to the tax payer. Medicare Advantage contractors should add, not subtract value to the client, i.e., we the people. Waste, fraud, and abuse including unnecessary care add another large component of the targeted 10 year reductions, and in total account for the budget magic to achieve net cost reductions while adding 30+ million Americans to the insurance roster.

The Medicare program is unsustainable (as is the cost of healthcare for all Americans, not just the uninsured or under-insured) and must be retooled as well as better managed, though recent declining cost trends including a slowing in the rate of inflation are ‘encouraging’, i.e., the program may be working if for no other(s) than sentient (anticipatory) effect.

The collective tapestry of program initiatives in the Act that further address innovation are via the Centers for Medicare and Medicaid Innovation, including demonstrations and pilots in medical homes, accountable care and alternate forms of delivery. Every credible health policy wonk and thinking health care professional including physician and hospital leadership as well as entrepreneurs absent an ideological agenda both understand and grasp the collective wisdom in the Act to scale-ably address the healthcare conundrum we’ve built.

Rather than a central planing, top down cookie cutter solution, the Act preserves current benefits, extends the life of the program and marshalls in the innovation embedded in the industry to deliver on a very challenging promise. Whereas, Ryancare merely shifts costs to the beneficiary, pats them on the butt, and wishes them good luck in the open market where they are disproportionately outmatched by a healthcare borg intent upon wealth transfer. This represents a rather naive and poorly configured view of healthcare economics, the provider and payor marketplace, as well as human nature for that matter, although it resonates with the Ayn Rand elitist paradigm.

These are the facts, unfortunately they don’t play well in a media market feeding on raw emotion and more often than not ignorance of the law, since the end game is politics and the virality of the disaffected – of which there is no shortage, not knowledge.

My original reply post is here.

‘RyanCare’ v. ‘The Affordable Care Act’: Bring on the Death Panels for Grandma

By Gregg A. Masters, MPH

Well the ‘repeal and replace’ health reform war is apparently shifting into overdrive via the selection of Congressman Paul Ryan to join the Romney ticket. This is a content rich conversation with something for everyone as we reconcile ‘ACA-esque’ RomneyCare with the voucher based weapon of mass Medicare destruction aka ‘RyanCare’. This will be fun!

My day started with reading an article in Forbes online titled: ‘Yes, Obamacare Cuts Medicare More Than President Romney Would‘ which needless to say caught my attention.

In this day of massive online media fraud, outright manipulation and Citizen’s United fueled disinformation, I usually find Forbes to be a reasonable outlet for quality content. After reading through this mostly ginned up story, I felt compelled to offer the author some facts and historical context, and paste that comment in whole below:

What disingenuous trash! Seriously, you can do better! The only fear mongering and disinformation you omit, are death panels for grandma.

The irony in the dumbed down sound byte attacks from the right, includes the failed stewardship by so called fiscal conservatives that somehow finds the overfunding of the Medicare Advantage program to be consistent with their ‘values’. (For factual recap, click here.)

The Affordable Care Act is an amalgam of a comprehensive series of historically bipartisan approaches to health reform. The public option was sidelined in deference to this pluralistic philosophy emerging from a set of guidelines, vs. narrowly cast top down determinations. Yet, the near term collective amnesia is comical. The consistent efforts (timeline here) of Max Baucus from 2007 to 2009/10 was to work with his Republican colleagues on the Senate Finance Committee even though the ‘manager’s mark’ received virtually no Republican support.

So we get what you proffer, dumbed down, sound byte pejorative appeal to the unreasoned mind, hungry to be fed what they so confidently ‘know’ to be true.

I know this may be a stretch for you, but try to keep your facts straight and contextually aligned.

Finally, to tag Ezra Kelin with the ‘left-of-center’ label vs. the thoughtful and thorough health wonk this man is, is just more red meat diversion of the mind to the lazy corridors of faux rage. We don’t need astro turfed controversy to stir the pot in healthcare, the conundrum is real and problematic for those of us committed to retool its paternalism and over-engineered complexity.

BTW, perhaps if Baucus had held 30 vs. the 29 bipartisan meetings on health reform, things might have been different, right? I think not.

And so it begins! We are going to see a considerable degree of banter and disinformation in the marketplace of ideas around health reform which by definition includes ‘accountable care’, and ACOs, see ‘The ACO is a Child of the ACA‘, so we expect to be busy and on watch as the noise notches up a bit.

As always, we welcome diverse opinions and encourage you to comment and/or submit a guest post which argues in opposition with any of the points made above on on this blog.

Big Data, Little Information, and the ACO Big Picture

By Michael Planchart, Perficient, Inc.

The Journey of a thousand miles towards an ACO begins with one step.
Healthcare organizations are coming to realize that the programs stimulated by the ARRA – HITECH Act, Meaningful Use (MU) and Accountable Care Organizations (ACO), require something that they don’t have in sufficient quantities, the desired type or in the right format: “Data”.

In this post we’re going to focus primarily on the ACO analytics side of things although some of the same principles are applicable to Meaningful Use at its various stages.

The Little Data We Do Have

Historically hospitals have focused on managing their data from the financial perspective. They are very good at submitting claims and receiving the reimbursements, or denials, and reconciling these. They are also very good at dealing with myriad payers which each have unique and complex processes and workflows to embrace. Government payers such as Medicare and Medicaid are very different to deal with because of complex rules that each of them has; Medicaid differs from state to state; private payers also have their disparities. Most healthcare organizations have created value based purchasing strategies that have nothing to envy the mammoth retailers. But all this data generated, stored and mined is similar to that of any other industry vertical. It’s business as usual here.

Hospital organizations have been relying on claims data for most of their financial and operational needs.

The current trend in healthcare is far beyond this type of data. Managing a patient’s health requires relevant clinical data. This is the data that is hundredfold more complex than any other industry has to deal with.

Folks that are, for the first time, entering the Healthcare Information Technology (Health IT) domain are a little perplexed and seem to perceive that we are years behind other domains. This is far from the truth. In the other verticals such as the banking, investment, retail or telecommunications ones, most of the data is of financial, logistic and operational nature. In healthcare we have to deal with this type of data as was indicated and with the other types that are not measurable with fingers alone, or an abacus.

Where’s the BIG Data

Laboratory information results are value and range based (e.g., normal, high, low), or binary (e.g., positive, negative), resulting from the chemical analysis and measurement of specimens (e.g., blood, urine, tissue); anatomical pathology results consist of the same in addition to complex interpretation narratives.

Medicines are discrete units that are being dispensed and administered (e.g., Metformin ER 500 mg tablet, Mupirocin Ointment USP, 2%) but also within a time frame, finite or infinite, and at precise intervals. And to add to the complexity; dosages may vary during the episode of care or an encounter in response to the patient’s reactions; allergies have to be taken into account; medicines may be changed; drug-to-drug interactions are evaluated prior to administering; diet has to be tracked and recorded; follow-up procedures or treatments have to be accounted for.

Imaging results from radiology contain images, discrete data, metadata and non-discrete narratives combined and packaged as a study. The non-discrete narrative is contained in report that is created by the radiologist while “reading” the images and recording into a transcription device or software which is converted from voice to text. A study can contain 1 or hundreds of images; a simple chest x-ray may contain 1-4 images (e.g., Posterior-Anterior (PA), Anterior-Posterior (AP), lateral (LAT)); a CT study may contain as many as 500 images each representing a slice.

We have complex coding systems: ICD-9 (currently migrating to ICD-10) for the classification of diseases, signs and symptoms, abnormal findings, complaints, social circumstances, and external causes of injury or diseases; LOINC for the classification of laboratory and clinical observations; SNOMED as an organized categorization of clinical terms, codes, synonyms and definitions of diseases, diagnosis and procedures; RxNorm provides normalized names for clinical drugs and links its names to many of the drug vocabularies commonly used in pharmacy management and drug interaction software; etc.

Hospitals also have their own reference coding systems that have evolved throughout the years.

When a patient arrives at a provider facility and the clinicians begin with the anamnesis, many events, manual or automated, may start occurring: insurance or Medicare/Medicaid eligibility is verified; laboratory, radiology and pharmacy orders are entered; laboratory and radiology results are generated; medications are ordered, dispensed and administered, sometimes with CPOE and sometimes not; scheduling is processed and resource availability is verified; registration, admission and transfer events are triggered; billing details are validated and recorded. Behind the scenes there are disparate systems “talking” to each other in several healthcare lingos: HL7, X12 and DICOM. Hundreds or thousands of messages containing data are going from here to there and vice-versa. All these messages are sending data that is being consumed by other systems or even other external organizations.

Then, if there is so much data why is there little data?

The answer is simple: an enormous amount of data or information generated that spans from the beginning of a patient’s anamnesis, through the evolution of the episode of care and until the end of the catamnesis, is not being collected, and if it is being collected then it’s being recorded in a format that is inadequate, difficult or impossible to mine (or extract).

But didn’t we just say in one of the above paragraphs that hundreds or thousands of messages containing data are being exchanged during an encounter?

The answer is yes, but the data that is being collected is only the tip of the iceberg of what is required for many of the use cases being envisioned and which are required to manage the population’s health that belong to an ACO.

For example, from the anamnesis the clinician obtains the chief complaint and tons more of information provided entirely by the patient that may have motivated the visit or encounter. The majority of the information being provided by the patient is subject to the interpretation of the physician or the nurse. Have you ever gone to two different doctors with the same ailment and received the same interpretation? I haven’t.

The physician and nursing notes are not being transcribed into the Electronic Health Record (EHR) of the patient mostly because many providers don’t have an Electronic Medical Record (EMR) system. Maybe the provider has an EMR but the EMR doesn’t capture the information in a discrete way. These documents might be scanned and stored in an image format.

You’ve mentioned it a few times, what in the world is an anamnesis? Good question, the anamnesis is the combination of the verbal narration and written information the patient provides initially during the first encounters and it may continue throughout the entire episode of care; and since the care of a patient can depend on other people than him/herself abundant data or information may come from a heteroanamnesis, that is where relatives or caregivers narrate and provide written information about chief complaint, family history, present illness, etc.

Thinking from the End

An ACO requires the following capabilities among many others:

  • Population Health Management (PHM)
  • Chronic Disease Management (CDM)
  • Disease Registries
  • Health Information Exchanges

These capabilities require tons of data or BIG data that should be collected by clinicians and other trained healthcare professionals and not by mere source systems communicating messages between themselves.

Most of the healthcare organizations have a very difficult time knowing what the Average Length of Stay (ALOS) is for their patients at each one of their facilities. Needless to say they believe that a re-admissions management system is something required to operate effectively. Do you have to manage re-admissions or do you just have to count them? You don’t manage re-admissions you avoid them!

How much data do you need to obtain results for these two trivial indicators? All you need is the patient identifying information and the admission and discharge dates for each episode of care. Of course, you could also get fancier and try to obtain the ALOS that corresponds to a particular physician or department. But still, this data is easily obtainable.

On the other hand the capabilities listed above require data that is not easily obtainable since many times it’s not even collected. In order to succeed you would have to determine what data elements would be required for each of the capabilities and then try to map these to the origins or source systems. Not too long ago I performed a mapping for Coronary Artery Disease (CAD) and it was a daunting task. My team and myself had discovered that 80% of the data elements had to be manually abstracted since they were contained almost entirely in scanned notes or even paper notes that had never been scanned.

Yet, thinking from the end and mapping to the source will help you discover the gaps in data that is required for each use case.

The Heterogeneous Curse

Most healthcare organizations choose the “Best of Breed” model for their various systems. What this means is that each application has its own database and typically they don’t share information among each other.

Even those healthcare organizations that have chosen a single vendor for most of their needs face a similar dilemma in that the vendors generally grow their offerings by acquisition of other smaller software companies. The end result is that although the systems are under one vendor’s umbrella they generally implement different technologies and interoperability among them is as challenging as in the “Best of Breed” model.

HL7 messaging, as explained above, has been able to get most of these applications to “talk” to each other. “Talking” alone doesn’t solve the problem of “actionable” data. “Actionable” data is a requirement for many of an ACO’s requirements.

The BIG Challenge Ahead

Getting to “actionable” data is key to overcoming the heterogeneous curse. This is the BIG challenge ahead.

Taking on this challenge one step at a time can help overcome the paralysis.

The most crucial step is creating an Operational Data Store (ODS) and an Atomic Data Store (ADS) from all the available historic data, whether archived or extracted from the source systems databases. Those organizations that have taken this step have been the ones that succeeded with Business Intelligence (BI), Clinical Intelligence (CI) and near real-time use cases.

The ODS/ADS combo will help aggregate the patients data. They will also be the precursors for the Extract, Transform and Load (ETL) layer.
Unfortunately, most hospitals treat the messages that are exchanged by the myriad of systems in a “consume and discard” fashion. Most of the messages navigate through the healthcare system going through a broker or interface engine. These messages get transformed or mapped and are pushed to the consuming systems which ingest the information they need. The messages may stay in the interface engine’s data store for a short period of time; typically between 15 to 30 days before they are deleted.

The next step is fomenting a cultural shift of the clinical staff. Clinicians have been reluctant to be data clerks and many have valid reasons. Fomenting the cultural shift is not changing mindsets of the clinicians. Enabling them with novel technologies to capture a patient’s health status at all critical points of the workflows will be the real game changer. Mobile technology, natural language processing (NLP) and voice recognition should become ubiquitous in the healthcare settings.

Leverage the CCD and other CDA based documents at each point of transfer of care. This requirement alone will be the major force to put in place all the necessary gear to get to an interoperable state.

Indirect requirements will start popping up: data governance will be mandatory, and so will coming up with well-defined terminologies and coding systems. Don’t let these dissuade you since they are all good.

Conclusion

To succeed in the future healthcare paradigm you must start immediately. Take one step at a time, have a BIG strategic picture of the future but act tactically now. You will get there, eventually.

Michael Planchart, aka @theEHRguy is an Health IT Interoperability Consultant, Enterprise Architect for Healthcare IT, Standards Specialist:HL7, DICOM, IHE. Android and iOS Mobile Health Apps designer.

Next Round of CMS ACO Deadline Fast Approaching

By Gregg A. Masters, MPH

Contextualizing the competitive market uptake given the ‘muddy waters’ aka hand-wringing, hedging, side-stepping or simply the ‘sensible accumulation of more data’ before taking the plunge into the controversial, in some quarters, Medicare Shared Savings Program via an ACO, will get a tad clearer as the deadline for submitting applications to CMS is fast approaching.

Not a day goes by without some bit of news from either the commercial, aka private, market as well as the government sector aka Medicare and Medicaid. Whether in the form of a report from one or more Pioneer ACOs, an Advanced Payment Model ACO or from the ever growing book of Aetna, United HealthGroup or Humana et al enabled commercial market ACOs, the newswire shall we say is witnessing no shortage of buzz.

Most recently, courtesy of Becker’s Hospital Review, we note:

San Francisco-based Dignity Health and Nashville, Tenn.-based Vanguard Health Systems have announced plans for their Arizona hospitals to form an accountable care organization and file for participation in the Medicare Shared Savings Program.

Dignity Health Arizona, based in Chandler and comprised of three acute-care hospitals, and Vanguard’s Phoenix-based Abrazo Health Care, which includes five acute-care hospitals. The model would include about 700 physicians.

Also in the key resources department, on Tuesday, August 7th, CMS held a conference on ‘Key Points for Completing an ACO’, for the associated deck, click here.

The Medicare Shared Savings Program application details can be accessed here. Also once approved by CMS, there are some first steps that you need consider, two major considerations are to digest and completely understand the terms of participation in the program, see: Medicare Shared Savings Program Accountable Care Organization Participation Agreement; and to determine your primary service areas. For background information and instructions, see: Medicare Data to Calculate Your Primary Service Areas.

Bottom line, the momentum is building. Our sense is we do not need to wait to get feedback from this next round of applications submitted via the September 6th, 2012 deadline, to sense a definitive market direction.

No Margin, No Mission or No Mission, No Margin for ACO Success?

By  Larry G. Raff, MPH, President, Copley Raff

Article originally appeared on Becker’s Hospital Review Magazine

Don’t look now, but the face of healthcare in the United States is about to change. The results will be better care, better patient outcomes, lower costs (or slowing of cost increases) and more financially sound providers. It would appear that accountable care organizations are on the minds and in the plans of every healthcare delivery system in the nation. And whether or not Obamacare endures, the self-evident logic behind the ACO model is undeniable, because at their core, ACOs foster clinical excellence and better patient outcomes while controlling costs.

However, the effort required to develop an ACO isn’t for the faint of heart, and neither is the financial commitment. The role of philanthropy in the transition to the ACO model will be important for the 58 percent of the nation’s hospitals that are non-profit and the 21 percent that are owned by local government. The role of philanthropy in supporting ACOs is increasingly clear, and the argument for philanthropists to direct their social investments in this direction is compelling.

The greatest challenge to this new era in U.S. healthcare will be the transition from what is charitably called our current healthcare “system,” to the mindset, technology, rigor and accountability that will soon dominate the landscape. According to the CMS, an ACO will be “an organization of healthcare providers that agrees to be accountable for the quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.” ACOs are also increasingly contracting with private payors, allowing these models to extend beyond the Medicare population.

The forthcoming transition will require significant investment on what Thomas Cassels, executive director for the Health Care Advisory Board, calls the long ACO “transition path.” The four pathways along this path include: 1) hospital and physician integration, 2) building information-powered health systems, 3) clinical transformation and 4) payment transformation. In each of these four steps, philanthropy can play a role in moving non-profit and government-owned systems forward in their efforts toward full ACO development.

Hospital and physician integration
ACOs call for creating a group of coordinated healthcare providers with a sufficient base of primary care practitioners. These professionals will be collectively accountable for quality and total per capita costs across the full continuum of care for a patient population. An ACO may include doctors of medicine or osteopathy, physician assistants, nurse practitioners, clinical nurse specialists in group practice arrangements, networks of individual practices of ACO professionals, partnerships or joint ventures between hospitals and ACO professionals, and hospitals employing ACO professionals.

An overarching challenge here is securing a sufficient number of primary care physicians and practitioners that reflects population need, particularly in small communities and inner city neighborhoods with limited primary care resources.

Philanthropy can help by funding incentives to attract and retain primary care clinicians in underserved communities. These incentives can include forgiveness of medical school debt, signing bonuses, housing stipends and funds for special interest research. With research clearly showing a good work environment is the single greatest incentive in recruiting and retaining physicians, philanthropic dollars can be well invested to upgrade facilities, purchase high value equipment and support special physician-led community projects.

Building information-powered health systems
ACOs are required to define processes that promote evidence-based medicine and patient engagement strategies. This patient-centered strategy relies on evolving and emerging technologies including telehealth, remote patient monitoring and electronic health record systems that link private practitioners and hospitals — all of which can be used to manage patient care. While these strategies require costly technologies and staff training, they will help the ACO fulfill requirements to evaluate and address the health and related needs of their patient populations.

Philanthropy is increasingly helping to purchase advanced technologies and equipment for hospitals and community health initiatives. As the justification for non-profit status comes under greater scrutiny, the use of philanthropic dollars can emphasize the community service being done by the ACO-anchoring hospital and how they are helping ACOs achieve higher quality and lower cost healthcare.

Clinical transformation
ACOs must define processes to promote evidence-based medicine, patient engagement, monitor and evaluate quality and cost measures, meet patient-centeredness criteria and provide coordination across the care continuum. Over time, it is expected more reliable and more sophisticated performance measures will be used to support improvements and demonstrate how cost savings are being achieved through improved healthcare delivery. Simultaneously, new federal healthcare reform legislation has empowered the Institute of Medicine to seek evidence-based clinical practice guidelines from all areas of clinical medicine. These guidelines will be posted on a fully accessible website with the expectation that clinicians will adopt and follow them.

Philanthropy is now being used to fund the creation of evidence-based clinical practice guidelines by many professional medical organizations and associations. The typical cost to create a single guideline, following a strict three-tier process, is between $80,000 and $100,000. As evidence-based medicine evolves, there will also be a much greater need for clinical training on using new standards of care and procedures.

Payment transformation
ACOs may use a range of payment models including capitation and fee-for-service with self-designed strategies for sharing generated savings. Through this approach, payment is based on the ACO’s accountability to patients and third-party payors for the quality, appropriateness and efficiency of healthcare services. Payments linked to quality improvements should also reduce overall healthcare costs, creating a value-based marketplace and standard of care.
Here, philanthropy can play a valuable role, as it has for decades, in helping improve the quality of care by elevating the care-giving physical environment, securing needed equipment for diagnosing and treating patients and helping clinicians remain current in their field.

Conclusion
The push to adopt the ACO model comes at a time when hospitals and integrated healthcare systems are experiencing their thinnest margins in memory. The American Hospital Association has estimated ACO formation will incur high startup costs and large annual expenses to maintain the system. Now, more than ever, the non-profit sector of the healthcare industry must look to philanthropic dollars to help adopt this new era in healthcare.

From a donor’s perspective, an investment in the success of the local ACO can result in multi-dimensional benefits, an annuitizing effect on their contributed funds and the taming of spiraling healthcare costs. And, as importantly, it is a gift that keeps on giving by contributing to improved quality of care, as well as a healthier and wealthier community.

Larry G. Raff, MPH, is president and principal of Copley Raff, Inc., a leading philanthropy consulting firm based near Boston. He brings three decades of leadership and experience to healthcare organizations seeking advancement results. His clients include four of New England’s largest multi-hospital systems, the largest multi-hospital system in the mid-west, numerous academic medical centers and community health centers. He also provides counsel to national organizations including the American Optometric Association and the Massachusetts Medical Society.

ACO Timeline: Key Dates and Application Process

By Gregg A. Masters, MPH

According to the Centers for Medicare & Medicaid Services (CMS) as of July 1, 2012 89 new Accountable Care Organizations (ACOs) began serving 1.2 million Medicare beneficiaries in 40 States and Washington, D.C.

These 89 new ACOs have entered into agreements with CMS, taking responsibility for the quality of care they provide to people with Medicare in return for the opportunity to share in savings realized through high-quality, well-coordinated care bringing the total number of organizations participating in Medicare shared savings initiatives to 154, including the 32 ACOs participating in the Pioneer ACO Model by the Center for Medicare and Medicaid Innovation announced last December, and six Physician Group Practice Transition Demonstration organizations that started in January 2011. As a result, as of July 1, more than 2.4 million beneficiaries are receiving care from providers participating in Medicare shared savings initiatives.

Acting CMS Administrator Marilyn Tavenner indicated:

This new group of ACOs adds to a solid foundation. The Medicare ACO program opened for business in January, and already, more than 2.4 million beneficiaries are receiving care from providers participating in these important initiatives.

Details on the timeline and application process are summarized below:

Application Cycle: Key Dates for Program Year 2013

Applications posted on CMS Web site Updated in July 2012
NOIs accepted Nov. 1, 2011 – June 29, 2012
CMS User ID forms accepted Nov. 9, 2011 – July 9, 2012
Applications accepted Aug. 1,2012 – Sept. 6, 2012
Application approval or denial decision Fall 2012
Reconsideration review deadline* Dec. 11, 2012

*  Date an organization must receive a favorable reconsideration review determination in order to qualify for the start date indicated on the application.

For complete details on the Medicare Shared Savings Program and associated timeline for applicants, click here.

Standing Up the ACO: A View from Ground Zero

By Gregg A. Masters, MPH

The clock has been officially ticking for the more mature ACO Pioneer class and recently anointed, perhaps less sophisticated pool of market entrants, in the Advanced Payment Model or standard Medicare Shared Savings Program. Clearly, top of mind strategic questions du’ jour in many board rooms and standing committee conversations now includes how do we make it work this time? and what do we need do differently?

Let’s step back a bit and create context in which to frame the ACO ‘stand up’ challenge.

For the most part, all ACOs will emerge via a range of formal relationships, some are corporate and achieved via vertically integrated entities, i.e., where a hospital or system is the ‘member’ sponsor of the organizational effort and ‘owns’ the delivery system (including physicians direct or via contract in states with a corporate practice of medicine doctrine) in whole or part, while others will materialize virtually, i.e., via a variable tapestry of contractual arrangements.

For purposes of this post I will focus on the second group who present themselves as more ‘agile’ players at least from the point of view of provider network development and/or recruitment. As ‘untethered’ players to an institutional interest (hospital or otherwise), they are free to negotiate and enter into whatever inpatient, outpatient and ancillary service arrangements including downstream sub-acute care providers, e.g., home health, rehabilitation, SNFs, assisted living, etc., that make sense to it’s service area and primary market demographics.

Let’s assume the legal, and operational backbone have been laid, including the essential capital to enable the start-up glide-path, thus the key question becomes recruiting physician participation in the ACO. How can this be optimally achieved?

The answer most likely dwells in the macro issues specific the maturity and competitive landscape of the primary market area, i.e.,:

  • How many ‘ACOs’ whether anointed officially by CMS or not, are actively recruiting in the market?
  • Are the ACO ‘sponsors’ experienced in patient centered, and team based coordinated managed care?
  • Have they been participating in Medicare risk contracting or commercial risk contracting?
  • What is their track record (if any) dealing with clinical risk management?
  • What is the state of physician organizations in the market? e.g., are there IPAs, medical groups (primary and/or multi-specialty), or MSOs with core competencies in contracting, administration and provider network relationship management?
  • Bottom-line, does the ACO sponsor or have pre-existing relationship(s) in the market to leverage?

Markets with little to no competition and no history of successful operations in either the commercial or Medicare risk space should have an easier time selling the value proposition to primary care and key referrals specialists, but absent a clearly articulated population management strategy supported by a well staffed and competent network manager are at highest risk to fail.

Yet, generalizations in healthcare are rarely accurate. In some instances, particularly rural, i.e., less ‘sophisticated’ markets, with one hospital and for all intent and purposes a ‘captive’ medical staff and community may succeed simply on the basis of a handful of key relationships in critical positions. Generally the equation is: greater provider complexity = greater challenge to succeed.

At the end of the day, the ‘secret sauce’ driving the Advance Payment or institutionally untethered physician led ACO success will likely come down to the intangibles of physician culture, vetting provider selection, and effective recruitment into the ACO. Since Medicare utilization and even medical cost ratios (MCRs) may be in the public domain to profile target network recruitment objectives, failure to include such a review in the development glide-path will be an oversight in the due diligence process.

The Advanced ACO Payment Model: An Unlikely Source of Innovation?

By Gregg A. Masters, MPH


Recognizing that all healthcare is local and typically imprinted with variable leadership DNA, risk maturity levels, provider concentration or segmentation, competitive dynamics, urban v. suburban and rural market considerations, the Centers for Medicare and Medicaid Services (CMS) including the Center for Medicare and Medicaid Innovation (CMMI) refined and offered several programs designed to appeal to different levels of candidate ACO provider readiness and geographic suitability. 

One such program is the Advanced ACO Payment Model which has recently announced an update to it’s 2012 class of participants. CMS outlines the program as follows:

The Advance Payment Model is designed for physician-based and rural providers who have come together voluntarily to give coordinated high quality care to the Medicare patients they serve. Through the Advance Payment ACO Model, selected participants will receive upfront and monthly payments, which they can use to make important investments in their care coordination infrastructure.

Context

By developing this option CMS is directly responding to stakeholder input sourced during the extensive Notice of Proposed Rule Making (NPRM) process relative to the Medicare Shared Savings Program (MSSP), including comments on the initial Advance Payment Model originally published May 2011.

One of the material themes emerging from the dialogue centered on the lack of ready access to capital and therefore the associated infrastructure to build out and ramp up the needed staff for provider recruitment, care coordination, and population health management. Thus the model addresses core issues of two principal provider classes including: ‘rural‘ and ‘physician led‘ ACOs. Both categories of providers generally present with unique start-up financial constraints and business challenges essential to  perform under the terms of the MSSP.

Design and Payment Details

According to CMS:

Through the Advance Payment ACO Model, selected organizations will receive an advance on the shared savings they are expected to earn. Participating ACOs will receive three types of payments:

  • An upfront, fixed payment: Each ACO will receive a fixed payment.
  • An upfront, variable payment: Each ACO will receive a payment based on the number of its historically-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO: Each ACO will receive a monthly payment based on the number of its historically-assigned beneficiaries.

Advance payments are structured in this manner to acknowledge that new ACOs will have both fixed and variable start-up costs.

For a complete listing of the participating providers in the Advanced Payment ACO model, click here. A CMS prepared fact sheet is available, here.

ACOs, Accountable Care and the Digital Health ‘App Market’

By Gregg A. Masters, MPH

So much of the innovation metabolism witnessed today via social media and seeping into mainstream consideration, seems to be sucked up in the many, perhaps oversupplied and under utilized consumer facing ‘digital health apps’ market. We have yet to see these app driven forces of nature materially unleashed in the healthcare borg. However, this may be changing.

Clearly there is a need to drive, enable or otherwise vision and frame local implementation pathways of the sole agenda that should be pre-occupying the interactive or social media domain, i.e., the triple aim, see: ‘The Triple Aim Sets the Agenda for Healthcare Social Media Community‘.

We stand at a point in history where the power of these tools, platforms, developer communities and the clusters of collective wisdom they can enable in support of a particular transformative cause is unprecedented. The key question is what ‘master’ are you serving? Is it about sustainability of the ‘all in patient centric healthcare ecosystem‘ posited by Dr Reed Tuckson aka @DrReedTuckson of United HealthGroup, see: ‘Digital Health Summit: Reed Tuckson, MD, SVP United HealthGroup‘ or a quick niche market entry and exit play?

As I tweeted earlier today:

Pulse check: the time is now, what are you doing to advance the #tripleaim?

The last time the healthcare social media community was faced with this opportunity for engagement it was in the form of the rancorous healthcare reform debate. From the House to the Senate and ultimately the President’s desk to town halls, the blogoshere and twitter it was a monumental undertaking (and historical) accomplishment I might add.

As someone who tweeted line item, by line item the Senate Finance Committee’s consideration of what would ultimately become the Patient Protection and Affordable Care Act, including some 600 or so frivolous amendments (see complete history here) proferred by the Republican side to slow if not derail it’s adoption, I can tell you there was precious little support or advocacy by the acknowledged healthcare social media thought leadership.

Hopefully things will be different this time, and peeps will take a stand in support of the Act, ACOs and the mantra of the triple aim. This is a critical time in the e-patients, healthcare wonk, clinical practitioner and institutional provider space including our proactive payor partners.

So let’s get ‘er done!