Health Plans: The Weakest Link in the Value Proposition?

By Gregg A. Masters, MPH

Today’s post comes to mind via a Tweet this morning courtesy of @CraigJCasey who proferred:

@2healthguru @pfanderson Occupy common sense, like Don Berwick – confirms Medicare wasting 20-30%!! Go big government, single payer

This Tweet is timely mindfulness and context for the wounded politico’s and their aligned think tanks who while not 100% satisfied with the PPACA, none-the-less stitched together a tenuous ‘coalition of the willing’ (i.e., AHIP, AMA, a litany of medical societies, and other allied health professional associations) to advance an arguably ‘less than perfect’ law to move the football and make progress in taming the ‘rapacious appetite’ of the healthcare beast aka ‘borg’.

Since Berwick announced his slightly earlier than expected retirement last week, and the Camp Goodman think tanks of the world, aka the NCPA, ‘celebrate’ the pyrrhic victory of the ‘Hatch/Enzi Gang of 42‘ engineered opposition, (p.s. you may know John Goodman who Uwe Reinhardt once addressed via his ‘Ground Control to John‘ blog post) and who’s claim to fame during the health reform debate was ‘there are no uninsured in America, afterall we all have access to the ER‘ (paraphrased).

Add to the tapestry that HR 676, the single payer option, never saw the light of day in the conservative halls of the US Senate. It extended a ‘Medicare E’ (for everyone) option modeled after the public/private partnership Federal Employees Health Benefits Plan (FEHBP) yet was tossed onto the trash heap of not politically viable options, so we got PPACA, the ‘Act’.

A central part of the Act was the definition and subsequent standard setting for what constitutes an ACO, how they organize, who plays, who pays, when, where, how, and why, etc.. As is often the case in pluralistic America, the lite (compromise) version of an otherwise proven health policy solution or business model is adopted often to no one’s satisfaction. When the intended results don’t materialize, the finger pointing and mud slinging begins – which is where we find ourselves at the moment. Add to that, the chorus of Attorney’s Generals opposition to the individual mandate, a very Republican idea forged via the Heritage Foundation, and you guarantee the continued dysfunctional processing of America finding it’s way into a sustainable healthcare delivery and financing paradigm.

Yet, in this state of compromised mediocrity, we do have reasons for innovation hope via the ACO challenge to the Medicare Shared Savings Program, but also in the minutia of the Centers for Medicare and Medicaid Innovation authorities. While most of the ACO conversation has focused on the final rule, application and certification process, many market driven efforts are emerging where health plans, hospitals, health systems and physician networks or medical groups are creatively collaborating to deliver ‘accountable care’ mostly unfettered by the language in the Act or series of rules which have followed.

So do health plans have a role in the transformation? Or is it inevitable that relentless internecine industry fighting will preclude building consensus towards a system that works, and leverages the inherent strengths of the parties in interest?

The evidence is quite clear, health plans and their associated ‘channel partners’ (from managing general agents to niche product underwriters) who add little if anything to the high value care process are at risk as they provide the least realized value in the healthcare exchange relationship. They must step up or face extinction, but up to what? My suggestion is for health plans to focus on their core strengths by adopting a ‘utility company’ role and work with local managed delivery partnerships. While they may not be a suitable ‘general partner’  to lead the effort, they certainly are an eligible ‘skin in the game’ limited. Why not bring their strengths and skill sets in marketing, underwriting, membership, population and disease management, including clinical pathways and best practices to the table? Lets explore better ways to collaborate vs. compete for the spoils of the ‘churn game’. Extend your horizon above quarterly conference calls to analysts, obsessed with indicia of profit/loss underwriting cycles, to a longer term community benefit frame of reference. Trust your provider partners to stay with you at the alter. Then brand via locally flavored provider partnerships, vs. your corporate nameplate and it’s potential baggage? Start walking the talk, and be the change lest you continue the intractable march into irrelevance. There is much to do!

ACO or vACe aka virtual Accountable Care enterprise?

By Gregg A. Masters, MPH (inspired by Vince Kuraitis)

e/n/t/e/r/p/r/i/s/e/ = A business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers… The etymology of “business” relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. – WikiPedia

Yesterday I had the pleasure of chatting with Andrew Croshack and Thomas Merrill of Leavitt Partners, aka @LeavittPartners, the consulting firm founded by former Bush Administration Secretary of HHS and EPA Administrator, Michael O. Leavitt. We discussed their recent report ‘Growth and Dispersion of Accountable Care Organizations‘.

Upon review of the document, and perhaps due to my UCLA forged public health genealogy, I instinctively substituted common epidemiology notions of ‘incidence and prevalence’ v. the growth and dispersion of ACO’s characterization. Not sure why, just an autonomic reponse (thanks professor/dean Detels). I suppose it remains to be seen whether the neo-clinical and underlying public health pathology implied will in fact materialize as de facto business or enterprise equivalents akin to the rise and fall of the physician practice management company industry (PPMC).

None-the-less, Croshaw posits as motivation to conduct the survey the absence of empirical data on the growth of the industry. Their reported results by ‘sponsor’ are summarized as follows:

Of the 164 identified ACOs, the sponsoring entities included hospital systems, physician groups and insurers with a market presence in 41 states but less than half of all HRRs. Of these entities, 99 were primarily sponsored by hospital systems, 38 by physician groups and 27 by insurers.

Yet following a review of their report and our conversation, noted industry observer and talented consultant Vince Kuraitis further opined on their methodology, specifically questioning their omission to distinguish between ACOs and ‘accountable care’ per se. Kuraitis offers the following:

Are the Findings Accurate?

I’ve written before about the critical distinction between “accountable care” and ACOs — they’re not the same thing. If there is one suggestion I would offer the Leavitt researchers, it’s that the next census should better distinguish between formal ACOs and other accountable care-like (AC-Like) activities.

A formal ACO organization is a legal entity formed by care providers — it is incorporated, has a Board, holds meetings, is registered with the Secretary of State.

Informal, AC-Like initiatives can be created through contracts. The parties simply get together and agree to develop an initiative. They might choose to announce or not to announce their initiative publicly. Commercial payers are much more likely to be involved in AC-Like activities — in many cases even leading the charge.

How accurate is the Leavitt census of ACO activity? I can see that it has potential both to overstate and understate accountable care initiatives.

Kudos to both Vince and Andrew et al for kicking off this conversation, and comments are most welcome here and there as well. Yes, there is little empirical data available and for good reasons noted in both narratives. I highly recommend you read both the Leavitt Partners report, and Vince’s follow-up thoughts to further develop your own perspective.

Leavitt Partners Report: ACOs, Their Growth and Dispersion

On the Wednesday, November 30th, 2011 broadcast at 11AM PT / 2PM ET my special guests include two principal co-authors of the recently released Leavitt Partners study titled: Growth and Dispersion of Accountable Care Organizations‘. For an extract and link to download the full report, click here.

More about the guests:

Andrew Croshaw is Managing Director, Health Care Practice, at Leavitt Partners. Founded by former U.S. Health and Human Services Secretary and EPA Administrator Michael O. Leavitt, the partnership advises clients in the health care and food safety sectors. As Managing Director of the Health Care Practice, Croshaw helps clients enter new markets, enhance the value of their products, navigate dynamic regulatory and reimbursement systems and improve health conditions around the world.

Thomas Merrill is a strategic analyst at Leavitt Partners. As a member of the knowledge development team, Merrill collaborates with others to analyze and research issues associated with health reform and more specifically, emerging care models and the various factors that influence the modern health care landscape.

We’ll discuss the key findings and implications of their report. To listen live or via archived replay, click here.

Leavitt Partners: Growth and Dispersion of Accountable Care Organizations

Extract Only:

Following the Patient Protection and Affordable Care Act’s emphasis on Accountable Care Organizations (ACOs) and the announcement of the Medicare Shared Savings Program, an increased interest has emerged among providers and payers to create ACOs. To date, little has been published regarding the types and locations of organizations adopting principles of accountable care.

As part of an ongoing national study, Leavitt Partners identified ACOs from news releases, media reports, trade groups, collaborations and inter-views through the beginning of September 2011. Also included were entities that either self-identified as being an ACOs or specifically adopted the tenets of accountable care including financial accountability for the health care needs of a population, managing the care of that population and bearing that responsibility at an organizational level. Leavitt Partners then mapped the market of each of these entities based on the States and Hospital Referral Regions (HRR) associated with the hospitals that each entity utilizes.

Of the 164 identified ACOs, the sponsoring entities included hospital systems, physician groups and insurers with a market presence in 41 states but less than half of all HRRs. Of these entities, 99 were primarily sponsored by hospital systems, 38 by physician groups and 27 by insurers.

A clear movement is evolving within the health care industry towards the accountable care model of providing health services. Adoption of this model will vary greatly due to both regional differences as well as variations among the sponsoring entities.

Introduction

Since the 2010 passage of the Patient Protection and Affordable Care Act (PPACA), industry, media and national interest has grown in the concept of the Accountable Care Organization (ACO)1,2. With backing from the White House3 and the conviction of Centers for Medicare and Medicaid Services (CMS) leadership that they will lead to better care, better results and decreased costs4, Medicare has placed added emphasis on developing ACOs as part of the Shared Savings Program5 and Pioneer ACO6demonstration projects. Additionally, private payers are experimenting with ACO-centric initiatives in an effort to increase the value they receive for the prices they pay by lowering the cost of care, improving the outcomes, or, ideally, both7.

While there are some specific requirements to participate in Medicare’s demonstration programs, ACOs can take many different forms within and apart from Medicare. Since there are likely many models that will be able to achieve the same goals, there is little reason to define what an ACO is and, instead, the emphasis should be on identifying what an individual ACO does and then study the different approaches that can lead to the desired results. To this end, the loose definition of an ACO suggested by McClellan et al is the most fitting: an organization that seeks “per capita improvements in quality and cost” with some degree of accounta-bility8. To clarify, an ACO must be, to some ex-tent, financially accountable for the health care needs of a population, manage the care of that population and bear that responsibility at an organizational level.

While the “Accountable Care Organization” name is of recent…

To download the complete report, click here. 

Berwick v. Hatch, Enzi & the Gang of 42. Lunatics 1, America 0

Reprinted in portion below:

Berwick’s resignation a signal of a faulty political system

via Healthcare Finance News by Stephanie Bouchard

WASHINGTON – It came as a surprise to no one that Donald Berwick, MD, the administrator of the Centers for Medicare & Medicaid, would not be carrying on in the position once his term ended on Dec. 31, but many were surprised last week when he announced his resignation would be effective on Dec. 2.

[See also: Berwick to step down at CMS, Obama nominates Tavenner .]

While much of the focus now is on Berwick’s replacement – the Obama administration is nominating Marilyn Tavenner, a nurse who is the principal deputy and chief operating officer at CMS and has already served as CMS’ acting administrator prior to Berwick’s appointment – some in the industry are reflecting on Berwick’s departure and the larger issues it signifies: a political system that is too polarized to be effective.

Berwick’s resignation – and the opposition he faced in Congress – is an example of the shallowness of our political system said John Chessare, MD, president and CEO of the Greater Baltimore Medical Center. “He gave the American people a gift,” said Chessare, who calls Berwick his mentor. “He accepted President Obama’s request to do it (become CMS administrator) and then because of the foolishness and the pettiness of our national political system, he’s leaving.”

“While I do support his vision for making healthcare more patient centered, focusing on decreasing hospital mistakes and errors and making healthcare more affordable for everyone, I’m more disappointed that he’s become a casualty in the political struggle over Obama’s signature healthcare reform law,” said Andrew Spanswick, MSW, chairman and CEO of KLEAN, a residential treatment center in West Hollywood, Calif.

The much acknowledged “problem” with Berwick wasn’t his qualifications – he spent 30 years at the forefront of healthcare innovation and improvement…

Read complete article, here. 

Follow HFN associate editor Stephanie Bouchard on Twitter @SBouchardHFN.

CMS Grant Program to Stimulate Public/Private Multi Payor Partnerships

By Gregg A Masters, MPH

The Centers for Medicare and Medicaid Services via the innovation center will award up to $30 million to innovative public/private partnerships, and will likely favor those ventures with multi-payor breath.

Via the ‘We Can’t Wait for Innovation Challenge’, a total of $1 billion is intended to stimulate the creative juices of physicians, their managers or joint venture collaborators.

Quoting directly from the November 14th, 2011 announcement:

Up to $1 billion dollars will be awarded to innovative projects across the country that test creative ways to deliver high quality medical care and save money. Launched today by the Department of Health and Human Services, the Health Care Innovation Challenge will also give preference to projects that rapidly hire, train and deploy health care workers.

“We’ve taken incredible steps to reduce health care costs and improve care, but we can’t wait to do more,” said HHS Secretary Kathleen Sebelius. “Both public and private community organizations around the country are finding innovative solutions to improve our health care system and the Health Care Innovation Challenge will help jump start these efforts.”

Funded by the Affordable Care Act, the Health Care Innovation Challenge will award grants in March to applicants who will implement the most compelling new ideas to deliver better health, improved care and lower costs to people enrolled in Medicare, Medicaid and the Children’s Health Insurance Program, particularly those with the highest health care needs. The Challenge will support projects that can begin within six months. Additionally, projects that focus on rapid workforce development will be given priority when grants are awarded.

“When I visit communities across the country, I continually see innovative solutions at the very ground level – a large health system working with community partners to decrease the risk of diabetes with nutrition programs or a church group that sends volunteers to help home-bound seniors so they can live at home,” said Donald M. Berwick, M.D., administrator of the Centers for Medicare & Medicaid Services. “By putting more programs like this in place and more “boots on the ground,” these types of programs can truly transform our health care system.”

Awards will be expected to range from approximately $1 million to $30 million over three years.  Applications are open to providers, payers, local government, community-based organizations and particularly to public-private partnerships and multi-payer approaches.  Each grantee project will be evaluated and monitored for measurable improvements in quality of care and savings generated.

For more information, click here.

Kudos to CMS on the heels of the rather depressing news that thanks to the ‘Gang of 42’ aka the Hatch/Enzi tribe, who registered their opposition to the formal appointment of administrator Berwick to head CMS, in March of 2011. As a result of the ideological misguided counsel and subsequent political obstructionism, one of the brightest minds in health policy and health innovation felt the need to step down.

EDITOR’S Note: One more time, the wingnuts and lunatic fringe in the US Congress, (recently and appropriately labeled the ‘do nothing’ Congress) triumph again in undermining proactive efforts to restrain the rapacious appetite of our healthcare borg aka the ‘US Sick-care [non] system’. This is nothing but more of the same procedural and frivolous opposition we witnessed during the Senate Finance Committee’s hearings on the Patient Protection and Affordable Care Act.

New Deadlines Announced for Advance Payment Model

Issued by CMS, Center for Medicare and Medicaid Innovation (CMMI):

Last month, CMS announced a new Advance Payment Model for physician-based and rural Accountable Care Organizations selected to participate in the Medicare Shared Savings Program. The selected ACOs will receive advance payments that will be recouped from the shared savings they earn.

Organizations interested in applying for the Advance Payment Model must complete separate applications for the Shared Savings Program and the Advance Payment Model.

Deadlines for the Advance Payment Model application are as follows:

·         April 1, 2012 start date

o   Applications accepted between January 3 and February 1, 2012

·         July 1, 2012 start date

o   Applications accepted between March 1 and March 30, 2012 (consistent with Shared Savings Program)

Note that the Advance Payment Model will NOT require a Notice or Letter of Intent as part of the application.  A template of the application will be available on the Advance Payment website later this fall.

Only ACOs that enter the Shared Savings Program in April 2012 or July 2012 will be eligible for advance payments.

Visit the Shared Savings Program website for more information on the Shared Savings Program application, including application deadlines.

For more information about the Advance Payment Model, visit the Advance Payment website.  Please send questions to advpayaco@cms.hhs.gov.

For information about all CMS ACO initiatives, visit www.cms.gov/aco.

ACOs: An Update on the Race

By Conor Green

A few months ago, we noted that the release of regulations for ACOs would trigger an ACO services race across the healthcare landscape, where market participants would be sprinting to create service offerings that would help hospitals and physician practices become compliant with the CMS ACO regulations for sharing financial risk and the rewards.  So where do things stand six months later?

Just like earlier this year, the “Big Two” – Optum and Aetna – seem to be squarely in the lead of creating a turnkey ACO solution.  And in the last few weeks, we’ve seen a couple items of note from these two.  The first was an interview with Charles Kennedy, CEO of Aetna’s ACO division on HISTalk.  In the interview, Kennedy talks about how Aetna is pursuing the ACO opportunity via three go-to-market offerings:

  • Clinical integration (basically an HIE via Medicity)
  • A population-based approach with chronic disease management tools that typically rolls out to hospital employees as a way of deploying a light version of an ACO
  • A full, private-label health plan, where a delivery system has their own health plan “powered by Aetna”

Last week, Optum announced that it has brought together its own ACO division with more than 700 people (!) focused on enabling “Sustainable Health Communities,” which is Optum’s version of the ACO concept.  Optum’s press release calls out its own five-part strategy:

  • Patient and population health management
  • Informatics, analytics, and technology
  • Clinical integration, network development, and physician change management
  • Payment model, contracting, and actuarial expertise
  • Operating expertise

Interestingly, the press release also mentions that Optum is also bringing solutions to market targeted at commercial health plans and government payers – the other side of the ACO/shared risk/bundled payment equation.

The big question we have been trying to figure out here at TripleTree is who is going to follow “the Big Two” and their industry-leading ACO partnership announcements (specifically: Optum with Tuscon Medical Center and Aetna with Carilion Clinic)?  Where are the other healthcare companies that are going to pursue this mammoth opportunity?  Wellpoint’s acquisition of CareMore, McKesson’s acquisition of Portico, and Harris Corporation’s acquisition of Carefx certainly point to their interest in this market, as does Premier’s burgeoning alliance with IBM – but we have yet to see any of these or other players signal their interest in developing a broader set of provider-focused bundled payment service offerings.

This past week we think have finally seen another company unequivocally throwing its hat in the ring:  The Advisory Board Company announced the creation of a new company called Evolent Health, in partnership with the UPMC Health Plan.  Evolent intends to provide a platform for population and health plan management to leading health systems as they develop their value-based care strategies.  This follows ABCO’s earlier acquisitions of Crimson, Concuity, and Cielo MedSolutions – all earlier signals that the company was pursuing the hospital analytics, contracting, and registry marketplaces in a big way.

It makes perfect sense for The Advisory Board to do this – with nearly unparalled access to hospital c-suites across the country, it was only a matter of time before they launched a solution to address the many, many requests they must be getting to help with hospitals’ new risk-sharing strategies.  We see this as a welcome development in this space, and hope to see other HCIT players, undoubtedly facing their own questions from their healthcare clients, enter the fray as well.  Where are you, Accenture, Microsoft, and Elsevier?

Let us know what you think.

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

ACOs and #OccupyHealthcare: Connecting the Dots

By Gregg A. Masters, MPH

Can you feel it?

“There is a great disturbance in the Force” | Emperor Palpatine in The Empire Strikes Back

At least two macros have placed this convergence experience in motion:

  1. the March 2010 passage of the Patient Protection and Affordable Care Act, et sequelae (i.e., the final rule on ACOs and the Medicare Shared Savings Program);
  2. the TweetChat #OccupyHealthcare on Novermber 6th, 2011.

While a material scale and magnitude differential exists between the two they are none-the-less intimately linked in our broader culture of innovation and transformational converations. Our healthcare ‘house of cards’ is perilously close to imploding of its own weight, inefficiency and absurd complexity.

The Federal deficit can not be addressed unless spending on Federal health programs can be effectively captured and restrained. That fact is no longer subject to ideological disagreement. Where we disagree is in the strategies and tactics to design and implement a cure.

The context for this consideration is in the midst of a growing albeit powerful message associated with the #OccupyWallStreet conversation which is playing itself out globally and is no longer a US-centric exercise.

On November 6th, 2011 a landmark TweetChat attracted a wide spectrum of the social media community and generated a fair about of web impressions via a dense transcript of ‘conversation’, click here for summary and stats. The home of this nascent ‘movement’ can be traced to the blog OccupyHealthcare.net – check it out if you want additional context, mission, organizers, ‘business case’. etc.

If I may summarize, the key argument for the #OccupyHealthcare movement is America’s ‘sick-care non-system’ isn’t working. It’s top heavy, too expensive, inaccessible to many, overly hierarchical, siloe-ed, not patient-centric (institutional mission mantra’s notwithstanding) and seriously lagging the adoption of key technological innovations including the meaningful use and sharing of health information, and role of social media to ameliorate if not remedy many of these deficiencies.

Enter the Accountable Care Organization, Primary Care Medical Home or Accountable Care Enterprise

To be clear I’m not talking about the arcane eligibility, legal entity or risk sharing provisions, etc., of the recently finalized rule, but lets roll this one back some 30+ years and examine the genesis of the HMO and the rather compelling arguments for coordinated, integrated or managed care.

To the extent the HMO represents ‘best in class’ health wonk implementation thinking to effectively tame the rapacious appetite of a determined healthcare borg, some 35 years since the passage of the HMO Act, the results have been, well rather ‘mixed’.  This ‘result’ is for good reason and upon analysis at no point can the wisdom of HMO design be seriously challenged if properly nested in group practice culture and administered accordingly. What stood in the way were corruptions of the business model from a non-profit community based enterprise to a series to for profit conversions by companies thirsty for expansion and market share gains. These companies grew aggressively via acquisition and roll-ups of mostly unrelated, discrete and non homogeneous HMOs by the major health insurers, i.e., Aetna, Cigna, United, WellPoint (Anthem/Blue plans).

Today, while you don’t hear much talk about HMOs, you do hear a lot of conversation on ‘accountable care’, ‘ACOs’ or even primary care medical homes. Yet, the same principles inherent in ACOs are the foundation and life blood of HMO managed service delivery and finance.

So lets revisit the charge to control costs, improve care and increase access via an evidenced based and patient centric health care enterprise. That formula to me can be represented as follows:

OccupyHealthcare precepts + indicia of accountable care x patient centric mission + accessibility / value  = ACO

These are not new ideas, nor concerns…the difference is at 17.5% of GDP the ‘business as usual’, i.e. show up and collect a paycheck crowd, has fewer and fewer supporters other than the weight of its own unsustainable momentum. What’s unclear is what comes next?

I hope this makes sense. If not, please share your thoughts.

Wal*Mart: RFI ‘Overwritten and Incorrect’

By Gregg A. Masters, MPH

Whoa! Not 24 hours after the Request for Information (RFI) issued by WalMart Health and Wellness directed to it’s ‘strategic partner’ downline hit the street, I mean was leaked to the press, WalMart’s senior management felt compelled to promptly backdown from it’s rational, comprehensive, timely and sensible approach to make a meaningful dent into the US Healthcare, I mean, ‘Sickcare’ quagmire, by issuing the following terse statement:

Walmart Statement in Response to Health & Wellness Request for Information

“The RFI statement of intent is overwritten and incorrect. We are not building a national, integrated, low-cost primary care health care platform.”
– John Agwunobi M.D., Senior Vice President & President of Walmart U.S. Health & Wellness

Yikes! What’s behind this ‘whiplash’ effect?

It’s not news that WalMart has a mixed history with respect to the way they manage or evade (depending on your point of view) offering health benefits as an incentive to their less than full time staff. Yet, WalMart is the ‘400 pound gorilla’ as Chukwuma I. Onyeije, M.D., aka @chukwumaonyeije opined in a Google+ thread to a pool of health care social media peeps on Wednesday.

Regardless of the creative health benefits offer or ‘avoidance strategy’ for their part time staff, WalMart who’s gross sales account for approximately .5% of total US GDP, is a behemoth and perhaps second only to the Federal Government, the single largest ‘wholesale buyer’ of health benefits in the US.

So when they retained Price Waterhouse Coopers to consult on the compiling and distribution of an RFI to the tighly held ‘strategic partner’ network, they clearly intended to step into the population management fray of the payor/provider conundrum. You know, your costs are my revenues…

I’ve suspected all along, that while many on the provider side whine about CMS, the PPACA and now final rule to implement ACOs, many forward thinking peeps, mostly the Wall Street crowd who smell profits in those emerging re-engineered rules around population health management are stepping foward, perhaps aided and abetted by the so called ‘2nd in position skin in the game’ employer community.

We’ll watch and report with interest how this drama and retraction plays out.

See recent article released today by NPR, ‘Wal-Mart’s Clarification on Health Care Leaves Room For Big Moves‘.