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The Importance of The Shared-Savings ACO Model

By Ron Klar

Certainly no Medicare provision of the Affordable Care Act (ACA) has generated more interest among health care providers, policy analysts, and consultants than the Medicare Shared Savings Program (MSSP) for accountable care organizations (ACOs). Because there are so many design elements for which the Secretary of Health and Human Services must “determine”, “establish”, and “specify” the details, all potential participants have been anxiously awaiting the proposed rule before deciding how, and if, to proceed. These details will have important implications for the future of traditional fee-for-service (FFS) Medicare and the program’s acceptance by physicians and beneficiaries.

The MSSP is based on the Physician Group Practice (PGP) Demonstration and incorporates a “shared savings” model (SSM) of potential bonuses for eligible groups of providers that meet annual performance standards of beneficiary quality and per capita expenditures. Payment for covered services will remain fee-for-service, and all of the fundamental and enduring FFS freedoms of choice, equality, and privacy are to be preserved. There will be no financial penalties or down-side risks for these groups other than their unreimbursed services and other investments. The SSM is not yet another version of managed care by at-risk entities for enrolled beneficiaries.

In spite of the clear Congressional intent to include this model, some are now questioning its adequacy to achieve delivery system “transformation” and its possibility for “unearned” bonuses, i.e., groups participate – do nothing – hope for a favorable random outcome.

Therefore, now being considered for the MSSP is the “option to use other payment models”, as authorized but only cryptically referenced, such as “partial capitation”, or “two-sided risk” recently suggested by MedPAC.

The “sentinel” issue should not be which model to promote, but which models and their differentiated design elements. This would optimize initial participation, ongoing “upward” progression (from one model to the next), and ultimate program impact.

The SSM will allow interested groups that are not willing or able to…. (Read complete article at Health Affairs).

Dr. Klar was recently named Chief, Health Systems Innovation & Performance, by the GW Medical Faculty Associates to lead their implementation of integrated, coordinated, patient-centered, and accountable care initiatives.

More Accountable Care Organization Conference Notes: No Faux ACOs Here!

By Jaan E. Sidorov, MD, MHSA, FACP

After a second and equally rewarding day at the Opal Summit, the Disease Management Care Blog has decamped from Austin Hyatt Hotel venue armed with additional Accountable Care Organization insights.

In yesterday’s post, the DMCB mentioned that it discovered there already are a host of ACO-like legal organizations providing patient-centered care to thousands of commercial insurance beneficiaries using evidence-based guidelines and data reporting with feedback under full or almost full capitation. More of them strutted their stuff today. The DMCB was impressed with their physician-friendly culture and repetitive use of the phrase “do the right thing.” While CMS Administrator Berwick has warned the industry that he won’t tolerate applications from faux ACOs, it looks like there are some genuine provider organizations that are primed and ready to go. The only things they’re missing are 1) an upside gainshare contract with Medicare and 2) invites to the conferences, symposia, meetings and forums being held inside the D.C. beltway.

One thing even more striking than the spandex on the Hyatt’s treadmills was that ALL of these organizations had made a huge investment in non-physician coaching programs that, depending on patient need, used both face-to-face and telephonic counseling to change patient behavior.

Additional food for thought:

Organizations that are ready to go for the ACO demos took at least 3-4 years to get where they are today. Unless the building blocks are already present, the DMCB thinks it will be very daunting for a regular hospital or a vanilla physician group to get up to speed by January 2012.

Want to be a truly “accountable” organization? Then you should, in this order, build: 1) an HIT infrastructure that includes an electronic record with an information exchange, 2) a primary care medical home network, 3) nurse-based patent counseling/coaching capability that is either embedded in the medical homes or shared among several medical homes, 4) an ability to assess the needs of your population and your organization’s performance in meeting those needs and then 5) be prepared to negotiate insurance risk-based contracts with the insurers.

Yes, evidence-base patient care protocols are important, but there are exceptions to every rule. Those exceptions are more common that you might think, especially in the elderly. Be prepared to support your providers when they break those rules.

Since it is unlikely that the Federal Trade Commission and the Department of Justice will allow ACOs to zip up an entire local provider market, will ACOs allow those non-participating providers access to their information systems? The DMCB thinks they should because patients “attributed” to ACOs will inevitably wander outside the network and benefit from the information sharing. The economics of upside gainsharing says they shouldn’t allow access, but that wouldn’t be the right thing to do, now would it?

Want to reduce readmissions? Then: 1) have a care management nurse conduct a in hospital visit with the patient, 2) conduct one or more home visits 3) carpet-bomb the patient with phone calls, 4) refer the patient to every community-based organization you can think of 5) over-communicate with the primary care provider 6) expect every discharged patient to be seen by that provider within seven days of discharge and 7) make sure the home health agencies understand you are not out to steal their business.

Heard of “hospitalists?” How about “post-hospitalists,” who are outpatient physicians responsible for seeing a patient within seven days of discharge? Two of the ACO-ready organizations mentioned above are doing this. Really.

While ACOs are taking on gainshares and capitation, they might also want to announce that they have a “center of excellence” that is open for the rapidly accelerating medical tourism business. Since they’re organizing providers to drive better clinical outcomes at lower cost, they could also argue that their hand, plastic or heart surgeons are among “the best” and steal some overseas business from places like the Cleveland Clinic.

Jaan E. Sidorov, MD, MHSA, FACP, is President of PMSLIC, a Pennsylvania physician-directed carrier with proven stability coupled with a strong personal commitment to physicians and physician practices.

ACOs and the Shared Savings Program: Some Common Misconceptions

by Reed Tinsley, CPA

Section 3022 of the Patient Protection and Accountable Care Act (the Act) creates the Shared Savings Program for Medicare. Under the Shared Savings Program, which is to take effect no later than Jan. 1, 2012, Accountable Care Organizations (ACOs) that meet certain requirements established by the Secretary of Health and Human Services will be eligible to receive additional payments from Medicare where certain performance guidelines are met and cost-savings targets are achieved. The amount of the additional payment will be a percentage of the difference between the estimated per capita Medicare expenditures for patients assigned to the ACO and the cost-savings per capita Medicare expenditures threshold.

While ACOs are often touted as the solution to many of the ailments of the current model of healthcare delivery for Medicare, including the need for enhanced quality, improved outcomes, better coordination of care, and greater cost-savings, there are many misconceptions about the Shared Savings Program and a growing list of questions about what form ACOs will take under the law.

The Centers for Medicare and Medicaid Services (CMS), which will be responsible for implementing the Shared Savings Program under the authority of the Secretary, has issued scant guidance on any specifics aside from a brief Preliminary Questions & Answers document posted on its website (the Q&A).

A number of unknowns exist at this time. This article tackles some of the common misconceptions about ACOs and the Shared Savings Program. In a second installment, we will address a number of unanswered questions about ACOs and the Shared Savings Program.

ACOs do not necessarily have to involve a hospital. ACOs are defined by the Medicare Payment Advisory Commission as a set of physicians and hospitals that accept joint responsibility for the quality of care and the cost of care received by the ACO’s patients. Many confuse the concept of ACOs with the concept of payment bundling models involving hospital and physician services and hospital and physician integration efforts.

While existing and developing ACOs often involve the integration of hospitals and physicians through contractual arrangements or employment of physicians, the Act and the Q&A make clear that, for purposes of the Shared Savings Program, group practices, physician networks, and networks of group practices can all be ACOs without including a hospital.

There is not much detail available at this time about specific participation requirements for ACOs that want to participate in the Shared Savings Program, but the Act does specify some minimum requirements, including: having a formal legal structure that allows the ACO to receive and distribute payments for shared savings; having a leadership and management structure that includes clinical and administrative systems; and having a defined process to promote evidence-based medicine, report on quality and cost measures, and coordinate care. The Act also specifies that, in order to participate in the Shared Savings Program, an ACO will be required to enter into an agreement with the Secretary to participate for no less than a three year period. In addition, the ACO must be of a size sufficient to provide the bulk of primary care services to a minimum of 5,000 beneficiaries. As the rule-making process with CMS proceeds, we will have more information about the particular characteristics that a given organization must have to participate in the Shared Savings Program.

An ACO is not a “provider network.” Beneficiaries assigned to an ACO are…… (read complete article, here)

Reed Tinsley is a Houston-based CPA, Certified Valuation Analyst, and healthcare consultant. He works closely with physicians, medical groups, and other healthcare entities with managed care contracting issues, operational & financial management, strategic planning, and profit strategies. His entire practice is concentrated in the health care industry.

How To Get Independent Physicians Into An Accountable Care Organization? Lessons Courtesy of One Large System

By Jaan E. Sidorov, MD, MHSA, FACP

The folks at Advocate Physician Partners (APP) argue that they’re a national model for Accountable Care Organization (ACO) wannabes. They’re saying that because they assert that they’ve figured how to out how to “Integrate Independent Physicians.” The intrigued Disease Management Care Blog first got a close look at them at the recent Health Affairs “Across The Nation In Health Care Delivery Conference” (second video down) and, when it got snowed in today, decided to take a closer look at their hot-off-the-presses published report.

As the DMCB understands it, Advocate Physician Partners is a 15 year joint venture between a consortium made up of over 2700 independent community-based physicians and the ten-hospital/800 salaried physician Advocate Health System (AHS) located in northern and central Illinois. It appears the independent docs are aggregated into the local physician-hospital organizations that make up AHS. Each PHO sends a delegate to the overall APP Board, which has oversight of an entity that can commit with a “single signature” to HMO and commercial fee-for-service insurance contracts.

All their physicians are required to meet individual clinical and work performance measures. Examples of the latter include their number of active patients in a registry, use of computerized order entry and efficiency measures such as length of stay. APP favors goals that also advantage their hospitals and are common across payers. They cite data collection with reporting feedback, strong governance and enforcement of mandatory protocols as the key to their success. As evidence of their discipline, they noted that the “partnership removed more than fifty physicians for noncompliance with their policies on the availability of information technology.”

The published “Integrate Independent Physicians Into ACOs” report linked above is modest about its outcomes (eICU, top ten rankings, HEDIS-based measures, asthma care, generic drugs and electronic data exchange). In contrast, their 2010 Value Report, which seems to be based on extrapolated data, says (on page 7) that they’ve saved millions of dollars.

What does the DMCB think? While this isn’t quite generalizable everywhere, there are some interesting lessons when it comes to wrestling the independent docs into ACOs:

When you’ve seen one ACO, you’ve seen one ACO: The Affordable Care Act may make you think ACOs can be neatly categorized. The mix of players in this physician-led APP suggests that the reality will be a complicated mix of integration approaches. This may complicate CMS’ ability to draw any generalizable conclusions about physician-led ACOs that can be effectively used in health reform.

Can’t accomplish this overnight: As noted above, APP had a 15 year head start. The current ACO models don’t contemplate taking years to develop a governance structure involving the buy-in of thousands of physicians. Pulling something like this off by January 1, 2012 may prove to be daunting.

The need for speed: While APP is herding cats, they’ve already demonstrated their ACO chops with a signed ACO-style commercial contract. If you think that’s complicated, imagine what the Medicare regulator-lawyers are going to do to this. And they are already – and unsurprisingly – behind schedule.

Only works in a city: While not mentioned above, the Health Affairs manuscript points out that APP has not drawn FTC ire because it occupies only 15% of their local market. Being able to simultaneously fire physicians and maintain a base of thousands of providers is impossible in rural America.

Whither disease management? On page 13 of the 2010 Value Report, there is a mention of “personalized one-on-one professional coaching by health and wellness professionals” but in reading further, the DMCB suspects APP has been largely focused on improving the physicians’ day-to-day performance. The DMCB suspects most doctor-dominated ACOs will initially stick to that formula, wasting precious physician time on stuff that non-physician professionals can do more efficiently and cheaply. They all come around, which is the real insight from the note that “personalized coaching” has started. Smart move.

While We Wait for CMS Guidance on ACO’s

Medicare “Accountable Care Organizations” | Shared Savings Program | New Section 1899 of Title XVIII | Preliminary Questions & Answers

The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). ACOs facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. This document provides an overview of ACOs and the Medicare Shared Savings Program.

Q: What is an “accountable care organization”?

A: An Accountable Care Organization, also called an “ACO” for short, is an organization of health care 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.

For ACO purposes, “assigned” means those beneficiaries for whom the professionals in the ACO provide the bulk of primary care services. Assignment will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.

Q: What forms of organizations may become an ACO?

A: The statute specifies the following:

Physicians and other professionals in group practices
Physicians and other professionals in networks of practices
Partnerships or joint venture arrangements between hospitals and physicians/professionals
Hospitals employing physicians/professionals
Other forms that the Secretary of Health and Human Services may determine appropriate.

Q: What are the types of requirements that such an organization will have to meet to participate?

A: The statute specifies the following:

Have a formal legal structure to receive and distribute shared savings
Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
Agree to participate in the program for not less than a 3-year period
Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
Have a leadership and management structure that includes clinical and administrative systems
Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.
Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall (Editors Note: Now expected in early 2011).

Q: How would such an organization qualify for shared savings?

A: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of perbeneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Q: What are the quality performance standards?

A: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Q: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

A: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Q: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

A: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.Q: When will this program begin?

A: We plan to establish the program by January 1, 2012. Agreements will begin for performance periods, to be at least three years, on or after that date.

Q: How do I get more specific information?

A: CMS plans to hold a listening session to hear stakeholder ideas on ACOs this summer.

Further details about this listening session, to be held as a special open door forum, will be posted by June 11 on the following special open forum website.

Further details for the shared savings program will be provided in a Notice of Proposed Rulemaking which CMS expects to publish this fall (Editor’s Note: Pushed to January/February 2011).

Reference source, click here.

Accountable Care Organizations, Explained

by Jenny Gold

As the House begins debate today on an effort to repeal the health care law, we took a closer look at one of the provisions of the law that health care providers are talking about the most — accountable care organizations.

ACOs take up only seven pages of the massive new health law but the idea has providers buzzing. ACOs are a new model for delivering health services that offers doctors and hospitals financial incentives to provide good quality care to Medicare beneficiaries while keeping down costs. A cottage industry of consultants has sprung up to help even ordinary hospitals become the first ACOs on the block.

Yet the concept is still short on details. ACOs have been compared to the unicorn: Everyone seems to know what it looks like, but nobody’s actually seen one. Exactly how ACOs would work in practice remains to be seen, though that hasn’t stopped the health care industry from embarking on a frenzied quest to create them as quickly as possible. The Centers for Medicare & Medicaid Services is expected to release detailed rules on ACOs within a few weeks.

Here is a brief guide to what we know about ACOs so far.

What is an accountable care organization?

An ACO is a network of doctors and hospitals that shares responsibility for providing care to patients. Under the new law, ACOs would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years.
Think of it as buying a television, says (read complete article, here).

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health care policy organization that isn’t affiliated with Kaiser Permanente.

ACO Watch: A Mid-Week Review with Brian Klepper, PhD.

Noted health care analyst, thought leader and blogger to discuss the employer’s interest in ACO development.

On the Wednesday, January 19th 2011 program at 11AM Pacific and 2PM Eastern, my guest commentator is thought leader, nationally known blogger, health care analyst, business development consultant, writer and speaker on health care cost and quality issues Brian Klepper, Ph.D. For more information, see: http://careandcost.com/. To listen to the broadcast live or via archived replay, click here.

Over many years, Brian Klepper has developed a national reputation for thoughtful, reasonable perspectives on complex health care issues. Dr. Klepper consults with health care organizations and business groups to create market visibility that leverages performance, and to take advantage of emerging trends that promise to positively transform both health care quality and cost.

Dr. Klepper serves as Editor for MedPedia, as Editor-at-Large for Community Oncology, and as one of only three non-physicians on the International Editorial Board of Medscape General Medicine, and is also a regular columnist on several of the best-respected and most widely-read expert health care blogs – The Health Care Blog, Health Care Policy and Marketplace Review, Health Commentary and Health Wonk Review.

Klepper is a Principal in three firms. Healthcare Performance provides market analyses and strategic services to the industry. Health 2.0 Advisors counsels health care firms on ways to use the Web to facilitate knowledge exchange, patient engagement, pricing and performance transparency, transactional streamlining and decision support. WeCare TLC develops and manages onsite clinics for employers and other organizations.

Please join us for an informative exchange!

ACO 101: A Physician Primer with Mark Browne, MD

On the Wednesday, January 5th 2011 broadcast ACO 101: A Physician Primer at 11AM Pacific and 2PM Eastern, my guest commentator and co-host is consultant, health innovation thought leader, and blogger, Mark Browne, MD of Pershing Yoakley & Associates, aka @consultdoc on Twitter.

While on the front end of the Centers for Medicare and Medicaid rule making process, we’ll focus on the known fundamentals of Accountable Care Organizations (ACO’s) of interest to physicians. Specifically we’ll address:

(1) What are ACO’s? Absent regulatory guidance, we have primarily a 30 thousand foot view with some pilot and demonstration exceptions. (2) What are the known or proximal models in operation to date? How are they structured? (3) How will ACO’s impact medicine and my practice in particular? Is this Medicare and Medicaid only? Or will its influence extend to the private or commercial (employer sponsored) market? (4) Why are ACO’s seen as a centerpiece in the Patient Protection and Affordable Care Act? Why the optimism? (5) What ‘go to’ resources are available, including related industry experience garnered from HMO’s, PPO’s and prior integrated delivery systems, to facilitate my education? (6) Why do ACO’s hold promise for taming the thirst of a seemingly insatiable health care financing and delivery ‘non’ system? (7) What does ‘physician leadership’ look like during the ACO consideration process?

Your advanced comments and questions are invited and welcome, and can be posted below via the comment section. In a prior post, we supplied links to 3 timely and informative reports well worth your review. Please join us.

Chasing Unicorns: The Future of ACOs

By Ian Morrison

The accountable care organization is like a unicorn, a fantastic creature that is vested with mythical powers. But no one has actually seen one.

I have re-blogged and re-tweeted (twitter@seccurve) this so often that I received all the credit for the line. Welcome to the Internet age. But in all fairness to me, re-tweeting someone else’s intellectual property is as close as most of us get to original thought these days.

And that, my friends, brings me to why chasing unicorns is so important. The rising cost of health care is a national security threat greater than any other. It will kill the budget, the economy and, some even argue, the patients because of unaffordability, excessive iatrogenic interventions and profligate use of resources. We desperately need some big new ideas about how to practically meet Don Berwick’s noble triple aim of better care, better population health and lower per capita costs.

One of those big new ideas is the accountable care organization, or ACO.

Well, actually it is not an entirely new idea. And many in health care can (and do) legitimately claim to having been one for a long time. Kaiser, Geisinger, Mayo, Cleveland Clinic, capitated delegated medical groups of California, and even a few network model HMOs, among others, can say they were doing this all along.

I gave a little after-dinner talk to an elite group of ACO thought leaders in Los Angeles (basically, the talk is the rest of this column) and it was a combination of both a roast and homage to Dr. Eliot Fisher of Dartmouth (who was there, I may add) and whom I always describe as a national treasure, not only for leading the wonderful Dartmouth Atlas work, which in many ways was the intellectual underpinning of and the compelling case for meaningful health reform, but also widely credited with coining the term “accountable care organization.” But, as Eliot would be the first to modestly admit, many others in the room that night (Enthoven, Shortell, Levine, Crosson, Margolis, O’Kane, Robinson, and too many more to acknowledge adequately here) are all part of the intellectual and practical foundations of this re-emergence of the accountable care organization vernacular.

At their very best, ACOs could be a powerful, successful, re-tweet of Enthoven’s managed competition, which a lot of us thought was a pretty decent American compromise the first time around (see a previous column, “The New American Compromise“). At its worst, it could be a badly defined mishmash of half-baked ideas and experiments that is an orgy of excess for lawyers and consultants. As one colleague noted to me, probably half of the 1,500 attendees at the 2010 ACO Congress in Los Angeles were lawyers and consultants (including me) eager to arm themselves with a new PowerPoint for an assault on the dazed and confused delivery system. (Do a Google search for “ACO video” and you will find a brilliant cartoon about this on YouTube.)

So, here’s my take on ACOs and what we have to do to make them work. I frame my suggestions simply and modestly, first as a central two-part problem, and second as Morrison’s 10 Laws. (When you are a futurist, you’re allowed to make up your own laws.)

The Mutual Disrespect Problem

There is in American health care a central problem…

Read complete article in Hospital and Health Networks, click here.

Physicians versus Hospitals as Leaders of Accountable Care Organizations

NEJM | November 10, 2010 | Topics: Accountable Care Organizations, Reform Implementation

Robert Kocher, M.D., and Nikhil R. Sahni, B.S.

Enactment of the Affordable Care Act (ACA) was a historic event. Along with the Recovery Act, the ACA will usher in the most extensive changes in the U.S. health care system since the creation of Medicare and Medicaid. Under this law, the next few years will be a period of what economists call “creative destruction”: our fragmented, fee-for-service health care delivery system will be transformed into a higher-quality, higher-productivity system with strong incentives for efficient, coordinated care.¹Consequently, the actions of physicians and hospitals during this period will determine the structure of the delivery system for many years. The implications will be profound for hospitals’ dominant role in the health care system and for physicians’ income, autonomy, and work environments.

The ACA aims to simultaneously improve the quality of care and reduce costs. Doing so will require focused efforts to improve care for the 10% of patients who account for 64% of all U.S. health care costs.² Much of this cost derives from high rates of unnecessary hospitalizations and potentially avoidable complications,³ and these, in turn, are partially driven by fee-for-service incentives that fail to adequately reward coordinated care that effectively prevents illness. The ACA includes numerous provisions designed to catalyze transformation of the delivery system, moving it away from fee for service and toward coordinated care (see table).

Read complete article, Physicians versus Hospitals as Leader of Accountable Care Organizations.