Posted in Accountable Care, ACO, Affordable Care Act

POTUS: The De Facto Health Wonk-in-Chief of the US?

by Gregg A. Masters, MPH

United States Health Care Reform

 

Love him or hate him President Barack Obama continues to demonstrate depth, insight, tenacity and a firm grip on the state of the U.S. Healthcare ecosystem dysfunction (and remedies) well beyond his formal training as a Constitutional scholar. Now as arguably one of the most legislatively accomplished President’s in U.S. history, particularly in light of the catastrophic train wreck he inherited from his predecessor and fueled by the nonstop ‘hell no‘ chorus of his disingenuous (often health policy clueless) political opposition he weighs in to set the record straight and for legacy purposes.

On July 11, 2016, JAMA released ‘United States Health Care Reform: Progress to Date and Next Steps‘ a rather scholarly construed unbundling of the state of healthcare then and now (pre and post ACA implementation). As a rather complex piece of legislation with many moving parts, and staggered implementation timelines (some as a result of political accommodation, some merely in tune with operational and prevailing healthcare delivery and financing legacy inertia) he steps up and in classic barrister narrative fashion lays out his case, and simultaneously calls out the next steps to remedy the U.S. healthcare conundrum.

POTUS aka ‘Health Wonk-in-Chief‘ Barack Obama concludes:

Policy makers should build on progress made by the Affordable Care Act by continuing to implement the Health Insurance Marketplaces and delivery system reform, increasing federal financial assistance for Marketplace enrollees, introducing a public plan option in areas lacking individual market competition, and taking actions to reduce prescription drug costs. Although partisanship and special interest opposition remain, experience with the Affordable Care Act demonstrates that positive change is achievable on some of the nation’s most complex challenges.

I strongly encourage you to click on and read the entire piece. It is well worth your time and wholly consistent with the ‘accountable care’ narrative (the subject of this blog) driving Medicare ACOs, their commercial derivatives and large portions of the moving parts of the ACA including the entire spectrum of ‘value based’ healthcare initiatives.

For this piece, I want to focus on four areas of the ‘next steps‘ called out by POTUS, namely: the ‘Health Insurance Marketplaces’, associated ‘delivery system reform’, AND the introduction of ‘a public plan option in areas lacking individual market competition, and finally ‘taking actions to reduce prescription drug costs’.

Health insurance marketplaces

So much of the ACA oppositional cheerleading liked to stress the ‘buying across state lines‘, and ‘malpractice reform‘ as ‘freedom and choice‘ enabled solutions to the health insurance quagmire. Never mind the rampant marketing, churn, double digit premium increases, retrospective rescissions or opportunistic denial rates, coverage limits and lifetime caps so endemic in the space. Not to mention ‘mini-meds‘ or ‘junk insurance’ so prevalent in the market before some baseline notions of what constitutes ‘insurance‘ in the face of typical health, illness or accident challenges one may experience in life. Here again, coverage baselines and the need for consistency to shop, compare and ultimately purchase real health insurance seemed like too much regulatory over-reach in a market where choice absent basic ground rules somehow seemed like a more attractive solution – at least to the often clueless opposition. The entire over-reach narrative was wrapped up, sold and bought as a ‘Government controlled healthcare takeover‘ per the vacuous talking points proffered by ACA oppositional research.

Google Image Result for http___1.bp.blogspot.com_-FCS-xwHjt8Q_TksRz3PW4CI_AAAAAAAAATo_aR9LEeQ57bU_s1600_medicare-keep-your-hands-off-my-medicare.jpg

 

Yet, the value proposition of an ‘insurance market place‘ whether Federally run, ‘facilitated’ or state delegated exchange option makes total sense if a transparent consumer market is to emerge from the chaos that is principally the individual market (non employer sponsored health insurance), though the group, or self funded ASO market ain’t much to cheer about either. Yet such a model was/is a proven way (witness the explosive growth of private exchanges) to introduce orderly competition in an otherwise opaque industry.

If you’ve ever run a health plan, built a managed care organization or contracted for hospital, physician, ancillary and pharmaceutical services (I presided over several employer sponsored health plan initiatives, MSOs, PHOs and IPAs tackling both capitated and discounted fee for service plan launch and operational issues in for-profit, voluntary and academic health systems) you will know that prudent (empowered, informed, etc.) purchasing of health insurance options requires clear apples-to-apples covered services comparisons, exclusions and non-covered item disclosures coupled with understandable pricing transparency and the cost sharing burden associated with your election. Absent this comprehensive clarity, listing guidance and/or requirements that an exchange imposes to ‘qualify’ eligible participants as candidates to choose from is virtually impossible. Standing up the infrastructure (people,  process, culture, etc.) to enable informed choice requires such an exchange environment whether public, private or some combination thereof to transparently market their services to the consuming public.

Delivery system reform

This is clearly the ACA’s ‘achilles heel‘ as there ain’t much there, there other than aggregate ‘on the come‘ efforts to tip toe into the waters of ‘clinical integration‘, measured risk assumption and a range of payment reforms collectively recognizing fee-for-service (i.e., do more to earn more) medicine as a burning platform. The most tangible form of this commitment is represented by Secretary Burwell’s call to migrate increasing shares of Medicare beneficiaries (including me, as I turn 65 in August and have elected Kaiser Permanente Senior Plan in San Diego) into Medicare Advantage, ACOs and a broadly cast series of ‘value based‘ healthcare arrangements by certain dates.

Standing Up the ACOFor the most part, ACA focused on insurance market place reforms. While delivery system reform was principally invested in ‘nascent’ ACOs (which are mutating as we speak amidst some 5 and 1/2 years of operating experience under the Medicare Shared Savings Program (one I like to call ‘HMO-lite’ which incidentally and inevitably is morphing into its more traditional gatekeeper HMO predecessor vs. the retrospective attribution methodology that undermines successful ACO risk assumption performance).

Additional delivery system reform was to come from pilots, demonstrations and other ‘innovations’ the Center for Medicare and Medicaid Services (CMS) funded via the Center for Medicare and Medicaid Innovation (CMMI) – who’s budget the Republican controlled Congress is determined to cut.  Here, I might add at the ACO Summit circa 2012 one of the most seasoned and successful risk savvy players I had the opportunity to work for and with in Dallas, Texas Richard Merkin, MD, the founder and owner of Heritage Medical Systems and Heritage Provider Network described as the ‘hidden jewel’ in the ACA.

As much as we’ve progressed into ‘managed care‘ whether discounted, bundled, case rates, per diems or global or partial per member per month (PMPM) capitation or percent of premium the majority (estimated at 80-90%) of healthcare payments are still of the fee for services variety. Back in the 80s when American Medical International (AMI) retained me to develop and preside over their managed care strategy for the California Region’s 19 hospitals I elected ‘Director of Health System Development‘ vs. Regional Director of Managed Care as a title, since I saw the strategic imperative of building and operating a hospital system as a partnership with payors, health plans and employer groups, in order to create value. Since ‘payors’ (as a group) were our customers to grow market share we needed ‘dots on the map‘ to effectively service their employees, members or insureds. That vision and strategy collapsed before taking root since quarterly earnings per share incentives of the hospital CEOs precluded the longer term strategy of acquisitions and divestitures consistent with a dots on the map game-plan could take hold.

Today, many years later health systems are ‘getting [payor/provider partnership] religion’ at least rhetorically, yet the prevailing provider/payor mindset remains ‘your revenues are my expenses‘ – not much progress! So don’t hold your breath on material delivery system reform other than the equivalent of re-arranging furniture on the deck of the Titanic while the ship sinks. Mergers, acquisitions, the ‘death of independent‘ medicine and rise of mega institutionally led health systems more or less ‘clinically integrated‘ notwithstanding.

A public plan option in areas lacking individual market competition

While POTUS stresses the individual market as the target ‘book of business‘ most at risk and dysfunctional absent effective reform the need for a ‘public option‘ across the board (group, self funded/ASO, fully insured, etc) is rather compelling, in my view. The recent failures of the ACA enabled ‘CO-OPs‘ notwithstanding (i.e., startup insurance companies or health plans rarely if ever achieve profitability in such a short timeline given the threshold need for ‘the law of large numbers‘ for actuarial credibility and the inherent volatility of the underwriting profit/loss cycle) do nothing to undermine the argument and need for a public option writ large.

I’ll go one step further and say ultimately our worshipping of ‘pluralism‘ in healthcare delivery and finance will ultimately give way to a ‘Medicare E‘ version as in Medicare for everyone. If public/private partnerships and business models could successfully manage clinical risk and meet the health and healthcare needs of their constituents we would have solved the problem in the 80s and 90s. Who remembers the ‘Harry and Louise‘ narrative battles (‘if the Government choses, we lose‘) on the Clinton Health Security Act aka ‘HillaryCare‘? So perhaps we’ll get there once we exhaust every other option to avoid ‘single payor‘?

Actions to reduce prescription drug costs

This seems to me the segment the easiest to resolve. Here I’d empower Medicare to negotiate direct and on behalf of it’s entire pool of beneficiaries, rather than dilute the market power via a tapestry of variably (under) performing ‘PDPs’. The political compromise that birthed Medicare Part D (the Prescription Drug Plan) materially undermines the market power of the ‘law of large numbers’ to extract best price from vendors, suppliers or providers of services. This make NO sense, and we’re paying the price! Here, politicos assured Medicare could NOT intervene with such market clout instead they routed the business upside to a pool private participants.

Add to this macro market efficiency undermining the challenges of orphan or rare disease market segments and the egregious and unaccountable pricing practices most recently popularized by ‘bad boy’ Martin Shkreli of Turning Pharma and more recently Valeant‘s abusive pricing admissions.

Yes, specialty pharma is at risk and a major source of heartburn for AHIP and it’s employer allies, yet PHRMA has a point. The drug discovery and commercialization process/pathways to market are unpredictable and fraught will high failure rates. Coupled with the long development runways and high costs, but absent a ‘ceiling’ or ‘pricing accountability framework’ pharma’s management credo will remain ‘whatever the market can bear‘ strategy lest ProPublica‘s (et al) investigational journalism (see their guide to investigating non-profit health systems) marshals sufficient public attention and shame forces reconsideration or retraction of Pharma’s lazy over-reliance on raising ‘P’ (Price) vs. the more complex market challenge of driving ‘U’ (units via share gains) becomes their duty and ultimate measure and basis of ‘success’.

So thanks BO! Despite all odds, you (and Max Baucus et al) pulled it off. And yes, it’s only a beginning and there’s lots of work to do. In the words of then Acting CMS Administrator, Don Berwick, who was wrongly blocked (by you know who) for permanent appointment [I paraphrase below]:

This will require no less than an all hands of deck, full court press to make happen [i.e., the triple aim].

 

Posted in Accountable Care, Affordable Care Act, health insurance reform

CMS Quality Measure Development Plan: A DRAFT

by Gregg A. Masters, MPH

An inspirational leader and ‘disruptive‘ politician taken down well ahead of his time once opined:

“Ask not what your country can do for you, ask what you can do for your country…” John Fitzgerald Kennedy

Fast forward some 55+ years and season such an invitation with the relentless drone of 24/7/365 faux patriotism, hate mongering, intolerance, and emotive ‘hell no‘ sound-bytes proferred by those who self righteously claim title to the ‘take back our country’ narrative and you may ask yourself how did we get from there (the Peace Corps) to here (carpet bomb em)?

Yet, in our unique strain of American democracy even through studies empirically demonstrate a consistent disconnect between what Americans want and what their representatives codify via policy with a capital ‘P’, the bottom line is look in the mirror ‘we are the government’.

CMS_quality_development_planWhether it’s the creation and passage of what merged into the ‘Affordable Care Act‘ (ACA) or how the ‘public’ participates in both the legislative process and its implementation via the rule making process initiated aka the ‘notice of proposed rule making’ (NPRM), we are presented with both the opportunity and as it turns out obligation to engage in and thus granularly shape (via a dialectical bottoms up vs. top down exchange) the ground rules which in turn govern our economy and the conduct of its constituent industry stakeholders.

In the quest to advance the efficacy of quality initiatives (garbage in garbage out) one recent effort is the DRAFT release of the ‘CMS Quality Measure Development Plan: Supporting the Transition to the Merit-based Incentive Payment System (MIPS) and Alternative Payment Models‘.  

As an industry we are process oriented sometimes to a fault. Moreover the ‘check the box’ or drop down nature of many of these measures lends itself to the argument that the state of the industry to actually measure, document and report healthcare quality is at best a crude representation of what is actually going on. Clearly there is more work to be done if this industry is to matter.

To help readers of this blog, the introduction of the executive summary is pasted below:

I. Executive Summary

Background

A transformation of the U.S. healthcare delivery system gained momentum in 2010 with the passage of the Patient Protection and Affordable Care Act (Affordable Care Act).1

The law established the Health Insurance Marketplace to extend consumer access to affordable care through private payers and provided strong incentives in publicly financed healthcare programs to connect provider payment to quality of care and efficiency. 

Building on the principles and foundation of the Affordable Care Act, the Administration announced a clear timeline for targeting 30 percent of Medicare payments tied to quality or value through alternative payment models by the end of 2016 and 50 percent by the end of 2018.
These are measurable goals to move the Medicare program and our healthcare system at large toward paying providers based on quality, rather than quantity, of care.2

The passage of the Medicare Access and Children’s Health Insurance Program (CHIP)
Reauthorization Act of 2015 (MACRA)3 supports the ongoing transformation of healthcare delivery by furthering the development of new Medicare payment and delivery models for physicians and other clinicians. Section 102 of MACRA4,i requires that the Secretary of Health and Human Services develop and post on the CMS.gov website “a draft plan for the development of quality measures” by January 1, 2016, for application under certain applicable provisions related to the new Medicare Merit-based Incentive Payment System (MIPS) and to certain Medicare alternative payment models (APMs).

The law provides both a mandate and an opportunity for the Centers for Medicare & Medicaid Services (CMS) to leverage quality measure development as a key driver to further the aims of the CMS Quality Strategy:

• Better Care,
• Smarter Spending, and
• Healthier People. 5

Measure Development Plan Purpose
The purpose of the CMS Quality Measure Development Plan (MDP) is to meet the requirements of the statute and serve as a strategic framework for the future of clinician quality measure development to support MIPS and APMs. CMS welcomes comments on this draft plan from the public, including healthcare providers, payers, consumers, and other stakeholders, through March 1, 2016.ii The final MDP, taking into account public comments on this draft plan, will be posted on the CMS.gov website by May 1, 2016, followed by updates annually or as otherwise appropriate.i

So here it is… have at it. Perhaps your input will in fact shape the substance and steward the glide-path of how the transformation from volume to value can be realized. Certainly it’s worth your consideration. Afterall, another attributed Kennedy quote with biblical DNA may apply here:

“We are not here to curse the darkness, but to light a candle that can guide us through the darkness to a safe and sure future. For the world is changing. The old era is ending. The old ways will not do.

The problems are not all solved and the battles are not all won and we stand today on the edge of a New Frontier – a frontier of unknown opportunities and perils, a frontier of unfulfilled hopes and threats.

It has been a long road to this crowded convention city. Now begins another long journey, taking me into your cities and towns and homes all over America.

Give me your help. Give me your hand, your voice and your vote.”

John Fitzgerald Kennedy

Posted in Accountable Care, Affordable Care Act, health insurance reform

12 Steps to the Triple Aim or Value Based Healthcare

by Gregg A. Masters, MPH

It has been challenging at times being in the ‘innovation conversation’ dating back to the 70s (who remembers ‘WIN’ [whip inflation now], PSROs or even HSAs (no, not the WIN \ Whip Inflation Nowprivatization funding mechanism, but the CON overlords) watching what get’s reported by industry press or online media as ‘innovation‘ or ‘bold new thinking‘ amidst a ‘cottage industry’s’ 3x trillion spend rate – including it’s culpable supply chain and many vendors (some may even say ‘pigs’) at the trough.

As indicia of the impending collapse of our aging house of cards healthcare delivery and financing industry (continued burnout rates driving physician exits to direct practice or concierge medicine, un-ending and nauseating opposition to the ACA, mega and no so mega hospital mergers, associated practice acquisitions and health plan consolidation, not to mention the codification of the cost shift charade via the lower metals designations of the ACA and including armies of dissatisfied patients suffering in a provider centric culture) continues to accumulate, it affirms what Esther Dyson once presciently characterized as the ‘calcified hairball‘ given it’s ‘resistance is futile’ [to change] nature.

Healthcare Inflation

Recent healthcare inflation moderation trends notwithstanding (see: ‘2014 National Health Spending; The Great Moderation Likely Not Over‘ by healthcare futurist Jeff Goldsmith) whether a function of ACA implementation in part of as a whole, the industry has essentially and collectively failed to deliver on the principles of the triple aim – which existed in spirit considerably before it’s labeling by the Institute for Healthcare Improvement (IHI). Providers continue to maximize their profits or ‘excess revenues over expenses’ for the ‘non-profit’ [aka tax exempt’ sector] often at the expense of community benefit.

Perhaps no other chart series in line item detail captures and evidences this slow burn of fail as the progressive and relentless growth of one man’s healthcare premiums in California. Take note of the persistent [cost] shift from the payer (health plan) to the patient or beneficiary.  If this is the best we can do via ‘wholesale purchasers’ (market savvy health plans) leveraging millions of members and ‘medical management’ and network contracting infrastructure, how can an army of independent and often clueless if not dis-empowered agents (patients, members sometimes at the point of service) do better?

[Editor’s note: one reason for an earlier post on the need for a ‘new IPA’ i.e., independent patient association]

This testimony was provided by Josh Libresco to the Department of Managed Care in California during their consideration of rate hikes by health plans.

Testimony1

Testimony2

 

 

 

Time for a New Manifesto?

With this history as both context and some may say ‘institutional memory’, I thought I might make sense to take heed of what’s become rather well known in the 12 step recovery community (from AA to Al-anon and many derivatives) which is to admit our ‘addiction’ to the arguably ‘easier softer path’, i.e., fee for services medicine.

Perhaps this can be a manifesto of sorts to embrace as we embark upon this journey for volume to value based healthcare?

Adapted from the 12 Steps of Alcoholics Anonymous

1. We admitted we were powerless over our addiction to fee for services medicine – that our healthcare delivery and financing model had become unmanageable.

2. We came to believe that power greater than ‘do more to earn more’ incentives (global capitation) could restore us to sanity and deliver on the triple aim.

3. Recognizing the finite nature of healthcare resources we made a decision to dedicate our will and our professional lives to the pursuit of the triple aim and the associated sustainable healthcare economy.

4. We made a searching and fearless moral inventory of our contributions to a seemingly ‘resistance is futile’ healthcare borg.

5. We admitted in our silo-ed huddles and to one another the aggregate nature of our collective wrongs.

6. We were entirely ready to have a calling to the ‘greater good’ transform a profit maximization – at any expense- operating culture.

7. We humbly asked our ‘higher power’ for faith in value based healthcare and for support to let go of the fee for services addiction.

8. We made a list of all patients, payers, or employers we had harmed, and became willing to make amends to them all.

9. We made direct amends to such stakeholders wherever possible, except when to do so would injure them, others or our ability to facilitate the journey from volume to value.

10. We continued to take personal inventory and when we felt the temptation to default to legacy inertia promptly admitted it.

11. We sought through mindfulness, meditation and collaboration to improve our vision and practice of value based healthcare, sharing openly for the knowledge, capacity and willingness to deliver this historically elusive goal.

12. Having had a professional if not spiritual awakening as the result of these steps, we tried to carry this message to one another and practice these principles in all our affairs.

 

Posted in Accountable Care, ACO, Affordable Care Act

Courtesy of our friends at AJMC: ‘5 Things to Know About Accountable Care Organizations’

by Laura Joszt

This week, The American Journal of Managed Care was in Palm Harbor, Florida, hosting the fall live meeting of its ACO and Emerging Healthcare Delivery Coalition, where stakeholders from across the healthcare industry discussed best practices. As the country moves from volume to value, accountable care organizations (ACOs) can play a key role during the transition from fee-for-service. However, ACOs not only remain largely a mystery to the average consumer, but also to providers who may be part of an organization participating in an ACO. Here’s what you need to know about ACOs:

1. ACOs are older than the Affordable Care Act. At least, the theory of ACOs is older. While the inclusion of ACOs in the health reform law has accelerated adoption of the delivery model, the term “accountable care organization” was first coined in 2006 by Elliott Fisher, MD, director of the Dartmouth Institute for Health Policy and Clinical Practice.

2. There are multiple models established by CMS. There are a number of different ACO models being offered by CMS. The most common model is the Medicare Shared Savings Program (MSSP), which has 404 ACOs and is accepting more. The Pioneer ACO Model is for healthcare organizations and providers already experienced in coordinating care, and while it started with 32 ACOs, just 19 remain today. The Advance Payment ACO Model is designed for physician-based and rural providers. And the newest model is the Next Generation ACO, which takes on greater performance risk with potentially greater rewards. The Next Generation ACO model is….

Complete article by Laura Joszt posted here.

Posted in Accountable Care, ACO, Affordable Care Act

ACOs: The Results So Far (It Depends)

by Gregg A. Masters, MPH

It might have been prescient but minimally it was perfect timing. While Fred Goldstein, President of Accountable Health, LLC, and me were prepping for our session to re-cap on PopHealth Week (@PopHealthWeek) some of the insights from our deep dive series into Population Health and ACOs, reporting insights from embedded executives at physician led, hospital sponsored and health plan enabled ACOs respectively, CMS yesterday (August 25th) posted the results from their participants in the MSSP and Pioneer Programs.

The Pioneer results are displayed below (for a description of the Pioneer program click here):CMS_ACO_Results_Pioneers
Again, while we’re still very early in this game, one bit of ‘cognitive dissonance’ that I experienced is worthy of note and further exploration.

That being the Heritage ACO a physician led enterprise fielded by managed care industry veteran and disruptive innovator Richard Merkin, MD, et al (including my former American Medical International colleague Mark Wagar, President Heritage Medical Systems and most recently CEO Empire Blue Cross and Blue Shield) untethered in any way from an institutional portfolio of healthcare infrastructure (i.e., hospitals) booked zero savings for distribution while hospital tethered and a card carrying member of the Association of American Medical Colleges (@AAMCtoday) (as the principal teaching hospital for Einstein College of MedicineMontefiore ACO booked massive (relative to ‘aligned beneficiares’) savings.

One must ponder the question and ask how can this be so?

It’s common knowledge that ACOs ‘untethered’ from (heads in beds) legacy hospital interests are more nimble and therefore better positioned to manage the volume-to-value transition. Further, when you add into the mix the history of successful risk assumption across a distributed network of ‘aware’ coordinated care practices (both IPA and medical group) you have a material competitive advantage.

So perhaps the ‘devil is in the details‘ as it often is, and the answers are to be found in the formulaic world of risk adjusters, corridors, baselines and severity of illness calculations. We hope top hear direct from Heritage ACO as this author has made that request a number of times previously.

Another interesting result that stands out as it arguably tethers to the presumptively competitively disadvantaged ‘health plan enabled‘ camp of ACOs is the incredible savings generated by the Banner Health Network (a Pioneer ACO), which if memory serves me well is a co-creation of Banner and Aetna via their ‘payor agnostic’ Healthagen subsidiary.

For complete details see the CMS release ‘Medicare ACOs Continue to Improve Quality of Care, Generate Shared Savings‘ and ‘Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014‘.

Meanwhile for a bit of reading the tea leaves color via Beckers Hospital Review see CMS releases 2014 Medicare ACO quality, financial results: 10 things to know):

1. Ninety-seven ACOs qualified to share in savings by meeting quality and cost benchmarks. Together, they earned shared savings payments of more than $422 million.

2. Fifteen of the 20 participating Pioneer ACOs generated a total of $120 million in savings in 2014, their third performance year. This is up 24 percent from the second performance year when they generated $96 million in savings. Of those that generated savings, 11 earned shared savings payments of $82 million.

3. Five Pioneer ACOs generated losses and three owed CMS shared losses of $9 million.

4. Pioneer ACOs increased their average quality scores to 87.2 percent in performance year three from 85.2 percent in performance year 2. They improved an average of 3.6 percent compared to performance year two on 28 of the 33 quality measures and showed significant improvement in medication reconciliation, clinical depression screening and follow-ups, and EHR incentive payment qualification…

Read complete article here.

Yes we do live in interesting times. And ideological prism not-withstanding there is no way this Genie (ACOs et al, and whatever formulaic derivatives may be forthcoming) gets put back in the bottle – the best efforts of Governor Scott Walker’s ‘bold’ The Day One Patient Freedom Plan (more likevaporware‘) effort to repeal and replace the Affordable Care Act.

This train has left the station. Time to deal with it?

Posted in Accountable Care, ACO, Affordable Care Act

Is Evolent Health the ‘New, New’ Healtheon?

By Gregg A. Masters, MPH

There are parallels worth considering!Evolent Health S1 Filing

But first for those who’s event horizons’ don’t reach back to the Healtheon era (mid to late 1990’s) a little history may help with the construction of this narrative. Perhaps the dots are optimally connected by the talented and best selling author Michael Lewis in his book ‘The New, New Thing‘ (a reader’s digest version of Jim Clark’s impact is here) wherein Lewis profiles Silicon Valley Healtheonculture and the ‘pre-mature’ rise of an ambitious company who intended to ‘fix healthcare’ via technology – Healtheon (the vestiges of which exist today as WebMD and Emdeon). And for those of you history buffs, who want a deeper dive into the story, see ‘What The Heck Is Healtheon?

Dots Connected?

EvolentHealthBoth Evolent Health and Healtheon are (or were) ‘transformation plays’ with an ‘on the come‘ revenue upside tied to the expected (almost inevitable) market restructuring from fee-for-services medicine to an expanding book of ‘alternative payment arrangements’, i.e., capitated or fixed price healthcare (‘generation 1.0’ of bundled payment via case rates, DRGs, global or service tiered per diems, etc., as the concept of ‘valued based’ care had yet to penetrate popular healthcare lexicon).

In sum, the rather over-simplified claim for Healtheon’s upside to Wall Street is paraphrased as follows:

‘[Healtheon] would use the power of computing and the Internet to revolutionize the health-care industry, stripping away its inefficiencies and inequities and streamlining it for the new millennium.’

Here’s the company description lifted from Healtheon’s registration statement in 1995:

Healtheon Company description

Fast forward some 19+/- years later, according to Evolent Health’s S1 filing here’s their story:

We are a market leader and a pioneer in the new era of healthcare delivery and payment, in which leading health systems and physician organizations, which we refer to as providers, are taking on increasing clinical and financial responsibility for the populations they serve. Our purpose-built platform, powered by our technology, proprietary processes and integrated services, enables providers to migrate their economic orientation from fee-for-service, or FFS, reimbursement to payment models that reward high-quality and cost-effective care, or value-based payment models. By partnering with providers to accelerate their path to value-based care, we enable our provider partners to expand their market opportunity, diversify their revenue streams, grow market share and improve the quality of the care they provide.

We consider value-based care to be the necessary convergence of healthcare payment and delivery. We believe the pace of this convergence is accelerating, driven by price pressure in traditional FFS healthcare, a regulatory environment that is incentivizing value-based care models, a rapid expansion of retail insurance driven by the emergence of the health insurance exchanges and innovation in data and technology. We believe providers are positioned to lead this transition to value-based care because of their control over large portions of healthcare delivery costs, their primary position with consumers and their strong local brand.

Today, increasing numbers of providers are adopting value-based strategies, including contracting for capitated arrangements with existing insurance companies, governmental payers or large self-funded employers and managing their own captive health plans. Through value-based care, providers are in the early stages of transforming their role in healthcare as they attempt to defend their existing position and capture a greater portion of the more than $2 trillion in annual health insurance expenditures. While approximately 10% of healthcare payments are paid through value-based care programs today, including through models created by systems like UPMC, Kaiser Permanente and Intermountain Healthcare, it is estimated that this number will grow to over 50% by 2020. There were 120 provider-owned health plans as of 2010 and this number continues to grow. The number of ACOs constructed to manage capitated or value-based arrangements with existing insurance companies or government payers grew to 742 by the end of 2014.

We believe the transformation of the provider business model will require a set of core capabilities, including the ability to aggregate and understand disparate clinical and financial data, standardize and integrate technology into care processes, manage population health and build a financial and administrative infrastructure that capitalizes on the clinical and financial value it delivers. We provide an end-to-end, built-for-purpose, technology-enabled services platform for providers to transition their organization and business model to succeed in value-based payment models. The core elements of our platform include:

• Identifi®, our technology platform;
• an integrated technology, proprietary process and clinical services model;
• long-term, embedded and aligned partnerships with health systems;

So the mission’s of both were similar if not identical in terms of the re-structuring upside. They vision a disruptive technology play layering efficiencies into (if not picking off the low hanging fruit) of a change resistant confederation of legacy healthcare interests inclined towards internecine warfare (dis-organized medicine writ large, but primary care v. specialty care in particular and the grand canyon divide between payors and providers to get beyond the simple calculus of ‘your revenues are my expenses’).

What’s different today?

Times have indeed changed, AND the stakes have risen considerably. From a macro-economic perspective the ‘cost shifting’ shell game is officially over as today it’s about ‘total costs of care’ (the triple aim and the new focus at the level of population health) and not shifting liabilities from ‘my P&L to yours’.

Yet, the fundamental problem of a healthcare non-system incentivized by a ‘do more, earn more’ payment model continues to consume a dis-proportionate share of the national economy despite both public and private sector efforts to restrain its appetite. Yet, I see at least four underlying market considerations belying this otherwise ‘deja vu’ insight.

  1. The presumptive value prop of technology (and its enabling infrastructure) is more prevalent, powerful and affordable today than it was in the 90s.
  2. The share of GDP the healthcare spend accounts for in the 90s hovered in the 9-10% range, whereas today that share is closer to 18% where nearly 1 in 5 dollars spent in the U.S is parked inside a seemingly insatiable healthcare appetite.
  3. The healthcare reform or health system re-design imperative, once contained behind the closed doors of health systems, risk bearing physician entities, corporate board rooms of purchasers or their health plan proxies and even the halls of both State and Federal Government is now ‘out of the barn’.
  4. Anticipating the trend growth (i.e., the impending bankruptcy of the U.S Treasury) in Medicare and Medicaid spending CMS has upped the ante in the value based payment glidepath by targeting 50% of their spend to be channeled via value based payments year end 2018; see: ‘Better Care. Smarter Spending. Healthier People: Paying Providers for Value, Not Volume‘.

This change if not re-invention mandate is a national if not global conversation and quest. In other words, the healthcare spend will sink not just companies, but countries if we do not find a satisfactory path to a sustainable healthcare ecosystem.

So maybe this time things are different (those above and perhaps many others) to make this reach and business model both practical and scalable for at times ‘impatient’ investors.

So ‘Ladies and Gentlemen, start you engines’. And by all means do buckle in, this ride will no doubt be a fun one!

Posted in Accountable Care, ACO, Affordable Care Act

The ‘NexGen ACO’: CMS Speaks [again]

By Gregg A. Masters, MPH

At one level you have perhaps the most risk savvy and successful operators in the Medicare Advantage space aka ‘CAPG‘ (the California Association of Physician Groups) closely tethered to it’s less geographically constrained though California domiciled partner IHA as in ‘Integrated Healthcare Association’ explicitly advocating for the preservation of the Medicare Advantage program (MA) aka ‘Part C‘ even though the pre-ACA historical cost to the Medicare Trust fund ‘overfunded’ the program by 114% (estimated in 2014 at 106%) vs. historical FFS program payouts. CAPG’s value prop statement is in part reflected below:

Medicare Advantage is a critical element in the nation’s movement from volume to value in healthcare. With its emphasis on risk-based contracting and clinically integrated care, Medicare Advantage is paving the way for the advancement of coordinated care in every other healthcare program. Medicare Advantage has motivated the deployment of electronic medical records, the expansion of robust quality measurement and reporting, and the movement to team based care, all of which have resulted in better care for seniors. In addition to improving care and quality of life for seniors, this risk-based coordinated care model has the ability to rein in Medicare spending, unlike fee-for-service and its volume-driven incentives.

ACO Next Generation Model

Whereas, under the new if not ‘Deputy’ leadership since the departure of Marilyn Tavenner, former CMS Administrator, Patrick Conway, MD, recently announced the launch of a ‘new and improved’ ACO tagged the next generation ACO – which at some level may be virtually indistinguishable from it’s more mature MA program.

So the question remains, where is this program going and what if any difference will there be between Medicare Advantage and ‘Next Generation of ACOs?’

Quoting from CMS, the initiative details are:

The Next Generation ACO Model is an initiative for ACOs that are experienced in coordinating care for populations of patients. It will allow these provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and Shared Savings Program (MSSP). The goal of the Model is to test whether strong financial incentives for ACOs, coupled with tools to support better patient engagement and care management, can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries.

Included in the Next Generation ACO Model are strong patient protections to ensure that patients have access to and receive high-quality care. Like other Medicare ACO initiatives, this Model will be evaluated on its ability to deliver better care for individuals, better health for populations, and lower growth in expenditures. This is in accordance with the Department of Health and Human Services’ “Better, Smarter, Healthier” approach to improving our nation’s health care and setting clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers based on the quality rather than the quantity of care they provide to patients. In addition, CMS will publicly report the performance of the Next Generation Pioneer ACOs on quality metrics, including patient experience ratings, on its website.

CMS expects approximately 15 to 20 ACOs to participate in the Next Generation ACO Model with representation from a variety of provider organization types and geographic regions. The Model will consist of three initial performance years and two optional one-year extensions. Specific eligibility criteria are outlined in the Request for Applications (PDF).

Clearly this may be an inflection point, or more aptly stated, a convergence of what has been a parallel track (excluding the Pioneer ACO program) between ACOs in the Medicare Shared Savings Program (aka ‘HMO-lite’) and their more risk savvy competitors in the MA space.

For a 2014 analysis of the costs of the Medicare Advantage vs. traditional Medicare program see: ‘Medicare Advantage Program in 2014‘.

As tweeted to me earlier this week by James Hansen, VP of the ACO and MA operator company Lumeris:

‘Next generation ACO, finally a starter or more kissing your cousin?’

No doubt CMS is being responsive to provider (contractor) market input from both the Pioneer program exits as well as the overwhelming election by ACOs to NOT assume downside risk under the current terms of the MSSP.

Like it or not, [ACO/HMO] convergence is coming. Clinical and financial integration including partial or full risk assumption are the business models that will succeed in the pursuit of sustainable healthcare financing and delivery business models. I view this latest CMS announcement as confirmation of this macro directional trend.