Posted in Accountable Care, ACO, Affordable Care Act

Meet the Next Generation ACO Cohort

by Gregg A. Masters, MPH

As announced in ‘Next Generation ACOs: A Deep Dive Serieswe’re launching a multimedia (blog, internet radio, social media and community tweetchats) programming schedule that will focus on the accountable care industry with specific deep dives into select participants in the cohort admitted by the Center for Medicare and Medicaid Innovation.

Next Generation ACO Model

Written versions of those interviews will post on ACO Watch, with audio versions featured on This Week in Accountable Care’ on the BlogTalk Radio and Affiliate Networks.

If you are interested in the Next Generation ACO Model, see: The Next Generation ACO: Accelerating the Transformation from Volume to Value and the CMS Webinar: Next Generation ACO Model – Overview and LOI Information with key webinar dates and application deadlines.

For those interested in learning more about the rather ‘eclectic’ (academic, physician led, hospital system sponsored and venture backed) class of 44 ACOs in the NextGen Cohort, I’ve listed them below: 

We intend to host monthly moderated ‘tweetchats’ to engage the community of stakeholders via #ACOchat and welcome your input on the preference of the participating ACOs you’d like us to profile.

Please post in the comments section.

Cheers!

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*Editor’s Note: This post including This Week in Accountable Care broadcasts, periodic tweetchats via #ACOchat and blog posts in this series) are sponsored by National ACO, a Next Generation ACO. For more information on National ACO, click here.

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

Next Generation ACOs: A Deep Dive Series

by Gregg A. Masters, MPH*

Since ACOs arrived in 2012 courtesy of the Section 3022: Medicare shared savings program, under Title III, Subtitle A, Part 3 of the Affordable Care Act (ACA) as the ‘new, new thing’ layered into a complex healthcare ecosystem peppered with more or less successful public/private efforts to restrain healthcare inflation, promote greater patient/member access, provide seamless coordinated care at lower per capita costs with better documented quality (the triple aim), ACOs have booked modest, variable but increasingly scalable impact via sponsored hosts from institutional health systems to physician driven enterprises.

A Brief Timeline

                                The evolution of manage care initiatives

In 1973 President Richard Nixon signed into law the ‘HMO Act‘ officially launching ‘managed care‘ principally via closed ‘staff‘ and ‘group‘ model HMOs catering to niche (vs. ‘mainstream’) segments of key industry stakeholders, i.e., members (patients), employers, participating physicians and hospitals.

In the early to mid 80’s we witnessed the accelerated migration from narrow market penetration to mainstream medicine validation of the HMO model via the emergence of network models typically enabled by then emerging ‘Independent Practice Associations’ (IPAs).

Most IPAs emerged as a loose confederation of participating physicians as many physicians engaged out of a sense of curiosity or defensive hedging to not lose patients. First generation IPA’s featured at best tepid economic bonds, thus alignment of member physicians with the entity ‘leadership‘ (i.e., the Management Services Organization) goals were often ‘incidental considerations’ to many participating physicians. There just wasn’t enough ‘skin in the game‘ or economic integration, i.e., losing a withhold against a fee-for-service schedule just didn’t make that much of a difference from a total compensation point of view.

In the mid 80s principally in California Preferred Provider Organizations (PPOs) emerged and launched the era of discounted fee-for-services contracting for hospital, physician and ancillary services. PPOs were an HMO-lite version as members/beneficiaries voted with their feet within the network based on ‘in network’ benefit plan incentives vs. the closed loop (gatekeeper) HMO model.

In the 90s as mainstream initiatives continued to evolve and mature we witnessed the emergence of Physician/Hospital Organizations (PHOs) more often than not a joint venture between a host hospital (or parent health system) and a member physician organization (typically one or more IPAs or multi-specialty medical groups). PHOs were contracting vehicles and typically supported by an affiliate or owned MSO. Few PHOs entered into full risk arrangements with payors.

For prior comment and context on the evolving market, check out ‘Hey, Remember IPAs, PPOs and TPAs?’

Enter the ACO

While an ‘alphabet soup‘ of healthcare cost containment and quality improvement acronyms enshrined themselves into US healthcare delivery and financing lexicon (HMO, IPA, PPO, PHO, MSO, EPO, DPA, OWAs [other weird arrangements]), healthcare consumption of GDP continued it’s relentless upward growth – though somewhat moderated post passage of ACA.

In 2012 27 ACOs officially launched under the terms and provisions of the Medicare Shared Savings Program (MSSP) via a cohort sourced from 18 states serving an estimated 375,000 beneficiaries. Approximately half of the participating ACOs were physician-led, per the Center for Medicare and Medicaid Innovation (CMMI) – the administering agency.

Amidst ‘mixed results‘ considerable provider input to CMMI via open door forums and NPRM comments the ensuing years witnessed many tweaks to the rules associated with both the MSSP and Pioneer programs. In January of 2015 then Secretary of Health and Human Services Sylvia Burwell set goals for migration of payments from volume to valued based arrangements, see: ‘HHS Sets Specific Targets and Timelines for Alternative Payment Models and Value-Based Payment‘:

By the end of 2016, HHS plans to make 30 percent of FFS payments through APMs, such as accountable care organizations (ACOs) and bundled payments, and tie 85 percent of all FFS payments to quality or value. By the end of 2018, HHS intends to pay 50 percent of FFS payments through APMs, and tie 90 percent of FFS payments to quality or value. 

This represents the first time in my 30+ years in healthcare delivery and financing innovation space that the Federal government has explicitly benchmarked industry migration away from its prevailing fee for services DNA.

While many pronounced ACOs as ‘DOA’ (dead on arrival) for many reasons, truth be told they’ve found their way into the managed competition ecosystem and are not going away anytime soon. In fact as is the case with most innovation, the ACO formula has been tweaked both in terms of its Government DNA (MSSP, Pioneer models, etc), and it’s private pay or commercial derivatives.

Meet the ‘Next Generation ACO Model’

The de facto amalgam of much of the lessons learned and serial tweaks imposed since the first class of ACOs launched in 2012 can be found in the Next Generation ACO Model, see: ‘The Next Generation ACO: Accelerating the Transformation from Volume to Value‘.

Per CMS, the model is defined as:

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.

A thorough application vetting process by CMS will assure participating ACOs admitted to the ‘NextGen’ cohort will present with the track record and capabilities to assume and manage the risk inherent in the model. Rather than bolt a new model on a legacy fee-for-services platform, CMS is fueling the necessary innovation to achieve the triple aim via a network of risk savvy ACOs.

Next Generations ACOs will deploy three (3) powerful ‘benefit enhancement‘ tools as they re-engineer clinical workflows and the prudent utilization of acute and sub-acute healthcare resources. This includes:

Featuring the ‘NextGen’ ACO Cohort

First up as we cycle through and profile best in class Next Generation ACOs is National ACO, led by industry pioneers and co-founders Andre Berger, MD, CEO and Alex Foxman, MD, FACP, President and Chief Medical Officer who serve as co-hosts of this series.

The series launches May 23, 2017 from 5PM – 5:30 PM Pacific/8PM – 8:30 PM Eastern. You can listen both live or on demand via This Week in Accountable Care.

We’ll discuss the model, their backgrounds and history in managed care and why they were drawn to form National ACO. We’ll close with comments from Alex Fair, CEO of the equity crowd funding platform Medstartr who will detail the recent listing of National ACO.

Join us!

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*Editor’s Note: This post including This Week in Accountable Care broadcasts, periodic tweetchats via #ACOchat and blog posts in this series) are sponsored by National ACO, a Next Generation ACO. For more information on National ACO, click here.

 

Posted in Accountable Care, health innovation challenges, health insurance reform, MSSP, Triple Aim

The Next Generation ACO: Accelerating the Transformation from Volume to Value

In January 2015, then Secretary of Health and Human Services (HHS), Sylvia Burwell outlined ‘Federal policy‘ and for the first time put a measurable stake in the ground to scale the pivot from fee-for-service to value based healthcare with concrete milestones and an associated timeline. The policy outlined seemingly scalable goals via linking 30% of traditional fee-for-service Medicare payments to quality or value through ‘alternative payment models‘ (APMs) including Patient Centered Medical Homes (PCMHs), ACOs or ‘bundled payment arrangements‘ (BPHCI) year end 2016, scaled up to 50% of payments year end 2018. For details see: ‘HHS Sets Specific Targets and Timelines for Alternative Payment Models and Value-Based Payment‘.

Now fast forward to 2017. First introduced in 2016 we’re approaching the start date of a ‘new and improved‘ ACO tagged the ‘next generation ACO model‘ now embracing an ‘all in population based payment‘ (AIPBP) option that ZERO’s out fee-for-service payments.

Between ACO operating results, significant provider community feedback via several Notice of Proposed Regulations‘ (NPRMs) and what some may say is simple commonsense, this latest iteration of the Next Generation ACO model is looking more and more like their predecessor risk bearing operators in the 80s and 90s.

As CMS notes:

Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program (Shared Savings Program), the Next Generation ACO Model offers a new opportunity in accountable care—one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.

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.

The Bottom Line

We (i.e., ACO industry operators, associated management companies’ including venture financiers, CMS and supplier stakeholders) are tweaking the ACO formula via a range of models that materially engage the provider AND payor communities as co-creators of a sustainable healthcare ecosystem embracing value and outcomes as the ‘dependent variable’.

With the uncertainty surrounding the future of the ACA and it’s likely ‘Trumpcare’ or ‘RyanCare’ replacement options, some argue ACOs are in an unspoken ‘safe harbor’ of sorts. Yet, much detail remains to be added before that picture is functionally revealed. Here at ACO Watch we’re proceeding on the assumption that ACOs or the accountable care industry collectively, are not likely to disappear anytime soon. So we’re posting some resources below:

For a deep dive into the AIPBP option CMS is hosting an Open Door Forum: Next Generation ACO Model – Overview of Population-Based Payments on Tuesday, April 11, 2017 from 4:00PM – 5:00 P.M. EDT.

For those pondering their 2018 ACO participation options, CMS‘s Center for Medicare and Medicaid Innovation (CMMI) issued an RFA (request for applications) and activated the application portal here.  

Finally to complete the picture CMS is hosting a series of open forums to provide an overview into the Next Generation ACO model offering information on the required letter of intent and on-boarding process in general on these dates as follows:

  • March 14 from 4 – 5 pm ET — Application Overview and Participating Provider Lists
  • March 28 from 3 – 4 pm ET — Benefit Enhancements Overview
  • April 11 from 4 – 5 pm ET — Overview of Population-Based Payments & All-Inclusive Population-Based Payments;and
  • April 15 — Deep Dive: Completing Your Next Generation ACO Model Participant List

For the complete list of available CMS ACO resources, click here.

And finally for those who desire an overview of the ACO theater, check out the dated but informative: ‘Accountable Care Organization (ACO) 101: A Brief Course by Neil Kirschner, Ph.D. Director, Regulatory and Insurer Affairs, American College of Physicians (ACP).

 

 

 

Posted in Accountable Care, ACO, Affordable Care Act, TrumpCare

Webinar: Next Generation ACO Model – Overview and LOI Information

By Gregg A. Masters, MPH

Webinar: Next Generation ACO Model - Overview and LOI Information Select link to open options forShare
Click to register!

Today marks the end to the eight year reign of President Barack Obama and the birth of the Trump Administration tenure.  Yet, so much in the health policy and reform domain remains unclear and on the come.

Since the passage of the Affordable Care Act (ACA) in March of 2010 the implementation of the delivery system side of the reform to restrain if not reduce healthcare spending has been vested primarily in a range of variably sophisticated ACOs and other participants in a tapestry of value based healthcare arrangements from bundled payments to patient centered medical homes and even the more risk savvy cohort of Medicare Advantage operators.

What is clear is change is on the horizon; yet just what the nature of that change will look like will probably reveal itself over the next several months and perhaps even years. For our discussion of what appears to be the emerging indicia of a ‘TrumpCare‘ chassis, Health Innovation Media principals share insights via: ‘On @PopHealthWeek: #Trumpcare What We Know @fsgoldstein @efuturist @2healthguru‘ and ‘A #TrumpCare Roundtable with @efuturist, @fsgoldstein and @2healthguru‘.

screen-shot-2017-01-20-at-1-52-24-pmClearly the era of ‘accountable care‘ and the provider organizations designed to explore and implement their local market vision of an entity that delivers accountability is not likely to come to an end as President Trump occupies the White House. In fact, though I have been deeply skeptical of the rather hollow ‘repeal and replace‘ mantra absent a material Republican replacement option, I am somewhat encouraged by the tempered optimism proffered by Ezekiel Emanuel, M.D., Ph.D., Former Chief Health Policy Advisor to the Obama Administration, to an informed audience at the Commonwealth Club of San Francisco earlier this month.

Meanwhile, I doubt the Trump Administration and his HHS and CMS appointees (Rep Tom Price and Seema Verma, respectively) once confirmed will advocate for an era of ‘unaccountable care‘ with a return to unbridled to fee-for-services medicine. Thus, I bank on the continued evolution and deployment of ACOs as progressive risk bearing entities and continuing clinical integration plays. However, we shall see!

We do indeed live in interesting times!

 

 

 

Posted in Accountable Care, ACO, Affordable Care Act, Triple Aim

FLAACOs 3rd Annual Fall Conference: A Retrospective

by Gregg A. Masters, MPH

This is the second year I’ve ventured to Orlando to cover the Florida Associations of ACOs (@FLAACOs) Annual gathering.

According to the website, the FLAACOs mission is:

…to provide members a vehicle to collaborate, ensuring that each healthcare organization grows and thrives. The Florida-based association aligns goals to shift physician incentives and improve health-care outcomes across the state.

FLAACOs provides a voice for the accountable care marketplace and its participating providers, payers, and individual physicians.

The goal of FLAACOs is to provide advocacy and support to all Florida accountable care organizations so that together they can become the health-care models of the future.

To many most of the managed care ‘smarts’ and thus ‘risk savvy sophistication’ typically resides in and ‘metastasizes‘ from California to other parts of the U.S. One example being the re-branding and re-positioning for growth ofCAPG formerly known as the California Association of Physician Groups who represents, advocates for and up-levels clinical risk management assumption core competencies for medical groups and ACOs nationwide. Yet, Florida is a Medicare Shared Savings Program (MSSP) hotbed market and judging from the results returned by Florida ACOs there’s a fair amount of savvy infrastructure in the ‘Sunshine state’ particularly as represented by the member ACOs participating in FLAACOs.

For more information on the conference you might review the agenda, faculty and sponsors.

For those who missed this informative conference, some of the highlights include:

flaacos_fields_keynoteA keynote presentation by Robert W. Fields, MD, Medical Director, Mission Health Partners ACO, titled ‘Key Drivers For Population Health: Redefining the Art of Medicine ‘. Our interview with Dr. Fields courtesy of Fred Goldstein is available here.

flaacos_lerer_keynoteFor the second year in a row René Lerer, MD,  President, GuideWell the parent company of a number of subsidiary companies’ including Florida Blue provided a comprehensive update detailing the dynamics of a changing ‘Payer Landscape’ given the instability of many if not all of the provisions of the ACA ‘at risk‘ under the impending Trump Administration. Prior equally informative interviews with Dr. Lerer are available here and here.

A timely panel presentation on ‘How Reimbursement Will Be Tied to Value (MACRA, MIPS, AAPM)‘ was facilitated by Kelly Conroy, Senior Advisor, Aledade, with panelists Dan Duncanson, CEO, Southeastern Integrated Medical, and Ethan Chernin, COO, BayCare Physician Partners.

Finally an extremely informative and insightful interview was offered by Mike Barrett, Sr. VP, Southeast Universal American/Collaborative Health Systems here.

An overview of FLAACOs the organization and its goals including a recap of the conference was offered by Nicole Bradberry, CEO via Fred Goldstein here.

The complete schedule and available presentation decks are here.

Posted in Accountable Care, ACO, Affordable Care Act

ACO Winners and Losers: A Quick Take

by Ashish K. Jha

Last week, CMS sent out press releases touting over $1 billion in savings from Accountable Care Organizations.

Here’s the tweet from Andy Slavitt, the acting Administrator of CMS:

NEW ACO RESULTS: physicians are changing care, w better results for patients & are saving money. Over $1B. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Press-releases/2016-Press-releases-items/2016-08-25.html 

The link in the tweet is to a press release.  The link in the press release citing more details is to another press release.  There’s little in the way of analysis or data about how ACOs did in 2015.  So I decided to do a quick examination of how ACOs are doing and share the results below.

Basic Background on ACOs:

Simply put, an ACO is a group of providers that is responsible for the costs of caring for a population while hitting some basic quality metrics.  This model is meant to save money by better coordinating care. As I’ve written before, I’m a pretty big fan of the idea – I think it sets up the right incentives and if an organization does a good job, they should be able to save money for Medicare and get some of those savings back themselves.

ACOs come in two main flavors:  Pioneers and Medicare Shared Savings Program (MSSP).  Pioneers were a small group of relatively large organizations that embarked on the ACO pathway early (as the name implies).  The Pioneer program started with 32 organizations and only 12 remained in 2015.  It remains a relatively small part of the ACO effort and for the purposes of this discussion, I won’t focus on it further.  The other flavor is MSSP.  As of 2016, the program has more than 400 organizations participating and as opposed to Pioneers, has been growing by leaps and bounds.  It’s the dominant ACO program – and it too comes in many sub-flavors, some of which I will touch on briefly below.

A couple more quick facts:  MSSP essentially started in 2012 so for those ACOs that have been there from the beginning, we now have 4 years of results.  Each year, the program has added more organizations (while losing a small number).  In 2015, for instance, they added an additional 89 organizations.

So last week, when CMS announced having saved more than $1B from MSSPs, it appeared to be a big deal.  After struggling to find the underlying data, Aneesh Chopra (former Chief Technology Officer for the US government) tweeted the link to me:

@ashishkjha CMS always releases these results. They are on the website!

You can download the excel file and analyze the data on your own.  I did some very simple stuff.  It’s largely consistent with the CMS press release, but as you might imagine, the press release cherry picked the findings – not a big surprise given that it’s CMS’s goal to paint the best possible picture of how ACOs are doing.

While there are dozens of interesting questions about the latest ACO results, here are 5 quick questions that I thought were worth answering:

  1. How many organizations saved money and how many organizations spent more than expected?
  2. How much money did the winners (those that saved money) actually save and how much money did the losers (those that lost money) actually lose?
  3. How much of the difference between winners and losers was due to differences in actual spending versus differences in benchmarks (the targets that CMS has set for the organization)?
  4. Given that we have to give out bonus payments to those that saved money, how did CMS (and by extension, American taxpayers) do? All in, did we come out ahead by having the ACO program in 2015 – and if yes, by how much?
  5. Are ACOs that have been in the program longer doing better? This is particularly important if you believe (as Andy Slavitt has tweeted) that it takes a while to make the changes necessary to lower spending.

There are a ton of other interesting questions about ACOs that I will explore in a future blog, including looking at issues around quality of care.  Right now, as a quick look, I just focused on those 5 questions.

Data and Approach:

I downloaded the dataset from the following CMS website: https://data.cms.gov/widgets/x8va-z7cu and ran some pretty basic frequencies.

Here are data for the 392 ACOs for whom CMS reported results:

Question 1:  How many ACOs came in under (or over) target?

Question 2:  How much did the winners save – and how much did the losers lose?

Table 1.

Number (%)

Number of Beneficiaries

Total Savings (Losses)

Winners

203 (51.8%)

3,572,193

$1,568,222,249

Losers

189 (48.2%)

3,698,040

-$1,138,967,553

Total

392 (100%)

7,270,233

$429,254,696

I define winners as those organizations that spent less than their benchmark.  Losers were organizations that spent more than their benchmarks.

Take away – about half the organizations lost money and about half the organizations made money.  If you are a pessimist, you’d say, this is what we’d expect; by random chance alone, if the ACOs did nothing, you’d expect half to make money and half to lose money.  However, if you are an optimist, you might argue that 51.8% is more than 48.2% and it looks like the tilt is towards more organizations saving money and the winners saved more money than the losers lost.

Next, we go to benchmarks (or targets) versus actual performance.  Reminder that benchmarks were set based on historical spending patterns – though CMS will now include regional spending as part of their formula in the future.

Question 3:  Did the winners spend less than the losers – or did they just have higher benchmarks to compare themselves against?

Table 2.

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings (Losses)

Winners (n=203)

$10,580

$10,140

$439

Losers (n=189)

$9,601

$9,909

-$308

Total (n=392)

$10,082

$10,023

$59

A few thoughts on table 2.  First, the winners actually spent more money, per capita, then the losers.  They also had much higher benchmarks – maybe because they had sicker patients – or maybe because they’ve historically been high spenders.  Either way, it appears that the benchmark matters a lot when it comes to saving money or losing money.

Next, we tackle the question from the perspective of the U.S. taxpayer.  Did CMS come out ahead or behind?  Well – that should be an easy question – the program seemed to net savings.  However, remember that CMS had to share some of those savings back with the provider organizations.  And because almost every organization is in a 1-sided risk sharing program (i.e. they don’t share losses, just the gains), CMS pays out when organizations save money – but doesn’t get money back when organizations lose money.  So to be fair, from the taxpayer perspective, we have to look at the cost of the program including the checks CMS wrote to ACOs to figure out what happened.  Here’s that table:

Table 3 (these numbers are rounded).

 

Total Benchmarks

Total Actual Spending

Savings to CMS

Paid out in Shared Savings to ACOs

Net impact to CMS

Total (n=392)

$73,298 m

$72,868 m

$429 m

$645 m

-$116 m

According to this calculation, CMS actually lost $116 million in 2015.  This, of course, doesn’t take into account the cost of running the program.  Because most of the MSSP participants are in a one-sided track, CMS has to pay back some of the savings – but never shares in the losses it suffers when ACOs over-spend.  This is a bad deal for CMS – and as long as programs stay 1-sided, barring dramatic improvements in how much ACOs save — CMS will continue to lose money.

Finally, we look at whether savings have varied by year of enrollment.

Question #5:  Are ACOs that have been in the program longer doing better?

Table 4.

Enrollment Year

Per Capita Benchmark

Per Capita Actual Spending

Per Capita Savings

Net Per Capita Savings (Including bonus payments)

2012

$10,394

$10,197

$197

$46

2013

$10,034

$10,009

$25

–$60

2014

$10,057

$10,086

-$29

-$83

2015

$9,772

$9,752

$19

-$33

These results are straightforward – almost all the savings are coming from the 2012 cohort.    A few things worth pointing out.  First, the actual spending of the 2012 cohort is also the highest – they just had the highest benchmarks.  The 2013-2015 cohorts look about the same.  So if you are pessimistic about ACOs – you’d say that the 2012 cohort was a self-selected group of high-spending providers who got in early and because of their high benchmarks, are enjoying the savings.  Their results are not generalizable.  However, if you are optimistic about ACOs, you’d see these results differently – you might argue that it takes about 3 to 4 years to really retool healthcare services – which is why only the 2012 ACOs have done well.  Give the later cohorts more time and we will see real gains.

Final Thoughts:

This is decidedly mixed news for the ACO program.  I’ve been hopeful that ACOs had the right set of incentives and enough flexibility to really begin to move the needle on costs.  It is now four years into the program and the results have not been a home run.  For those of us who are fans of ACOs, there are three things that should sustain our hope.  First, overall, the ACOs seem to be coming in under target, albeit just slightly (about 0.6% below target in 2015) and generating savings (as long as you don’t count what CMS pays back to ACOs).  Second, the longer standing ACOs are doing better and maybe that portends good things for the future – or maybe it’s just a self-selected group that with experience that isn’t generalizable.  And finally, and this is the most important issue of all — we have to continue to move towards getting all these organizations into a two-sided model where CMS can recoup some of the losses.  Right now, we have a classic “heads – ACO wins, tails – CMS loses” situation and it simply isn’t financially sustainable.  Senior policymakers need to continue to push ACOs into a two-sided model, where they can share in savings but also have to pay back losses.  Barring that, there is little reason to think that ACOs will bend the cost curve in a meaningful way.

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Post originally appeared at An Ounce of Evidence | Health Policy: The blog of Ashish Jha — physician, health policy researcher, and advocate for the notion that an ounce of data is worth a thousand pounds of opinion.

Posted in Accountable Care, ACO, Affordable Care Act

The Long and Winding Road to Healthcare Price Transarency

by Gregg A. Masters, MPH

Bitter Pill: Steve BrillWhen Steven Brill published ‘Bitter Pill: Why Medical Bills Are Killing Us‘ in 2013 he brought national attention via a series of personal stories that served to reveal the complex dysfunction inherent in our healthcare delivery and financing system. A veritable ‘conundrum‘ created over the decades of layering managed care complexity (pre-certification, prior authorization, referral management, contract payment adjudication, etc.) on top of the arguably burning ‘fee-for-services’ platform that incentivizes the prevailing ‘do more [units] to earn more [income]’ mentality of hospitals, physicians and allied healthcare practitioners who do not operate in a pre-paid or per member per month capitated environment.

Central to Brill’s narrative was the hospital ‘charge master‘, typically a made up fictional schedule of retail (sticker shock) values with ZERO relationship to the actual cost of services provided nor what would ultimately be paid by the patient or third party on his or her behalf.

Brill admonishes readers to:

Pay no attention to the chargemaster – No hospital’s chargemaster prices are consistent with those of any other hospital, nor do they seem to be based on anything objective — like cost — that any hospital executive I spoke with was able to explain. “They were set in cement a long time ago and just keep going up almost automatically,” says one hospital chief financial officer with a shrug.

Most of us are fortunate enough to have 3rd party coverage via our employer or Government funded programs like Medicare, Medicaid, etc., and benefit from deeply discounted intermediary ‘wholesale rates‘ often beginning at 50% of the published charge master rates.

Ironically, those who of us absent this ‘buffer’ and who could least bear the sticker shock burden associated with arbitrary (no relationship to cost) charge master pricing, i.e., the un and under insured, paid the steepest price, see: ‘Medical Bills Are the Biggest Cause of US Bankruptcies: Study‘.

Consumer Directed Health Plans and the ‘Empowered Patient’ Mandate

Since the launch of the Health 2.0 movement and arguably the ‘digital health‘ innovation industry writ large by co-founders Matthew Holt and Indu Subaiya, MD, some of the start-ups launched addressed the problem of price transparency ‘workarounds’ via back end building of ‘virtual’ contract rate books through platform user submissions of EOBs detailing the charge basis and ultimate contract repricing per the health plan negotiated rate of the services rendered and paid. Some of the companies operating in the space, though not necessarily back-ending virtual rate books, include: Medlio, Change Healthcare, Healthcare Bluebook and Castlight Health, see: ‘8 companies working on healthcare price transparency‘.

Clearly the ‘holy grail‘ here is contract rate-book transparency, but don’t hold your breath. These rates are deemed proprietary and thus closely guarded ‘trade secrets’.

So fast forward to today. It’s 2016 (some 43 years post HMO Act) and healthcare inflation which has shown remarkable restraint principally due to the lingering impact of the great recession of 2008, coupled with the health insurance industry’s new found love affair fueled by the ACA with so called ‘consumer directed health plans‘ (aka code for the ‘cost shifting’ charade). Think of it this way, massive health plans, pooling millions of lives, extracting maximum pricing leverage from providers and exercising varying degrees of medical management oversight have explicitly admitted that as an industry they can NOT manage clinical risk, thus have chosen make provider pricing restraint ‘our’ problem. Afterall, they reasoned the required (mythical absence of?) ‘skin in the game‘ of high deductibles, non-covered services, copayments and co-insurance drives granular price sensitivity since the once 3rd party buffer (if it ever existed) is no longer present to immunize our exposure to the cost of utilizing healthcare services.

Last month The Health Care Incentives Improvement Institute (HCI3 ) and Catalyst for Payment Reform (CPR) issued the fourth installment of the ‘Report Card on State Price Transparency Laws‘. The picture below tells the less than pretty story:

Price Transparency Report Care

 

They open the report noting:

Despite the full integration of price information into almost every other retail experience, it’s typical in American health care for consumers to go into an appointment or procedure knowing nothing about what it will cost until long afterward

And conclude as follows:

Our 2016 Report Card on State Price Transparency Laws shows that price transparency—an obvious expectation integrated into every other consumer experience—is on the minds of state legislators and other health care leaders throughout the U.S. It also highlights why this information is so critical to every health care consumer in every state; prices for routine and very common procedures can vary by more than 50 percent, even in the same geographical area, placing a potentially significant financial burden on individual consumers, a burden that can be avoided with robust health care price transparency. Thus, design and implementation of the legislation matter.

In fact, the potential for transparency to empower consumers, shift costs down, and raise quality rests entirely on the strength and comprehensiveness of each state law’s implementation. This is a perspective that is often lost in some of the research on the effectiveness of price transparency, even though no one should be surprised that weak resources yield poor results. Importantly, a very strong and thorough body of research demonstrates that consumers will seek lower-priced, high-quality providers when given the right information in the right format.

Many states may see low grades for themselves. However, in this report card, they also have a roadmap for improvement. It’s up to states to apply that roadmap to benefit from the desired and proven positive effects of price and quality transparency. 

I am not as optimistic as the authors that price transparency solutions coupled with a growing army of ‘empowered patients‘ are sufficient to tame the rapacious appetite of a predominantly volume incentivized delivery system. Clearly this is a slog unlike any other industry re-tooling, re-invention or re-engineering challenge we’ve EVER faced in the United States. More will be revealed as we move from niche solutions (concierge medicine, direct practice, non-risk bearing ACOs or IDNs, or HMO-lite solutions, etc.) tweaking at the margins of the ecosystem dysfunction but delivering little by way of sustainable contribution.

As I was recently reminded by Dan Munro of a quote often mis-attributed to Winston Churchill:

The question is whether there is any reason to believe that such a new era [think value based healthcare driven by ’empowered patients’] may yet come to pass. If I am sanguine on this point, it is because of a conviction that men and nations do behave wisely once they have exhausted all other alternatives. Surely the other alternatives of war and belligerency [avoiding the inevitable path of risk assumption/integration] have now been exhausted.  Abba Eban,  June 1967 

Bottom-line?

I see HMO’s 2.0 (global risk) in our future. There just isn’t anyway around it, though we’re trying our best to avoid the inevitable.

Your thoughts?