Introduction The stated goal of the Medicare Shared Savings Program (MSSP) is to lower the rate of growth in healthcare spending while improving patient access to quality care. (12) MSSP Accountable Care Organization (ACO) progress toward this goal of achieving savings or reducing expenditure growth has proven controversial, in part because there are a variety of ways to measure savings that may generate different results. In this report, we describe the Dobson | DaVanzo team approach13 to measuring MSSP savings and contrast this with reported findings from CMS. We also compare our results to other published work. Dobson | DaVanzo & Associates was commissioned by the National Association of Accountable Care Organizations (NAACOS) to conduct an independent evaluation of MSSP ACO cost savings. The CMS method of measuring ACO performance is based on an administrative formula that creates spending targets constructed with ACOs’ historical expenditures that are used to determine whether they will receive bonus payments. It is problematic when this financial target setting approach is used as if it were a program evaluation. Indeed, when independently evaluating both the Pioneer ACO and Next Generation ACO programs, CMS contractors used a difference-in-differences regression approach to estimate savings rather than the CMS benchmarking methodology used to set financial targets and calculate bonuses or penalties. (14,15). The CMS benchmarking methodology addresses the question “How has ACO spending changed compared to prior years’ spending?” While this may be an appropriate way to set performance benchmarks, it produces a biased estimate of program savings when compared to what may have occurred in the Medicare Fee-for-Service market had the ACO program not been in place. Instead, evaluation of program savings should incorporate a carefully designed comparison group or counterfactual to account for prevailing trends in order to address the question: “How have ACOs changed expenditures compared to other providers not participating in the ACO program?” Read the complete report from National Association of ACOs, here.Given the release of the NPRM and the October 16th deadline for comments with an expected ‘go live’ date in early 2019, the Florida Association of ACOs (FlaACOs) upcoming annual meeting in Orlando is a timely event to compare notes and process the impact of CMS’ proposed changes with your peers. For those of you in the Southeast with an interest in ACOs or valued based healthcare models and their performance in the greater Florida market, take note the Florida Association of ACOs (FlaACOs) convenes in Orlando, October 18th and 19th for their fourth annual meeting. This year’s impressive faculty line-up and agenda include a keynote presentation by former Health and Human Services Chief Technology Officer Todd Park. For the 5th year in a row, Health Innovation Media, publisher of ACO Watch, including Fred Goldstein, President, Accountable Health, LLC and me will be onsite interviewing keynote faculty and select participants at the FlaACOs conference. A video recap of last year’s gathering is here, as are two recent interviews with Farzad Mostashari, MD, CEO Aledade, and David Bjork, CEO, Commonwealth Health Advisors. Wednesday, September 12th at 3PM Eastern, 12 Noon Pacific, we chat with FlaACOs CEO and founder Nicole Bradberry on PopHealth Week. Join us! ==##==
Two macro trends are converging to further season and ultimately catalyze the transformation of the American healthcare enterprise: the predominant fee-for-service model that fuels the provider ecosystem (hospitals, health systems, medical groups, IPAs, ACOs, or managed physician networks, etc.) and their ‘partner’ financing plans, payors or administrators.
Ecosystem incumbents include national or regional commercial health insurers (payors), third party administrators (TPAs) that enable self-funding options for smaller employers unable to access the administrative services only (ASO) market, and the historically volatile ‘individual’ market. And, no discussion of markets would be complete without considering the wide range of public sector initiatives including Medicare (Medicare Advantage and Accountable Care Organizations or ACOs) and Medicaid’s outsourcing to contract with managed healthcare organizations.
These two trends, seemingly at odds with one another, are on a collision course… and the health of our nation hangs in the balance. The burning platform regarding fee-for-service is commonly seen as driving a seemingly insatiable appetite for ‘more’, giving rise to widespread conversation and supportive health policy advocating ‘value based’ healthcare with an emphasis on quality, outcomes and affordability.
The roadmap to achieving wholesale transformation of our system to focus on health is perhaps best reflected in the emerging science and practice of population health management.
Population health management depends on business and service delivery provider/financing sector partnerships to achieve a sustainable healthcare ecosystem that enables the ‘triple aim’. Yet, the results of early population health management initiatives nationally are generally mixed, particularly when they neglect to consider the contextual social determinants specific to the target population and community.
In order to achieve that holy grail of improved health outcomes, we must have a clear understanding of the needs and available resources as well as a coordinated plan that includes all the relevant stakeholders.
To avoid the metaphoric outcome once opined by an Eastern Airlines (RIP) pilot emerging from the cockpit to announce to his passengers:
‘well folks, the good news is we’re making great time, the bad news is we have no idea where we’re going…’
The rest is legion for those who recall the death of legacy carrier Eastern.
The promise of managing populations efficiently and effectively, leading to a healthier overall America is something that just makes sense, whether the push is from the government, payers or providers. Where can one explore the myriad pieces of the population health puzzle to find out what’s working? Fortunately, the upcoming Eighteenth Population Health Colloquium, March 19-21 in Philadelphia, Pennsylvania can provide some answers.
This conference, chaired by David Nash, MD, MBA, Founding Dean of the College of Population Health at Jefferson, the first such institution in the country, provides the opportunity to hear from and network with some of the biggest names and companies in the field.
Whatever your area of interest — policy, data and analytics, program design and development, provider-based programs and ACOs, payer-based programs, value-based care and contracting, social determinants of health, technologies or even personalized medicine — . Dr. Nash and his team are bringing together world class leaders and in a right-sized setting that supports interactions with speakers and networking with other attendees.
If you haven’t been to this conference before, now is the time, as health and healthcare system and communities at large are turning to population health. Be part of this transformation by attending the Colloquium!
For an invitation to the 18th Population Health Colloquium David Nash, MD, MBA, Dean of the Jefferson College of Population Health provides an overview of what to expect (click image).
For the 3rd year in a row Health Innovation Media will be on the ground interviewing keynote speakers, conference organizers, select sponsors and exhibitors committed to supporting the emerging population health focused economy.
For more information or to register, click here.
This post is sponsored by the Jefferson College of Population Health
You may have heard the expression:
‘The more things change, the more they stay the same.’ Jean-Baptiste Alphonse Karr
But what does this really mean?
One interpretation is ‘change is the only constant‘ or alternatively not much new here – just old ideas rediscovered? Yet if you frame the assertion to measure where we once were to where we are now or appear or to be going in the future, an answer is revealed if you link the question to the ‘deja vu’ phenomenon, i.e., ‘we have all be here before‘ courtesy of Crosby, Stills, Nash and Young.
Much recent ‘innovation‘ in health care delivery and financing (MACRA, APMs, etc.) seems poised to re-visit the provider risk assumption days that characterized the rapid growth of HMOs in the 80’s and 90’s. This period witnessed the variable download of clinical risk from partial to global capitation or percent of premium contracts to clinical entities including IPAs (independent practice associations), primary or multi-specialty medical groups or their ‘virtual’ cousins (medical groups without walls), all typically stitched together and administered by MSOs (management services organizations).
ACO 1.0: A Toe in the Water of Risk
When Accountable Care Organizations were first introduced as the ‘new, new shiny thing‘ (and ACO acronym) added to the long list of entrants in the managed competition space (IPAs, MSOs, PHOs, HMOs, PCMH, TPA, ASO, OWAs, etc.) following passage of the ACA they were characterized by this author as ‘HMO-lite’ or ‘too little too late’ initiatives since they often lacked the infrastructure, incentives, capital and authority to channel utilization and manage the costs associated with the ‘attributed‘ population for which they were ‘accountable’. While CMS offered two ACO model tracks in the Medicare Shared Savings Program (MSSP) one included gain sharing (upside) only, the other track included capped downside exposure for the ACOs performance, the vast majority (91%) of ACO participants elected upside gainsharing only.
To address and encourage participation from more experienced care management operators (typically Medicare Advantage participants) and other risk savvy medical groups, IPAs or physician networks entered the ACO market via the pathway then designed for more mature risk bearing entities via the Pioneer ACO program.
In the years that followed, a majority of the original cohort exited the Pioneer program due in part to the mechanisms to channel and proactively manage the assumed risk while enhanced when contrasted with the Medicare Shared Savings Program (MSSP) provisions still didn’t meet the needs of responsible risk management. Three (3) years in only a minority remained in the program as noted by CMS: ‘The Pioneer ACO Model began with 32 ACOs in 2012 and concluded December 31, 2016 with 8 ACOs participating,’
During the launch of the ACO program writ large, CMS has remained open to comments from industry participants and has continually tweaked the formula to better align with the policy commitment to pivot Medicare from a traditional fee-for-service chassis and series of incentives to one based on a value framework.
CMS Ups Ante Accelerating Rate of Risk Assumption by Providers
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 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).
Whether you call it personalized medicine or as Eric Topol MD prefer’s ‘individualized medicine’ or even via the possible conflation of the two c/o the President @BarackObama ‘Precision Medicine’s’ initiative (see fact sheet here), it strikes me that we may need an emerging business model glossary to make sure we’re comparing, contrasting and discerning health reform and clinical practice innovation correctly.
Further considering the difficulty in separating healthcare innovation or clinical practice transformation/re-engineering from political spinmeisters and their ideological agenda’s, it’s vitally important to gain a grasp of the range of conversations now in play under a ‘big tent’ of widely variable practice in health[care] innovation circles.
It’s tempting to dumb down the debate by assigning those ventures in the ACO or accountable care derivative play space to ‘tweaks at the margin’ of business as usual medicine, while reserving the more promising frontier represented by precision medicine as a life sciences and biotechnology fueled new breed of medicine enabling us to walk away from the business as usual burning platforms required by the current financing and delivery of care paradigm.
A few articles will help with the discernment and formation of a common taxonomy of accountable care and precision medicine practices – which I will use to include both personalized and individualized medicine.
In ‘Specialist Doctors Head for Exit as U.S. Shifts Payments‘ we revisit the perennial dispute between cognitive vs. procedural medicine specialists and the relative embrace or resistance of ‘bundled payment’ as a transitional practice to value (vs. volume) based medicine. Disorganized medicine has a history of ‘circling the wagons’ and shooting in to solve differences. Unfortunately, the current developing divide between primary care specialists and their sub-specialty peers will likely continue this tradition of internecine warfare.
In ‘Precision medicine takes genetic mapping to the next level‘ Florence Comite, MD (@comiteMD) an endocrinologist turned precision medicine evangelist unbundles the biotech and genomic medicine fueled promise of this emerging field.
And at ‘Will patients pay for Personalized Medicine?‘ Rob Wright (@RfwrightLSL) dips into the ‘follow the money’ question given the continued practice (now somewhat codified by the ACA via a metals designation of plan type) of cost shifting from health plans to patients/members the increasing burden of health benefits coverage.
Finally perhaps tangential though relevant to the conversation is the recent ruling in the Massachusetts Attorney General v. Partners Healthcare litigation where the delivery system merger is being challenged as anti-competitive. Fueled by accountable care strategy roll-outs (formerly ‘managed care’), market trends and the ACA, consolidation is one of the key themes likely to influence both the alchemy and market conditions under which both of these models will continue to evolve before before their inevitable convergence into a sustainable health[care] ecosystem.
Yes, we do live in ‘interesting times’.
In preparing for my trip from San Diego to San Francisco to cover the 33rd Annual JP Morgan Healthcare Conference, see: ‘JPMorgan Healthcare Conference 2015: 33 Years Later We’re Still Searching…’ I’ve been speculating about the broader investment themes that many in the life sciences, biotech and pharma investment banking space may NOT be pondering given prevailing quarterly or year over year EPS event horizons.
In the post Affordable Care Act (ACA) era and with the ‘repeal and replace’ crowd chants notwithstanding the strategic imperative has not – and will never – change. The ‘all in’ from a total cost of care perspective pursuit of the ‘triple aim’ (better care, better outcomes, lower per capita costs) MUST be the ‘holy grail’ of any and all relevant investment themes valuing the quest for a sustainable public/private healthcare economy. Unfortunately too many niche market ‘exit calculations’ still seek to extract returns from a collapsing, volume incentivized – if not ‘burning platform’.
Whether the ACA is repealed or not (highly unlikely) its underlying value basis with a focus on population health and accountable care – including all of it’s derivative expressions (patient centered medical homes, patient empowerment via digital health technologies, pricing transparency plays, etc.) will remain the forward operating vision and quest of the day – if not decade.
In 2013 I focused on one publically traded company Universal American’s (UAM) ‘Healthy Collaboration’ ACO business model, see: ‘Universal American: A Healthy Collaboration’ and followed that post in 2014 with ‘Universal American: A Sign of Things to Come?’. As a reporting company their operating results would be useful to gage the progress towards ‘accountable care’ from a representative national and for-profit operator.
Before scanning the agenda for JPM15 presenting companies, I tweeted:
Gregg Masters @2healthguru
Curious if Universal American will report #ACOs or MA plans at #JPM15. 2013 session here: bit.ly/1g4CKZ5 pic.twitter.com/cs8eXMCdn4
Then upon determining they were not on the schedule this year I reported the ACO Revenue result sourced from their Q3 10Q 2014 filing:
Gregg Masters @2healthguru
RE: UAM ‘ACO Revenue’ #JPM15 pic.twitter.com/pgnd8QzQBb
Fred Goldstein @fsgoldstein RT @2healthguru: RE: UAM ‘ACO Revenue’ #JPM15 pic.twitter.com/VcnxmEF1mn …. Not bad 10% achieved shared savings he said sarcastically..#ACO
So, what does it mean if anything? We shall see if this is an artifact or non-appearance for perfectly reasonable causes, i.e. perhaps as banal as UAM no longer banks with JP Morgan, or maybe it’s a purposeful retrenchment by UAM leadership to not have to explain away their inability to perform on the ACO strategy.
On the anniversary of the launch of the Florida Association of ACOs and the vital role of MSOs in supporting the operations of disruptive business models chasing the sustainable healthcare ecosystem I had a round two conversation with Nicole Bradberry, President and Chief Operating Officer of Orange Health Solutions and CEO of the Florida Association of ACOs.
Listen as we learn more about the accountable care market one year later, including insights on the investment by Great Point Partners in Orange Health Solutions enabling the acquisition of MZI Healthcare including it’s suite of products built on the EZCAP chassis.