Accountable Care, ACO, Affordable Care Act

On ACOs and their ‘Stealth’ Upside via @Farzad_MD CEO @AledadeACO

by Gregg A. Masters, MPH

For those of you not on twitter and not following the former National Coordinator for HealthIT and now co-founder and CEO of ACO ‘Management Company’ Aledade, Farzad Mostashari, MD, I’m pasting his rich thread on ACOs and the prospects for its near term future as a tool in the healthcare finance and delivery arsenal. Conventional wisdom is and for the most part remains that ACOs are a ‘mixed bag‘ of predominantly ‘upside only’ (gain sharing), HMO-lite value based healthcare initiatives under the Medicare Shared Savings Program (MSSP) with at best mixed results on projected savings (variably calculated) to the Medicare Trust Fund.

Recently, CMS Administrator Seema Verma upped the value based transitional ante accelerating ACO movement into ‘risk’ issuing the Notice of Proposed Rule Making (NPRM) “Pathways to Success,”  see ‘CMS Proposes “Pathways to Success,” an Overhaul of Medicare’s ACO Program‘.

NOTE: For additional context on the thread offered by Farzad, check out: Founder and CEO of ACO Management Company Weighs in on Regulatory Uncertainty‘.

Posted Thursday, August 30th 2018 by Farzad Mostashari, MD  @Farzad_MD

1/ 2017 #MSSP#ACO Results! ACOs have scaled rapidly across the country! In aggregate, the 472 ACOs were accountable for nearly 9 million Medicare beneficiaries and $95 Billion – that’s a quarter of all fee for service, and almost half of the entire Medicare Advantage market.

2/ If you add up all the actual costs versus benchmarks, these 472 ACOs were collectively $1.1B under their benchmarks (more on whether that’s the right counterfactual later). Medicare shared $780 million in payments with the ACOs, netting the taxpayer $313M.

But wait! There’s lots of evidence that the benchmark underestimates the savings produced. @JMichaelMcW et al have shown convincingly that a true “difference in difference” approach would show substantially higher net impact. The green eyeshades folks at CMS OACT said add 60%.

3/ So that means that the best guess for MSSP savings is actually $1.75B in 2017, with Medicare paying out $780M (45%) – not a bad deal for the taxpayer!!! That does NOT count savings that come from lower costs to the taxpayer from Medicare Advantage rates that are And on quality – the average ACO earned 92% on their quality scores- and the scores improve the longer you are in the program according to the ACO Rule’s Regulatory Impact Assessment. 

4/ Here’s how the CMS actuaries put it:

And on quality- the average ACO earned 92% on their quality scores- and the scores improve the longer you are in the program according to the ACO Rule’s Regulatory Impact Assesment. (The Aledade average quality score applied was over 95%, and as high as 99.8% #GoKANSAS)

farzad aco data quality

6/ Lemme say that again…. ACOs saved Medicare over a Billion dollars in 2017. Cheaper than FFS, cheaper than MA. And they did it without cutting payments to doctors or narrow networks And they did it with higher patient quality. That’s called delivering what was promised.

7/ the Track 1 ACOs more than held their own here Best guess is that Track 2/3 generated 190M in savings (w 60% spillover) and received $95M (50%) Track 1: $1.5B in savings, $685M in payments (44%) (I’m still a believer in moving to 2-sided risk to help weed out ACO squatting).

8/ You know what was a great investment? Giving small and rural physician-led ACOs an advance payment to help them invest in infrastructure and setup costs. It was critical to the success of several of our @AledadeACO. More commercial payors should do this!

farzad aco data49/ But what this initial release does not help us do is see which type of ACOs are creating the most value. My guess is that it’s not much different from what the CMS actuaries found for PY 2016 – ACOs that include hospitals and directly control more of the cost of care do worse.

farzad aco data510/ The “low revenue” ACOs (in the OACT analysis – less than 10% of total cost of care came to them) were only a third of the lives in the program, but generated roughly 98% of the savings. THAT is why in the ACO Rule CMS proposed letting them stay in low risk models longer.

farzad aco data611/ That was the entire thesis behind “the paradox of primary care leadership” that informed the founding of @AledadeACO That is also why @AledadeACO partners with independent physician practices, not hospitals like others do. jamanetwork.com/journals/jama/…

12/ A quick analysis by the amazing @Travis_Broome divides these 2017 results by whether the ACOs included a “facility/CCN” (CAH, RHC, FQHC don’t count for this purpose) – Same pattern- 95% of the savings are coming from the ACOs that don’t include hospitals.

farzad aco data7

13/ Only 3.5M of the 9M ACO – attributed benecificries were cared for by the smaller ACOs that didn’t include a hospital facility- and they generated 95% of the savings. If you’re an independent practice seeing these results and the policy direction, why would you join a hospital ACO?

So how did @AledadeACO do? We are always very transparent with our results- even when things didn’t go our way- to look for ways to be better, and to make policies better that are holding back broader success. This article 2 years ago was full of pain. ajmc.com/journals/issue…

15/ This was a good year for @AledadeACO. Only 1/7 freshmen ACOs made savings – but we have learned to set expectations – it’s a long game. But 5/8 ACOs that were sophomores or older will get checks. And 2/3 that didn’t get MSSP crushed it in commercial contracts.

16/ But I’m more proud that EVERY ONE of our @AledadeACO have measurably improved health for the patients we are accountable for. We have increased wellness visits, transitional care, and chronic care management- and that’s translated into lower ED visits and readmissions.

farzad aco data8

17/ So where do we go from here? The #MSSP#ACO program has been a hugely successful motivator of nationwide transformation, but it can be reformed, and I believe @SeemaCMS is on the right track. Here’s what I would expect might change between the NPRM and the final ACO rule:

18/ The GlidePath to risk reduces ACO squatting, and brings revenue-based downside risk to MSSP, but the lowered gainshare in 1st 2 years (25%) is not enough to get new entrants and ACO investments. (as suggested) “low revenue” ACOs should get higher gain-share and lower MSR.

farzad aco data9

19/ The refined benchmarking method gives greater predictability by allowing risk adjustment and regional trending-which is great! But the cap on risk adj (3% over 5 years?!) don’t control for rising risk and introduces gaming on falling risk Instead of a cap, do renormalization.

20/ Concern about “windfall profits” led to an ill-advised proposal to cap regional efficiency at 5% – In Medicare Advantage if you are efficient, you get to keep the difference, which has spurred huge innovation in the space. why blunt improvement? 100% tax brackets are not good.

21/ Credit to CMS for trying to fix the unintended “regional comparator” problem – where rural ACO savings are reduced in direct proportion to market share. But the “national trend blend” proposal makes NO SENSE. Let’s just take ACO beneficiaries out of the regional comparison please!

22/ But the biggest impact of these results on the proposed rule should be on the idea that the way to benefit the Trust Fund is to protect it from ACO earnings. These caps, etc reduce ACO earnings – and ACO motivation/participation- and therefore reduced benefit to Medicare.

23/ The NPRM RIA estimates through 2024 these caps push $390M in lower ACO earnings, but lower ACO participation under these policies will INCREASE claims costs by $60M- and would prevent beneficiaries from receiving the benefits of the program. That’s not the right balance.

farzad aco data10

24/ The magic of accountable care is when physicians & Medicare partner together to sustainably align financial incentives, help beneficiaries and the Trust Fund. Medicare hasn’t behaved like some commercial payers who are still seeing zero sum. Let’s hold onto that partnership.

POSTSCRIPT:

As someone who’s been at the strategy table for hospitals, parent health systems, IDNs, or managed care joint ventures of all stripes AND an early adopter of this medium (I signed on to my twitter account in August 2008) believing the technology has the potential to ‘democratize healthcare’ from it’s provider centric DNA and fee-for-services fueled addiction to build ‘Cathedrals of Medicine’ separated by moats and silos from the very constituency they ostensibly ‘serve’, I’ve alternated from optimism to pessimism.

While we’ve seen some progress to date with a fair amount of co-opting, compromise and commercial exploitation along the way, I remain committed to the medium and those I follow who offer me both insights, and the connectivity to continue to refine my thought process and leadership contributions whether it be on twitter, our podcast series at This Week in Health Innovation, Health Innovation Media‘s video library,  PopHealth Week or ACO Watch blog posts. If you are NOT following @Farzad_MD or @AledadeACO, and are in the value based healthcare or accountable care space, I strongly recommend you do!

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Affordable Care Act, health insurance reform, health reform

Senate GOP Health Reform Fail: Many Knew This Day Was Coming

by Gregg A. Masters, MPH

Unlike many in the conversation on social media including the likes of Twitter, Facebook, LinkedIn and blogs such as ACO Watch, I have been active in the health reform exchange of ideas since registering my twitter handle @2healthguru in August of 2008. My participation has been of the ‘sweat equity’ variety vs. those who are compensated for their content, curation or advocacy.

Many of us in the healthcare space (both clinical and administrative) are addicted to the industry and find it difficult if not impossible to exit whether physically or emotionally. Some commit out of a sense of missiongiving back or being of service, while others for the economic upside this vast ecosystem (which I have labeled the healthcare borg resisting any attempt to materially restrain its appetite) affords to exploit low hanging fruit from a fragmented, inefficient and unwieldy financing and delivery system. Many have personally enriched themselves via the frequent churn of asset ownership (hospitals, nursing homes, imaging centers, ambulatory surgery centers, etc.) or via niche solutions with little to no sustainable value followed by quick exits and generous investor returns.

This timing of my entry into social media was co-incident with the deliberative process that ultimately rendered unto the American public what was merged as the Affordable Care Act (ACA),

In the early days of twitter those of us active in the community spoke of the ‘addictive’ nature of twitter engagement, some even referred to this virtual community as ‘the matrix’. Bonds were formed, some of which remain intact to this day.

The ‘Fictional’ Obamacare ‘Disaster’

This morning Donald J, Trump aka the POTUS weighed in on the failed efforts of Senate GOP leadership to advance the Better Care Reconciliation Act of 2017 as amended by Senator Ted Cruz to the Senate floor. He said:

By the way Obamacare isn’t failing, it’s failed

That this man continues to minimally misrepresent and worse intentionally lie to the American public is beyond the capacity for many to comprehend. From the American Academy of Actuaries to the Non-partisan Congressional Budget Office and multiple authorities in the underwriting to delivery space including risk bearing provider organizations and integrated delivery systems the narrative is quite to the contrary.

And where there is evidence of market instability or ‘failure‘ there is explanation including serial GOP initiatives to undermine the Affordable Care Act specifically with respect to ‘qualified health plans‘ (QHPs) listed on State run or Federally Facilitated Marketplaces (FFM) aka ‘Exchanges.’

The ‘death spiral‘ or ‘disaster‘ narrative is principally vested in the following argument:

  • Major health plans and regional players who initially developed individual market product(s), i.e., benefit plans, and associated provider networks including premiums) for these exchanges are withdrawing participation from select markets.
  • Premiums for some QHPs have increased by 100% or more on select exchanges; and
  • In some states and select counties there are no participating health plans with QHPs offered

On the face of this narrative, yes it makes sense. This market instability is unacceptable. No one can celebrate a law who’s principal intent is to expand coverage can applaud the absence of health plan participation at the state or county level.

But let’s peel back the curtain and look at the reasons for this ‘instability‘ claim. From day one of the Obama Administration, the GOP agenda was to make him a ‘one term President‘.

On the ACA given it’s passage was a straight line party vote with no support from GOP even though the health reform consideration process was an open and lengthy affair, Senator McConnell et al’s agenda was to remain the ‘party of no‘ and criticize the very model of health reform they had not long ago proffered as a public/private solution,  See: ‘GOP ACA Myths‘ where I’ve posted links to credible voices and JD Kleinke’s classic: ‘Why There Is No Obamacare Replacement — In One Picture‘. 

The bottomline is any ‘fails’ or under performance of the ACA whether enrollment projections, premium sticker shock, exchange exits or regulatory burdens have been engineered by a relentless series of sabotage efforts from defunding risk corridors, to current (see: This Blame Game Driving Up Health Insurance Costs) threats to not fund the subsidies that make QHP listed plans ‘affordable‘. And let’s not forget the big SCOTUS decision on Medicaid expansion which gave Red State Governors the ‘option’ whether to expand coverage for their citizens.

Karma?

So the ‘who knew healthcare was so complex’ remark offered by POTUS earlier this year was pure BS. I buy his ignorance of health policy and the complexity inherent in a cottage industry with a $3+ trillion spend, but what about those GOP ‘health wonks’ engaged in this process – from the ‘Senate Quackers’ (my term), i.e., Tom Coburn and John Barrasso – both politicians playing the doc card during ACA markup in 2009, or even worse one half of the GOP ‘young guns’ now Speaker Ryan who’s a budget [and by declaration health] wonk. What’s their excuse for this ‘surprisingly epic fail’?

This is a HUGE squander of the public trust!  And contrary to POTUS assertions, the GOP now has complete ownership of the chaos they’ve stoked from the beginning to this gross mis-management of the legislative process. It’s laughable that GOP are trying to pin this one on the Democratic party.

My god, wake up GOP. You ‘own’ healthcare. Fix the ACA.

Accountable Care, Affordable Care Act, health reform

TrumpCare: What We ‘Know’?

by Gregg A. Masters, MPH

You’ve no doubt heard the expression: ‘a picture is worth a thousand words‘.

Well courtesy of Oliver Wyman Health we have an infographic that segments key provisions of ‘TrumpCare’s‘ impact on providers. For original graphic, click here, and timely commentary, see:Special Election Coverage: What Now? The Impact of a Trump Presidency‘ via Partner Sam Glick.
TrumpCare Impact on providers

Oliver Wyman breaks down the identifiable components of TrumpCare’s impact on providers as follows:

TrumpCare screen-shot-2016-11-15-at-10-06-48-am screen-shot-2016-11-15-at-10-07-00-am

 

So much ‘meat’ remains to be put on the bone. Assuming anything whether ‘substantiated’ by previous campaign rhetoric or more recent ‘indicia‘ of what will emerge post ‘repeal and replace‘ or now ‘amend’ intentions relative to the ACA (see: ‘As the TrumpCare Pivots Begins‘) is without a doubt ‘faith based‘ reliance on what remains essentially an aggregate ‘hologram‘ of President-Elect Trump’s health reform agenda.

Stay tuned!

 

Accountable Care, ACO, Affordable Care Act, health insurance reform

Health Insurance Industry Consolidation: Any ‘Qui Tam’ Exposure?

by Gregg A. Masters, MPH

If you’re a health policy junkie like me, then the best show in town (or anywhere for that matter) was in the Dirksen Senate Office Building in Washington, D.C., where HMO industry veteran and Chairman, President and CEO of Aetna Mark T. Bertolini and Anthem President and CEO Joseph R. Swedish among other industry stakeholders testified before the Senate Judiciary Subcommittee on Antitrust, Competition Policy and Consumer Rights on health insurance industry consolidation, for video replay click here or watch below:senate hearing health insurance industry

As most of you reading this blog know, subject to the Department of Justice review Aetna will acquire Humana, and Anthem will acquire CIGNA. Thus, the submitted testimonies and ad hoc answers to sitting Senators on the Subcommittee were potentially a high stakes exchange.

Moreover, the hearing today was nothing short of a tutorial into the dynamics of the managed competition marketplace (both theory and practice since absent complete transparency assuming the salutary benefits of such competition may be more ‘wishful thinking‘ than reality as noted by Senator Blumenthal – CT, the home of the insurance industry) and whether this unique American strain of public/private collaboration can deliver on the oft repeated promises of such integration, i.e., that scale via consolidation drives operating efficiencies, improves quality and lowers costs to end users. We shall see…

As I heard the pitches from the various representatives assembled to offer perspective to the sitting Senators (see list here), I began to wonder if any of their testimony would be subject to the ‘false claims Act‘ if post consolidation the promised benefits do not accrue to the intended benefactors.

For those of you not familiar with the ‘False Claims Act‘ or otherwise known as Qui Tam filings, here a summary including its recent expanded scope via the Affordable Care Act:

The False Claims Act, expanded by the Fraud Enforcement and Recovery Act of 2009, P.L. 111-21 (S. 386), 123 Stat. 1617 (2009), now proscribes: (1) presenting a false claim; (2) making or using a false record or statement material to a false claim; (3) possessing property or money of the U.S. and delivering less than all of it; (4) delivering a certified receipt with intent to defraud the U.S.; (5) buying public property from a federal officer or employee, who may not lawfully sell it; (6) using a false record or statement material to an obligation to pay or transmit money or property to the U.S., or concealing or improperly avoiding or decreasing an obligation to pay or transmit money or property to the U.S.; (7) conspiring to commit any such offense. Additional liability may also flow from any retaliatory action taken against whistleblowers under the False Claims Act. Offenders may be sued for triple damages, costs, expenses, and attorneys fees in a civil action brought either by the United States or by a relator (whistleblower or other private party) in the name of the United States.
If the government initiates the suit, others may not join. If the government has not brought suit, a relator may do so, but must give the government notice and afford it 60 days to decide whether to take over the litigation. If the government declines to intervene, a prevailing relator’s share of any recovery is capped at 30%; if the government intervenes, the caps are lower and depend upon the circumstances. Relators in patent and Indian protection qui tam cases are entitled to half of the recovery.

Not sure if qui tam consideration can or even remotely applies to the upside representations proffered in favor of the acquisitions, since as noted by one or more witnesses today much of the empirical (public) record is incomplete and inconsistent with respect to supporting or discounting the arguments that will or have been made to DOJ as they conduct their anti-trust investigation into the proposed acquisitions or mergers.

[Editor’s Note: Two examples of previous health insurance industry consolidations were noted, including Aetna’s 1999 acquisition of PruCare, and United Health Group’s acquisition of Sierra Health Services. I will post the submitted witness testimony once it becomes available online, including any current discussion ‘tea leaves’ of what and where the DOJ investigation may be headed in both transactions. If you have anything, please feel free to add in comments section.]

This Subcommittee hearing is rich with both fundamentals and nuance considerations of the Affordable Care Act and whether it’s many moving parts can indeed align to meet the legislative intent of its authors.

Stay tuned!

Uncategorized

The Medicare Shared Savings vs. Pioneer ACOs

By Gregg A. Masters, MPH

During the ‘risk download days’, i.e., from health plan to physician groups or networks and institutional health systems or hospital partners, whether via global percent of premium, or budget driven PMPM contracts, some of us used to joke that using healthcare actuarial data to manage forward clinical risk was like driving your car via the lens of a rear view mirror (note: this is the pre-‘Google car’ era).

In fact some of us even were known to whisper in these sessions that actuaries where kind of like accountants albeit with a ‘charisma bypass’, yet none us would consider for a nano second assuming the risk of these full risk global deals without the aid of a competent actuarial advisor.

One of those players then and remaining so today is Milliman who’ve recently published a briefing on the difference between those ACOs functioning under the terms of the Medicare Shared Savings Program vs. the more ambitious and perhaps flexible Pioneer program. This is an excellent primer on ACOs, including a summary of risk, incentives and associated performance benchmarks.

Uncategorized

Health Reform Readiness Infographic

By Gregg A. Masters, MPH

We all love infographics, right? This one caught my eye today. Kind of a clever snapshot of the crap shoot we’re in relative to the legal and political uncertainty festering in the US today. The original graphic is courtesy of @HITconsultant via his blog here.

Whether this captures the essence of our health reform readiness or not, the survey findings are summarized as follows:

  • Despite intense debate, over 80% of health plans are implementing Healthcare Reform (HCR) initiatives
  • Consumer experience tops the agenda on the 2012 priority list for health plans with a focus on member satisfaction and service
  • 80% of health plans are in the “wait and watch” mode and only in planning stages with their Health Insurance Exchange (HIX) initiative
  • Nearly 40% of health plans are already implementing Accountable Care Organizations (ACOs); more than half are in planning stages

Uncategorized

CMS Innovation Center announcement supporting health care innovation

By Gregg A. Masters, MPH

Looks like we’ll get the results of the first round of innovation grants funded via the Center for Medicare and Medicaid Innovation. Rumor has it that there will be a 2nd round of grant funding. I assume we’ll minimally hear about round 1 awards, and perhaps more. Detail via CMMI pasted below:

CMS Innovation Center announcement supporting health care innovationPlease hold the time on Tuesday, May 8th at 3:30pm to join Richard Gilfillan, MD, Director of the CMS Innovation Center, to discuss an important announcement regarding health care innovation. Additional details to follow tomorrow morning.

WHO:             Richard J Gilfillan, MD,  Director of the CMS Innovation Center

WHEN:          Tuesday, May 8th, 2012 at 3:30 p.m. (EST)

DIAL IN:       877-267-1577

PASSCODE: 9164#

The CMS Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models that have the potential to reduce program expenditures while preserving or enhancing the quality of care. More info at innovation.cms.gov