Accountable Care, ACO, Affordable Care Act

The Evolution of ACOs

by Gregg A. Masters, MPH


Recently the accountable care industry’s leading ‘skin in the game‘ PPMC 2.0 aka ACOcor equivalent (think PhyCor, MedPartners, FPA Medical, et al) of our time – though Aledade’s model is anything like the pyramid scheme of the PPMC (physician practice management companies) of the 1990s, reviewed the Center for Medicare and Medicaid Services (CMS) recent Notice of Proposed Rule Making (NPRM): CMS Proposes “Pathways to Success,” an Overhaul of Medicare’s ACO Program‘. 

Below are key take-aways from the presentation. The entire webinar is accessible free upon registration here

I will post the Q & A thread that Farzad Mostashari, MD, CEO and Travis Broome, VP, Health Policy, respectively Aledade shared on twitter as well.

Meanwhile, here’s the gist of their analysis and message:

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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!

Accountable Care, ACO, Triple Aim

ACOs in the Medicare Shared Savings Program (MSSP): Is There a Fix?

by Gregg A. Masters, MPH

The Center for Healthcare Quality and Payment Reform just released ‘How to Fix the Medicare Shared Savings Program‘ with lead author and long term managed health care industry veteran Harold D. Miller, its President and CEO. 

Some six (6) years into the Affordable Care Act (ACA) provisions specific to Accountable Care Organizations (ACOs) the results remain mixed at best, and like the serial tweaks made to the Medicare Advantage Program, now covering some 30% of Medicare beneficiaries, the underlying ACO structural characteristics and enabling health policy regulations remain ‘on the come‘ for this still nascent and evolving delivery system model.

For the many critics of ACOs as a form of an ‘HMO lite‘ in the fee-for-services Medicare market, with none of the channeling characteristics commonly associated with HMOs, this comes as no surprise.

In this just released report, Harold Miller weighs in on the fix he sees essential for the program to achieve it’s cost containment and quality improvement objectives.  The executive summary is posted below and the full report is available here.

Executive summary:

Rather than generating savings as expected, the Medicare Shared Savings Program (MSSP) has created losses for the Medicare program for four years in a row.

Calculations by the Centers for Medicare and Medicaid Services (CMS) appear to show that ACOs with downside risk produce higher savings than the “upside-only” ACOs. However, Medicare actually spends more per beneficiary in the downside risk ACOs than in other ACOs, with no difference in quality. Moreover, ACOs that have moved to the downside risk tracks have saved less after doing so.

The risk adjustment and benchmarking formulas used by CMS can penalize ACOs that serve higher-need patients and patients living in rural areas. The greater savings attributed to downside risk ACOs may have more to do with differences in the types of patients they see than differences in the way they deliver care.

Concerns about the problems with the risk adjustment and benchmarking methodologies in the MSSP have made many ACOs unwilling to enter the downside risk tracks. Requiring all ACOs to move to downside risk could force successful ACOs to leave the program, thereby reducing Medicare savings and harming the quality of care for millions of beneficiaries.

There are other options for modifying the Medicare Shared Savings Program in order to increase Medicare savings, including dropping ACOs from the program if they fail to achieve savings after two consecutive years, reducing shared savings payments for ACOs that incur losses before achieving savings, reducing the shared savings rate below 50% for Track 1 ACOs, and/or enabling ACOs to take accountability for the specific types of services they can control rather than placing them at risk for
total Medicare spending.

Neither shared savings nor shared risk payment models solve the fundamental problems in the fee-for-service payment system. As a result, it is unlikely the MSSP will ever result in significant savings or improvements in quality, and it has the potential to harm patients by rewarding providers that withhold necessary services.

Instead of continuing to modify the Medicare Shared Savings Program, CMS should focus on implementing Patient-Centered Alternative Payment Models that provide the resources physicians, hospitals, and other providers need to successfully address their patients’ healthcare needs while holding the providers accountable for those aspects of spending and quality they can control.

Twitter Dialogue on ACO Results Reported

Today on twitter there was a representative exchange from both sides of the ACO narrative which I’m posting below for context:

MANas8U's avatar

True! Yet innovation is not cheap + anything even moderately at scale in Medicare/Medicaid is definitely not cheap. Questions while innovating: What did we learn? How can we inform our future efforts? @policywonk1

danmunro's avatar

I would argue that the evidence is already in b/c the trajectory we’re on is easy to see – and forecast. Just labeling newer efforts of ‘cost containment’ as ‘innovation’ is like rearranging (in this case expensive) deck chairs.

danmunro's avatar

But that may be the same hymnal in title only: HC Reformation I don’t think #FFS is “an addiction” that needs #ACO or #VBP rehab and the evidence that #FFS works reasonably well around the world is compelling. We don’t need single-payer, but we absolutely need single-pricing.

A Sampling of ACO Leadership on the Center for Healthcare Quality and Payment Reform Report and Associated Remedies

Our Nation’s move from volume to value based care will not occur in one day. Transformation of our complex, misaligned and disjointed healthcare system will take the hard/smart work, dedication, risk and financial support from key stakeholders, including the largest being CMS. Transition to risk based/value based care is not an option, it is a necessity not only to save but successfully advance the US Health Care system. It is easier to point out problems, than to roll up our collective sleeves and develop innovative and outside the box solutions.  – Alex Foxman, MD, FACP, CMO, President and Co-Founder National ACO, LLC

The state of Florida is a great example of ACOs having success.  I believe this is true because we already have a vibrant managed care market.  Medicare Advantage makes a lot of people money but has not proved it has saved any.  It has only served to risk adjust a population for higher revenues.  ACOs, as originally designed, may only be ‘transitional’ but they are an important step toward shifting from volume to value payment models. We should expect the models will continue to evolve.  This shift is a jog not a sprint. The goal and focus should be on the “shift” not which model and flavor is the stepping stone along the way. – Nicole Bradberry, CEO and Chair of Board, Florida Association of ACOs 

ACOs in Florida reduced expense by $365,809,069, earned shared savings payments of $178,447,886 with a net benefit to the Medicare trust fund of $187,361,183. MSSP is working in Florida! We’re concerned that the success of the MSSP is being evaluated based aggregate ACO performance which includes ACOs who are not putting forth adequate effort. I know of at least 7 ACOs that have 2 or less employees. That’s not enough effort to make ANY business model work! Unfortunately their results are tabulated with others and cause the program to be inaccurately evaluated. We look forward to the required transition to downside risk as it will require those without much commitment to drop out. If you drop the minimum effort ACOs, we expect the aggregate ACO results will look different. This is PY 2016 data… –  David Klebonis, Chief Operating Officer, Palm Beach Accountable Care Organization & Chief Operating Officer, South Florida Accountable Care Organization 

One definition of literal fantasy requires only that we accept a single non-reality, after which the rest of the story becomes quite plausible. If that be the case, Mr. Miller has written a Best Seller. His entire analysis assumes that the CMS “Shared Savings” formulas reflect reality, when those of us that have really crunched the numbers know this is far from the truth.

Intentionally or not, CMS has built significant savings for the Trust Fund into the benchmark methodologies for both MSSP and NextGen. These range from the actuarial fallacies inherent in continuous attribution, successful ACO market share effects on the “Benchmark”, National Efficiency ratios that divert Benchmark dollars from high attribution areas to low attribution areas, risk score caps, automatic “discounts” and much, much more.

Still, it seems that our Florida ACOs consistently overcome the increasing headwinds and succeed. Additionally, CMS recognizes the problems in their own Benchmarking models and has tweaked these year after year, including the latest Proposed Rule submitted by MSSP to OMB earlier this month. I fear Mr. Miller is whistling past the graveyard on this one.

For a glimpse into a few of the methodology problems, see ‘Regional Benchmarking or Regional Bonus? Sustainability in the Medicare Shared Savings Program‘. – Richard J. Lucibella, CEO, Accountable Care Options

 

A Continued Search for Answers and Business Models

Further context sourced from the Florida Association of ACOs annual conference last year was provided by Aledade co-founder and CEO and former National Coordinator for Health Information Technology at the Office of the National Coordinator Farzad Mostashari, MD here.

Weigh In

So what do you think? Please offer your thoughts in the comments section. This is a dialogue well worth a broader exchange as our industry evolves perhaps even ‘pivots’ from it’s near term PCMH or ACO roots to a the valued based healthcare model – one that many refer to as a ‘Rorschach test’ of sorts – where any projection of what constitutes a value based model will do.
Please feel free to post any resources that support your take and we’ll happily include via our social reach. If any of you are inspired to author a guest post with references of citations, we’re happy to include at ACO Watch.

 

Accountable Care, ACO, Affordable Care Act

Center for Medicare and Medicaid Services Releases Accountable Care Organization Performance Results

by Gregg A. Masters, MPH

Friday, October 27th, the Center for Medicare and Medicaid Services (CMS) released details for participating Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP) for the 2016 performance year.  For reporting ACO results view the entire report here.

The National Association of ACOs (NAACOs) weighed in below:

The new results demonstrate the value of a premier Medicare alternative payment model and include a higher rate (56 percent)* of MSSP ACOs generating savings than ever before and an almost equal proportion as last year of ACOs that earned shared savings (31 percent).

This public update follows previously posted results for Pioneer ACOs, the Next Generation ACO cohort and the Comprehensive End Stage Renal Disease ACO (ESRD) care model here.

In table form, the results are summarized below:

All in, participating ACOs generated $843 million in gross program savings with a modest net savings of $78.6 million for Medicare in 2016, in addition to material gains in quality scores for aligned ACO Medicare beneficiaries.

While Clif Gaus, NAACOS CEO notes:

These results show the growing success of ACOs, which is a positive trend that should not be ignored. A lot has been accomplished in a relatively short amount of time, and ACOs are on the front line of redesigning healthcare delivery. This is a moment to celebrate them and their hard work.

The ACO ‘Jury’ Is Still Is Out

Given the range of models, risk assumed or gain sharing distributed operating results in a program that some still see as fundamentally ill equipped in a predominant fee-for-services market to materially change physician and beneficiary behavior – and thus enable the elusive ‘triple aim‘ – many in the health policy area including select ACO operators remain convinced to maximize impact the ACO model will ultimately morph into the more robust Medicare Advantage operating platform.

Perhaps the ‘stealth play’ in the mix is the potential upside of Next Generation ACOs to fully leverage their competitive advantages (3 day SNF waiver, telehealth visits, relaxed supervision requirements for post hospital discharge visits and the move to all inclusive population based payments) can up-level both their game AND improve outcomes at lower per capita costs?

On the next episode of This Week in Accountable Care, our very special guest is former Acting Administrator of CMS Andy Slavitt, now Senior Advisor to the Bipartisan Policy Center. Andy was initially part of the ‘fix it dream team‘ that righted the failed launch of Healthcare.Gov, and then presided over the administration of the Affordable Care Act.

Andy is rather familiar with the original intent of the ACA, its many ‘working parts’ and the bumps in the road to perfect the law via provider input, updated rule making and policy refinements.

We’ll get Andy’s take on a range of issues from the political environment to conflicting health policy guidance including broad brush advice to ACO operators.

Join National ACO co-founders Andre Berger, MD and Alex Foxman, MD as we engage this visionary and accomplished entrepreneur turned public service official in critical dialogue impacting the transformation of our industry from its fee-for-services roots to a new model based on a value and patient centricity.

 

Accountable Care, ACO

A Day in the Life of an ACO Chief Executive

By Gregg A. Masters, MPH

Transforming a $3.2+ trillion dollar economy where approximately 1 in 5 dollars of GDP finds its way into the healthcare financing and delivery ecosystem is no small challenge. Decades of variably branded health policy initiatives from HMOs and PPOs to their arguably derivative reincarnated ‘brethren’ ACOs all presented with the promise of taming what remains a rather rapacious appetite for ‘more‘ in a complex do more to earn more web of financial incentives.

The most recent addition to this effort was delivered via the Affordable Care Act courtesy of President Obama in March of 2010. Accountable Care Organizations (ACO’s) are defined as follows:

ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.

The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

When an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.  –  Centers for Medicare and Medicaid

Meet Dr. Andre Berger

Andre Berger, MD is a busy man committed to move the needle towards the seemingly conflicting goals of the ‘tripe aim’ – better experience of care, with improved outcomes at lower per capita costs.

This multi-board certified physician has a lot on his plate – a busy cosmetic surgery and anti-aging medical practice as well as the chief executive officer of a primary care physician led and governed next generation accountable care organization (ACO) with a successful five year operating history.

I first learned of  Dr. Berger as a result of my interest following and reporting on Accountable Care Organizations (ACOs) for ACO Watch. Dr. Berger was listed as the CEO of National ACO admitted to the first class of participating ACOs in the Medicare Shared Savings Program (MSSP) as an advanced payment model. Then I noticed the office for National ACO was headquartered in Beverly Hills, California on the very street I called ‘home’ while serving as Director of Managed Care for American Medical International (now operating as Tenet Healthcare) California Region –  I thought to myself what a coincidence! I need to learn more about this enterprising physician and wondered why a surgeon specializing in a direct pay (non 3rd party reimbursed) specialty for often ‘non-covered’ services from a typical group or individual health benefit point of view, be leading such an effort?

This co-mingling of seemingly divergent interests convinced me there is a deeper story to uncover possibly with an important message for physicians, hospitals, and patients given the current instability of our volume driven healthcare delivery and financing model.

Fast forward some four years + later, and I’ve been invited to advise National ACO on their social media presence and to develop a portfolio of digital assets for a growing thought leadership library.

On recent trip from South Lake Tahoe to cover BIO 2017 the global annual go-to gathering of the best and brightest minds in the biotech sector in San Diego, I was invited in to ‘shadow’ Dr. Berger and get a feel for a typical day in his life at the helm of National ACO.

Tuesday 8:30 AM

While Dr. Berger is CEO of National ACO (NACO) a growing enterprise with lean staffing he maintains his clinical practice so balancing workflow is a challenge addressed by having dedicated NACO days, and in office or surgery patient days. Today was an NACO day.

Dr. Berger arrives at the office equipped with briefcase including his accessorized iPhone, MacAir, iPad. AppleWatch, associated peripherals and a series of file folders. What follows is a series back-to-back phone calls, tech-enabled virtual staff meetings and seemingly non-stop text messaging.

The first call is with the Medical Director of NACO’s PET (provider engagement team) and the subject is physician performance (both quality and financial) reviews.

Next up is executive staff meeting with a long list of action items finalizing a progress report due to CMS.

Key themes include overall and regional performance of  on annual wellness visits (AWV) and chronic care management (CCM) programs.

Given growth in NACO there’s considerable discussion on staffing needs, particularly acute is recruiting a Director of Care Management given a tight market and low supply of candidates, NACO may need to retain search firm. Finding qualified case managers and care management staffs sound equally challenging.

The ‘mobile physician’ waiver (allowing physician access to patient’s homes to provide transitions of care consults) is delegated to the chief medical officer, NACO plans to deploy in Q3. Will help with CM staffing and population management.

Provider Network Managers to inventory ‘at risk’ patients to put on care managers’ priority screening. Is vendor a reliable source? May need to vet further for accuracy and then prioritize.

Other agenda items included: contracting with nursing homes, hospice providers, reviewing stop loss policy, discussion of ESRD patient mix, and possibility of contracting with key nephrologist or nephrology group(s).

All with intent to ID ‘preferred providers’ and ultimately tag for population based payments.

9:30 AM GOTO Meeting Conference Call (to review performance results)

Reviewing IT vendor dashboard detailing physician performance by ACO, region, etc. Considerable discussion on the need to manually design custom reports and the duty of that burden falling on the physician or whomever is pulling the data have to input the requested parameters.

Further discussion topics include: evidencing completion events for quality metrics reporting, the status of hospital real time ‘ping system‘ alerting ACO physicians of admits, discharges or transfers. It was affirmed that efficacy of the notification program requires two pings: one to admitting physician, the second to NACO medical director.

Considerable discussion on vendor performance and opportunities for workflow improvement.

HR issues (mostly need for additional staff).

Dilution agreement (issues associated with NACO capital raise via PPM to participating physicians, medical groups or IPAs.

10:10 Management Meeting – Agenda

Routine conversation on travel policy and company preference to avoid ‘non refundable’ airline ticket purchases. Recommended leveraging tools available via concierge support services as often as practical.

Balance of meeting agenda deferred to NACO operations manager. On tap is IRR review of ’Project Plan Requirements’.

Define compliance reporting to NGACO Governing Body members. What does this include? In the minutes. All needs to line up with contracting obligations.

Definition of ‘beneficiary representative’ who is this? Definition of ‘Certified Participants’? Quest was submitted by NACO as ‘preferred provider’.

Same (COI) issue for ‘consumer advocate’.

Key issue is defining ‘joint venture’ (JV)? For purposes of disclosure requirements. Are lab vendor relationships a JV? What about PBMs?

Training and Education program need be developed. Need to source CMS requirements NGACOs.

Need project format with due dates and compliance checks.

Letter re: advantages of joining NACO. Details calculations and benefits of affiliation.

Need fine tune the ‘marketing materials’ for physician recruitment and any special considerations for appeal via IPAs.

Physician outreach need stay away from ‘guarantees’, but stipulate shared savings participation on an ongoing performance basis.

Next Generation ACO Deadlines and Calendar: Webinar schedule, voluntary alignment dates, provider risk stratification meeting, the need for executive breakout session to review tier assignment, engagement level and appropriate notice and cure periods. Deadline is 9/29 for removal from NACO panels. Report period 2017 or rolling 12 months.

Recent submission to CMS certified. Break out by physicians, TINs and preferred providers.

Population Based Payment: what’s plan, deadline and status?

PBP Agreements are just now being sent out to target physicians.

Follow-up planned one week post mailing.

Senior staff query: how are we engaging our medical directors to facilitate recruitment and participation PBP program? May need to develop video on PBP program directed to target physicians with outreach via NACO medical directors.

Chronic Care Management program update included number of care plans completed, outbound call volumes, number of patients in program, sorted by minutes to meet marks.

Care Manager recruitment status report.

Revenue pro-forma review, including ‘consent’ status and whether ‘on plan’ or not.

Group recruitment update: Signs two agreements to perfect NACO/Group relationships: TIN affiliation agreement, and group participation agreements.

Channel partner initiative. Vetting potential IPAs for outreach purposes.

When recruiting multiple docs, NACO assists with formation of ‘POD’. How defined? Filing required. Maybe role for regional PODs or eve ’super PODS’.

When they get participation letter, who do they call? No specific name listed. Now only directed to general phone number.

SNF Rollout. Primary scope is 3 day SNF waiver portion. Tracking referrals and performance needs improvement.

Remainder of agenda included: Referral tracking and management vendor options, telehealth update, AWV proposal plan given 27.8% completed 2017 v. 21% in 2016 performance and target at 70-80%.

ACOs that incentivize AWVs show shared savings. Need see ROI on internal vs. outsourced AWVs.

1:20 PM Meeting with Operations Manager for update

Status of group recruitments in California, Colorado and other regions.

Worked on letter on ’physician recruitment’ upsides of participation.

Review responses to RFP for IT vendor replacement.

Review of marketing and communication efforts including social media activities.

3:30 PM

Conference call with IT vendor RFP consultant, with status vendor submission ratings.

4;30 PM

Free flowing debrief with Dr. Berger on day’s wide ranging and non-stop series of activities. Included question of whether or not to re-do a previous broadcast of This Week in Accountable Care which experienced some audio quality issues due to the moderator originating the broadcast from BIO International Conventions media center.

5:30 PM

Calling it a day, Dr. Berger drops me off at my car.

Comment

It’s very clear to me that managing an institutionally ‘untethered’ and physician led ACO – while more agile, if you will – is none-the-less a complex and challenging affair. There are many moving parts and with multiple parties coming into and out of key management decisions – both virtually and ‘IRL” – with all the attendant people and systems’ challenges, keeping focused and moving the enterprise forward takes constant vigilance.

When you add the complexity of the volume-to-value transformational imperative into the successful operation and scaled growth into the enterprise agenda, you begin to get a picture of what Dr. Berger, his physician colleagues and administrative staff face on a daily basis.

When you add the advantages (and associated duty to leverage them in support of the elusive triple aim) afforded by CMS specific to Next Generation Models such as National ACO, that complexity takes on an additional duty of care to manifest the ambitious but worthwhile mission of transforming U.S. Healthcare from a volume driven system to one that materially embraces a value based and outcomes oriented future.

My hat is off to this ambitious physician enterprise!

 

 

 

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.

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.

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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].