Accountable Care, ACO, Affordable Care Act

Vetting the ACA’s Impact on Health Insurance Operators

by Gregg A. Masters, MPH

Milliman Health 2013 Briefing Paper ACA ResultsIn contrast to the comprehensive ‘go live’ implementation of ‘RomeyCare’ in the Commonwealth of Massachusetts, the phased (and some would say diluted if not ‘fatally’ compromised) implementation of the Affordable Care Act (ACA) has been muted via a staggered on-boarding schedule of its various component parts and further selectively waived or delayed provisions primarily for political considerations.

Yet, we’re now some 3 1/2 years since enactment of the spirit of the ACA in March of 2010. One of the arguably principal accountability players to advise, measure, and report on the success or failure of the Act’s specific provisions are the good folks at Milliman Health – principal ‘actuaries to the stars’ of sorts.

Milliman often consults on the front end of risk assumption, mitigation – if not avoidance – in the shift from volume-to-value. They also measure and monitor the aggregate performance of the law based on their access to propriety client derived data sets, those residing in the public domain as well as tapping secondary sources in the market place as proxies.

Recently Milliman issued the Briefing Paper: ‘2013 Commercial Health Insurance – Overview of Financial Results’ wherein the report notes:

‘With the Patient Protection and Affordable Care Act (ACA) enactment in March of 2010, health insurers have had to comply with minimum loss ratio requirements, more stringent rate reviews, removal of annual benefit limits, first dollar coverage of preventive care, and other requirements. The insurer experience for 2013 reflects the third year insurers have been required to comply with minimum loss ratio requirements. Additionally, 2013 marks the final year that medical underwriting was not prohibited for new business in the individual and small group comprehensive health insurance markets in many states. Therefore, 2013 commercial health insurance can be used to both evaluate the impact of ACA reforms that were implemented prior to 2013, as well as serve as a benchmark to evaluate insurer financial results moving forward’.

Suffice it to say, there is more meat in the report sourced from various indicia of market performance, but witness the Milliman general conclusion noting:

Milliman  Health Breifing Paper on ACA Results 2010 - 2013

The report provides ‘an overview of health insurer financial results in 2013 and evaluated changes in the health insurance industry’s expense structure and profitability from 2010 to 2013, including changes in the medical loss ratio.’ 

The report’s conclusions are rather instructive and a testimonial of how imposing ‘order’ (or some degree of plan standards and thus comparability to an arguably cowboy market – primarily the individual insurance domain) – has impacted the operations of market participants.

Basically, Milliman is saying some patterns can be more clearly discerned (in group market) while in truth there are too many moving parts and it’s perhaps to early to tell at least in the individual market.

For complete report access click here.


It remains to be seen how the political theater if not continuing litigious climate will impact the future performance of this initially proffered conservative health policy ideology muscled only into law via straight party line voting. The complexity of our healthcare system is such that any material effort to arrest, mitigate and redirect its underlying healthcare economics will be met with special interest agenda driven resistance if not outright mass public deception.

So in the spirit of the 70s rock band Kansas viaCarry on my wayward son‘, lets be mindful of the timeless advice of Mr. Rogers offered during times of deep national tragedy:

Look for the helpers. You will always find people who are helping.’ ~ Frederick “Fred” McFeely Rogers


Accountable Care, ACO, Affordable Care Act, MSSP

‘Pioneers Take Arrows While Settlers’ Get the Land?’

At the ACO Summit in Washington DC in June 2012 Elliott Fisher, MD arguably one of the admitted father’s of the ACO movement opined perhaps prophetically from a panel including Mark McClellan, MD and former Health Affairs Editor, now RWJF Senior Health Policy Advisor Susan Dentzer the above wisdom.Richard Gilfillan MD

Today, CMS via the Center for Medicare and Medicaid Innovation (CMMI) released their eagerly anticipated results for the Pioneer class, i.e., that risk savvy group of participants most likely to make the accountable care vision work. Unfortunately as was the case in the predecessor Physician Group Practice (PGP) demonstration sample, the results where well ‘mixed’ with several exiting the program entirely while other’s chose to default to the ‘tamer’ Medicare Shared Savings Program.

According to Modern Physician:

Seven Medicare Pioneer accountable care organizations that didn’t produce savings in the first year of the Obama administration’s most ambitious test of the accountable care model have told the CMS they will leave the Pioneer program and enter the Medicare Shared Savings Program model, while another two participants have indicated they will leave Medicare accountable care entirely, the federal agency announced Tuesday.

The American Medical Group Association (AMGA) also released the following statement:

…regarding the announcement from the Centers for Medicare & Medicaid Services (CMS) on first-year results from the Center for Medicare and Medicaid Innovation’s Pioneer ACO Program (25 of the 32 health systems in the program are AMGA members):

“AMGA member groups are in the forefront of transforming the nation’s healthcare delivery system to achieve coordinated, affordable, high-quality care. AMGA is always proud to highlight the groundbreaking and innovative steps our members have taken, and continue to take, in order to improve the quality of our nation’s healthcare system, but today we are particularly pleased to congratulate members in the Pioneer ACO program for improving patient care and in some cases lowering the cost of care. All of these groups are to be applauded for their leap of faith and their continued dedication to advancing the role of high-performing health systems in America. ”

As with any ambitious effort of this scale, the movement to value-based, accountable, coordinated care for patients is an evolutionary process. Programs like ACO initiatives will take many years to mature, especially because they are creating and testing new models for payment and care delivery. AMGA is encouraged by the achievements of the Pioneer ACO participants in the first year of the program. We also pledge our continued support of our members that are committed to promoting better health care at lower costs in the Pioneer ACO and Medicare Shared Savings programs. ”

Many AMGA medical groups, and in particular the ACO Pioneers, are laying the foundation for future programs and innovative payment arrangements. These medical groups will continue to invest in improvements in care processes and infrastructure that will provide patients with better health outcomes, enhanced care experience, and lower costs well into the future. AMGA commends all of our members who have undertaken this journey. – Donald W. Fisher, Ph.D., CAE, AMGA President and Chief Executive Officer

The CMMI announcement reads in part as follows:

Today, the Centers for Medicare & Medicaid Services (CMS) announced positive and promising results from the first performance year of the Pioneer Accountable Care Organization (ACO) Model, including both higher quality care and lower Medicare expenditures. Made possible by the Affordable Care Act, the Pioneer ACO Model encourages providers and caregivers to deliver more coordinated care for Medicare beneficiaries. This model, launched by the CMS Innovation Center, is part of the Affordable Care Act’s efforts to realign payment incentives, promoting high quality, efficient care for Medicare beneficiaries. ACOs, including the Pioneer ACO Model and the Medicare Shared Savings Program, are one way CMS is providing options to providers looking to better coordinate care for patients and use health care dollars more wisely.

“These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients,” said CMS Administrator Marilyn Tavenner. “The Affordable Care Act has given us a wide range of tools to realign payment incentives in Medicare and Medicaid, and these efforts are already paying off.”

For the complete CMMI announcement with exit rational and implications for the program, click here.

Accountable Care, ACO, Affordable Care Act

Back to the Future: Another Run for PPMC’s v2.0?

By Gregg A. Masters, MPH

This is about as good a framing of the failed run during the 1990s when the physician practice management (PPMC) industry caught the attention of Wall Street and had a 10 year run before a literal collapse of what many considered a ponzi scheme at heart. Bottom line is Wall Street underwriters hit pay dirt, while the entity managers – at least those who stuck around trying to make the models work, and the physicians who sold their practices to these entites for paper and/or and some cash dipped into deep despair.


As discussed in ‘Waiting for ACOcor?’, we’re witnessing a similar market opportunity in large part due to the passage of the Affordable Care Act, and ACO specific provisions detailing pathways and timelines to scaled risk assumption and population health management for less than risk savvy medical groups and or their parent health systems.

So the executive summary courtesy of CitiBank analysts: Gary Taylor, Ryan M Langston and Patrick Feeley crystalizes the basis for the zeitgeist failure of this once promising rollup and integration business model. For the complete report, click here.

Risk Payment Models are on the Rise

Everywhere, we read and observe new interest by payors and providers to consider alternatives to existing fee-for-service (FFS) payment models. DVA, HUM and UNH have all recently acquired risk-taking physician practices. Hundreds of hospitals & physician groups are forming accountable-care-organizations (ACOs) and hospitals are increasingly directly employing or acquiring physician practices.

PPMs Were Once Perceived as Ideal Risk Vehicles

The original thesis for physician-practice-management (PPM) companies included consolidating, modernizing and capitalizing a cottage industry, but the real perceived opportunity relied on assuming prepaid medical care population ri sk, then lowering hospital utilization.

But Most PPMs Declared Bankruptcy in the Late 1990’s

Eight of the ten largest publicly-traded PPMs in 1997 declared bankruptcy by 2002. Of 35 public PPMs in 1997, only MD is still listed today. We can cite myriad reasons for the downfall, but ultimately the industry overpaid for assets while mispricing actuarial risk, focusing on the wrong patient population & failing to generate organic growth in acquired practices.

Some Things are “Different this Time”

PPMs are now focused primarily on the Medicare (non-commercial) patient population. Physician culture and attitudes have evolved over the last two decades. Also, information technology and electronic health records (EHRs) are vastly more sophisticated today – promising better tools for practice management, clinical integration, care coordination & actuarial analysis.

…but, Reasons to be Cautious

Myriad reasons exist primarily in execution, not premise. It remains difficult to implement systems to manage large groups of physicians, develop actuarial expertise, ac hieve clinical integration, drive care-coordination while dodging irrational competition and the insurance underwriting cycle.

Healthcare Remains “Local”. No National Model will Emerge

In many markets, new or existing integrated-delivery-networks (IDNs) will prove a superior model with critical mass and first-mover advantage vs PPMs. In other markets, large primary or multi-specialty physician groups will become or remain dominant. The goal of creating a “national PPM model” is fallacy. That said, some local & regional markets are large enough to constitute multi-billion dollar revenue opportunities.

Accountable Care, ACO, health reform, Triple Aim

The 9 C’s of Accountable Care with Tom Doerr, MD

By Gregg A. Masters, MPH

Collaborative Payer Lumeris mastheadRecently I came across a blog post titled ‘The Nine C’s of Successful Accountable Primary Care Delivery’ by Tom Doerr, MD. I had the additional opportunity to participate in a portion of The Collaborative Payer Model: 5 Lessons for Accountable Care webinar which Dr. Doerr led wherein he unbundled some of the data and conclusions drawn from the Lumeris experience to date. This is a AMAZING session with deep and powerful information for emerging as well as risk savvy medical groups, IPAs or IDNs.

For an archived replay of The Collaborative Payer Model: 5 Lessons for Accountable Care webinar click hereACOwatch: This Week in Accountable Care

Meanwhile, on Wednesday, May 1st, 2013 broadcast of ‘This Week in Accountable Care’ at 12 Noon Pacific and 3PM Eastern, we get a second chance to engage with Dr. Doerr. You can listen live, or via archived replay.

Dr. Doerr is a soft spoken but highly informed physician who’s gained considerable experience under the auspices of Essence Healthcare, a Medicare Advantage organization under contract with the Federal Government, via a range of integrated contracting entities.

Join us!


Strategic Market Tea Leaves: The Health Plan Perspective

By Gregg A. Masters, MPH

JPMorgan Healthcare Conference 2013 HealthNet PresoWhether you love em (anyone love their health insurance company?) or hate em, major health plans are in a reasonable position to lead if not steward the needed healthcare transformation. While physicians aka ‘disorganized medicine’ too often circle the wagons and shoot in, and whereas hospital systems present too much baggage and institutional inefficiencies, health plans with a ‘utility company’ mindset and access to local, regional and national market ‘big data’ footprints are likely candidates to support if not direct and brand local innovation.

In a continuing series to sample and curate narrative from the rich content at JP Morgan Healthcare conference 2013 here are some highlights as well as the audio webcast and deck proffered by industry veteran Jay Gellert, CEO and President of HealthNet.

Setting context for his remarks and visualizing the future he stipulates:

We think that whatever happens over the next 3-4-5 years [in our business] is going to be an increasingly Government driven market (‘B to G’).’

“…historically at this conference until very recently the vast majority of presenter’s talks has been about how to increase revenue….we think that’s kind of the past as we move to budget driven system…a much more radical change than people have come to grips with…

Gellert’s strategic thesis for HealthNet is offered upfront:

Gellert HealthNet Thesis: JPMorgan Healthcare Conference

Meanwhile some of the other market worthy observations include:

One of the benefits of being in California is that you’ve seen this [risk migration/management] movie before…”

“We’ve really never had an experience in the history of this country where we’ve moved from medical underwriting to community rating without intense disruption…

“…whether successful or not…one of the key challenges for all of us to remember is the individual market is only 5% of the [total]..

Key themes included positioning for the health insurance exchanges, ‘scrubbing the [commercial] book’, positioning for membership growth in Medicaid (MediCal), dual eligibles’, Medicare Advantage and continued uncertainties associated with specific provisions of the Affordable Care Act.

Up next @Aetna, then @Cigna.


And the Circle Grows! CMS Announces Another Round of ACOs

By Gregg A. Masters, MPH

Industry watchers have to be impressed by the announcement from CMS today that effectively doubles the ACO count from prior reported totals.

CMS App Clipped

Is it just me, or can you can sense the subtle shift in market sentiment from skepticism to loss of first mover opportunity in one’s market.

For the list of newly anointed ACO’s with a start date of January 1, 2013, click here.

We’ll digest the details and un-bundle its significance for you shortly. i.e., ‘Columbus gets its first Obamacare Accountable Care Organization’ market by market, and model by model.

Take note: the filing application deadline for January 2014 go live date is Summer 2013! Get those apps in process!


The ACO Surprise

By Gregg A. Masters, MPH

Timing can be everything at times, no?

Just after completing the post:From “Unicorns to Multicorns” ACOs Morphing Below Radar, I received information from Oliver Wyman, a Marsh McLennan Company, previewing a study which documents (at least for some) ‘unexpected’ results in the world of ACO penetration.

For background market scaling or ‘ACO virality’ context, be mindful we had a bit of an energetic but collegial exchange between HMO industry veteran William DeMarco and noted healthcare futurist Jeff Goldsmith. DeMarco was opining on the prevalence of ACOs et sequelae, while Goldsmith ridiculed DeMarco’s referenced math via the post ACO Explosion, carried forward into Are Hospital Business Models on a Burning Platform? Not Yet, But It’s Inevitable’ by Vince Kuraitis at the Healthcare Blog. DeMarco notes that:

….20% of Medicare beneficiaries…will be connected to Medicare through their ACO by 1.1.13..’

[add] Medicare Advantage beneficiaries [27%]…a factual statement…[and ACO share will approach] 50% of Medicare population.’

To wit, Goldsmith skeptically retorts:

The Medicare ACO program “covers” less than 5% of Medicare beneficiaries, and a tiny fraction of it will actually resemble full risk. There is simply no evidence of momentum toward risk-sharing with hospitals in the current payment stream. Medicare Advantage is growing at 10% a year, but most of the hospital contracts are not shifting risk to hospitals. DeMarco’s forecast is laughable.

Now add to this thread data from the Oliver Wyman Group (aka @OliverWyman) structured inquiry. (Editor’s note: Marsh McLennan is not a newcomer to the healthcare risk, actuarial, underwriting or consulting broker universe. Progenitors of InterQual’s the ‘Potentially Compensable Event’ hospital survey commercially morphed into the ‘generic screening criteria’ for the Intensity of Service/Severity of Illness data set, they could be arguably considered one of, if not the principal founders of the clinical risk management or quality assurance industry. Take away: listen to what they have to say, tweeps!).

In just two years, a new model of healthcare captures 10 percent of the market.

The healthcare world has only gotten serious about accountable care organizations in the past two years, but it is already clear that they are well positioned to provide a serious competitive threat to traditional fee-for-service medicine. In “The ACO Surprise”, our analysis finds that 25 to 31 million Americans already receive their care through ACOs—and roughly 45 percent of the population live in regions served by at least one ACO. While relatively few organizations have achieved the full potential of the model, the top performers are already generating savings and delivering improved care.

For the complete Oliver Wyman report, click here.

Man, things are really starting to get interesting!