Medicare Announces 27 ACOs. A New Species?

I’m surprised and intrigued by Medicare’s announcement of 27 new Shared Savings model ACOs.

Surprised

I had been anticipating this announcement as a defining moment for Medicare’s thrust into accountable care. My expectations had been that we would see either:

Boom — a big splash of new Medicare shared savings ACOs announced, including big name hospitals and medical groups that were starting large scale ACOs, perhaps with hundreds of thousands of patients.

Bust — no one showed up at the party. Providers would have concluded that Medicare ACOs were too risky, bureaucratic, and high effort.

Intrigued

What we got is something in the middle:

Patient “Leakage”: Rethinking Two Field of Dreams Assumptions About ACOs

A study released last week by the Massachusetts Attorney General contains surprising data to challenge two commonly held ACO (accountable care organization) “Field of Dreams” assumptions. These assumptions relate to patient “leakage” — out-of-network patient care and referrals.

1) Hospital administrators assume that tighter physician-hospital integration (e.g., through employment of physicians) will result in “captive referrals” by physicians back to the mother-ship hospital.

2) Medicare administrators are assuming that Medicare Shared Savings ACOs will be able to coordinate patient care even without limitations on patients’ choice to go to providers outside of the ACO provider network.

Here’s the data that challenges the validity of BOTH of these assumptions:

Trend Spotting: 1) Medicare ACO Dead-in-the-Water, 2) Payers Awaken to ACO Opportunities

It’s time to call it — the Medicare Shared Savings (SS) ACO is dead-in-the-water.

Ironically — at the same time — commercial payers are awakening to ACO opportunities.

Please read further.

Is Hospital-Physician Integration Sustainable?

Reprinted courtesy of MCOL.

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Perspectives on a Selected Key Topic |     April 2011/May 2011     |   Volume Three Issue Two


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Will a material number of hospitals and their core medical staffs, that are relatively independent, evolve into highly integrated delivery systems during this decade, and why?

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William J DeMarco MA, CMC
Demarco1
President and CEO, Pendulum HealthCare Development Corporation

The great momentum brought about by government and private payers demand for more accountability is unstoppable. Rapid consolidation of hospitals and consolidation of physicians by physician groups, hospitals and now insurers will shift referral patterns and consumer preference. 1 out of 4 hospitals will fall short of providing value and close or be absorbed within 10 years.

Physicians will be offered higher prices to sell out to insurers and investors who value the short supply of PCPs and will try to control care demand by retooling the care system building ASC and small scale short stay hospital.

True clinical integration will follow for the survivors. The ability to prospectively develop clinical budgets and bundles of services will connect regional tertiary and quaternary care facilities to local hospitals so integration can be regionalized across larger populations and payer segments.

Once these delivery systems realize they need a product recognizable to individual consumers they will seek alliance with select insurers or create their own insurance company thereby achieving the true definition of integration which is to integrate financing and delivery of care.

This offers the shared savings with themselves and stabilizes patient flow and overhead to achieve value to purchasers and users of care.

We think these opportunities will be at a tipping point on a market by market basis over the next 5 years and will be a national definition of success within 8 years. We believe this will happen because already the bond rating companies are looking at physician alignment and payer alignment as factors in establishing credit worthiness of hospitals for expansion and mergers.

Benjamin Isgur
Isgur2
Director, PricewaterhouseCoopers LLP’s Health Research Institute

Integration is certainly on the rise. The notion of independent physicians may be a myth because so-called independent physicians are becoming increasingly financially tethered to hospitals. In fact fifty-six percent of physicians PwC surveyed want to more closely align with a hospital in order to increase their income. The new health reform law focuses on population health and adopts a Medicare compensation model that penalizes poor quality and rewards cost savings and electronic information sharing. Some commercial payers are also pushing this business model.

List of Top 10 Health Plan Issues — Out of Whack!

Healthcare IT News just published its list of top issues for health plans in 2011:

1. Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.).
2. Care Management, Data Analytics, and Informatics.
3. Health Insurance Exchanges and Individual Markets.
4. New Provider Payment & Delivery Systems (ACOs, PCMHs, etc.).
5. Bend the Cost Trend.
6. Medicare and Medicaid.
7. Health Information Exchanges and EMRs.
8. Consumer’s Role in the Modernization of Healthcare.
9. Reform Uncertainties.
10. Payer/Provider Interoperability.

Dear health plan colleagues,

Wake up! The order of this list is totally out of whack.

#2: Care Management, Data Analytics, Informatics. Good…sounds about right.

However,

#2 can’t happen before you address:

#7: HIEs and EMRs

#10: Payer/Provider Interoperability

Health plans can’t analyze the data and assist in care management unless they first have access to it. Payers need access to clinical data, and they are at risk of being cut out of the loop.

P.S.

Please also take a look at priority #1: Administrative Mandates (Compliance HIPAA 5010, ICD-10, etc.). This is completely reactive!

In these times of great change, is this how health plans want to posture themselves in the community?

Tire Kickers Need Not Apply: 8 First Impressions of the Medicare ACO Rule

On March 31, CMS released the long-awaited “Medicare Shared Savings Program: Accountable Care Organizations” document (ACO Rule). Read the details here (strong suggestion: unless you’re working on your PhD in ACOs, start with the fact sheets).

There are many surprises. Here are eight first impressions on this 429 page tome:

  1. The bar has been set high…very high.  Tire kickers need not apply.
  2. Don’t expect to see many or any small ACOs.
  3. Patients will be confused by ACOs.
  4. Concerns over maintaining competition and avoiding antitrust are being taken seriously.
  5. CMS scores points for coordinating the ACO Rule across Federal agencies.
  6. CMS loses points for micromanagement and a controlling mindset.
  7. Possible losers — hospitals, ACO vendors.
  8. Possible winners — physicians, health plans.

The details follow.

ACO Roundtable on blogtalkradio: Friday, April 1

On Friday April 1st, 2011 (yes, ‘April Fools day’) at 4 PM Eastern and 1 PM Pacific

ACO Watch: A Mid Week Review will host a special roundtable series on the ‘hot of the press’ Notice of Proposed Rules’ pertaining to the implementation of Accountable Care Organizations. For the published rule, click here.

The roundtable team will consist of Mark Browne, MD, PYA, aka @consultdoc, Vince Kuraitis, e-Care Management blog, aka @VinceKuraitis, and David Harlow, the Harlow Group, LLC,  aka @healthblawg, with Gregg Masters, aka @2healthguru, as moderator and host.

To listen live, or via archived replay, click here. During the broadcast you may also listen in via (619) 393-2836, and even participate in the chatroom.

The New ACO Rule is Here…The New ACO Rule is Here…and more!

429 p. Proposed ACO Rule

ACO Fact sheet from HHS

Medicare Fact Sheet: What Providers Need to Know

HHS press release

Don Berwick’s article on ACOs in the NEJM

ACO Quality Performance Standards Summary

FTC/DOJ Joint Antitrust Statement on ACOs

TheHill article “Leaked memo reveals Dem strategy for defending healthcare reg”

The leaked memo

The 6th Thing to Watch in the Medicare ACO Regulations

Health care lobbyists and advocates are bracing for six pages of the health care reform law to explode into more than 1,000 pages of federal regulations when the Department of Health and Human Services releases its long-delayed accountable care organization rules this week. Politico

What should you be looking for as you snuggle by the fireplace this weekend reading the draft ACO regs?

Rob Lazerow writes a helpful article listing 5 Things to Watch in the Medicare Shared Savings Program Proposed Rule. His list of five key design issues includes:

  1. How will patients be assigned to ACOs?
  2. To what cost benchmark will ACOs be compared?
  3. How will bonuses be calculated and paid?
  4. For which quality metrics will ACOs be responsible?
  5. What is the application process?

I’d like to add a sixth  item — which actually would be #1 on my list.

As I’ve previously written, IMHO the central issue around ACOs is:

Are (hospitals and doctors) viewing ACOs as a way to truly develop patient centric, collaborative care or as a means toward consolidating market power against payers? We really don’t know.

So here’s item #6:

HSR Study: Focus on High-Cost Medicare Beneficiaries

Following the Money: Factors Associated with the Cost of Treating High-Cost Medicare Beneficiaries. Health Services Research; February 9, 2011

Access to the full online article is currently available for free on the Center for Studying Health System Change website.

Key excerpts:

Conclusions. Health reform policies currently envisioned to improve care and lower costs may have small effects on high-cost patients who consume most resources. Instead, developing interventions tailored to improve care and lowering cost for specific types of complex and costly patients may hold greater potential for ‘‘bending the cost curve.’’

This research uses patient-level data and a much richer set of explanatory factors than previous studies to examine key patient, physician, practice, and market characteristics associated with costs of high-cost Medicare beneficiaries, defined as the top 25 percent of beneficiaries arrayed by expected Medicare costs… we estimate determinants of Medicare expenditures (costs) at the beneficiary level….After exclusions, the analysis sample comprised approximately 1.6 million beneficiaries.