Commonwealth Fund: Vermont ACO Experience

As you know I have a keen interest in the account care organization (ACO) pilots underway throughout the country. Having providers and payers come together to provide high quality coordinated care is not an easy venture as both groups need to trust and coordinate with each other like never before. What has been the experience with ACOs in Vermont? In short physician buy-in and leadership is essential for success. From a Commonwealth Fund Report:

Over the last two years, the Vermont Health Care Reform Commission (HCRC) has been charged with investigating how ACOs might be incorporated into the state’s comprehensive health reform program. Three Vermont provider organizations are now in various stages of creating an ACO, with the objective of implementing the first site in 2011 as part of a national ACO Learning Network.

In 2008, the Vermont state legislature instructed HCRC to assess the feasibility of a pilot project based on the ACO model. Based on HCRC’s findings, legislation was passed supporting the implementation of at least one pilot ACO as the next phase of health care payment reform. The ultimate goal is to achieve delivery system reform based on the development of a true community health system that both improves the health of the population it serves and manages medical costs at a population level.

Key stakeholders in the ACO pilot program have included the state’s three major commercial insurers, three community hospitals and one tertiary hospital, the state hospital association, the state medical society, the business community, state health reform staff, the Vermont Department of Health, the Department of Banking, Insurance, Securities, and Health Care Administration, and the legislature.

KEY FINDINGS

The ACO cannot exist in a vacuum. It is essential to simultaneously create or enhance capabilities at the primary care practice level, as exemplified by the patient-centered medical home; at the community health system level; at the state level, with infrastructure to support health information technology, payer payment reforms, and technical support services; and at the national level, chiefly through Medicare participation. Our experience to date has shown that we know how to build these capabilities at the primary care practice level and at the state level. However, the real action in “bending the medical cost curve” is at the community level.

The working design for an ACO pilot is built on three major principles: 1) local accountability for a defined population of patients; 2) payment reform based on shared savings; and 3) performance measurement, including patient experience data, clinical process and outcome measures. All ACOs should be structured as provider-based organizations with a network of primary care providers that elect to participate in the ACO. The model should also have a patient population of sufficient size to support performance measurement and the stability of expenditure projections. In rural areas like Vermont, commercial payers may have to participate in a consolidated shared savings pool in order to achieve the minimum population. The ACO must be a legal entity capable of internally distributing shared-savings payments and accepting incentive payments from payers and also have an organizational and governance structure capable of coordinating providers into a single ACO entity.

ACO pilots need to have threshold capabilities in five areas to get started. First, the ACO must be able to manage the full continuum of care settings and services for its assigned patients, beginning with a patient-centered medical home approach to primary care. Second, it must be financially integrated with both commercial and public payers, and all payers need to participate, so that at least 60 percent to 70 percent of patients in a provider’s practice can be eligible for inclusion in a shared-savings model. Third, a health information technology platform that connects providers in the ACO and allows for proactive patient management is essential, along with a strong financial database and reporting platform for managing the global medical budget. Fourth, physician leadership, as well as the commitment of the local hospital CEO and leadership team, is vital to driving changes in process, cost structure, and mission. Finally, it must have the process improvement capabilities required to change both clinical and administrative processes to improve the ACO’s performance so that it can achieve its financial and quality goals.

CONCLUSIONS
Community health systems are the focal point of health care delivery reform, as they are responsible for care integration and coordination of the service network that provides the bulk of care to a patient population. The ACO is a promising financial incentive model that could support the development of a community health system, but it still needs to be tested in pilots. This will require participation of public payers, particularly Medicare, in a common multipayer framework to realize their potential.

Some large integrated care systems have the scale and resources to work concurrently at practice, community, and regional/state levels to support ACOs. However, most small and medium-sized communities and care systems will need state and/or national support for defining a common financial framework for all payers, supporting the development and expansion of primary care medical homes, information technology (IT) support, technical support, and training and start-up funding. A rural setting makes potential ACOs even more dependent on state and national support. Rural models will require either a consolidated performance pool involving multiple payers or an expansion of the ACO to include multiple hospitals, making it possible to achieve the necessary critical mass of patients needed to support statistically meaningful measures of performance.

KEY RECOMMENDATIONS
Some important lessons have emerged from the Vermont ACO pilot experience thus far:

1. National and state sponsors should proceed with pilots and learning collaboratives in diverse settings, including smaller communities, to learn more about success factors in developing ACOs. A critical pilot component is funding for a local provider infrastructure and community resources.
2. An ACO’s success depends on committed leadership from physicians and other key stakeholders, multipayer participation, a patient-centered primary care model, and robust IT support and reporting.
3. Clusters of ACOs within selected states would encourage the development of the statewide infrastructure needed by ACOs. States can also support ACOs by mandating Medicaid participation in ACO pilots through a state waiver, implementing IT tools and a health information exchange, and sponsoring patient self-management programs, among other options.
4. ACO growth in Vermont and elsewhere must be coordinated with the broader payment and delivery system reforms included in the recently enacted health reform bill. Federal policy support will be critical to enabling a fair test of the ACO model, including Medicare participation in ACO pilots by 2011, federal approval of state waiver requests for Medicaid participation in ACO pilots, and implementation of Medicaid/Medicare advanced primary care model multipayer demonstrations.

Agreed: More Geriatric Training Needed!

Early in my career my focus was on developing home and community based services for seniors to help prevent premature admission to nursing homes. I noticed while doing this work how little health care professionals, particularly physicians, knew about dealing with seniors. Amazingly enough, with early baby boomers on the cusp of retirement, calls for geriatric training for health care professionals are still being made. From HealthLeaders:

The Partnership for Health in Aging—a coalition of more than 20 organizations representing eldercare professionals—released today a set of 23 geriatrics core competencies that it says all healthcare providers should have to better care for elderly patients.

The coalition developed the competencies in response to the Institute of Medicine's 2008 report Retooling for an Aging America: Building the Healthcare Workforce, which recommended that "licensure, certification, and maintenance of certification for healthcare professionals should include demonstration of competence in the care of older adults as a criterion."

Geriatric specialists are already in short supply and training more may not be feasible given the lack of interest and growing demands of an aging population. Some experts think training all doctors, dentists, nurses, physician therapists, social workers, and other providers in basic elder care may be the best way to prepare the nation for the "silver tsunami."

"The ultimate goal is to have universal geriatrics competencies that can enhance the capacity of the entire workforce in caring for older adults," said Todd Semla, MS, PharmD, who chairs the workgroup. The final competencies cover six domains:

• Health promotion and safety. These competencies include promoting mental and physical health behaviors, assessing risks like falls and elder mistreatment, and recognizing evidence-based treatments for older adults.
• Evaluation and assessment. Example competencies include, "Apply knowledge of the biological, physical, cognitive, psychological, and social changes commonly associated with aging," and, "Demonstrate knowledge of the signs and symptoms of delirium."
• Care planning and coordination across the care spectrum. Emphasis was placed on ensuring person-centered and -directed care across the continuum, including end-of-life care.
• Interdisciplinary and team care. The competencies encourage providers to refer to and consult with any of the multiple healthcare professionals who work with older adults and incorporate discipline-specific information into the overall care plan.
• Caregiver support. The competencies call for providers to: "Assess caregiver knowledge and expectations of the impact of advanced age and disease on health needs," and take other steps to involve and work with caregivers.
• Healthcare systems and benefits. One major challenge for providers would be to know how to assess and share with patients information about Medicare, Medicaid, Veterans' Services, Social Security, and other public programs.

The authors of the competencies intentionally left them broad, and expect each discipline to determine how to incorporate them into their training programs. However, the workgroup believes the competencies can apply to all entry-level professionals.

"There will be variations in how the competencies apply to each discipline, and each discipline will need to determine how the competencies will be utilized within their own curriculum development and credentialing processes. We see this as an iterative process as other disciplines build upon the work that we have started," said Semla.

I raised this issue at a geriatric conference I attended in 1982! It amazes that this type of training has yet to be implemented across the board.

Recissions: The Actual Data

Nothing makes health insurers look more vile than the practice of recission; revoking coverage and refusing to pay claims if the insurer determines the covered individual was not honest when they completed their health questionnaire. Wellpoint is the most recent insurer to get "raked over the coals" for this practice. But how often does this practice occur? According to an article in Kaiser Health News:

Rescissions are very rare. They apply only to the individual market (less than 10% of private health insurance) and even then they occur less than 4/10ths of 1% of the time. Even when it does happen, there is almost always an appeals process where the decision is reviewed by an internal committee and often submitted to outside reviewers. Further, when insurers are wrong – as they may sometimes be – it is the job of state regulators to correct this injustice.

But while recissions rarely occur, their potential to turn into a PR disaster for companies is huge as we have seen. It makes me wonder then why health insurers were so adamant about reserving the right to do so. Perhaps they believed that the threat of recission would keep people more honest.

Health Promotion Grants for Small Employers

There are many different provisions/benefits to the recently passed health reform bill. While the availability of tax credits available to small employers dominated the news earlier this week, these companies will be eligible for other types of grants.

For example, starting in 2011, the law authorizes grants totaling $200 million over five years for small companies that start wellness programs focused on efforts such as nutrition, smoking cessation, physical fitness and stress management. Companies with fewer than 100 employees qualify for the grants, which will be administered by the Department of Health and Human Services, but only new wellness initiatives -- those launched after March 23, 2010, the date the heath reform bill was enacted -- are eligible." In addition, starting in 2014, employers can offer health insurance coverage reward payments to workers who meet health benchmarks.

What will be the interest among small group employers in seeking these grants? From my experience in dealing with these size groups I do not think it will be very high. Groups this size at best have one person dedicated to HR issues so the internal resources to coordinate a health promotion effort are not there. If the grants allow for an outside entity to run the program, it could prove to be more popular than I think. However, health promotion programs take several years before they show any impact and how many employers will have the patience to wait for the pay-off? Plus since many of these sized groups do not self-insure, how will a health promotion run by an outside entity be accounted for by that organization's health insurer? I really do think the availability of these grants is a good idea but there are many issues that need to be worked out .

Pricing Transparency

One of the major reasons cited for the increasing costs of health care is that the consumer usually has no idea what the procedure or test costs that their doctor is recommending. As I mentioned in an earlier post, neither does the physician. So why can't you just have providers post their costs?
Three bills recently introduced in Congress attempt to resolve this pricing transparency issue:

Transparency in All Health Care Pricing Act of 2010 (HR-4700): Introduced by Rep. Steve Kagen (D-WI), the bill calls for hospitals, physicians, nurses, pharmacies, pharmaceutical manufacturers, dentists, and the insurance entities to "publicly disclose, on a continuous basis, all prices for such items, products, services, or procedures." The bill would require disclosure "at the point of purchase, in print, and on the Internet," and would allow the Secretary of Health and Human Services to investigate and fine entities that do not comply.

Health Care Price Transparency Promotion Act of 2009 (HR-2249): This bill also calls for pricing transparency, but it would require all 50 states to develop disclosure requirements without involving the HHS Secretary. The states would have to develop rules related to the disclosure of hospital charges as well as estimated out-of-pocket costs. The bill also calls for the Agency for Healthcare Research and Quality to develop a report on charges and out-of-pocket costs. The bill has both Democratic and Republican co-sponsors.

Patients' Right to Know Act (HR-4803): The broadest and most specific of the three bills (also with bi-partisan support), the Patients' Right to Know Act explicitly includes ambulatory surgical centers in the group of entities required to disclose pricing information. The bill would allow HHS to define some of the specifics, but would rely on states to enact reporting requirements. It also would require health insurers to disclose information about the limitations and restrictions of a health plan, the process for appealing coverage decisions, the amount of cost-sharing required, the number of providers participating in a plan, and more.

While having public access to the cost of procedures is helpful, knowing the "retail" price is not very helpful unless you are uninsured. Those who have insurance really need to know the discounted rate negotiated by their carrier. However, many carriers see these discounted fees as proprietary information. The proposed pieces of legislation I believe try to "back-door" this issue by requiring insurers to provide the amount of cost-sharing required.

However, while knowing the cost of a procedure is helpful, it would also be good to know the quality of care provided which the bills do not address in any detail. How important is it to have good cost and quality data?

An analysis by The Fiscal Times says "publishing the cost and quality data has had a far-reaching impact on [Wisconsin, which is considered a front-runner in health care transparency], whose health care system is now considered among the best in the country. It gave hospitals with low quality ratings objective feedback for improving their performance. And the rankings motivated high cost hospitals to begin looking for ways to eliminate expensive but medically questionable procedures that didn't improve outcomes."

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Update on ACO Pilots

From an AIS Newsletter:

Provider groups gearing up to participate in the Medicare Accountable Care Organization (ACO) pilot programs created in the new health reform law face a daunting task of preparing. That’s because even though the programs start in January 2012, CMS is nowhere close to issuing the regulations defining how performance will be measured or savings computed and shared with providers, and says it can’t even discuss those topics yet. But there are some recent public- and private-sector programs that give a good idea of what to expect, experts say.

One clear implication is that the law’s ACO provisions “massively” favor multispecialty physician practices not associated with hospitals, Francois de Brantes, CEO of Bridges to Excellence, tells HRW. His private-sector organization now operates in 13 states and has paid $12.4 million to providers through programs with financial incentives to deliver safer, more effective and efficient care.

At least initially, ACOs probably will use claims-based measures and will measure savings based on a three-year trend, with the precise terms perhaps negotiated individually between CMS and each ACO to account for geographical and other differences, Larry Kocot tells HRW. A former top CMS official, Kocot now is deputy director of the Engelberg Center for Health Reform at the Brookings Institution, which has been co-sponsoring a private-sector ACO initiative that influenced the ACO provisions in the reform law.

The statute, which authorizes ACOs in fee-for-service Medicare, defines them as provider-based organizations comprised of multiple levels of providers and responsible for the full continuum of care. They are held accountable for overall costs and quality of care and share in the savings from it. The statute lists certain provider entities as eligible to participate (e.g., group practices, networks of individual practices, physician-hospital organizations and integrated delivery networks), but also allows for other groups that the HHS secretary deems appropriate.

The statute does not spell out performance measures, expenditure benchmarks, how savings would be measured, savings thresholds to qualify for payments, or even the portion of savings ACOs would get. And CMS spokesperson Peter Ashkenaz tells HRW “it’s too early for us to discuss any of this.”

With little concrete detail, the first step for provider entities wanting to participate in the new ACOs is to measure current and historical Medicare spending, and recognize that the reform law provides no new money to pay for the ACO program, says Douglas Hastings. A frequent speaker at ACO conferences, Hastings chairs the board at health care law firm Epstein Becker & Green. Then, he says, the government needs to set target savings levels and a formula for splitting savings if those targets are achieved.

While he cautions there is no basis for saying the CMS rules will come out this way, Hastings notes that an ACO project involving the Brookings Institution, the Dartmouth Institute for Health Policy and Clinical Analysis and hospitals gives 80% of the savings to providers.

ACOs under the new law, he points out, will need to have enough primary care physicians to deliver care to at least 5,000 Medicare beneficiaries. The law doesn’t specify payment methodology for the program but does allow use of partial capitation arrangements.

He says ACOs should expect to be measured on the basis of patient outcomes and satisfaction as well as cost efficiency.

Expect Use of Claims Data to Measure Quality

Specifically, says Kocot, providers should expect claims data to be used in such quality measures as cancer screening, depression follow-up and management, testing for hemoglobin A1c and lipid levels, testing for appropriate use of high-risk medications, and timely outpatient follow-up for congestive heart failure (CHF) patients. It is not yet known, he says, whether just process measures as opposed to actual results will be used as quality measures.

Kocot contends although “some ACOs will fail,” successful ones could share in significant savings, based on factors such as the results of the recent Medicare Physician Group Practice (PGP) demonstration program. After three years, he notes, all 10 participating sites in the PGP met quality goals and, in the third year, five of the 10 met savings goals and reaped a total of $25 million in rewards.

For physician groups, the steps needed under an ACO-type structure are clear and measurable, suggests de Brantes. They include avoiding hospitalizations, emergency department visits, and unnecessary use of specialists and diagnostic services, plus improving outcomes on patients with chronic illnesses, he says. With CHF patients, he adds, the bulk of expenditures may be on avoidable hospitalizations, so that groups preventing these can save “real money.”

The ACO language “seems to be implying some sort of gain-sharing,” de Brantes asserts, adding “whether it’s 50-50 or 60-40, I don’t know.” He notes that in the PGP, which involves very large groups, it has been 50-50.
For hospitals, measuring and compensating for performance in an ACO is “tremendously challenging,” he contends.

The scope of services is far greater, he explains, and you’re dealing with inpatient, acute medical and even outpatient services if the hospital has a clinic. Computing savings becomes “very tricky” since you have to assess such things as what should be the prevalence of knee replacements and strokes. There might be 500 or more measures, says de Brantes.

There are issues even for multispecialty group practices, de Brantes adds. If the group is already doing well, according to de Brantes, it may be hard to achieve additional savings. And practices tied in with hospitals may have another issue since the revenue gain of a small reward stemming from cutting hospital utilization may be dwarfed by the loss of hospital revenue.

Report: Commercial Revenue Decreasing Among Health Insurers

From a report by Mark Farrah (http://www.markfarrah.com/healthcarebs.asp):

Due to economic and demographic changes health insurers have seen a shift in sources of revenue. Comprehensive commercial coverage as a percentage of total revenues has fallen from 59% in 2006 to 51% in 2009. The growing senior population accounts for some of the growth in the Medicare segment, managed Medicare products now account for 21% of health plan total revenues, up from 16% in 2006. Revenue from state Medicaid programs also grew as a percentage of total revenues from 10% in 2006 to 14% in 2009, a consequence of current economic conditions and a result of more states moving toward managed care to insure low income residents.

With health care reform making more individuals eligible for Medicaid, look for this trend to continue. This trend away from commercial business is the major reason United Healthcare started its emphasis on Medicaid managed care several years ago.

Shocking Finding: E-Prescribing Reduces Error Rate at Brigham and Women's Hospital!

OK, this is certainly not a surprising finding. What I don't understand is why aren't more hospitals using this technology in prescribing drugs for their patients? It is a no-brainer. From HealthLeaders:

Using bar-code technology can substantially reduce transcription and medication errors, and prevent potential adverse events, according to a new study funded by the Agency for Healthcare Research and Quality.

Researchers at Brigham and Women's Hospital in Boston compared error rates in order transcription and medication administration at an academic medical center before and after it implemented a bar-code electronic medication-administration system (eMAR). The eMar system sends electronic alerts when a patient's medication is overdue or if there is a mismatch between the bar codes on a patient's wristband and the medication.

Of the 14,041 medication administrations and 3082 order transcriptions researchers reviewed, they noted 776 errors unrelated to timing on intensive care units that did not use the bar-code eMAR, compared to just 495 on units that had implemented the system--a 41.4% relative reduction in errors.

The rate of potential adverse drug events also fell just over 50%, and the rate of timing errors in medication administration dropped by 27.3%. The authors extrapolated those results to estimate the potential impact on the hospital over the course of a year.

"Because the study hospital administers approximately 5.9 million doses of medications per year, use of the [bar code system] is expected to prevent approximately 95,000 potential adverse drug events at the point of medication administration every year in this hospital," researchers wrote in their report, which was published in the May 6 issue of the New England Journal of Medicine.

In addition, they expect the technology to reduce the number of early or late medication administrations by 270,000 per year and to prevent approximately 50,000 potential adverse drug events related to transcription errors.

EMR Benefit: Disease Mapping Across Communities

Electronic medical records have been hailed for their potential to make care more cost efficient those some in the provider community have their doubts. In Durham, NC another benefit of EMRs has been realized (from HealthLeaders):

When Durham-based Duke University and the Durham, NC, community launched Durham Health Innovations (DHI) in April 2009, they knew they were embarking on a groundbreaking project that would use medical informatics to identify chronic disease interventions and improve the health of patients. But at some point during the recently completed planning stages of the project, team members realized that they had stopped talking about patients—and started talking about communities.

"We realized that we were doing a whole lot of work on individuals," says Lloyd Michener, MD, chair of the Department of Community and Family Medicine at Duke. "Until this project, we hadn't clearly seen how individuals were part of the same networks, the same communities, and the same neighborhoods. In many cases, it makes sense to do things at the community and neighborhood level rather than one at a time at an expensive doctor's office."

The project uses data from Duke's electronic medical records (EMR) system. The university runs customized software that assigns geographic locations to the data, also known as geocoding. This HIPAA-compliant process lets team members look at areas of disease clustering.

The technology allows DHI to track progress and create interventions to prevent health problems from worsening in real time, says Gayle Harris, public health director in Durham County and member of the DHI oversight committee. The disease clustering maps are "amazing," says Harris, adding that they helped DHI identify disease hot spots at the neighborhood level.

"We shared the data with community members so they could see the patterns of illnesses that were affecting the community and the burden that imposed and talk about the interventions they would like to implement," says Michener. "It helped the communities galvanize and come together to find solutions."

Ten disease-based project teams, composed of diverse members from the Duke health system and the Durham community, used the data to develop plans to reduce death or disability from specific diseases and improve overall health outcomes.

"This is actually fairly exciting," says Michener. "With all the talk about unhappy doctors and patients and healthcare not working, this feels like people starting to take control of their own destiny and saying we can do better."

DHI project teams are now in the process of implementing their plans to evoke long-term change in the community. This month, Medicine on the 'Net® took the opportunity to follow up with them on the progress that they've made this past year.

It takes a village to improve health outcomes Michener was impressed by the deep level of interest that the project created in the tight-knit Durham community.

The project involved nearly 1,000 participants from Duke, the community, and 90 agencies who volunteered to work together to develop a better way of providing healthcare.

"This really brought the community together," Michener says. Team members involved in the project discovered that there were groups in the community that were working on similar issues, but that they weren't aware of one another's existence. "I couldn't count how many groups were working on obesity in the Durham community," he says. "The project let people connect and coalesce."

One of the teams has started working with a free clinic in the community to provide mammograms and cancer screenings using grant funding, says Harris. This opportunity came about because the project united people who wouldn't normally work with one another, she says. It helped them tap into current resources to put something in place that had been missing.

Project team members have garnered a new understanding of their community and have come away from the project feeling energized and ready to set their changes in motion.

"We've made a point of saying that health is everyone's business and it's going to take all of us," says Harris. "With that ongoing message, people will see that they have a part to play."

Targeting obesity—one child at a time
The obesity committee decided to tackle obesity in the Durham school system. The team believes that this will also allow them to affect change in parents, teachers, and other members of the community. They selected a target school as part of their first-year effort, and it has been cooperating with their efforts.

"The school system was the lowest-hanging fruit in terms of the obesity project," says David Reese, MBA, chief operating officer of the Inter-Faith Food Shuttle and vice chair of the Partnership for a Healthy Durham, where he co-chairs its obesity and chronic illness committee.

"It was a demographic in which we had the ability to affect the greatest change." Duke's EMR system did not store data on weight checks, and some of the children were not in the Duke system. As a result, the team needed to visit the school to gather the vital data that were missing. They collected the heights and weights of all the students at the target school to identify overweight children.

They are currently in the process of implementing a nutrition-based cooking class called Operation Frontline. The school is also applying for a USDA grant that could provide healthy fruit and vegetables to the school.

Reese says the team will move cautiously and at a sustainable pace during the first year. He is optimistic about the project and believes it will yield "tremendous results." Without the project, he says efforts to tackle this obesity in the community would continue to be fragmented.

Creating a community health system
One unexpected outcome from the project was the community's support of having their healthcare data shared across providers. "They were actually comfortable with data being shared and aggregated so we could look at how problems affected their neighborhoods," says Michener.

In one example of data sharing, project team members discussed the benefits of creating a common, patient-centered medication list so they didn't have to reiterate their list of medications to every healthcare worker they saw.

Although members of the community support data sharing, they don't want a specific EMR to tie them down, especially one owned by Duke. Likewise, Duke doesn't want the responsibility that comes with owning large amounts of patient data.

Duke has already determined that it currently stores too much information and is trying to limit it to 20 to 50 data points. As a result of project team discussions, DHI team members no longer believe they need a single electronic medical record system for Durham county. Instead, they are now discussing how to create a common health record that allows them to share and aggregate data in their community.

"That's a major conceptual shifting," says Michener. If DHI can develop a common health record, he says annoyances such as medication lists will become a thing of the past. Such a health record could update and share medication lists across multiple providers.

"We're actually looking at a wireless community in which health related data is shared—with permission—freely across the health system," says Michener. "It's a rethinking of healthcare. Chronic disease is a major problem in healthcare. You can't just deal with this in the hospital and medical setting. You have to include the churches, schools, the health department, and the workplaces in the environment."

In addition to the Duke data, the project teams determined that they want to collect information from non– health system sites such as workplaces and schools (with permission) and upload the data to a single database.

"There's still a lot of work to be done, but the whole notion of having a plan that the community embraces is just such a good thing," Harris says.

GAO to CMS: Monitor Bundled Payments to ESRD Patients

As I have mentioned in previous posts, I think that bundled payments are one of the critical ways to control the cost of health care in this country. Obviously given its dominant funding position, the Medicare program's experience in bundling payments will be important to watch. The Government Accountability Office recently released a report on Medicare's pilot program to bundle payments for Medicare recipients with ESRD scheduled to begin 01/01/11. Highlights follow:

Under the current fee-for-service system of payment, certain demographic groups showed above average Medicare expenses for injectable ESRD drugs. For example, Medicare spent $782 per month in 2007 on injectable ESRD drugs for each African American beneficiary. This was nearly 13% higher than the average for all beneficiaries on dialysis and also was higher than for other racial groups.

In addition, monthly Medicare spending for beneficiaries with additional coverage through Medicaid was about 6% higher than the average across all beneficiaries on dialysis.

Although GAO did not identify those factors that created these differences, staff did obtain information from 73 nephrology clinicians and researchers on the factors that they thought would result in above average doses of injectable ESRD drugs. This included more than a dozen factors—such as chronic blood loss and low iron stores—as likely to result in above average doses of injectable ESRD drugs.

As required by law, CMS's proposed design for the new payment system for dialysis care includes two payment mechanisms to address differences among beneficiaries in their costs of dialysis care.

With the first payment mechanism—a case mix adjustment—CMS proposes to adjust payments based on characteristics such as age, sex, and certain clinical conditions, which are associated with beneficiaries' costs of dialysis care. The second proposed payment mechanism—an outlier policy—calls for making additional payments to providers when they treat patients whose costs of care are substantially higher than would be expected.

Missing from these preliminary plans, though, is to what extent CMS will monitor the effects on the quality of and access to dialysis care for different groups of beneficiaries. In particular, these areas should focus on above average costs of dialysis care under the new bundled payment system, GAO said.

This monitoring should begin as soon as possible once the new bundled payment system is implemented and should be used to create potential refinements to the payment system, GAO added.

Medical Homes Save Money!

Yesterday I talked about a study that revealed how little medical students learn about the costs of health care. Bundled payments, I said, is one way to provide the incentive for docs to pay attention to the cost of care. Medical homes are another way to get primary care docs involved in providing more effective care. So do patients in medical homes use fewer resources? A story from Kaiser Health News revealed the following:

Some health policy experts and clinicians have long maintained that, in the effort to reduce health care costs and improve patient outcomes, there's no place like (a medical) home.

A new study in the May issue of the journal Health Affairs seems to validate that notion.

Medical homes — where primary care doctors are held responsible for coordinating care for individual patients – are seen as a model for lowering costs without sacrificing quality. (Related story: Living In A Medical 'Home’).

Dr. Rob Reid and colleagues from the Group Health Research Institute examined the costs and patient outcomes from a team of medical professionals providing care for 10,000 patients at a Seattle-area Group Health "medical home." The conclusion? The medical home produced significant cost savings.

For example, during the two years studied, the team's patients had 29 percent fewer ER visits and 6 percent fewer hospitalizations compared with other Group Health clinic patients. There were start-up costs — $16 per patient per year — and results took a couple years to provide the bulk of the savings. But, ultimately, Reid said that for every $1 it invested in the system, Group Health saved $1.50 by keeping patients out of the ER and the hospital. And the medical home patients "reported better care experiences" as well.

The strategy is now being expanded to all 26 of Group Health's Washington state medical centers — covering more than 400,000 patients. Reid, in an interview, called primary care "a real team sport where the primary care clinician is the quarterback."

If such plans sound like managed care organizations such as Kaiser Permanente, that's because they have a lot in common, including the primary care doctor at the center. But patients at Group Health can self-refer to certain specialists and the approach rewards doctors, not simply the organization, to improve health outcomes.

There's evidence that the medical home, "works and works very well," said HHS Secretary Kathleen Sebelius, at a Tuesday Health Affairs briefing. She also noted that primary care will be important to transitioning to a lower-cost health care system in America. But historically, it's been difficult to attract the necessary workforce needed to provide that type of care. "The reimbursement system clearly has penalized primary care providers over the last several decades," she said.

For instance, a second Health Affairs study says doctors could leave as much as $3 million on the table over the course of their careers by choosing primary care as their focus instead of certain specialties.

So it's no wonder that in order for the medical home model to be successful, a few things must be changed, according to Group Health's Reid: The payment system has to be changed to reward better outcomes and boost primary care, electronic medical records and e-health should become a focus and medical teams need to replace lone doctors as the primary providers of care.

As it stands, most doctors in America are paid per patient visit. Doctors at Group Health are on salary, but their salaries also have financial incentives built in — like increased payments if their patients are more satisfied or if they receive better quality scores for their care — something others say could pose significant cost savings if implemented elsewhere. With such changes, the reasoning goes, doctors get to spend more time with each patient because they're not focused on non-medical tasks. Getting doctors to buy in, however, is a significant task.

Speaking of Payment Provider Bundling

As a follow-up to my earlier post this morning, here is an excerpt on provider bundling from Modern Healthcare:

"Bundling payments to hospitals and doctors for episodes of care is gaining momentum in the federal government and in the private sector as a way to increase provider accountability and improve care -- but lingering challenges may deter its application on a broader scale." Demonstration programs that use bundling -- paying doctors and hospitals a fixed amount for a package of services or time period per patient -- have helped hospitals, patients and doctors, save money. The Obama administration also hopes it can help save Medicare $17 billion over a decade.

But, "'The private sector is right not to wait around' for the federal government to take the lead on bundling, says Deirdre Baggot, administrator for cardiac and vascular services at 361-bed Exempla St. Joseph Hospital in Denver. 'They want to explore this as a viable payment strategy.' ... Bundling has progressed more slowly at the federal level because of a series of snags, even though the concept has been on HHS' agenda for decades. Medicare in the 1990s conducted a successful demonstration on payment bundling for heart bypass procedures, but various explanations have been given for why the project hasn't become an actual payment model. What we were told by the CMS is the project was very successful, but that they lost focus trying to get ready for any Y2K problems, Baggot says"

OK Y2K was now over 10 yrs ago. I think CMS can move onto bundling. Obviously bundling was not a priority item for the Bush administration. It was too busy fighting unnecessary wars, cutting taxes for the wealthy and trying to privatize Social Security.

Future Doctors Need Better Training on Medical Costs

Good article (http://www.nytimes.com/2010/05/04/health/04cost.html?ref=science) in the NY Times today on the efforts of medical schools to teach their students about the cost of care. While efforts to do such training have improved there is still major room for improvement:

Nonetheless, the effort has not been universal. According to a recent A.A.M.C. survey, about 60 percent of 102 American and Canadian medical schools include some material on health care costs, although the time they devote to it varies widely.

Dr. Prescott said a separate survey of 155 large teaching hospitals that together sponsor more than two-thirds of accredited residency programs in the United States found that only 41 percent had made sure that all their residencies included material on health care costs.

The article goes onto describe how volunteering at health clinics is another way medical students and residents are exposed to cost issues.

So it is certainly not a surprise then that medical costs have been so hard to contain when both the people who prescribe them and the the people who receive them know show little about the cost of the care.

This is why I believe the movement towards bundled provider payments have such promise. It will force medical providers to really look at the cost and necessity of the care they prescribe. Consumers also have a role to play in the cost equation but I really believe medical professionals are in a much better position than the average consumer to make the correct call on the necessity of a particular procedure/test.

Study: EMR Saves Lives

In a previous post I noted that a study of the electronic medical record system employed by the VA has saved the American taxpayer money. Well today I would like to cite the first study that has showed that EMRs also save lives (from the Washington Post):

Doctors at a California children's hospital have found the first evidence that using an electronic system to communicate their orders may save lives.

After the system was introduced in 2007, the hospital witnessed a 20-percent drop in mortality rate, the equivalent of 36 fewer deaths over a year and a half.

"It's the lowest rate ever observed in a children's hospital," said Dr. Chris Longhurst, of Stanford University and Lucile Packard Children's Hospital in Palo Alto, California, whose findings are published in the journal Pediatrics. "It begs the question how many lives could be rescued on a national level."

In 1999, a report from the Institute of Medicine blamed medical errors for between 44,000 and 98,000 deaths per year in the United States. Many hospitals have since introduced so-called computerized physician order entry, or CPOE, in an effort to lower that number.

Such systems allow doctors to relay prescriptions to pharmacists without delay, and without the need for the pharmacist to decipher doctors' scrawl.

"What used to take 40 minutes or so now takes 20," Longhurst told Reuters Health.

Although close to three in ten U.S. hospitals use CPOE, no one had been able to show a decrease in mortality until now. In 2005, a Pittsburgh hospital even reported an increase in the number of child deaths after it implemented the system.

"There have been a couple of studies previously that have taken a similar approach and have found the opposite result" of the current study, said Nir Menachemi, an expert in health information technology and policy at the University of Alabama at Birmingham. "I was more surprised by those studies."

The debate over whether CPOE is working as intended is hardly over, said Menachemi: "I think it would be foolish to believe that any one study can end the discussion."

According to Longhurst, what set Packard Children's Hospital apart was its careful and well-planned implementation of CPOE.

He said the hospital, which has a total budget of between $600 and $700 million, had spent about $50 million on the project.

"We have realized some cost savings, but I could not tell you that we've saved money," he said.

However, the hospital has saved lives, it appears. When analyzing about eight years' worth of data, the researchers found that average mortality dropped from slightly more than one death per 100 hospital discharges to around 0.7 with the introduction of CPOE.

The system has also helped doctors limit some unnecessary procedures such as blood transfusions, which Packard Children's Hospital had overused, according to Longhurst.

While it's hard to prove that CPOE is directly responsible for the decrease in mortality -- which could have been brought about by other improvements during the same period -- the researchers did the best they could to account for those factors.

"The cards were almost stacked against finding positive results," said Menachemi, noting that the hospital had admitted more severely ill children after the new system was taken into use.

Despite the encouraging findings, Longhurst said he was concerned about President Obama's call for rapid implementation of the electronic system.

"It should be rolled out by experienced experts," he said. "And there are only so many experts in this country."