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.