Accountable Care Organizations, Bundled Payments and More. Presented at AAOS Practice Forward 09 2011


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Specialists and other health care providers must embrace cultural change in order to succeed under Accountable Care Organization rules, bundled payment initiatives, and other CMS and private payor innovations

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  • As I was getting ready to come out here for this course, I saw that Kevin Pho was kind enough to re-post one of my blog posts on ACOs this Wednesday. So if you’d like to refer to this post – and I’d suggest you follow the links to other materials if you are interested in this subject – you can find it on either by scrolling back to Wednesday’s posts, or searching for my name on Kevin’s blog. This morning, AHLA posted a white paper on ACO quality measures which I coauthored –
  • Orthopedic surgeons, like all specialists, need steady flow of referrals, and adequate reimbursement for services. Health reform is making it harder to succeed. Need to get smart about ACOs and other shared savings programs, and begin making changes in practices in order to prepare for the future. If you stand still – or sit still, like Rameses II, you could get swallowed up by the sands of the desert.
  • The goal for all of us in health care these days is to be better integrated with other parts of the system, so that we can do more with less in the future. Everyone from the White House to the CMS Center for Innovation to all of us in this room knows that we will have to do more with less. The key to future success will be managing patients’ care, and managing an episode of care that extends beyond a surgery to encompass pre-admission and post-discharge services.
  • Who is this man, and why is he smiling? … Don Berwick has been talking about The “Triple Aim” for years {aswe heard about from Valinda this AM}since his days with IHI {Inst. For Healthcare Improvement} this philosophy aims for(1) Better care for individuals, (2) Better health for populations, (3) Reducing per-capita costs. It is now the official policy of CMS. The CMS Innovation Center has been handed a pile of cash to spend on figuring out how to translate this vision into reality. They are starting to get creative – bundled payments initiative, which we’ll discuss in a bit. {Do you know the definition of a camel? A horse built by a committee} And that is how we can think of the ACO – as Lambert alluded to earlier, it’s a legislative compromise that CMS and other agencies are now trying to implement. There are elements of the ACO that will provide to be very important and valuable, but the ACO per se, unless there are significant changes in the final regs … not so much.
  • Population health management is what it’s all about. CMS is leveraging its authority by saying in the regs that an ACO must have at least 5000 patients (sort of a low number), but the effect of the ACOs practices will be magnified because the patients are attributed to the ACO retrospectively – based on percentage of PCP encounters. This means that an ACO must treat each patient who comes in the door as someone for whose care it will be on the hook financially, because we won’t know til later whether that person is a member of the ACO or not. Congress and the agencies did not want to restrict patient choice, so a patient will not be restricted in choice of providers – even if that means the patient goes outside your network for care which hits your budget, assuming the patient is ultimately assigned to the ACO.
  • ACOs are supposed to improve population health quality while reducing the cost of caring for that population. If they do, they get to share in the savings. Based on PGP Demo – physician group practice – data shared by CMS when these demo participants re-upped for an additional term. : 10 Participants – only 1 doing really well (Marshfield Clinic)Gottathink these guys planned carefully – Geisinger, Billings Clinic, Dartmouth, etc.All these providers improved their qualitry metrics on Diabetes, heart failure, preventive care …Are the results random? WHY? Rural Wisconsin … Something in the milk up there?
  • We can trace the origin of the term ACO to Elliott Fisher, of Dartmouth Health Atlas fame – he and his team conceptualized this model. So I’ve described what the government wants to accomplish through ACOs, and how they want to incentivize provider organizations. As of right now … nobody’s ever seen an ACO, the regs are not yet final, – and yet over 60% of health care provider organization execs surveyed say that their organization will be one. Medicare ACO established under ACA. Specified criteria for approval are in statute and regs. Like a unicorn: “Nobody’s ever seen one, but everyone can describe what it looks like.” Let’s a look a little more closely at what you actually have to do to be enrolled as an ACO, and also at the broader context. – There’s the pioneer program (for orgs that are already pretty mature in terms of IT infrastructure and organizational readiness) – applications were due a week or so ago {anybody here in a system that applied??} The ACO program was supposed to go live in January – at this point even the fallback date of July 1 seems unlikely. Meanwhile, as many of you know, commercial payors have been rolling out ACO-like programs, shared savings programs, and some of them have been in place for a couple years or so – like the Alternative Quality Contract of BCBSMA, back in my neck of the woods. – Getting good reviews so far, though of course “further study is needed”
  • So – What does the statute require?1.Lgl entity2.3 yr commitment3.1-way & 2-way risk sharing. Statute calls for 1-way (meaning providers can chare in savings, but are not exposed to risk). CMS using its general authority to innovate under the ACA basically undid this political compromise in Congress by mandating exposure to downside risk – which of course makes sense from a policy perspective – skin in the game. Initially, however, an ACO may elect to have the upside only, in which case it gets a smaller percentage of the upside. If you take the downside risk, have to reserve some $$ against the possibility that you’ll have to repay it.4.Full network needed either by membership in ACO or by contract. PCPs may belong to only one ACO – specialists: many. – keep this point in mind, we’ll come back to it5. Key requirements are patient engagement and patient centeredness. Inclusion of these terms in statute by congress really represents a watershed moment. They’ll be more fully defined in the regs.6. Other regulatory exceptions/workarounds
  • For all the issues we may have with the content, and despite one or two turf battles, I have to say that the interagency coordination that was required in order to pull together - and publish simultaneously - all of the regs and guidance was 1remarkable.+ Coord w HHS OIG, FTC, DOJ, IRS+ Ltd Stark & AKS & CMP waivers, just enough to make ACO work+ IRS guidance : A-OK so long as no private inurement to 501c3 insiders, or ACO insiders/members+ FTC/DOJ antitrust -- safety zone, mandatory review (preapplicatin review), and middle ground (expedited rvw). -- Based on market share.
  • Largely because of the tremendous investement that will be needed to makew this work (and little guarantee of ROI) {unless you have the secret milk recipe from Marshfield Clinic} JAMA OF ORGANIZATIONAL CAPABILITIES1. Overestimation of Ability to Manage Risk.2. Overestimation of Ability to Use Electronic Health Records. 3. Overestimation of Ability to Report Performance Measures.4. Overestimation of Ability to Implement Standardized Care Management Protocols.FAILURE TO BALANCE INTERESTS AND ENGAGE STAKEHOLDERS5. Failure to Balance the Interests of Hospitals, Primary Care Physicians, and Specialists in Creating Governance and Management Processes to Adjudicate Differences.6. Failure to Sufficiently Engage Patients in Self-care Management and Self-determination.***** 7. Failure to Make Contractual Relationships With the Most Cost-Effective Specialists. ***** - NOT JUST ABT UNIT PRICING - HOW MANY REVISIONS, HOW MANY READMOISSIONS, etc.8. Failure to Navigate the New Regulatory and Legal Environment. 9. Failure to Integrate Beyond the Structural Level. FAILURE TO RECOGNIZE INTERDEPENDENCIES10. Failure to Recognize the Interdependencies and Therefore the Potential Cumulative “Race to the Bottom” of the Above Mistakes. THE WAY FORWARD: MEASUREMENT AND MANAGEMENT
  • To focus on one cost for a moment, there are a couple of estimates floating around out there that say the IT infrastructure investment required by a typical medical center in order to participate in the ACO initiative would be over $1.5m+ It might be worth it – as we heard from Shannon – you can make targeted investments in programs like this that do pay off+ In this era of HIPAA-compliant cloud computing and SAAS, maybe this expenditure can be broken down/spread out
  • + Retro Assignment+ Put up money to cover potential losses+ Lack of a roadmap to success – as Shannon said, anyone participating in these programs now is really going to be a pioneer+success will be measured not just by costs saved, but by quality of care – 65 quality measures to be tracked in order to participate+ 50% of PCPs must be meaningful users of EHRs by startof year 2 (and what if they’re not?? How can you control this??)+public reporting of ACO membership, performance, how using shared savings, quality performance scores+ % of savings the ACO can receive is capped by CMS –3.9% for 5K member one-sided model2% for 60K member one-sidedtwo sided 2% across the board+benchmarks and actual avg per capita bene spending need to be risk adjusted - so that ACO doesn't benefit purely bcs of pt selection bias -- CMS requested comments on this+CMS has also requested comments on the two-sided model in regard to whether any of its proposals would triggerthe application of any State insurance laws and ways that it can work with ACOs and States to minimize the burden ofany additional regulation.+ACO can be terminated for risk selection or poor quality; can't participate in more than one shared savings program
  • The statute says this should be in place for January 1, the regs contemplated a July 1 start, but even that is in question now. Valinda has left the building, so we can’t ask her when to expect the regs, though CMS keeps saying: very soon.
  • … even though we don’t quite know what they are yet.Therefore, in order to prepare ourselves for the future …. We need to invest in developing the right conditions for success, in amending the soil, if you’re a gardener …
  • Clearly, a culture of collaboration will be the key to success under new payment systems where we’re seeking to manage care and cost across an episode of illness – not just in an acute care setting or in a post acute setting, not just the professional fees and not just the facility fees. All parties will need to come together and pull in the same direction in order to achieve success under shared savings and other new modles of payment. This requires adopting models such as the medical home, etc. ---
  • +That’s what the PCPs need to do, you’re thinking, but what about us?+ Be the “go-to” practice in your specialty – you can participate in multiple ACOs, or in multiple other arrangements, be they commercial or other Medicare initiatives, including the bundled payment initiative.In order to do so you need to+embrace the culture of collaboration+know your costs – you cannot manage what you do not measure
  • You may not be enrolling in an ACO (few are unless they change dramatically in the final regs), but you do need to prepare now for commercial “ACOs”
  • ACO takes a pretty standard approach – due to statutory constraints.Other CMS initiatives are much more open – and CMS has in fact announced: the door is open, please let us know what you think would be a good initiative, or extension of an existing initiative. And the private sector, commercial insurance, is of course the most freewheeling of them all. Many payors across the country are already operating programs that they refer to as ACOs. … and they do a variety of different things. - again – BCBSMA - AQC
  • Here’s a thought – published in Health Affairs a while back, in reaction to the federal regs - In brief, Goldsmith recommends risk-adjusted capitation payments for primary care, fee-for-service payments for emergency care and diagnostic physician visits, and bundled severity-adjusted payments for episodes of specialty care.  Primary care would be provided through a patient-centered medical home model, which would likely have a collateral effect of reducing the total volume of emergency care and diagnostic physician visits.  Specialty care would be provided through "specialty care marts," ideally more than one per specialty per market to maintain a little healthy competition. … one of these payment systems should be “just right” for each provider type.
  • And in fact, CMS has now rolled out the bundled payment initiaitve -- The Bundled Payment Initiative is just one of many that we will see coming out of the CMS Center for Innovation – and this is one to pursue if you want to get your feet wet – As we heard from Valinda - You can basically offer a bundled bid on a set of services – preadmission, inpatient, post-discharge, and if you meet CMS crieteria (including, eg, having 50% of physicians in the applicant group as meaningful users of EHRs) As Wade mentioned earlier, There will be another Bundled Payment Pilot (specifically authorized by the health reform law) starting in 2013, and CMS is likely to extend the scope of the bundled payments initiative after the initial projects get going.
  • You need to start to shift your way of thinking, if you have not done so already, about the nature and definition of a “case” – much broader than you may be used to thinking about it. You need to think about clinical and business opportunities in a broader way as well, and then focus on what value you can bring to the whole. How can you offer value engineering advice to the hospital, and to the inpatient and outpatient rehab programs you refer your patients to post surgery?I have to confess that over the course of my career I may have heard one or two surgeons, and maybe even an orthopedic surgeon, suggest that he had some thoughts on how a hospital could be better managed … Well here’s your chance to speak up, offer concrete input that can lead to change, and be in a position to share in the “shared savings”
  • Remember as specialists you need to be attuned to these developments in a different way than hospitals and PCPs – Can’t ignore them, but you need to acknowledge you’re not the prime mover on the road to ACO – You can however move your colleagues and institutions to participate in the ACO initiatives or related initiatives coming down the pike. And some of these initiatives, build on the same premise as the ACOs – that with appropriate case management (in the broadest sense possible) in place, we can achieve the triple aim – better care, better health, lower costs.
  • You cannot manage what you do not measure – So Job 1 – if you’re not already doing this – you need to get a handle on your costs. Understand them, Understand what goes into them. Explore whether there are any immediately apparent savings that may be pursued without sacrificing quality. Explore opportunities for benchmarking best practices – through the Academy or otherwise. If you’re serious about this – start to get a handle on the hospital’s costs – you may be surprised at the cost ramifications of decisions that you make, that never hit your own bottom line. Also – understand the data use agreement that you can put in place with CMS in order to access payor level data.
  • A key issue for ACOs and other shared savings modelswill be effective contracting with the most cost-effective specialists. This is NOT just about unit pricing; it’s about how many revisions you have, how many readmissions you have – Need good quality care and good quality data to back it up in order to succeed.
  • I hope I’ve provided enough of a background today so that you can start planning for successfulinternal preparations and ultimately partnerships with other providers in order to be part of the shared savings initiatives that are coming down the track – As some of you may know, this monumental temple at Abu Simbel has been saved from the sands of the desert – and from the rising waters of Lake Nasser behind the Aswan Dam – the whole structure was disassembled and moved to a new location. I challenge each of you to be as open to change in the name of self-improvement and self-preservation.
  • The rules are changing, and whether it’s through the ACO program per se, or through other public or private sectors initiatives, now is the time to seize the initiative and establish your practice as an integral part of a high-performing health care system.
  • Thank you for your attention .
  • Accountable Care Organizations, Bundled Payments and More. Presented at AAOS Practice Forward 09 2011

    1. 1. The Accountable Care Organization and the Specialist<br />American Academy of <br />Orthopaedic Surgeons<br />Practice Forward: Managing Your Practice in an Era of <br />Health Care Transformation<br />Chicago, IL<br />September 23-24, 2011<br />David Harlow JD MPH<br />The Harlow Group LLC<br />blog •<br />twitter • @healthblawg <br />
    2. 2. Disclosure<br />My clients include health care providers and health-care-related businesses, including on-line patient-facing services. As a lawyer, I can’t really tell you who they are.<br />I speak about health care business, legal and policy issues on a regular basis, at live conferences and via webinars. Some organizers of these events cover my expenses and/or offer honoraria.<br />None of these relationships constitute a conflict of interest with respect to today’s presentation.<br />
    3. 3.
    4. 4. We are challenged by shifting sands<br />
    5. 5. High-performing specialty practices can be integrated into high-performing health care systems<br />
    6. 6. What are the federales trying to accomplish?The “Triple Aim”Better careBetter health Lower costs<br />
    7. 7. ACO is one tool to get providers to manage a population of patients<br />
    8. 8. How? Financial incentives. <br />Graphic courtesy Jaan Sidorov, Disease Management Care Blog<br />
    9. 9. Whatis an ACO? <br />
    10. 10. ACO Basics<br />Single Entity<br />Three-year commitment<br />One-way or two-way risk-sharing<br />PCPs and broader network <br />5000 patient minimum<br />Patient engagement<br /> Patient-centeredness<br /> Stark/AKS<br /> IRS<br /> Antitrust<br />
    11. 11. ACO regulations coordinate across numerous Federal agencies<br />
    12. 12. All in all, ACO risk/reward ratio seems skewed<br />
    13. 13. IT infrastructure cost estimate >$1.5m<br />
    14. 14. More details from the ACO rules, and traps for the unwary<br />
    15. 15. Rules not finalized yet for a program due to begin very soon<br />
    16. 16. Over 60% of health care provider executives say they intend to form an ACO<br />
    17. 17. Culture of Collaboration<br />
    18. 18. Focus on opportunity for specialists<br />
    19. 19. Even if an ACO is not in your immediate future, these principles will affect you<br />
    20. 20. Commercial plans are non-standardized<br />
    21. 21. Jeff Goldsmith: Suggests 3 commercial ACO payment systems for 3 different types of providers<br />
    22. 22. Bundled Payments<br />CMS Bundled Payment Initiative<br />ACO “lite”<br />MS-DRG-specific<br />Gainsharing<br />. . . Bundled Payment Pilot - 2013 <br />
    23. 23. What can you do now to prepare for the future? <br />
    24. 24. Specialists are key components of any compre-hensive network<br />
    25. 25. You cannot manage what you do not measure<br />
    26. 26. Opportunity: Be the go-to guys (or gals) – cost-effective specialists<br />
    27. 27. .<br />
    28. 28.
    29. 29. for contact info <br />txt dharlow to 50500<br />or scan the QR code<br /><br /><br /><br /><br />Thank You<br />David Harlow JD MPH<br />The Harlow Group LLC<br />