Of Rising Risk and ACO Success in the Medicare Shared Savings Program: Community Health Network and Pharos Innovations

To each according to their need, from each according to their ability.

While that famous (and paraphrased) adage was originally used to attack capitalism, it's also not a bad way to think about effective care management programs.  Ill persons have varying needs, and care providers have varying resources.  In a resource-constrained environment, the health system that matches the right needs with the right resources will win.

A case in point may be one of the few Medicare Shared Savings Program (MSSP) ACOs that met CMS' savings threshold.

"Community Health Network" is a joint venture between HealthEast Care System and Entira Family Clinics that serves Medicare beneficiaries in Minnesota's Twin Cities.  According to this Pharos Innovations case study (which can be found here), the organization analyzed their population's past utilization and future risk and realized that a relatively small group of beneficiaries were high need.

High need was defined as those individuals with "rising risk" or what the Population Health Blog has termed the "sweet middle." These are individuals who are not only burdened by chronic medical conditions (such as heart failure), but have a constellation of issues (such as a recent discharge from a hospital) that also can be mitigated or impacted.

Once these patients were identified, Pharos Innovations provided the "transition coaches" and "engagement specialists" for the high need/rising risk/sweet middle patients who were most likely to have an admission and/or readmission.

By pinpointing state-of-the-art heart failure treatment protocols, care management, self-care coaching and discharge-care interventions, avoidable admissions and avoidable readmissions - compared to a control group of patients - dropped in significant manner. That was enough to skew the ACO's overall admission and readmission costs downward and reach CMS' savings threshold.

Population Health Blog lessons:

1) If a healthcare organization is willing to take on the financial consequences of health insurance risk, it will have to array its covered population's risks from high to low, and deploy interventions that can address the needs of patients at high - yet modifiable - risk.

In other words, within any high risk subpopulation are sub-populations with specific health care needs that can be addressed with smart population-based care management interventions. 

2) The PHB looks forward to these data appearing in the peer-reviewed literature.  In the meantime, kudos to Pharos Innovations for achieving credible outcomes based on a comparison to a valid control group.

3) Patients who don't have to go into a hospital are better off for it.  Despite Karl Marx's antipathy, aligned economic incentives can be win-win for everyone.  Community Health Network deserves to be financially rewarded by CMS.

4) There is a good reason to believe that Community Health was destined to do well versus the other MSSP participants. As pointed out here, physician leadership may be one ingredient to the MSSP ACO secret sauce. According to the case study linked above, Community Health Network expended considerable resources to convince their physicians that this approach was a good idea.  What's more, their board is majority physician controlled.  In addition, Pharos Innovations was started by a doc and they have additional physician representation on their board.

The Majority of Medicare ACO Participants Appear to Have Lost Money in 2014

There's no other way to put it.

Like many wonks, the Population Health Blog glommed onto this recent CMS report report on the 2014 performance of the Pioneer and Medicare Shared Savings Accountable Care Organizations (ACOs). 

While there's some quality reporting data, the PHB decided to focus on the economics.

It ain't pretty.

Briefly, as the PHB understands it:

The 20 Pioneer and 333 Medicare Shared Savings Accountable Care Organizations generated a total of $411 million in savings.

Among the Pioneer participants:

15 out of 20 generated savings.  Only 11 of the 15 earned enough savings to trigger a payment from CMS that totaled $82 million.  The PHB calculates that's an average payment of approximately $7.5 million for each ACO. 

Three of the Pioneer ACOs had to provide clawbacks to CMS of $9 million, or an average $3 million each.

Of the 333 Medicare Shared Savings participants:

92 out of 333 saved $806 million in health care costs.  They received checks totaling $341 million.  The PHB calculates that's a payment of $3.7 million per ACO. 

Another 89 of the Medicare Shared Savings reduced costs, but not enough to trigger a payment from CMS.  That also means that the rest of these ACOs didn't even reduce costs.

The PHB's conclusions:

ACOs in the Pioneer program have about a 50% chance of getting some money back.  Assuming that there are from $2 million to $7 million per year in program support costs - in addition to the all of the foregone billable services - it's not clear to the PHB that the business model is sustainable (for example) for many of the Pioneer participants.  To add downside-risk insult to injury, there's a 15% chance a Pioneer ACO would have to pay Medicare.

ACOs in the Shared Savings program have a 75% chance that they won't be able to generate enough savings to cover the lost of income from fewer billable service or their program costs.

That's a majority of the participating ACOs.

Admittedly, there are several advantages to ACOs.  They 1) are an answer to the threat of rising health care costs, 2) are a laboratory for bundled payments, 3) promote care coordination and 4) are linked to medical homes.

But that's all for naught if the majority of the program participants are losing money in a massive exercise in risk transfer involving hundreds of millions of Medicare dollars.

This is health reform?

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Coda: The PHB can't help noting that the title of the CMS report is "Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014."   That may be technically true, but that title is more about spin than about the science. The findings haven't been submitted to the scrutiny of peer-review, and until it is, the PHB won't really know what to believe.

Are Primary Care Physicians (PCPs) Important to ACO Success? Payment Arrangements Say Otherwise

Long ago, the Population Health Blog learned that when it comes to health insurance, capitation or bundled payments brakes, while fee-for service payments are gas. Too many physician office visits?  Use "capitation" brakes. Want to increase physician visits?  Apply a payment for each encounter with some FFS gas. 

Health care organizations can pass this arrangement onto their physicians. They can pay them with a salary (a form of capitation), or a variable "productivity" compensation (seeing more patients is compensated with a form of FFS) or with a combination of both.
 
Simple, right?  To figure out this ying-yang of utilization management, just follow the money.

That's why the PHB was interested in this just-published Annals of Family Medicine paper on how primary care physicians are being paid by Accountable Care Organizations (ACOs). If you believe more primary care visits translate to savings in other parts of the ACO, then you'd want to apply gas. If you believe primary care visits are a cost that doesn't necessarily save money, you'd want to apply the brakes.

The authors used data from the 2012-2013 "National Survey of Physician Organizations" to compare primary care physician (PCP) compensation in ACOs with non-ACOs. 1,398 organizations were in the original database; after excluding solo practitioners and specialist physician organizations, 632 were left. 

Three groups were compared:

1) Medicare ACOs (21.1%) with exposure to some financial risk related to total health care utilization;

2) Non-ACOs (2.8%) with contracted financial risk for primary care costs (2.8%);

3) No ACO and no risk (76.1%).

Results?  PCPs in.....
Medicare ACOs got 49% of their income from a flat salary and 46% tied to productivity. 3.4% was tied to quality;
Non-ACOs at primary care risk got 66% of their compensation from salary, 32% tied to productivity and .8% from quality;

No ACO arrangements with no risk had compensation that was similar to the Medicare ACOs.

The PHB's take-aways?

Based on the non-ACOs, health care organizations are prepared to use salary to influence physician behavior.  If you believe PCP visits are a cost and you are at financial risk for utilization, apply more brakes than gas.  The model is still out there.

But......

The leaders running Medicare ACOs don't know what the right balance of FFS and capitation for PCPs, and are mirroring a status quo that is indistinguishable from business as usual.  Despite the fanfare about the critical role of primary care in health reform, the Medicare ACOs have decided otherwise. If they ultimately succeed or fail, it won't be because of any special innovation involving their PCPs' compensation.

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Health Policy Insights from the Medical Home Summit: Wellness, ACOs

The Opening Ceremony of
The Medical Home Summit

The Population Health Blog is back home after attending the intellectually rewarding Population Health Colloquium and Medical Home Summit.  It was great to reconnect with old colleagues and make new friends.

In no particular order, here are some PHB take-aways:

One representative from household-name health insurer spoke in a lofty plenary session on the merits of keeping patients healthy. While the PHB was inspired by the videos of device-wearing joggers, it all seemed eerily reminiscent of the wacky pharmaceutical company value-propositions from years ago. That's when these companies said that they weren't selling "pills" but "cures."  It remains to be seen if Humana's transition from pooling risk to promoting fitness will lead to a similarly unprofitable ending.

More than one smart policymaker expressed skepticism on-stage about the ability of Accountable Care Organizations to reduce costs or increase quality. Wow. The PHB suspects more ACO shoes are getting ready to drop inside the beltway. If that's correct, it seems the expert-class is not only reducing their exposure to the coming stinkbombs, but is retooling to get in on The Next Big Idea gravy train.

One compelling speaker suggested that truly "patient-centric" primary care medical homes should offer timely access, the ability to talk to the doctor by phone at any time and attentiveness to the social dimensions of their patients' needs while richly rewarding docs to provide high-value care to fewer patients.  When the PHB mused out loud that may be what precisely what Concierge/Direct Primary Care practices are doing, the reaction of the audience prompted momentary concern that it might get lynched. 

The looming repeal of the SGR was mentioned only in passing, suggesting that few believe that this latest legislative fix portends a renewed commitment to health care reform.  As the PHB understands it, the current proposal commits Medicare to a .5% increase in physician fees per year over the next five years. This reminds the PHB of a compromise it made when the Spouse countered that a loaded SUV was a better option than a loaded sedan.  We got the loaded SUV.

And the EHR wasn't mentioned at all, which kept the PHB from offering its novel twist on Ms. Clinton's Emailgate tempest. It's clear that the Secretary reasonably concluded that her State Department's email system was unable to meet her personal workflow electronic communication and documentation needs. Our nation's EHR-using physicians feel her pain and salute her for her approach to finding a workable solution. After the American Medical Association gives her a suitable award, they should ask her if they can expect that same commitment to innovative health information technology solutions when she wins the White House.

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The End of Power Health Care?

Corporate titans enjoying
the good old days.

While Moses Naim's The End of Power devotes only a few pages to medicine, it's still provocative and worthwhile reading for anyone involved in the delivery of health care.

As the Population Health Blog understands it, the book's central thesis is that traditional "power" is being disrupted by the three modern trends of "more," "mobility" and "mentality."

We live in an unprecedented era of more (relative) widespread wealth, have an astonishing ability to move goods, services, information and ourselves around the globe (mobility) and are far less likely to adopt the cultural and intellectual assumptions and norms of established society (mentality).

Despite the depressing narrative of the "elite 1%," the irony is that governments and corporations have far less ability to command and control the 99%. This has big implications for world affairs, democracy and U.S. power.

Wow.

Big themes like this naturally prompt the excitable Population Health Blog to speculate about the implications of Naim's more-mobility-mentality for health reform in the United States.

It should be no wonder that policymakers, politicians, academics and regulators are promoting a large and concentrated i.e. powerful version of healthcare delivery.  These cognoscenti argue that huge integrated delivery systems, accountable care organizations and regional providers can "rationalize" health care with standardized protocols, less variation, efficient service lines, alignmment of incentives, optimum capital deployment and assumption of insurance risk.

Mr. Naim cautions that the power-play may not succeed. The PHB extrapolates:

1. While pundits can argue whether the Affordable Care Act's insurance options are as good as they should be, we're devoting a lot of wealth toward health care. More individuals have higher levels of resources to put into their care than they've ever had before. And they know it.

2. While that wealth is being tempered by out-of-pocket expenses, network exclusions, service limitations and other trade-offs, consumers still have relatively abundant choices on not only when, but where to see that doctor, have that surgery or take that pill.  By the way, information is not only cheaper (thanks to the internet) but no longer monopolized by the health professions. 

3. Whether it's a one-on-one recommendation to have a procedure or a proposal to build a new hospital wing, gone are the days when a professional expert's opinion was automatically accepted. Stakeholders are demanding evidence, seeking justification, asking for alternatives and are relishing the "gotcha" moments.

Where do these healthcare versions of more-mobility-mentality take us? Greater access to resources means higher expectations. Mobility means consumers will use exercise choice to cross country, state or even national borders to access care when they choose to do so.  And mentality translates into higher levels of individual consumerism.

Instead of protocols with less variation, patients will want the care to be personalized. Service lines will be judged less on efficiency than on local notions of value. Provider incentives based on "outcomes" and "upside risk" will have zero value proposition for their wealthy, mobile and skeptical customers.  Capital won't necessarily flow toward non-performing assets and year-end savings won't materialize just because policymakers wish it so.

Accountable care organizations and integrated delivery systems will still have huge competitive advantages. That being said, their chances competing successly against smaller competitors and access to capital will be increased if

1) their protocols are flexible,

2) variation is not only welcome but warranted,

3) patients have a good reason to choose their service lines,

4) incentives are broadened, and

5) this new and different level of complicated risk is realistically priced.

And that's assuming that the health provider policymakers, politicians, academics, regulators and CEOs realize that they're not quite in charge anymore.

Doubling Down on Accountable Care Organizations and Health Information Networks

Want to achieve effective health care, reduced costs, increased quality, population health, widespread prevention and seamless health information access? 

It's easy, says  this article in Population Health Management: mix one part PHO with one part HRB to create a HAPPI.

The Population Health Blog was confused too, but that's what's proposed by three smart academics from Johns Hopkins, Arizona State University and UC Berkeley.

As the PHB understands it, Population Health Organizations (PHOs) would be responsible for all medical, public health, community and social services in a defined geographic area and coordinate them with local education, housing and labor. Much of it would be paid for by a pooled risk-adjusted global or capitated payment (budget) from all insurers.

Each organization would be paired with a Health Record Bank (HRB), which would act as a huge data warehouse that not only stores all medical information, but any other publically available information on every individual enrolled in the PHO. The HRBs would be owned and operated by "trusted custodial organizations." Data access would be ultimately controlled by each patient.

The authors believe that patient payments would be a source of additional revenue for their PHOs. Examples include buying "apps" that are tailored to their individual health needs, or selling their personal health information, especially if it means helping physicians buy an electronic health record or access cutting edge research.

Combine a PHO and HRB and you have a Health and Prevention Promotion Initiative (HAPPI). Its size and scale would warrant contributions from community and provider organizations "without the need for additional reimbursement or outside funding." It would efficiently "align incentives" for insurers, hospitals and ACOs - with money left over for prevention, care coordination, decision support and a learning health system.

Breathtaking, isn't it?  If any PHB readers thought accountable care organizations (ACOs) and health information networks (HINs) weren't big enough, along comes Tyrannosaurus rex-sized PHOs, HRBs and HAPPIs. 

The PHB worries that while we'd want to see how pint-sized ACOs (not a slam dunk) and HINs (likewise not a slam dunk) perform before we apply the massive steroid doses, the opposite could happen: their messy failure could be just the justification for doubling down and going even bigger. 

As pointed out in a recent Wall Street Journal Notable and Quotable:

Economist Michael Munger writing in the Freeman, Aug. 11:

When I am discussing the state with my [academic] colleagues, it's not long before I realize that, for them, almost without exception, the State is a unicorn. I come from the Public Choice tradition, which tends to emphasize consequentialist arguments more than natural rights, and so the distinction is particularly important for me. My friends generally dislike politicians, find democracy messy and distasteful, and object to the brutality and coercive excesses of foreign wars, the war on drugs, and the spying of the NSA.

 

But their solution is, without exception, to expand the power of "the State." That seems literally insane to me—a non sequitur of such monstrous proportions that I had trouble taking it seriously.

 

Then I realized that they want a kind of unicorn, a State that has the properties, motivations, knowledge, and abilities that they can imagine for it. When I finally realized that we were talking past each other, I felt kind of dumb. Because essentially this very realization—that people who favor expansion of government imagine a State different from the one possible in the physical world—has been a core part of the argument made by classical liberals for at least three hundred years.

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Can Physician Loyalty to Their Profession Be Superseded by Loyalty to their Employer?

Whenever the Population Health Blog heard the "value-not-volume" health policy operatives drone on about "provider alignment of incentives," it wondered.... really wondered.... if this Kool-Aid had completely convinced the ACO Adminosphere's inhabitants that their physicians' loyalty to their profession could be superseded by loyalty to their employer.

Sure, running a private-practice sucks and Obamacare's economics favor consolidation, but that's not necessarily enough to capture hearts and minds.  The PHB recently heard a local ACO executive explain that her long-employed physicians were still (yes, still) challenged with EHR implementation, teaming, shared savings, quality metrics, practice management, joint ventures and the role of patient educators. 

Other than that, Mrs. Lincoln, how was the ACO play?

And then there's a tweet from @VinceKuraitis on how a group of St. Louis cardiologists are "leaving" hospital employment and striking out on their own. Vince asks if this is a random blip or start of a trend.

Good question.

If this does turn out to be the start of a trend, don't be surprised. As someone very wise pointed out millennia ago, people do not live by bread alone.

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