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What’s needed for future bundled-payment success

 

A piece in JAMA looks at what would be needed in future expansion of bundled-payments programs.

The authors consider such things as extending bundle durations to a year; the role of bundled-payments programs outside the hospital, especially as efforts intensify to reduce readmissions, and ensuring that Accountable Care Organizations and bundles are adequately integrated and coordinated by aligning incentives and sharing information on shared patients.

The authors conclude

“Expansion of bundled payment for episodes of care is under way. The 3 key innovations in the next generation of bundled payment models (extending the duration of the bundles, expanding the accountable entities beyond hospitals, and integrating bundled payments with global budget models within ACOs) could better align episode-based payment with population health and offer a smoother path to global budgets. Testing bundles nested within overarching collective accountability through bundle-ACO integration is particularly promising. There will be ample opportunity to inform bundle design based on findings from voluntary and mandatory Centers for Medicare & Medicaid Services programs and private insurer initiatives. Innovations in bundled payment design could increase their attractiveness to commercial and public payers alike in the pursuit of higher-value care.”

To read the whole article, please hit this link.


Senate panel clears bill to help chronically ill Medicare patients

The Senate Finance Committee has unanimously approved a bill aimed at improving care for Medicare beneficiaries with chronic conditions.

Med Page Today reports that the Creating High-Quality Results and Outcomes Necessary to Improve Chronic (CHRONIC) Care Act of 2017 {whew!} would increase access to telehealth for Medicare beneficiaries with chronic illnesses — including those in Medicare Advantage plans — as well as provide more incentives for enrollees to receive care through accountable care organizations (ACOs). It also would extend the Independence at Home demonstration program to keep people in their homes rather than hospitals, allow reimbursement for more non-health and social services, and extend permanently MA Special Needs plans that target chronically ill beneficiaries.”

“One thing we hear a lot from ACOs is they have trouble keeping beneficiaries in-house rather than going to a provider outside the ACO, and that makes it harder to coordinate their care,” a committee aide told the publication. “This bill says that if you go to a primary care doctor in the ACO, we’ll reduce or eliminate your cost-sharing for that primary care service. That will make beneficiaries stick to the ACO, and bring down their costs.”

Sen. Ron Wyden (D.-Ore.), the committee’s ranking member, told MedPage that the measure is “transformative.”

“This is a formal recognition that this package of services — the focus on care at home, the focus on new technology, the expanded role for primary care and prevention, which inevitably leads to more non-physician providers — is the beginning of our push to update the Medicare guarantee. That’s why it’s transformative.”

To read more, please hit this link.


Future ACO growth opportunities

 

 

Paul Keckley looks at the future of Accountable Care Organizations in H&HN. Among his observations

  • “Care coordination across multiple sites of care vis á vis an ACO results in improved efficiency and outcomes.”
  • “The infrastructure, skill sets, care coordination processes and actuarial risk associated with ACOs is expensive and evolving. Organizations with large, multispecialty medical groups or networks that sponsor their own health plans or have experience in capitated contracts {have} fared best.”
  • “The expected increase in health spending to 6 percent annually for the next decade will prompt close attention to the effectiveness of ACOs as a vehicle for reducing cost. Physician-led organizations that adhere to care standardization and incentives for their clinicians linked to cost savings will be sustainable. Others will falter. And industry consolidation means ACO consolidation.”
  • ”The centerpiece for sustainable ACOs will be a comprehensive primary care network that integrates physical and behavioral health, pharmacy, dental, eye and nutrition services with heath coaches to change patient behavior. … From these primary care centric models, virtual ACOs that incorporate rural health and teleconnectivity, and clinical models that include social determinants of health in assessing risks and care coordination tactics will evolve.”
  • ”The MSSP likely will morph. Quality measures will change. The Shared Savings Program formula will be altered. Some MSSP ACOs will test shared savings with enrollees themselves, rewarding medication adherence or self-care management. CMS will simplify its reporting requirements to encourage continuity in the programs and seek to reduce attrition of participants. And attention to formulary design and medication management, post-acute care coordination, digital connectivity and self-monitoring and alternative health modes of care will become imperatives to achieving savings.”
  • ”Medicaid ACOs will be a growth opportunity. The shift of control from CMS to states via block grants or capitated payments will present an opportunity for ACOs, provided their primary and behavioral health capacity is adequate and actuarial risk assessment is precise going in.”

To read more, please hit this link.

 

 

 


Medicare ACOs seen gaining this year

 

Avalere Health, the  consulting firm, sees financial-risk-bearing Accountable Care Organizations gaining more traction and popularity this year. It says that “providers will feel increasingly comfortable with assuming financial risk in exchange for larger incentives” as more than 9 million Medicare beneficiaries are covered by a total of 480  (ACOs), including 99 new participants, in the Medicare Shared Savings Program (MSSP).

The number of ACOs participating in the Next Generation ACO Model launched by the CMS Innovation Center has more than doubled to 45 this year, from 17 in 2016..

Of the 525 ACOs serving Medicare beneficiaries, 87 are in risk-sharing arrangements that include bearing financial losses if certain cost targets aren’t reached.

Healthcare Dive noted: “Expansion of MSSP and growth in the number of risk-sharing ACOs is due in large part to the passage of MACRA, which is accelerating the trend toward value-based initiatives through the Quality Payment Program. So far, it seems that MSSP has been successful saving a total of $466 million in 2015 and more than $1.29 billion total since 2012.”

“As Congress considers health reform, there is some doubt surrounding the future of value-based initiatives like MSSP, which was established by the ACA. One reform floated by Republican leadership could be detrimental to progress made toward value-based care.”

“This approach would cause Medicare to function more like traditional markets, which would increase financial responsibility borne by beneficiaries and leave improvements to market forces rather than government regulators.”

To read the Avalere report, please hit this link.

To read the Healthcare Dive analysis, please hit this link.

 

 


2 studies look at savings from ACOs

 

While provider participation in Medicare and Medicaid Accountable Care Organizations may lead to only modest savings at first, the savings grow substantially over time, say two studies.

The first study, led J. Michael McWilliams, M.D., Ph.D., of Harvard Medical School and published in JAMA Internal Medicine,  found that such organizations notably cut post-acute care costs. Between 2012 and 2014,  the 114 ACOs in the research reduced post-acute spending by 9 percent, or just over $100 per beneficiary, compared with a non-ACO control group.

To read the study, please hit this link.

The second study, also published in JAMA Internal Medicine, compared  two Medicaid ACOs, one each  in Colorado and in Oregon.

To read that study, please hit this link.

An editorial accompanying the two articles concluded:

“Accountable care organizations have been established across diverse market settings, using a multitude of organizational structures and approaches to governance and operations, and this heterogeneity is reflected in the heterogeneity of their performance. The 2 articles published in this issue add to a growing body of evidence on overall performance, several dimensions of quality, and spending. Nevertheless, we know little about the effects of ACOs on patients’ health and quality of life. Perhaps most important for ACO leaders and the long-term success of these programs, we know little about the key ACO capabilities that are important to ensuring their success in different organizational or market contexts. Although the Centers for Medicare & Medicaid Services has conducted rigorous evaluations of the Pioneer program, generalizable findings tailored to organizational contexts are few. A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform.”


Vermont’s all-payer healthcare hopes

stateseal

The Vermont State Seal in a stained glass window in the State House.

Governing magazine has looked at Vermont’s development of  an all-payer healthcare system, which CMG has reported on before.

In this approach, the publication says,  ”{i}nstead of billing doctors for each service they provide, insurers in Vermont will now give them a fixed sum each month, along with bonuses for keeping patients healthy. (Doctors can also pay penalties for adverse health effects, like having a high number of patients getting readmitted to the hospital within 30 days.) The hope is to eliminate unnecessary procedures, reduce costs and elicit more positive health outcomes.”

“In the 1970s, a dozen or so states tried all-payer systems for their hospitals. Except for Maryland, they all eventually shifted back to the standard fee-for-service because there was little evidence that all-payer was actually reducing overall health-care spending.”

“All of those states, however, only applied all-payer to hospitals — leaving out a large portion of health-care providers and limiting its potential impact.”

“Vermont’s system will cover all providers — hospitals, primary care, specialists, urgent care clinics, you name it. And instead of the state paying the providers their monthly fixed sum, it will be up to accountable care organizations (ACOs), which are groups of providers that have the same goals as all-payer: to reduce spending by rewarding better, not more, care.”

But there will be big challenges to making this work.

To read the Governing piece, please hit this link.


Nursing homes stressed as move to value-based reimbursement intensifies

In a new report, Stackpole Associates has commented on and summarized  data  that the nursing-home industry has been avoiding for several years.
Of particular interest to Cambridge Management Group is the effect on nursing homes of moving from volume to value, since CMG has been spending a lot of time in helping clients do that in recent years.
 Among Stackpole’s observations:

“Declining demand in long-term care markets is not a popular topic, but the inaugural SNF {skilled nursing facility} report from the National Investment Center for Seniors Housing & Care (NIC) clearly shows this trend. The occupancy rates in long-term care markets have been dropping, and in the SNF category, occupancy fell from just under 85% in October 2011 to 82.8% in December 2015, according to NIC. The decline in occupancy in this specific long-term care market would have been worse if owners and operators had not been removing capacity (taking beds off-line) from the system progressively over the same period of time. When both the number of beds is declining, and occupancy is decreasing, how can this be described as anything but a late mature, early declining market?”

“The biggest single factor in the decline in demand in the long-term care markets is the Demographic Dip or Birth Dearth. Demographics are like gravity; you can learn to work with it, but you can’t deny it.”

We at CMG take issue with part of Stackpole’s  remarks below. The implication  that nursing homes will only be available for rich people is not correct.    Strong skilled nursing facilities are emerging in the Medicaid sector.

“Compounding the challenges of declining long-term care markets, are the initiatives by CMS and … managed care organizations to reduce utilization, and ‘squeeze out’ margin in the sector. The transition from volume-based payments to value-based payments through such mechanisms as Accountable Care Organizations (ACOs) and Bundled Payment for Care Improvement (BPCI) are laudable and needed, but these will have devastating effects on the sector. The shift from volume to value will benefit the strongest (i.e., SNFs with the best quality payor mix) and disproportionately hurt SNFs serving the most vulnerable populations in our society. As intermediaries and value-based payment initiatives reduce utilization, and margin from the sector, the weakest will be forced to either close or merge with other, bigger and stronger systems.”

 


Wis. ACO laying off 40% of employees

jobless

The Milwaukee Business Journal reports that Integrated Health Network {IHN} of Wisconsin, an Accountable Care Organization based in Brookfield, has laid off 21 employees (40 percent of its employees) as  part of shifting some functions from ACO administrators to participating healthcare organizations.

“IHN is in the process of adjusting operations and staffing across the organization to most efficiently and effectively meet the network’s evolving strategic needs,” Kathy Allen, IHN’s vice president for  marketing and communications, told the publication.

The job cuts followed   strategic planning sessions with the ACO’s board of managers.

“It was determined that owner-member health systems and health plans now have the capabilities to absorb many functions IHN provides as they continue the transition to value-based care,” Ms. Allen said. Health systems can perform some of these functions. Some of these systems run their own health plans and population-health management programs.

Ms. Allen said that many of the employees being fired are being considered for jobs within health systems that are members of the ACO.

To read the Milwaukee Business Journal article, please hit this link.


6 ways to make the case for social equity at hospitals

 

How do healthcare institutions  build a business case for social equity for their patient population? In a piece published in Hospitals & Health Networks, Kedar Mate, M.D., chief innovation and education officer for the Institute for Healthcare Improvement, outlined  six ways.

  1. Collect and report clinical data stratified by race, ethnicity, language and socioeconomic status.
  2. Incentivize preventive and primary care: “The bulk of disparities we see can actually be addressed if we have greater investment in primary care and preventative care. We must implement more aggressive risk-sharing agreements and shared-savings plans that encourage greater investment in preventative and primary care.”
  3. Develop equity-accountability measures across payers: “This is the idea that we need to create or add race, ethnicity and language dimensions to existing outcome measures. It’s not about increasing the overall measurement burden. The idea is not to add new measures; it’s about stratifying those measures by race, ethnicity, language and socioeconomic status.”
  4. Use them to incentivize the reduction of health disparities: “We could be incenting systems to achieve threshold levels of performance for reduction in disparities or to reward improvement. They could be built into ACOs and other shared savings systems.”
  5. Assist the safety net: “We have to provide adequate Medicaid reimbursement to our safety nets. That’s where a lot of our patients are going to be seen. We have to risk-adjust clinical performance scores for socio-demographic information. We have to be careful about decreasing federal subsidies before those health insurance plans have an opportunity to enroll patients in their care.”
  6. Launch demonstration projects to test payment and delivery system reforms: ”The Centers for Medicare and Medicaid Innovation can do this, but there are others who can do this as well.”To read the whole piece, please hit this link.

Bundled payments: Big promise, big pitfalls

hip

See hip replacement at left.

David Blumenthal, M.D., and David Squires have written a very cogent and realistic overview of the promises and pitfalls of bundled payments. Among their remarks:

“Healthcare economists are drawn to bundled payments because a bundle of care constitutes a clinically and intuitively meaningful “product” — in this case, the clinical episode. Defining clear products in healthcare helps create markets in which providers directly compete on quality and price. One barrier to effective healthcare markets has been that prices, when available, tend to relate to inputs into clinical care — such as pills, bandages, bed days, or X-rays — that are not meaningful to consumers of care and that don’t necessarily predict the total costs of care. ”

“Yet bundled payments have drawbacks. First, it can be complicated to define and track the type of care that should be included in the bundled payments for which a given provider is at risk. Knee and hip replacements are well-suited to bundles because they often involve comparatively young patients who are physically active (often the source of their joint damage) and want to remain so. But when patients have multiple chronic conditions that interact with each other, it becomes less clear whether the bundle should include the costs of caring for all those problems….Monitoring the fairness of these interactions could become burdensome and increase administrative costs.”

“{A}s the hip patient example suggests, bundles could inhibit certain types of care coordination, even as it encourages other types. On the plus side, bundles may encourage hospitals to work more closely with rehab centers. On the negative side, bundles may encourage specialists’ already strong tendency to see patients not as whole individuals, but as single disease problems or procedures, and to diminish their sense of responsibility for costs of illnesses not included in their particular bundled payment.”

{B}undled payments could encourage destructive competition for patients with profitable bundles. The otherwise healthy patient needing a knee replacement may prove more profitable than a knee replacement patient with complicating problems such as heart, lung, or kidney disease. While risk adjustment could somewhat compensate for cherry-picking, such adjustments have not proven foolproof in the past, and an entirely new fleet of risk adjusters that are specific to given clinical episodes will likely be required. Monitoring the work of multiple risk adjusters and possible gaming by providers could become yet one more administrative expense.”

“{B}undled payments may make it harder for population-based payment methods like ACOs to be successful. Providers who participate in ACOs assume responsibility for all the care their patients need during a given period of time, including specialty care. This general accountability for their patients’ health encourages efforts to coordinate care, especially for complex patients. Still, to be financially viable, ACOs must generate savings from existing services. If independent specialty providers capture the elective procedures for which savings are easiest to generate through bundled payments, it could be harder for ACOs to find those savings within their own service mix.”

To read this entire essay, please hit this link.

 

 

 

 


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