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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


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


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


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.





CMS releases stronger incentives to join ACOs

CMS has released final regulatory revisions  to strengthen incentives for Accountable Care Organizations in the Medicare Shared Savings Program.

CMS Acting Administrator Andy Slavitt said the changes  will “encourage more physicians to improve patient care by joining ACOs, while also refining how the program measures success, so that current participants are better rewarded for quality.”

Mr. Slavitt said the changes will also help physicians prepare for the new Quality Payment Program That program will hold providers to unprecedented accountability not just for reporting, but also, among large physician groups, for performance on a broad range of behaviors.

Here, according to Becker’s Hospital Review, are five takeaways from the MSSP ACO final rule.

1. “CMS modified the process for resetting benchmarks used to determine ACO performance.”

2. “CMS removed the adjustment that explicitly accounts for savings generated under an ACO’s prior agreement period.”

3. “The rule includes a phased-in approach to implementation.”

4. “CMS finalized an additional option for ACOs participating under Track 1 to apply to renew for a second agreement period under a two-sided model.”

5. “The rule establishes timeframes and criteria for ACOs to appeal CMS’ calculation of bonuses and penalties.”


CMS announces new Medicare ACOs


The Centers for Medicare & Medicaid Services (CMS) has announced 21 new participants in Medicare Accountable Care Organization (ACO) initiatives designed to improve the care patients receive  and lower costs. With this announcement, ACOs now represent 49 states and the District of Columbia.

7 ideas for maximizing ACO potential


This HealthAffairs article looks at  what Accountable Care Organization funders can do to maximize an ACO’S potential. Among the suggestions of the authors, Andrea Ducas, Rob Houston, Tricia McGinnis, and Stephen Shortell:
1. “Encouraging movement toward greater accountability. Experts still grapple with the question of what ACOs are really accountable for. There is a need to clarify goals (for example, cost reduction, quality and value improvement, transfer of risk to providers) and to use these insights to drive accountability…. ”

2. “Breaking down policy and regulatory barriers
. Barriers exist that inhibit optimal ACO data sharing, such as privacy regulations, software interoperability, and regulations limiting how Medicaid funding can be used to address the social determinants of health. Minimizing these barriers may help ACOs and their partners to create more efficient and innovative ways to serve patients.”

3. “Facilitating multipayer alignment. Support for alignment—for example, aligning payment methodologies with quality measurement and reporting requirements, but also aligning efforts across payers and programs—may help ACOs develop more population-based models, reduce measurement confusion, and increase provider participation.”

4. “Refining risk adjustment across populations and services. More accurate risk adjustment methods that include factors like the social determinants of health could make ACOs better able to bear more financial risk and to support population-based models, particularly for people dependent on the safety net.”

5. “Managing market consolidation. Additional research is needed to determine the effects of ACO arrangements on market consolidation. The results from such research could inform future regulatory or other market action that may be taken by state or federal governments, if they felt it was warranted.”

6. “Encouraging greater patient engagement in care. Funding could be used for research or pilot projects to improve patient engagement. More specifically, foundations could explore ways that well-designed incentives might promote shared decision making and greater self-care management.”

7. “Improving measurement of ACO success. Randomized controlled trials and other formal, but more feasible, methods of evaluating ACO interventions and performance relative to non-ACO activity could help to identify key factors in ACO success and lead to adoption of more scalable models.”


Senators release paper on managing chronically ill seniors


Fierce Healthcare reports that a bipartisan group of U.S. senators has released a paper outlining policy initiatives “aimed at Medicare patients with multiple chronic diseases such as heart disease and diabetes” with the aim of improving treatment and controlling costs as payers and regulators continue the long slog toward emphasizing preventive care and pay-for-value to replace pay for  episode-by-episode service.

The idea, of course, is to replace the traditional episode-by-episode approach with a population-health-based management system,

The proposals are divided into several categories, including, summarizes FierceHealthcare:

  • “Patient and caregiver empowerment during the care delivery.
  • “High-quality home care.
  • “Expanding benefit innovation and technology access.
  • “Expanding interdisciplinary, team-based care access.
  • “Population-health management for chronically ill patients.

Fierce reports that “{s}pecific policy proposals include reducing care coordination barriers within Accountable Care Organizations (ACOs), extending hospice benefits to Medicare Advantage beneficiaries and expanding home-care models. The group also proposes giving Medicare Advantage and ACOs more flexibility to deliver essential non-health services for beneficiaries with multiple complex conditions.”





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