By Akhil Shah
ACOs in the News
There’s a lot of criticism circulating around the Medicare Accountable Care Organization (ACO) programs, both Medicare’s Pioneer ACO program and Medicare Shared Savings Program (MSSP). The Pioneer ACO program has garnered national attention due to the hemorrhaging losses sustained by several high-profile institutions, leading to their exiting the program. Just 16 out of 32 Pioneer ACOs remain in the program, with headline exits including Dartmouth-Hitchcock, home of ACO-thought leader Dr. Elliott Fisher, and University of Michigan Medical School, which was one of two physician groups saving money in the Physician Group Practice Demonstration Project, the precursor for the ACO program. There remains criticism regarding the MSSP as well where 89 MSSP ACOs reduced costs, but did not receive any savings.
However, criticism aside, the key question is whether or not these programs have been effective in achieving their goals.
In late August 2015, CMS announced that both the Pioneer and MSSP programs have yielded quality measure improvements in 28 and 27 categories, respectively, out of 33 total metrics. Combined, the two programs and their participating ACOs yielded over $411 million in savings in 2014 alone. This feat is impressive, and it seems to show that the investments and transformation activities of these ACOs are yielding measurable results while helping drive improved quality and reduced cost in the healthcare delivery.
Why the Focus on Medicare?
This is not meant to be an analysis of whether the critics are right or wrong. The underlying question is: When did this movement become all about Medicare? Sure, the ACO program was developed out of the Center for Medicare & Medicaid Innovation (the agency’s Innovation Center) and was legislated into the Affordable Care Act (ACA). By design, the Innovation Center and CMS have played a critical role in driving demonstrations and developing permanent programs to drive quality improvement and cost management. As the only true national payer, their ability to drive participation in and adoption of these programs is unmatched. However, many provider groups have become solely focused on Medicare performance when considering pursuing an ACO. The bottom line is, providers are not—nor are they intended—to care differently for patients based on insurance. CMS and the Innovation Center are merely a test lab for the adoption of new models of care that must permeate across patients and across payers.
Accountable Care is Accountable Care.
People, process, technology, and financial infrastructure are core components of the transformation to patient-centered and accountable care. The basic elements of strong physician-led governance, strong clinical processes, care management, population health focus, health information technology (HIT), and aligned incentives (just to name a few) are fundamental organizational components that drive a comprehensive integrated health strategy that transcends any one Medicare or Medicaid program. These key foundational components drive an All Payer model of care.
Think Beyond Medicare: Value-based arrangements
For providers investing so much in the infrastructure and adopting a new model of healthcare delivery, there remains a high financial strain in funding the transformation. Therefore, sustaining losses in the Medicare ACO program, especially upfront, should be no surprise. HIT alone can cost tens of millions of dollars. Providers should view accountable care organizations as a vehicle to be rewarded for improved and sustained quality and financial performance across all lines of business and payers. Because benefits reaped from improved clinical outcomes and reduced cost is done so across payers, not just Medicare, providers should pursue Medicare ACO program participation and value based arrangements with commercial payers in parallel. Providers must adopt the All Payer mindset to leverage the future quality and cost benefits across the delivery system. Where commercial payers, and even Medicare Advantage plans and Medicaid managed care organization, have traditionally paid performance incentives and administrative fees for quality improvement activities, providers must shift payers to investments in infrastructure and value-based or performance-based payments. Payers have demonstrated a willingness to transition from traditional, and somewhat outdated, forms of revenue enhancement to more meaningful ones that include upfront administrative funding for HIT, development of practice-based care management programs, and other infrastructure initiatives that align with ACO outcomes.
With improving infrastructure within provider organizations, there is an ability to develop more creative and complex value based arrangements. Along the spectrum of this shift toward value-based contracting is the movement to risk-based or upside only shared savings programs, similar to the MSSP ACO program. These programs enable providers to bank on their ability to meaningfully manage costs. However, with commercial payers, providers will have more transparency and input into the development of the shared savings targets and payment methodologies. The shift towards value-based contracts with payers is a partnership with mutual benefit—increased quality, lowered cost, and enhanced revenues for doing so.
It’s a Win-Win
Commercial payers, across all lines of business, reap the quality and cost benefits when provider organizations make transformative organizational changes. All payers need improving performance across quality metrics either for Medicare, Medicaid, or commercial quality scoring as they impact publicly available quality scoring, enrollment, and reimbursement. Furthermore, consolidation and cost pressures continue to increase, as does medical cost trend, which makes clinically avoidable cost management a critical priority. In recognition of the work to achieve those goals, payers are willing to invest in transformation that positively impacts their business as well. Providers who are narrowly focused on Medicare are missing a huge opportunity to be reimbursed for accountable care activities, infrastructure investments, and adoption of new models of care already underway.
Providers, and others, cannot be confined to thinking that accountable care is limited to Medicare. It’s an All-Payer, population-focused initiative, and we must begin to look at the successes and failures of ACOs through a broader lens.
Akhil Shah is a Manager with Optimity Advisors. He has extensive experience in the development and implementation of physician alignment, clinical integration, and accountable care strategy. Key projects have included the development and launch of a health system-aligned IPA, a physician alignment and clinical integration strategy for a large national Catholic health system, and a physician-alignment and ACO strategy and roadmap for a community-based hospital in NY.