WHITE PAPER. Contributions of Pathologists in Accountable Care Organizations: A Case Study. May 2012

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1 WHITE PAPER Contributions of Pathologists in Accountable Care Organizations: A Case Study May 2012 David J. Gross, PhD Director, Policy Roundtable, College of American Pathologists College of American Pathologists 325 Waukegan Rd. Northfield, IL Tel: cap.org

2 TABLE OF CONTENTS Introduction... 3 Background... 4 Case Study: Specific Ways That Pathologists Are Adding Value in Three ACOs... 6 Findings Common Threads... 8 Challenges Conclusions and Policy Implications References Appendix A: Interview Participants Appendix B: Discussion Guide For Semistructured Interviews College of American Pathologists. All rights reserved.

3 Contributions of Pathologists in ACOs CAP Page 3 INTRODUCTION Accountable Care Organizations (ACOs) represent the most recent trend in trying to restrain the growth in US health care spending. With an explicit goal of improving quality of care and health care outcomes, as well as restraining spending, ACOs are coordinated care systems in which providers are incentivized on the basis of outcomes rather than the number of services. The Affordable Care Act allowed for the establishment of ACOs within Medicare, and ACOs (and other coordinated care delivery systems) exist and are expected to proliferate in the private sector as well. The model represents an attempt to address the problems of a fragmented, largely fee-for-service-based medical care system that rewards provision of services rather than achievement of outcomes, contributing to rapid growth in health care spending (now over 17% of GDP) and a system in which as much as 30% of costs are generated because of overuse, underuse, and misuse of health care services. 1 ACOs offer both challenges and opportunities for pathologists. The challenges accrue from substantial changes that are associated with practicing in an ACO, in particular a movement away from traditional fee-for-service payment and from an individual approach of practicing toward being part of a care team. However, with their emphasis on health care quality and population health supported by electronic connectivity, the ACO model also offers opportunities for pathologists to apply their skills to help ACOs achieve their goals while finding new ways to show value in an environment where reimbursement rates are expected to continue their downward trend. Given these concerns and challenges, the College of American Pathologists (CAP) sought to gain an understanding of how some pathology practices have been able to take leading roles in ACOs. To accomplish this, CAP staff visited with pathologists, administrators, and other physicians at three such health care organizations. These organizations represent diverse models of health care delivery. One, Geisinger Health Systems, located in Danville, Pennsylvania, is an organization that has long been a leading integrated delivery system. A second ACO, the Accountable Care Alliance in Omaha, Nebraska, is a unique collaboration between a community health system (Methodist Health System) and a university hospital (The Nebraska Medical Center) that has been operating as an accountable care organization for about two years. The third, Catholic Medical Partners (CMP) in Buffalo, New York, emerged from a partnership between four community Catholic Health of Western New York hospitals and a network of associated physicians, CIPA Western New York IPA, Inc. In this paper, we identify actions and approaches taken by pathology to help the ACO achieve its goals of improving health care while reducing health care costs by offering more efficient, better integrated, and more quality-driven health care delivery. Our research identifies ways in which

4 Contributions of Pathologists in ACOs CAP Page 4 pathologists used their unique skill set to provide greater rationality to laboratory medicine in a way that helps clinicians offer better patient care and helps the system to reduce costs. We also identify barriers that these organizations have identified. Finally, we present a set of potential policy issues that can enhance the ability of pathologists to achieve the goals of the ACO and of the overall health care system. BACKGROUND What is an ACO? A simple definition of an ACO is that it is a network of health care providers that is held accountable for the costs and quality of health care services that are provided to a defined group of patients. While ACOs exist in different forms, the general framework is that it is an organization, physical or virtual, that takes on the responsibility of reducing health care costs for this population while also meeting predetermined quality standards for its patient population. 2 Collaborative care models, such as ACOs, have emerged in the private sector in recent years, but much recent attention has been focused on the development of Medicare ACOs. Beginning April 2012, Medicare contracts with ACOs began operation under the auspices of Medicare s Shared Savings Program. This program follows Medicare s Physician Group Practice Demonstration, the precursor to its current ACO efforts, which involved 10 health care organizations that were eligible to share in cost savings they could achieve and would receive bonuses based on their performance along 32 quality of care measures. In addition, 32 health care organizations with a proven track record in an ACO-type of model are part of a demonstration project called the Pioneer ACO model. In both of these structures, the ACOs are eligible to share in savings for reducing costs and meeting quality standards, but in the Pioneer program they have the opportunity for greater savings but also face financial risk if their costs are not well managed. 2 Key issues around ACO development. A key element to a successful ACO model, at least in theory, is that health care providers become part of a team. The team primary care physicians, hospitals, specialists, and other providers are jointly responsible for achieving efficiencies and seeking high quality care for the patient. 3 Nace and Gartland identify three interdependent aspects that are necessary for an ACO: (1) care delivery reform, ie, replacing the current fragmented system of providing care with a system which features clinical integration and coordination of care; (2) payment system reform that rewards achievement of a set of quality standards and reductions in cost, rather than one that rewards provision of services only; and (3) a health information technology system that allows providers to access information about the patient across different care settings and allows for implementation of the payment and care delivery reforms. 1

5 Contributions of Pathologists in ACOs CAP Page 5 While appealing in theory, the practice of operating an ACO is quite complicated. Existing health information systems often don t communicate well between providers and practice settings; many providers are only at the beginning of establishing electronic health records (EHRs) for patients; and even within a single setting (eg, a hospital) different aspects of health technology may not be interoperable. Setting up systems of coordinated care requires establishments of health networks and changes in how providers work together. And, importantly, basing provider payment on savings and measures of health outcomes and quality standards is challenging, particularly when it comes to developing measures to reward providers such as pathologists, who provide a large amount of cognitive and diagnostic services that aren t easily measured by health outcomes. For example, in a recent New England Journal of Medicine article, Bruce Landon notes that many of the measures currently being considered for rewards in ACOs relate to primary care but that incentivization of other specialties, particularly those that provide cognitive services, has not yet been adequately addressed. 4 Potential pathologist roles in improving clinical outcomes. There is some literature from pathologists regarding how laboratory medicine can contribute to efforts to improve clinical outcomes and increase efficiency in the delivery of health care. Schuerch, et al, of Geisinger Health Systems, summarize the role of the pathologist in improving laboratory clinical effectiveness as: Sharing accountability for patient outcomes and performance of the health care system Providing reliable laboratory measures Establishing and using a standardized laboratory database for outcomes research and health care improvement Participating in design of standardized practice algorithms for things such as laboratory test ordering, test interpretation, and therapeutic recommendations Developing patient health information tools that are designed to improve patient care Extending laboratory reporting to include improvements in how the data are presented to clinicians as well as clinical recommendations Using information system tools to improve reliability of quality of care in all health care settings, including the hospital, the clinical, long-term care facilities, and the home Providing clinical consultations when appropriate. 5 Sussman and Prystowsky, pathologists at the Montefiore Medical Center, recently reported on their experiences in creating value in a risk-based environment. Their model of how pathologists add value in such a system has five elements:

6 Contributions of Pathologists in ACOs CAP Page 6 Working with clinical colleagues to optimize testing protocols Reducing unnecessary testing in both clinical and anatomic pathology Applying personalized therapy to help guide treatment Designing laboratory systems to allow quick data mining by pathologists and clinicians Administering cost-effective laboratories. In the future, they say, success will hinge on ability to collaborate with clinicians, and provide education to those clinicians, in order to manage the appropriate use of high-cost tests while also reducing the unnecessary use of more common tests. 6 Among the many concerns is how pathologists will get paid for these value-added services. Many pathologists are used to getting paid under a fee-for-service model for outpatient services and under a contract with hospitals for inpatient/part A inpatient services, but the services that pathologists would offer do not easily accrue under such a model. At Geisinger and Montefiore, pathologists are salaried employees of the institutions, and incentives such as gain sharing and rewards for innovation are easier to apply. As Sussman and Prystowsky note, however, this is not the same for all institutions. 6 Such concerns are not isolated to pathologists. For example, the American College of Radiology (ACR) recently published the recommendations of a work group it formed with the express purpose of identifying ways that radiologists can successfully contribute in ACOs. Like pathologists, radiologists are diagnosticians who apply their expertise to the diagnosis and management of a wide variety of medical conditions. While not necessarily endorsing the evolution of ACOs, ACR s recommendations offer a framework for how radiologists can contribute within that environment as well as strategies for being financially recognized for their contributions. 7 CASE STUDY: SPECIFIC WAYS THAT PATHOLOGISTS ARE ADDING VALUE IN THREE ACOS In order to get a sense of how some pathology practices are functioning in and dealing with the challenges and opportunities associated with ACOs, we conducted site visits of three different health care organizations in which pathologists have successfully integrated into ACO leadership positions. These organizations, while not necessarily representative of all ACOs in which pathologists have been active, represent three distinct organizational models as well as distinct histories in the development of their structure. We conducted our interviews between February 15 and February 27, The first ACO we visited, the Accountable Care Alliance in Omaha, Nebraska, is a unique collaboration between a community health system (Methodist Health Systems) and a university medical center (The

7 Contributions of Pathologists in ACOs CAP Page 7 Nebraska Medical Center) that has been operating as an accountable care organization for about two years. Methodist Health Systems (Methodist), founded in 1982, is a network of hospitals, clinics, and a nursing and allied health college. It includes Methodist Hospital, a 440-bed facility in Omaha. The Nebraska Medical Center, which was formed in 1997, is Nebraska s largest health care facility. With more than 1,000 physicians, it is the teaching hospital for the University of Nebraska Medical Center. With facilities statewide, it includes a 624-bed acute care hospital in Omaha. 8,9,10 Our second visit was to Geisinger Health Systems, headquartered in Danville, Pennsylvania. Founded in 1915, Geisinger is a physician-run, -integrated, and -coordinated health system that serves more than 2.6 million residents throughout 44 counties in central and northeastern Pennsylvania. Geisinger is an integrated delivery system that has a long history of coordinating the delivery of health care across the continuum of care, ie, preventive, primary, acute, and inpatient care. 11,12 The third visit was to Catholic Medical Partners-IPA in Buffalo, New York. CMP emerged from four Physician Hospital Organizations (PHOs) that were incorporated in the mid-1990s with the Catholic Health System of Western New York hospitals and a network of associated physicians. CMP has long held agreements with commercial health plans that hold it at financial risk. With over 900 members in its network, CMP adopted a clinical integration model around 2006 and places a focus on improving clinical performance, being accountable for patient satisfaction, implementing new health care information technology, and improving the quality of health care. 13 For each of these organizations, the evolution to a coordinated care delivery model was more a function of natural outgrowth of an existing business model than a reaction to health care reform or the Medicare Shared Savings Program in particular. That is, they saw the model whether it was called ACO or began with another name as a necessary way to rationalize health care costs while providing enhanced value for payers and, importantly, for patients. Geisinger Health Systems offers the longest experience of the three institutions in operating as a coordinated care system. While its original focus was on primary care, for at least the last two decades it has focused on developing new, cost-effective, and patient-centered approaches for treating chronic illness. Indeed, Geisinger can be considered one of the models for ACOs, and it was one of the original 10 CMS Medicare Physician Group Practice sites. CIPA Western New York IPA, Inc., the predecessor to Catholic Medical Partners (CMP) began in 1996 as an Independent physician association (IPA) that jointly negotiated agreements with the health plan, assuming financial risk and accelerating clinical integration. Over time, its leaders anticipated that traditional fee-for-service reimbursement would eventually be replaced with something that looked more like a bundled payment system that would be based on cost savings and provision of high-quality care. As a result, over the last decade the organization has been evolving into a more coordinated

8 Contributions of Pathologists in ACOs CAP Page 8 care model. The TNMC/Methodist collaboration began in 2008 as a joint purchasing pool seeking to gain leverage with their suppliers in order to get lower costs for both institutions. After successful negotiations to save money on the purchase of blood products and apheresis services, both organizations decided they could effectively work together and began to develop other ways of both saving money and developing methods for improving patient care. In our interviews, we met with various officials from each institution (listed in Appendix A). We asked questions about areas such as how the structure of the ACO, how pathologists are able to have an impact in the organizations, evidence of impacts, and barriers to their successful involvement. These questions were developed by staff at the College of American Pathologists and were reviewed by CAP members who are members of the both the ACO network and steering group, some of whom provided substantive suggestions that led to alterations in the survey instrument(shown in Appendix B). FINDINGS COMMON THREADS Pathologists in these three institutions share a common perspective of the role of pathology in clinical care. This perspective might be best expressed by Schuerch, et al s assertion that: Pathologists must share accountability for the larger process, extend themselves outside their traditional boundaries, and engage in activities that improve clinical outcomes. Pathologists often have special knowledge to contribute in designing clinical pathways, and they have informatics and communication tools at their disposal that may be used to improve clinical performance. 5 Not only have these pathologists adopted this broader perspective about their potential contributions, but also they have successfully incorporated themselves into ACO leadership and demonstrated the value that they could bring to the organization. Leaders in the ACOs we visited, such as ACO executive directors, chief medical officers, and medical directors, asserted that pathology and laboratory medicine play an integral role in successfully achieving the ACO goals of reducing costs and improving quality and safety. They recognize the extensive influence of laboratory testing on clinical decision making and the unique role that pathologists can play in assisting them to meet their objectives particularly in the application of evidence-based approaches to eliminate waste and inefficiencies in laboratory medicine. The importance of pathologists comes in their ability, unique among medical specialties, to collect and analyze data related to patient testing and diagnosis.

9 Contributions of Pathologists in ACOs CAP Page 9 We identified four examples of how pathologists and laboratory medicine have added value in their institutions: 1. Development of protocols for laboratory ordering One important way that pathologists in these institutions contribute to ACO goals is by setting up test ordering protocols for high-cost or high-volume tests. Officials and pathologists at the institutions we visited told us that clinicians don t always know or understand which tests are appropriate for different conditions. There is evidence that, in settings in which care is not coordinated, ordering protocols for the same condition are not always standardized protocols can vary between sites or between physicians at the same site, and that the continuum of evidence behind those protocols can vary from being well investigated to being developed on an ad hoc basis. 14 Other studies point to the substantial effort needed to ensure that protocols are consistently updated to reflect medical advances and new information on clinical effectiveness. 15 While pathologist contributions to the development and maintenance of order sets are not unique to an ACO environment, ACOs are unique in that (1) there is the opportunity to apply similar standards across a wide range of health care settings, and (2) financial incentives can be put in place to reward pathologists for this and other contributions to promoting efficiency and effectiveness in clinical care delivery. As a vice president at Methodist Health System observed, pathologists are uniquely situated to lead the development and maintenance of standardized, evidence-based order sets in ACOs. Such standards on test ordering can save money by reducing unnecessary tests and can also improve patient treatment because the patient is more likely to get the kind of tests that can most efficiently identify (or rule out) a particular medical condition. This role is expected to be of greater importance with the expected growth in high-cost genomic tests. In the institutions we visited, pathologists develop standardized testing protocols in consultation with other clinicians. In some cases, this consultation is done informally, while in others it is conducted through more formal mechanisms, such as membership on a laboratory service advisory committee, and/or other similar activities. Furthermore, the standards may be based on clinical consensus or may be developed on the basis of evidence-based research. There are several ways that standardized testing protocols have been implemented in the ACOs we visited:

10 Contributions of Pathologists in ACOs CAP Page 10 Pathologists at TNMC/Methodist and at CMP have developed standards to reduce the use of tests that are ordered too frequently or high costs tests that are rarely needed. When they identify such tests, they contact the clinician to determine whether the test is necessary (as compared to something that might be interesting but not clinically necessary). At TNMC/Methodist, such efforts have resulted in a reduction of proliferating or costly tests (specific data on cost savings were not available), and efforts are ongoing to develop a broader formulary that would identify appropriate tests for different medical questions. At CIPA, standards developed by pathologists are designed to provide a more rapid and more accurate diagnosis for C. difficile colitis a digestive condition that can have severe impacts on patients and high costs of care and to more appropriately test patients who are suspected of having a thrombosis. Another TNMC/Methodist effort led by pathologists is to reduce the use of red blood cells and platelets for patients undergoing orthopedic and other surgery. Based on standards established in the medical literature, adoption and enforcement of these standards at Methodist Health System have contributed to roughly a 50% reduction in the cumulative costs of blood supply over the last few years. It also has reduced adverse reactions to blood transfusion and results in a reduced length of stay. A pathologist chairs a multidiscilplinary laboratory utilization committee at Geisinger. Through the Transfusion Committee, the laboratory has led the development of standard criteria for transfusions and monitors the utilization of blood products against these criteria. The laboratory has also provided leadership for a clinical blood conservation program. Laboratory professionals vetted the standardized order sets of various specialties as they were built into the EHR. 2. Population health management Our interviews also identified ways that pathologists have applied their expertise to help ACOs develop standards for identifying and managing chronic illness among the population enrolled in the system. Geisinger Health System s experiences offer several examples of how population based analysis can be applied. Geisinger has implemented standards under its ProvenCare programs, which establish clinical guidelines and offer guarantees to patients and third-party payers that they would not have to pay for readmissions due to care that should not have been needed. The laboratory standards for this program are based on applying clinical data trends that identify the most effective treatment, and that use the EHR to notify physicians (and patients) of when

11 Contributions of Pathologists in ACOs CAP Page 11 certain treatments are required. Among the results of Geisinger s application of this approach are: Reducing the median days it takes for renal patients on EPO to reach a target hemoglobin level, from 62.5 days to 35 days, and saving about $2,200 per patient per year. Effectively following standardized guidelines for treatment of diabetic patients, resulting in a one-third increase in the percentage of these patients who received flu vaccines, a 40% increase in pneumococcal vaccination, a 50% increase in patients who met goal measures of HgbA1c levels, and a 46% increase in meeting goals for blood pressure. 3. Improving physician access to actionable data from the laboratory As noted earlier, access to electronic patient data is a foundation of an ACO s ability to effectively coordinate care. As EHRs and HIEs become more common, a key role for pathologists is to design the format for lab results in the EHR and HIE, making the format as actionable as possible. As owners of the laboratory data, pathologists in these organizations either have taken, or are looking to take on, a leadership role in making data more accessible and more actionable by physicians. Pathologists at CMP are working on how they can use data to improve care management. For example, they are looking at how to use the EHR to identify diabetic patients who had not been getting the HgA1cb tests that are needed to determine whether their disease is under control. The medical director of Univera Health Plan, a health plan that covers many of the ACO members with which CMP has a contract, has been favorably disposed toward such efforts, and it expressed a desire for pathologists and the laboratory community to give extra help to primary care physicians and other ordering physicians on when follow-ups are needed (eg, following diabetics who aren t getting their tests). Pathologists at Geisinger Health Plan stated that the report to the treating physician is the most important product that a pathologist can produce. Indeed, pathologists at Geisinger explicitly stated the view that their job does not end when the data is provided to the clinician; rather, they see all aspects of lab enterprise analytics as their responsibility, including how the data are used and how they are communicated to the patient. In an environment where the LIS and the EHR are well-integrated, as at Geisinger, laboratory staff are working toward a goal of designing laboratory reports that makes it easier for the clinician to act faster and more efficiently: more clearly communicating test results, providing simpler test interpretation in order to reduce the burden on the clinician, increasing the probability of the information getting to the patient, and clearly identifying actionable contents of the report. This type of activity is welcomed by other providers in the organization, some of whom expressed a desire to have improvements such as

12 Contributions of Pathologists in ACOs CAP Page 12 electronic prompts to the physician identifying when patients need particular tests or when they need particular follow-up. 4. Greater collaboration with other clinicians Both pathologists and nonpathologists agreed that pathologist leadership and collaboration with other physicians and with ACO leaders are major contributors to their success. As they note, many clinicians do not understand the analytic role that pathologist play or the expertise of pathologists in understanding the most effective applications of laboratory medicine. As a result, it is easy for pathologists and for laboratory medicine to be overlooked during the development of ACOs. The opportunities for pathologists to collaborate are varied. Already mentioned is their role in establishing guidelines for laboratory medicine and for improving treatment of chronic disease. Pathologists can provide post-test consultation for complex tests such as coagulation/hemostasis work-ups; cancer diagnosis with ancillary genomic/proteomic results; pharmacogenomic testing; and follow-up disease-risk genomic testing. Pathologists in the three institutions we visited achieved their leadership roles by proactively asserting their ability to help the ACO meet its goals. In each organization, there is an established culture of pathologists working in a coordinated and integrated manner with other clinicians. For example, the pathology department at Methodist Health System had nearly onehalf century of leadership by pathology department chairs that focused on applying data and evidence toward medical practice throughout the hospital. Geisinger s pathology leadership for the last two decades has been at the forefront of coordinated care, and has been in an institution where coordination is part of the culture. At Geisinger, the lab has an integrated presence in every owned clinic site, providing phlebotomy, performing on-site testing, and ensuring seamless services and information flow into the EHR. A close partnership with pharmacy is the foundation of a system of coagulation clinics serving about 16,000 patient encounters per month. The lead pathologist at CMP has also been a leader for over a decade in pushing his institution to incorporate clinical effectiveness guidelines from pathology and laboratory medicine into efforts to improve outcomes and reduce costs. Interviewees also noted that pathologists would have a much harder time implementing recommendations without strong support from ACO leadership. Lacking such support, it would be difficult both to get resources for pathology to develop guidelines, but more importantly there may be reduced incentives for other clinicians to follow pathologist advice.

13 Contributions of Pathologists in ACOs CAP Page 13 CHALLENGES Despite their successes, pathologists in these organizations, as well as the organizational leadership, continue to face challenges relating to achieving the greatest possible value from improving laboratory medicine. One of the most important problems they face is how to pay for pathologist contributions. As noted earlier, others such as the American College of Radiology and Landon have cited the difficult issues associated with paying for such services under a bundled payment model. One difficulty is that a traditional fee-for-service model may not be appropriate because adoption of guidelines and measures promoted by pathologists may actually decrease the volume of laboratory tests (and therefore the income derived from fee-for-service payments). In addition, many of the ways in which pathologists add value to the ACO are not related to the provision of particular services to specific patients, but to the development of systems (such as EHR coordination with laboratory) and guidelines that globally reduce costs and potentially improve patient care. Payment. The institutions we visited have had differing degrees of success with determining how to pay pathologists and how to allocate to them gains from greater efficiency in health care delivery. Geisinger, with its two decades of experience working in a coordinated care environment, has developed a system under which all providers are salaried and are eligible for substantial incentive payments for areas such as cost savings and development of care innovations. Pathologists at Nebraska Health Center and Methodist Health System are salaried, and the pathology department gets a bonus that is based both on cost reductions and on achieving quality targets. While pathologists will be among the medical specialties eligible for sharing in cost reductions from greater efficiencies under shared savings agreements in the physician hospital organization in which the pathologists at Methodist participate, the share going to pathologists and all other PHO physicians had not been determined at the time of our visit. Payment issues are particularly important for organizations such as CMP, where pathologists are not employees of the hospitals or ACOs and therefore are not directly compensated for the quality improvement services that they provide. Instead they contract with the hospitals for inpatient/part A services and receive fee-for-service payments from payers for outpatient services. Under their IPA arrangement, pathologists were eligible for incentive payments based on performance measures. Under CMP, the formal ACO, how pathologists should be paid for efficiency gains is a work in progress and not yet fully resolved conceptually or specifically.

14 Contributions of Pathologists in ACOs CAP Page 14 Improving the capabilities of Health Information Technology (HIT) systems. A second important issue is the extent to which ACOs HIT systems are bi-directional, ie, allowing laboratory pathologists easy access to patient data across the patient s EHR and allowing other clinicians easy access to readable and actionable data from the laboratory. Such data are used in several ways, including implementing population health management programs (such as those used at Geisinger), communicating and assessing the effectiveness of standardized laboratory order sets, and presenting laboratory results in a way that makes it easier and more efficient for the clinician to provide appropriate care to the patient. In their current operations, pathologists typically utilize laboratory information systems (LIS) and anatomic pathology information systems (APIS) that enable them to receive test orders, track test status, and report test results and provide interpretive reports. These test results and interpretive reports are then typically transmitted by interface to the EHR. However, in many organizations without a single electronic medical record (EMR), physicians often are not able to access complete ambulatory and hospital due because of complex interface barriers. At least one expert with whom we spoke believes that these problems eventually will be corrected but require both more time and more resources. The lack of a single EMR also makes it much more difficult for the treating physician to access actionable data from the laboratory record (eg, automatic prompts that a patient is due for a test; electronic versions of testing protocols associated with a particular patient condition or symptom; or information about whether the patient has already had a particular test particularly a costly genetic test for which results would not change in a patient s lifetime). It often falls to the clinical laboratory to solve EHR interface problems, so as to establish robust mechanisms to link laboratory testing and results to the patient s clinical record. Such high functionality is required to ensure timely delivery of test results to providers, to avoid duplicative testing, and to ensure coordinated management of patient testing and therapeutic management by the patient s treating physician(s). Pathologists are key to ensuring the quality of laboratory tests by collecting, surveying, analyzing, and using patient population clinical results to guide therapy, best practices, and safety for individual patients and patient populations. Among the organizations that we visited, Geisinger Health System has the most integrated HIT networks, but even officials there say that such networks take years to develop and requires continuous improvement efforts. At the other institutions, however, integration is still far from complete. TNMC and Methodist Health System have interoperability in their LISs, enabling pathologists in one institution to see what tests have been run (and results found) in the other institution, but the institutions use different EHR systems. As a result, they need to work on ways to integrate these systems so that the two hospitals can access patient data from one another. In addition, Methodist Health System s LIS is still not fully integrated with its EHR. CMP is able to access clinical information through HEALTHeLINK, a regional health information organization (RHIO) operating in Western New York state that offers access to patient records at different institutions. While this system provides a physician with access to the broad menu of

15 Contributions of Pathologists in ACOs CAP Page 15 care that a patient may be receiving, officials with whom we spoke told us that data is not easy to extract. Difficulty of culture change. Finally, officials and pathologists at all three institutions agree that moving to an ACO model takes a substantial amount of time, effort, and behavior change. Specific to pathology, it requires changes in how clinicians and administrators see the role of pathologists, and in how pathologists view themselves. In organizations that are moving to a collaborative care model, pathologists who are not used to such active collaboration may need to be retrained in how they practice, how they communicate with other providers, and what kinds of role they can play in increasing their value. As CMP s David O. Scamurra, MD, FCAP noted, it will take retraining of pathologists to show them new ways of adding value. And because other clinicians typically are not aware of the contributions and capabilities of pathologists, it requires retraining and methods for providing continuing education to reinforce how pathologists can enhance patient care and reduce institutional costs. As Dr. Scamurra said, pathologists need to continuously identify and stress the importance of pathology, or they will be left out of the discussion. CONCLUSIONS AND POLICY IMPLICATIONS The growth of collaborative care models such as ACOs presents challenges to pathologists, particularly those who have relied on traditional methods of payment and of practicing laboratory medicine. Pathologists particularly those in independent private practice may face pressures to show their value added or could face an environment where the ACO views their services as a commodity to be purchased from the lowest bidder rather than as a service that can help the ACO achieve its quality and cost-reduction goals. But, for those pathologists who are seeking an expanded role in applying their skills as diagnosticians and integrators of health data, they also pose a dramatic opportunity. In addition, in an era of continually falling reimbursement rates for pathologists operating in a fee-forservice environment, roles in collaborative care may offer a growth opportunity for pathology and laboratory medicine. As one of the pathologists we interviewed said, one cannot stand still in this environment because payment systems are bound to change. And, because of the unique capabilities that pathologists bring in data management and testing, they offer important opportunities to help ACOs achieve their goals of providing better care while rationalizing the costs of that care. These three case studies of very disparate ACOs show distinct ways in which pathologists within those organizations have been able to add value and become leaders in their institutions. They have been able to implement collaborative approaches that reduce costs without reducing indeed, often while enhancing patient safety and health care outcomes. Admittedly, implementing these approaches is

16 Contributions of Pathologists in ACOs CAP Page 16 not easy. And success requires vision and leadership from pathologists, from administrators, and from lead clinicians in the institution. Success may also hinge on reorienting both pathologists and other clinicians to work better together and on successful use of interoperable electronic connectively both to provide the data and to make best use of the analysis and feedback which pathologists provide. The ACO model relies on innovation by private actors, notably physicians and hospitals. Even the Medicare ACO model is designed to allow models to emerge under a broad set of regulations that merely set the financial and quality ground rules. Nevertheless, our site visits suggest some potential areas where public policy changes can establish an environment that would enhance opportunities for ACOs to be more effective: 1. ACOs should establish an advisory board that evaluates and monitors clinical laboratory testing protocols and guidelines. Given the fundamental role played by the clinical laboratory in allowing the ACO to achieve its health outcomes while reducing costs, it is vital that the laboratory provide diagnostic protocols, including optimized order sets, that are evidence based and designed to make sure that the patient gets the right test at the right time. Several institutions, such as the Mayo Clinic and the institutions we visited, already have advisory boards that identify areas for standards that are evaluated by providers and are based on strong medical evidence. Currently, about half the states have considered ACO legislation that would allow these entities to function under state law. The Massachusetts Society of Pathologists (MSP) is advancing legislative language, to be included in anticipated legislation, which would require each ACO to establish a clinical laboratory testing advisory board, charged with recommending guidelines or protocols for clinical laboratory testing in the ACO. According to an undated MSP legislative memorandum in support, the MSP proposal would require the board s membership to include at least one physician who is both a member of the ACO and the medical director of a CLIA-certified clinical laboratory. It is important to note that such legislation not establish the guidelines themselves. Rather, it would require the ACO to establish such an advisory board, including a CLIA-certified laboratory director physician who is a member of the ACO, as part of the approval process for any ACO. 2. CMS guidelines for ACOs should, at a minimum, strongly encourage that patient EHRs allow for bi-directional exchange of data between the laboratory and other patient information. The EHR is, in effect, the central nervous system of an ACO. EHRs should enable all relevant providers including pathologists to have the ability at any points in the decision-making process to access the information on the patient s health status, the health care plan, and results. Such information helps to avoid medical errors, unnecessary duplication of services, and underuse of appropriate services. 16 This access is particularly important because patients may be getting

17 Contributions of Pathologists in ACOs CAP Page 17 care at different sites within the ACO. For example, they could be getting care at two different hospitals and from several different physicians. All of the experts we interviewed expressed the importance to ACO success of pathologist access to data in the EHR in order to correctly assess patient needs and to implement programs that promote appropriate care. 3. CMS should study the extent to which patients and smaller health care practices in rural areas are able to take advantage of any cost and quality improvements that may be associated with ACOs. The ACOs that we visited are all well established and had experience operating in an organizational capacity (eg, hospitals, major regional health centers, large physician practice organization). But patients receiving care from such organizations should not be the only ones to benefit from coordinated care models. In some markets, particularly in rural areas, starting an ACO poses not only major logistical problems but also financial problems (particularly for the required investments in common EHR systems). They also face greater risk because there is uncertainty about whether ACOs in rural areas can achieve savings. 17 Similarly, the smaller pathology practices typical of such rural areas may lack the financial capital needed for startup. This could be particularly important where such practices are the only ones available in the community. 7 CMS has recognized the issue of barriers in establishing ACOs in smaller communities, particularly in their financial ability to build an EHR system, and established the advance payment program to give such ACOs access to future shared savings in order help fund startup costs without any net government contribution. However, these payments only address start-up costs and do not reflect the potentially greater risks that ACOs face in these communities. In addition, there is concern that the eligibility requirements do not reach all necessary communities, and while the funding accrues to the ACO, it is not clear that the ACO would distribute the funds in a way that would provide needed investment funds to specialists such as pathologists, who would need to make investments in data integration. Inadequate distribution of funds would diminish the effectiveness of the ACO in achieving the types of gains that can be achieved in larger markets. While adoption of these policy measures would enhance pathologists ability to contribute in an ACO, it would be naïve to think that all or even most pathology practices are able to immediately provide coordinated care systems with the kinds of laboratory-based contributions that have been highlighted in this analysis. These are particularly true for small- and medium-sized practices, which still employ the majority of practicing pathologists in this country. If coordinated care systems such as ACOs become a more dominant part of the health care delivery system, practices seeking to participate as leaders in those systems must address the following issues:

18 Contributions of Pathologists in ACOs CAP Page 18 Many of the potential roles for laboratory medicine in ACOs require expertise in laboratory medicine, but smaller practices often have focused their current staff expertise in anatomic pathology. In order to be a leader in the ACO, a pathology practice needs to have sufficiently broad expertise to allow them to be leaders in all areas of pathology, including the laboratory medicine areas of clinical chemistry, hematology, medical microbiology and transfusion medicine, equally with anatomic pathology. Similarly, ACO administrators may be looking to pathologist for standards and protocols in emerging areas of diagnosis, including molecular testing. Again, some practices may not have sufficient staff expertise in all the areas where such protocols might be needed. Relatively few pathologists have the training and skills in health care informatics that are required to acquire and analyze the data needed for population health management. Even though not every pathologist would need these skills, many small- and medium-sized pathology practices do not have sufficient staff expertise in this area. If pathology practices beef up their staffing to enhance their value to existing or future coordinated care delivery systems, the question remains of how to pay for this enhanced staffing. Pathology practices may be unable (or, at a minimum, reluctant) to invest in these resources when there is no established basis for payment by an ACO for the savings and improvements in quality that these staff would bring to the ACO. That being said, ACOs are still in their formative stages in most parts of the country, and this analysis suggests ways that pathologists can best avail themselves of the opportunity to be part of this new world: Be proactive. As noted earlier, individual pathologists can be proactive in reaching out to ACO organizers in their communities, explaining the potential for pathology and laboratory medicine to contribute to ACO goals, and offering to take a leadership position by participating in the ACO and joining ACO committees. Working with local ACO leaders and administrators, and getting an early seat at the table is vital for pathologist, particularly in an environment where roles, procedures, and payment mechanisms are still being invented. Document value. Once a laboratory is in an ACO, it is important to document ways that its actions have contributed to enhanced outcomes, more appropriate care, and cost reductions for the ACO. Examples such as we heard, where a pathologist was able to talk to a clinician about the reasons for not ordering a requested $1,500 test which the clinician noted wasn t vital but would just be interesting need to be identified and highlighted. Conversely, there should be an opportunity to identify the specific value of ensuring that appropriate testing is done at the appropriate time, with appropriate interpretation and follow-through.

19 Contributions of Pathologists in ACOs CAP Page 19 ACOs and coordinated care models also offer opportunities to the profession of pathology as a whole. In particular, pathologists working with other clinicians have the opportunity to apply their substantial laboratory-based information and expertise to develop evidence-based guidelines for optimal use of laboratory tests to monitor the health status of patients with chronic disease, detect illness in patients at risk for health problems, and facilitate initiation of treatment interventions. Admittedly, this may be a new and perhaps controversial area for pathologists to explore. But the need for such standards came up repeatedly among ACO administrators with whom we met, at least one of whom cited similar standards that have been developed for radiology. The CAP should consider whether it would be appropriate and useful to follow the example set by the American College of Radiology to develop criteria for testing.18 Such an action could potentially raise the visibility of pathology and lead to improved and potentially less costly outcomes for patients. David J. Gross, PhD is director of the Policy Roundtable, College of American Pathologists (CAP). The author acknowledges the contributions of his CAP colleague Sharon West, who participated in the ACO site visits and whose expertise on ACOs helped to frame the issues addressed in this paper as well as to provide the basis for substantial comments throughout the paper s development. The author also received valuable comments from John Scott and John Olsen, MD, both of CAP; members of CAP s Policy Roundtable Committee, including Richard C. Friedberg, MD, FCAP; James M. Crawford, MD, PhD, FCAP; W. Stephen Black-Schaffer, MD, FCAP; Thomas M. Wheeler, MD, FCAP; and Michael B. Cohen, MD, FCAP; as well as from Donald S. Karcher, MD, FCAP, who chairs the CAP s ACO Network. The author accepts responsibility for any errors or omissions. Any opinions expressed herein are solely those of the author and do not necessarily represent the policies or positions of the College of American Pathologists.

20 Contributions of Pathologists in ACOs CAP Page 20 REFERENCES 1. Nace D, Gartland J. Providing accountability: accountable care concepts for providers. McKesson/Relay Health white paper. Published Accessed March 14, Berenson, RA, Burton, RA. Health policy brief: next steps for ACOs. Health Affairs. January 31, Accessed April 17, Meisel Z, Pines J. Post-HMO health care: are ACOs the answer? Time. May 31, Accessed April 18, Landon B. Keeping score under a global payment system. N Engl J Med. 2012;366(5): doi: /j.cll/2007/12/ Schuerch C, Selna M, Jones J. Laboratory clinical effectiveness: pathologists improving clinical outcomes. Clin Lab Med. 2008;28(2): , vi. 6. Sussman I, Prystowsky MB. Pathology service line: a model for accountable care organizations at an academic medical center. Hum Pathol. 2012;43(5): Bibb A Jr, Levin DC, Brant-Zawadzki M, Lexa FJ, Duszak R Jr. ACR white paper: strategies for radiologists in the era of health care reform and accountable care organizations: a report from the ACR Future Trends Committee. J Am Coll Radiol. 2011:8(5): About the partners. Accountable Care Alliance website. Accessed April 18, About us. Methodist Health System website. Accessed April 18, About us. The Nebraska Medical Center website. April 18, Geisinger Health System. About Geisinger. Updated March 14, Accessed April 18, Department of Public Relations & Marketing, Geisinger Health System System Report. Accessed April 18, A new era of accountability is here: 2011 annual report. Buffalo, NY: Catholic Medical Partners; Meleskie J, Eby D. Adaptation and implementation of standardized order sets in a network of multi-hospital corporations in rural Ontario. Healthc Q. 2009;12(1) Busby LT, Sheth S, Garey J, et al. Creating a process to standardize regimen order sets within an electronic health record. J Oncol Pract. 2011;7(4):e8 e14.

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