The Impact of Accountable Care Organizations on Healthcare Delivery, the Primary Care Physician and the Medicare Patient

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1 The Impact of Accountable Care Organizations on Healthcare Delivery, the Primary Care Physician and the Medicare Patient Brian A. Kessler, D.O. Health Policy Fellowship Class of 2011 ACOs l November 1, 2012 l 1

2 Accountable Care Organizations: Increase Quality, Decrease Costs ACO is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it. - Section 3022 of the Patient Protection and Affordable Care Act s Medicare Shared Savings Plan (MSSP) - Formal legal structure (management and legal) - 5,000 beneficiaries for 3 years - Quality measures that reduce cost to receive payment - System for evaluating the health needs of the population Source: "Medicare "Accountable Care Organizations" Shared Savings Program - New Section 1899 of Title XVIII, Preliminary Questions & Answers". Centers for Medicare and Medicaid Services. https://www.cms.gov/officeoflegislation/downloads/accountablecareorganization.pdf ACOs l November 1, 2012 l 2

3 What Comprises an ACO? Accountable Care Organization Hospital Specialists Appropriate use of resources Primary Care Integration of Specialists Patients Strong Base of Primary Care patient-centered care ACOs l November 1, 2012 l 3

4 Why ACOs? Problems - Cost - general Medicare - Cost - chronic illness - Decline in quality - Decrease in workforce - Access ACOs l November 1, 2012 l 4

5 The Problem: Medicare Cost The rising cost of healthcare and the stability of Medicare: - In million were covered by Medicare million aged 65 and older, and 7.9 million disabled next twenty years the Medicare population is expected to double - 23% of mandatory federal spending 2 2 nd only to Social Security - Medicare is not financially sustainable 3 By 1990 Medicare was seven times over budget and currently is growing each year by twice the cost-of-living - 7% versus 3% per year. - Medicare participants may see a reduction in benefits Sources: 1. Statistics from the Medicare Trustees Report; 2. Congressional Budget Office; 3. ACOs l November 1, 2012 l 5

6 Problem: Cost of Chronic Illness Leading cause of death and disability in the US 1 75% of total US health spending 2 66% spending increase over the past 20 years is linked to chronic disease 3 Medicare patients with chronic conditions have more office visits 4 Sources: percent-of-health-spending; 3. Partnership to Fight Chronic Disease, Policy Platform, September 2007; 4. ACOs l November 1, 2012 l 6

7 Houston: We ve got a problem Federal Spending Source: (left) (right) ACOs l November 1, 2012 l 7

8 Healthcare Spending is Expected to Increase National Health Expenditures (NHE) NHE as Percentage of GDP NHE Per Capita 2004 $ 1,855,400, % $ 6, $ 1,982,500, % $ 6, $ 2,112,500, % $ 7, $ 2,239,700, % $ 7, $ 2,338,700, % $ 7, $ 2,473,300, % $ 8, $ 2,600,200, % $ 8, $ 2,709,800, % $ 8, $ 2,851,600, % $ 9, $ 3,024,800, % $ 9, $ 3,302,400, % $ 10, $ 3,538,200, % $ 10, $ 3,795,900, % $ 11, $ 4,044,800, % $ 12, $ 4,297,600, % $ 12, $ 4,571,500, % $ 13, Source : 2010 Office of the Actuary, CMS ACOs l November 1, 2012 l 8

9 Problem: Quality Preventable Deaths* per 100,000 Population in (19 Industrialized Nations, Commonwealth Fund) (* by conditions such as diabetes, epilepsy, stroke, influenza, ulcers, pneumonia, infant mortality and appendicitis) If the U.S. could reduce mortality to the average rate achieved in the three top-performing countries, there would be fewer deaths. Source: ACOs l November 1, 2012 l 9

10 Problem: Workforce = Access The Association of American Medical Colleges (AAMC) predicts a shortage of approximately 21,000 primary care physicians (PCPs) in Population growth and aging will increase family physicians and general internists workloads 29% between 2005 and Initial estimates: shortage of 35,000 44,000 primary care physicians for adults by Sources: ; 3. ACOs l November 1, 2012 l 10

11 ACOs l November 1, 2012 l 11

12 Medicare Visits to Primary Care Source: ACOs l November 1, 2012 l 12

13 Medicare and Primary Care The Medicare population makes up approximately 15% of the U.S. population % all ambulatory medical care visits were made to primary care physicians in office-based practices. 2 From 1978 to 2008, for patients aged 65 and over, the percentage of visits that were to primary care decreased from 62 percent in 1978 to 45 percent in Sources: ; 3. ACOs l November 1, 2012 l 13

14 Fewer PCPs caring for the Medicare population 83% of doctors accept Medicare (CMS). 1 15% of AOA members did not participate in Medicare. 2 19% of AOA members did not accept new Medicare patients. 2 13% of family physicians did not participate in Medicare in 2009 (AAFP). 2 Sources: UnitedStates/Local%20Assets/Documents/US_CHS_PhysicianWorkforce_ pdf ACOs l November 1, 2012 l 14

15 ACO: Structure Maintain consistent quality measures; Increased awareness of capital & operational planning; Utilize existing relationships and strengthen PCP infrastructure; Sustainability and expand resources. ACOs l November 1, 2012 l 15

16 Opponents: Accountable Care Organizations Concerned about the CMS rules and regulations - American Medical Group Association (AMGA) - Premier Healthcare Alliance (PHA) - Federation of American Hospitals (FHA) ACOs l November 1, 2012 l 16

17 Opponents: Accountable Care Organizations Limited Health Information Technology (HIT) Inability to access adequate funding Limited physician coverage Demographic variances Patient and healthcare professional education Barriers between administration and medical staff ACOs l November 1, 2012 l 17

18 Proponents: Accountable Care Organizations American Hospital Association (AHA) American Osteopathic Association (AOA) American Medical Association (AMA) American Academy of Family Physicians (AAFP) American Academy of Pediatrics (AAP) ACOs l November 1, 2012 l 18

19 Proponents: Accountable Care Organizations Will help drive healthcare delivery reform by reducing costs and increasing quality. Facilitates coordination and cooperation among providers. Improves beneficiary outcomes and increases value of care. ACOs l November 1, 2012 l 19

20 Unintended Consequences Exclusion of Providers - Solo or small primary care practices will be excluded because of their size - Loss of the physician: retirement, lack of participation - Mid-levels Role of costs - Start-up financing (higher cost) - Data mining: quality measures that need to be documented and reported Patient Accountability ACOs l November 1, 2012 l 20

21 ACO (PPACA): Opportunity - Estimated Medicare savings: $170 million and $960 million over the next three years. 1 - Provide an opportunity for improved quality. 2 - Reduce redundant, unnecessary and inappropriate medical care. 3 - Integrate quality care & accountability. 4 - Act as a care organization model Sources: ACOs l November 1, 2012 l 21

22 Recommendations: ACOs ACO models that allow greater participation by smaller primary care practices. Improved financing mechanisms and start-up costs. Greater flexibility in the criteria used to qualify practices for participation in an ACO. Right size the quality measures to make them more reasonable for smaller groups. Reduce the data burden and patient load. Broaden waivers to facilitate necessary up front investments such as electronic health records. ACOs l November 1, 2012 l 22

23 ACOs: Concluding Thoughts ACOs provide an opportunity for all healthcare providers to contribute to the reduction in the escalating costs of healthcare. Emerging consensus: Better health, better care, lower costs. The time is now Federal support for change: - Comparative Effectiveness Research (CER) - Health Information Technology (HIT) - Coverage expansion - Commitment to value-based healthcare ACOs l November 1, 2012 l 23

24 QUESTIONS ACOs l November 1, 2012 l 24

25 References Accountable Care News Special Edition: Expert Commentary on the CMS, FTC/DOJ, IRS, and OIG ACO Regulations/Guidance. April, Accessed May 14, Accountable Care Organizations: AHA Research Synthesis Report. American Hospital Association Committee on Research, June Ault, A. Primary Care Groups Outline ACO Principles, FPN, December 2010, Vol. 40, No. 20 Pg 1, 87. Centers for Medicare and Medicaid Services resource pages. "Medicare 'Accountable Care Organizations' Shared Savings Program -New Section 1899 of Title XVIII: Preliminary Questions & Answers". Web Site. Accessed March 4, CMS releases ACO guidelines. Web Site. Accessed May 14, Congressional Budget Office, "Budget Options: Vol. I; Health Care," December Web Site. Accessed March 4, Congressional Budget Office, Letter to Rep. Nancy Pelosi, Speaker of the House of Representatives, March 20, Web Site. Accessed March 4, Department of Health & Human Services. Centers for Medicare & Medicaid Services. Improving Quality of Care for Medicare Patients: Accountable Care Organizations. CMS Office of Media Affairs; March 31, Department of Health and Human Services, "Report to Congress: Physician Group Practice Demonstration Evaluation Report," September Web Site. Accessed March 4, Devers, K. "Can Accountable Care Organizations Improve the Value of Health Care by Solving the Cost and Quality Quandaries?" (Washington, DC: Urban Institute, October 2009). Web Site. Accessed March 4, DeVore, S. Driving Population Health Through Accountable Care Organizations. Health Aff. January 2011; 30, 1: 41. Elliott, V. Most ACOs May Lose Money Initially, American Medical News (April 7, 2011). Evans, M. Proposed ACO rules too risky, demo group participants say. ModernHealthcare.com. Web Site. Accessed May 13, ACOs l November 1, 2012 l 25

26 References Fisher, D. American Medical Group Association. Letter addressed to Donald M. Berwick, M.D. Re: Medicare Shared Savings Program Accountable Care Organizations. May 11, Fisher, E. "Creating Accountable Care Organizations: The Extended Hospital Medical Staff," Health Aff 26, no. 1 (2007): w44-57 (published online December 5, 2006). Web Site. Accessed March 4, Glass, D. Medicare s Shared Savings Program for ACOs. October 7, MedPAC. Web Site. Accessed April 22, Goldsmith, J. Accountable Care Organizations: The Case For Flexible Partnerships Between Health Plans And Provider. Health Aff. January 2011; 30, 1: 32 Health Affairs resource pages. Health Policy Brief: Accountable Care Organizations. Web Site. Accessed March 4, Health Policy Institute of Ohio (HPIO) Health Policy Brief. Understanding the Medicare ACO and Its Potential Impact on Ohio and the Nation: Considerations of CMS Draft Rules. May Web Site. Accessed May 14, Heart Rhythm Society resource pages. ACO Proposed Rule. Web Site. Accessed May 8, Iglehart, J. Assessing an ACO Prototype Medicare s Physician Group Practice Demonstration, 364 N. Eng. J. of Med (Jan. 20, 2011). Iglehart, J. The ACO Regulations Some Answers, More Questions. New England Journal of Medicine. April 13, Lieberman, S. Building Regulatory and Operational Flexibility into Accountable Care Organizations and Shared Savings. Health Aff. January 2011; 30, 1: Lieberman, S. Proposed CMS Regulation Kills ACOs Softly. Health Affairs Blog, April 6, Martin, S. Medicare Shared Savings Program- Accountable Care Organization Proposed Rule. American Osteopathic Association (AOA) Government Relations. Letter to Bureau on Federal Health Programs (BFHP), Joint Committee on Quality and Payment (JCAP), April 4, ACOs l November 1, 2012 l 26

27 References McClellan, M. Accountable Care Organizations: A Framework for Evaluating Proposed Rules. Health Affairs blog, March 31, Accessed April15, Medicare Payment Advisory Commissions. MedPAC resource pages. Search: Accountable Care Organization. Web Site. Accessed May 2, Medicare Shared Savings Program, 76 Fed. Reg et seq. 2. (proposed April 7, 2011); Patient Protection and Affordable Care Act, Pub. L. No , 3022 (2010). Merlis, M. Health Policy Brief: Accountable Care Organizations. Health Aff. July 27, Physicians for a National Health Program resource pages. Accountable Care Organizations. Web Site. Accessed May 11, Shortell, S. "How the Center for Medicare and Medicaid Innovation Should Test Accountable Care Organizations," Health Aff. 29, no. 7 (2010): Walker, D. U.S. Government Accountability Office. 21 st Century Health Care Challenges: Unsustainable Trends Necessitate Reforms to Control Spending and Improve Value. Web Site. Accessed March 11, Medical Group Management Association. (2008). Physician Compensation and Production Survey. Denver: Medical Group Management Association. Murray, M., Davies, M., Boushon, B. Panel Size: What is it, why is it important, what is the ideal panel size and is there a limit to panel size? Internet Group. Retrieved April, 27, 2009 from the source. AAFP Accountable Care Organization Task Force Report (October 2009). Possible Impact of Accountable Care Organizations on Family Medicine Practices. Department of Health & Human Services Centers for Medicare & Medicaid Services Room 303-D 200 Independence Avenue, SW Washington, DC Media Affairs Office MEDICARE NEWS, December 9, 2010 Medicare demonstrations illustrate benefits in paying for quality health care McGeeney, T. The Patient-Centered Medical Home and the Accountable Care Organization. ACOs l November 1, 2012 l 27

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