ACOs: The Promised Land of Health Care Delivery Reform

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1 ACOs: The Promised Land of Health Care Delivery Reform Steven J. Bernstein, MD, MPH University of Michigan VA Ann Arbor Healthcare System The Medicare NewsGroup / Poynter Institute St. Petersburg, FL Covering Medicare: Care, Costs, Controls & Consequences 6 May 2013

2 Presentation Background UM Health Care System UM Population Management ACO Development and Challenges 2

3 The Cost of American Health Care In 2011, U.S. health expenditures hit $2.7 trillion and accounted for 17.9% of the GDP Health care expenditures are expected to reach $4.6 trillion in 2020 o 1/2 from government sources 3

4 Per Capita Spending - PPP Adjusted $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 University of Michigan Health System Growth in Total Health Care Expenditures Per Capita, United States Switzerland Canada OECD Average Sweden United Kingdom $1,000 $ Sources: OECD Health Data 2011 (June 2011); Commonwealth Fund Chart book 4

5 Quality of Care in the United States ( ) Number of quality indicators Percentage of Recommended care received Overall Care % Type of Care preventive % acute % chronic % Function screening % diagnosis % treatment % follow-up % EA McGlynn et al. The quality of health care delivered to adults in the United States. NEJM 2003;348:

6 The Quality of American Health Care Mortality Amenable to Healthcare: Deaths per 100, France Japan Australia Spain Italy Canada Netherlands Austria Germany Denmark United Kingdom Portugal United States * Countries age-standardized death rates < age 75; includes ischemic heart disease, diabetes, stroke & bacterial infections. Source. E Nolte et al. Measuring the Health of Nations: Updating an Earlier Analysis. Health Affairs 2008;27(1):

7 Monthly Cost of Cancer Drugs at the Time of FDA Approval, Monthly Cost of Treatment (U.S. dollars) Source. PB Bach. Limits on Medicare s ability to control Year of rising FDA Approval spending on cancer drugs. NEJM 2009;360: Source. PB Bach. Limits on Medicare s ability to control rising spending on cancer drugs. NEJM 2009;360:

8 Care, Costs and Consequences 89 year old woman with decreased blood flow to her legs in July 2012 Treatment: Stents to open the arteries Cost for a one-day hospitalization: 2 iliac stent procedures 28,743 3 iliac stents 6,702 Blood tests 3,107 Intravenous (IV) medications 7,735 X-ray studies 4,991 Sterile supplies 19,629 Oral medications,333 Oxygen/hour,999 Intravenous salt water (6 liters) 1,080 Total $74,775 8

9 Patient Perceptions regarding Cost Having patients weigh costs when making medical decisions has been proposed as a way to rein in health care spending. 22 focus groups of people with insurance to examine their willingness to consider costs when deciding among nearly comparable clinical options. Found four barriers to patients taking cost into account: a preference for what they perceive as the best care, regardless of expense; inexperience with making trade-offs between health and money; a lack of interest in costs borne by insurers and society as a whole; non-cooperative behavior characteristic of a commons dilemma, in which people act in their own self-interest although they recognize that by doing so, they are depleting limited resources R Sommers. Focus groups highlight that many patients object to clinicians' focusing on costs. Health Affairs 2013;32(2):338-46

10 Patient Perceptions regarding Cost Having patients weigh costs when making medical decisions I want the best health care. has been proposed as a way to rein in health care spending. Money s no [object]. Either pay the best, or maybe they even miss something with the 22 focus other groups scan. of people with insurance It s to asking examine us to bear their willingness to consider costs when deciding among nearly comparable clinical options. responsibility for the costs when we didn t have a part in creating these costs in the first place. Found four barriers to patients taking cost into account: To be kind of nonchalant about I don t care what my insurance company pays is ridiculous because the cost is going to come back to you. a preference for what they perceive as the best care, regardless of expense; It s your health. [What] you re talking about here is health versus money; in other words, life versus cost. But cost don t come into effect when it s versus life. I wouldn t care if they said it cost $10 million, give it here. I ain t got $10 million, but give it anyway. inexperience with making trade-offs between health and money; a lack of interest in costs borne by insurers and society as a whole; non-cooperative behavior characteristic of a commons dilemma, in which people act in their own self-interest although they recognize that by doing so, they are depleting limited resources R Sommers. Focus groups highlight that many patients object to clinicians' focusing on costs. Health Affairs 2013;32(2):338-46

11 The Triple Aim Improving the individual care experience Improving population health Reducing per capita costs At least 5 areas must be addressed: partnership with patients & families, primary care redesign, population health management, financial management & macro system integration Source. DM Berwick et al. Health Affairs, 2008;27:

12 University of Michigan Health System What are Accountable Care Organizations? ACOs are groups of health care providers, with or without hospitals, who come together to manage all the care for at least 5,000 Medicare beneficiaries for three years The goals of ACOs are to: Avoid duplication of services Prevent medical errors Provide high-quality care Reduce costs ACO non-cost performance is measured on: Patient satisfaction / experience (CG-CAHPS) Care coordination / safety (Med Rec; Amb Care Sens Admits; Readmits; Falls) Chronic disease quality metrics (diabetes, coronary artery disease) Preventive health quality metrics (immunizations; cancer screening; BMI) ACO products are being offered by Medicare and Commercial Insurers 12

13 Differences between 3 Medicare ACO Programs Pioneer ACO model (experienced organizations) Recommended 15,000 patient minimum First two years include a shared savings payment In Year 3 can transition away from fee-for-service payments to population-based payments (a per beneficiary/per month payment) Medicare Shared Savings Program (MSSP) Recommended 5,000 patient minimum Advance Payment ACO model Developed for providers that lack ready access to the funds needed to invest in the infrastructure and staff for ACOs. 13

14 259 CMS Accountable Care Organizations* (Jan. 2013) Pioneer ACO Shared Savings ACOs 2012 Cohorts Shared Savings ACOs January 2013 Cohort * Pioneer ACOs, Medicare Shared Savings Programs, Advanced Payment ACOs Slide developed by the Advisory Board,

15 Presentation Background UM Health Care System UM Population Management ACO development and challenges 15

16 1.7 million out-patient visits per year 46,000 hospital admissions per year 3 hospitals / 866 hospital beds University of Michigan Health System University of Michigan Health System 23 Primary Care Health Centers Personnel 9,000 full-time-equivalent staff 1600 faculty (~124 FTE primary care) 960 house officers / residents 700 medical students Information Technology: Electronic Health Record Mixed reimbursement model: Medicaid, Medicare, Commercial, Managed Care*, Uninsured University is self-insured (78,000 staff/dependents) 16

17 Evolving Population Management at the University of Michigan 2011 Population Health 2008 Quality Management Projects Disease Management 1996 GUIDES* Programs 2013 Medicare Shared Saving Program 2012 Pioneer ACO: CMS* 2012 Michigan Primary Care Transformation: Multiple 2005 Physician Group Incentive Program: BCBSM* 2004 Physician Group Practice (PGP) Demonstration: CMS* * CMS = Centers for Medicare & Medicaid Services BCBSM = Blue Cross Blue Shield of Michigan GUIDES = Guidelines Utilization, Implementation, Development and Evaluation Studies 17

18 Physician Group Practice (PGP) Demonstration Project Geisinger Clinic Marshfield Clinic The Everett Clinic St John s Health System Deaconess Billings Clinic The University of Michigan Dartmouth-Hitchcock Clinic Park Nicollet Health Services Forsyth / Novant Medical Group Integrated Resources for Middlesex PGP Basics ( ) Designed to encourage increased care coordination, improved quality, and decreased costs in the context of fee-for-service reimbursement model for Medicare beneficiaries Large, multi-specialty group practices selected for participation Sites eligible for savings bonus of up to 80% of total cost savings over 2% if quality targets met - Cost/quality weighting changed from 70%/30% (Yr 1) to 60%/40% (Yr 2) to 50%/50% (Yr 3-5). PGP demonstration sites serves as a model for ACO structure and reimbursement 5,000 Physicians and 224,000 Medicare Beneficiaries 18

19 Results of PGP Demonstration Project Since Medicare expenditures were more than 2 percent below target for their patients, bonuses were given to: Two PGPs in the first year Four PGPs in the second year Five PGPs in the third and fourth years Four PGPs in in the fifth year Two PGPs, including the University of Michigan (UM), received bonuses in all five years UM received $17 million and saved Medicare $22 million Much of the savings were based on care for patients who had both Medicare and Medicaid ( dual-eligibles ) L. Nelson. Lessons from Medicare s Demonstration Projects on Value-Based Payment CBO Working Paper C Colla et al. Spending differences associated with the Medicare PGP Demonstration. JAMA 2012;308(10):

20 Spending Differences Associated With the Medicare Physician Group Practice Demonstration Overall, adjusted annual mean savings were $532 in dual-eligibles and $59 in non-dual eligibles* For the UM, the savings were $2499 in dual-eligibles and $717 in non-dual eligibles Data points represent annual per beneficiary spending, capped at $ & inflated to 2009 dollars using the GDP deflator. Author analyses of Medicare claims files, (20% sample), (100% sample). Shaded areas indicate 95% confidence intervals. * Overall annual unadjusted mean savings were $114 per beneficiary excluding the bonus payment and $10 including the bonus payment C Colla et al. Spending differences associated with the Medicare PGP Demonstration JAMA. 2012;308(10): S Woolhandler et al. JAMA 2013;209(1): C Colla et a.l. JAMA 2013;209(1):31. 20

21 Blue Cross Blue Shield of Michigan Physician Group Incentive Program (PGIP) Slide courtesy of David Share, MD (BCBSM, 2011) 21

22 Medicare Multi-Payer Advanced Primary Care Demonstration (MiPCT)* 8 states participating in program Must be budget neutral over 3 years Michigan program based on BCBSM s PGIP Patient Centered Medical Home (PCMH) program 36 Physician Organizations 410 PCMH or NCQA Designated Practices (April, 2012) 1.8 million beneficiaries * MiPCT = Michigan Primary Care Transformation 22

23 UMHS Accountable Care Organization Development Home Care Services Sub-acute Care Washtenaw Health Plan Public Health Safety Net Clinics Other physician groups Hospital Care (UM Hospitals) Specialty Care (UM Faculty Group Practice) Patient Centered Medical Home (Primary Care) 23

24 Presentation Background UM Health Care System UM Population Management ACO development and challenges 24

25 The need to coordinate care Jobs allowed his wife* to convene a meeting of his doctors. He realized he was facing the type of problem that he never permitted at Apple. His treatment was fragmented rather than integrated. Each of his myriad maladies were being treated by different specialists - oncologists, pain specialists, nutritionists, hepatologists and hematologists - but they were not being coordinated in a cohesive approach One of the big issues in the health care industry is the lack of caseworkers or advocates that are the quarterback of each team, Powell said. This was particularly true at Stanford, where nobody seemed in charge of figuring out how nutrition was related to pain care and to oncology. So Powell asked the various Stanford specialists to come to their house for a meeting They agreed on a new program regimen for dealing with the pain and coordinating the other treatments * Laurene Powell 25

26 Multiple Clinical Interventions to Improve Patient Centered Medical Home Post- Discharge Calls Michigan Visiting Nurses Population Sub-Acute Nursing Home Care Disease Management Health ED Consult/Referral Complex Care Coordination Overall strategy reduce preventable admissions & readmissions Social Work Transitional Care Clinics manage chronic conditions coordinate care of complex and costly patients Geriatrics Consult Service Geriatrics Palliative Care Clinic Palliative Care Consults 26

27 Actions to improve ambulatory care quality Multi-payer chronic disease registries Asthma Diabetes Coronary Artery Disease Heart Failure Assess quality; identify gaps in care Provide just-in-time actionable, patient-specific quality gap reports for physicians Modify delivery system to improve care Controlled Substances Pediatric Obesity Modify electronic medical record to facilitate care Develop physician leadership to lead prioritized performance improvement activities 27

28 Quality Initiatives: Physician Diabetes Feedback Report 28

29 Quality Initiatives: Site Diabetes Feedback Report 29

30 Standardized Asthma Action Plan Templates On-screen reference of inhaled corticosteroids dosage ranges Convenient droplists of asthma medications and directions Automatic calculation of peak flow ranges based on patient s personal best Space for additional directions Clear & legible printouts Revised IT workflow so when document is electronically signed copy is automatically printed and an imaged document is sent to CareWeb 30

31 Decision Support: Diabetes specific report Report detailed clinical data to the provider at patient's visit via an automated system 1 st generation report limited to patients with diabetes Identify items that need attention; then provide detailed action steps Work with staff to divide work & responsibilities 31

32 Activate Patients Activate and educate patients by providing them with information on how they are doing at the time of their visit Insert patient data onto a take-home educational sheet 32

33 Decision Support: 2 nd generation report all patients 33

34 Using Technology to Improve Quality of Care Computer Assisted Terminal Interview Web based program used to improve preventive services across UMHS Facilitated medication switch program Interactive Voice Response System: CarePartners Use computer managed interactive voice response systems to help manage patients with chronic disease (e.g., CHF, diabetes, depression) Link patients and providers with informal care-givers

35 Univ. of Michigan Health System Automated reminder letters to registry patients Dear John Smith, At the Brighton Health Center, we want you to have the best care. We are sending this letter with recommended tests and exams to help you take care of yourself. Please take the enclosed slip to a University of Michigan lab for a: - blood test to check your average sugar control (A1c) - blood test to check your cholesterol levels - urine test to check your kidneys A foot exam should be done at your next visit. If you do not have an office visit scheduled, please make one by calling the clinic at.. 35

36 Care Management Models Care managers (RN or other health professional) 1 per 5,000 MiPCT beneficiaries (work with ~ 10%) Target: patients with moderate complexity illness Goal: mitigate risk factors, optimize chronic conditions, provide self-management support Complex care managers (generally RN) 1 per 5,000 MiPCT beneficiaries (active cases ~ 150) Target: patients with multiple co-morbidities and/or high utilization Goal: coordinate care, maximize function 36

37 Presentation Background UM Health Care System UM Population Management ACO development and challenges 37

38 UM ACO Development: Local Medical Groups Huron Valley Physician Asso (397) Integrated Health Associates (165) University of Michigan FGP (838) Medicare Pioneer ACO (UM and IHA) BCBSM Organized Systems of Care (UM, IHA and HVPA) Washtenaw County 38

39 UM ACO Development: Regional and Statewide CMS Shared Savings Program (UM and POM) Mid-Michigan Health Plan* (UM and Mid-Michigan) Medical Groups Advantage Health Physicians (386) Crawford PHO (77) Lakeshore Health Network (356) Oakland Southfield Physicians (233) Olympia Medical (191) United Physicians (805) Physicians of West Michigan (344) Wexford PHO (395) * Not part of an ACO / Shared Savings Program Washtenaw County 39

40 Important Considerations for an ACO Provider structure and organization - governance Financial success one-sided vs. two-sided risk, quality Comparison group local or national Patient attribution Risk adjustment / Coding Provider Roles ACO Challenges 40

41 ACO Governance Physicians must be predominant: PO, IPA, PHO, Integrated Governing Board with power to direct the ACO Must include a patient representative on the governing board Clear plan on how to distribute shared savings Strong organization and structure to get involved in an ACO Resources for up-front investment, financial tracking and ability to absorb losses Data processing & analysis capacity Clinical implementation model Experience with quality improvement * *Source: Z Song, TH Lee. JAMA 2013;309(1):35-36.

42 Pioneer ACO: Pay for Performance Phase-In Complete & accurate reporting in the 1 st year qualifies an ACO to share in maximum available quality sharing rate Quality is measured on four areas: Patient and Caregiver Experience Care Coordination and Patient Safety Preventive Health Chronic disease measures In future program years: Shared savings payments linked to quality performance High performing ACOs receive higher sharing rate 42

43 Patient Attribution: why is it important? A physician s and an organization's ability to coordinate and manage the health care of a beneficiary depends on the its control over the beneficiary s utilization of services. Most current attribution models are based on fee-for-service billing; there is no enrollment process whereby beneficiaries accept or reject involvement 80% with a particular provider The amount of services beneficiaries receive from physician groups may vary significantly Patient assignment can change over time 60% 40% 20% 0% Variation in the % of Medicare patients assigned to physician organizations in the Physician Group Practice Demonstration

44 Types of Providers, Roles and Responsibilities Role in ACO Provider Types Assigned Patients / ACO Member Governance Role Receive Shared Savings Other Incentives * Core providers (assigned patients if unique to a single ACO) Internal Medicine, Family Practice, Pediatrics, Ob/Gyn Yes / Yes Most likely to participate in governance Yes Yes Specialists likely to have an ongoing relationship with some patients Oncology, General Surgery, Orthopedics, Gastroenterology Not likely / Yes Possible Maybe Maybe Other specialists Anesthesiology, Radiology, Emergency Med No / Maybe Not likely No Maybe Non-contracted providers Hospitals, Skilled Nursing Facilities & Home Health No / No No No No * Bundled payments, Health Information Technology subsidy, Quality bonus, Preferential Referral Modified from: ES Fisher, MB McClellan. Toolkit ACO Learning Network. Exhibit 2.2. The Brookings Institution

45 Medscape Physician Compensation Report 2013 University of Michigan Health System

46 Medscape Physician Compensation Report 2013 University of Michigan Health System

47 Medscape Physician Compensation Report 2013 University of Michigan Health System

48 Medscape Physician Compensation Report 2013 University of Michigan Health System

49 Medscape Physician Compensation Report 2013 University of Michigan Health System

50 Pioneer ACO: General Organizational and Data Challenges Organizational Challenges Hospitals decrease in occupancy may threaten viability Physician groups independence may be reduced by aggressive tactics of hospitals or other physician organizations Physicians in practice specialists will need to coordinate care more closely with primary care providers Patients may seek care elsewhere* Competing programs patients may enroll in other programs (e.g., Medicare Advantage) Leadership where does the organization want to go Data Challenges Patients can opt out of sharing data Data volume must be capable of processing data * Major difference between Pioneer ACO and BCBS Massachusetts Alt. Quality Contract 50

51 Proportion of Michigan Primary Care Physicians Reporting Capacity to Accept Additional patients with New Coverage M Davis et al. Primary Care Capacity and Health Reform: Is Michigan Ready? CHRT Policy Brief. Jan 2013 (www.chrt.org) 51

52 Impact of ACA on Medicare Advantage Medicare Advantage (MA) programs offer Medicare beneficiaries the option of receiving extra benefits if they enroll in the program MA plans have been paid at rates about 13% higher than the estimated spending for comparable individuals in the traditional FFS Medicare program The ACA relied on reductions in MA payment rates to finance a significant portion of the subsidies associated with coverage expansion. Revising the payment system ACA reducing overpayments led to a reduction in plan options for beneficiaries C Afendulis et al. The impact of the Affordable Care Act On Medicare Advantage Plan availability and enrollment. HSR 2012;47(6 ):

53 Contact Information Steven J. Bernstein, MD, MPH Assistant Dean for Clinical Affairs Professor, Department of Internal Medicine Research Scientist, Department of Health Management & Policy Director, Quality Management Program University of Michigan Research Scientist, Center for Clinical Management Research VA Ann Arbor Healthcare System Phone: (734)

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