ACO Best Practices for Shared Savings WHITE PAPER

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1 ACO Best Practices for Shared Savings WHITE PAPER

2 Accountable Care Organizations (ACOs) are one of the main instruments of U.S. healthcare reform used to change a fragmented fee-for-service system to a coordinated system with reduced costs and improved quality. The total number of ACOs (Medicare plus commercial) has grown rapidly from 329 in 2012 to 645 in 2014 with the total number of lives covered now over twenty million i. The number of ACOs participating in the Medicare Shared Savings Program (MSSP) has increased from 116 in 2012 to 405 in 2015 with the latest addition of 89 new ACOs announced by the Centers for Medicare and Medicaid Services (CMS) in December 2014 ii. Despite the significant amount of start-up costs and time invested by providers to establish these ACOs, the initial results have been mixed. On the positive side, MSSP ACOs as a whole showed improvement in 30 out of 33 quality measures as well as improved CAHPS patient experience survey scores while Year 1 Pioneer ACOs showed overall improvement in 28 of 33 measures and improved patient and caregiver scores across 6 of 7 measures iii. Although many have been able to improve quality measures, the number of ACOs that have generated shared savings is disappointing to some. Only about one out of four MSSP ACOs (53 out of 220) have been able to generate any shared savings while only 12 out of the original 32 Pioneer ACOs earned shared savings. There are 19 remaining Pioneer ACOs after 13 providers exited the program largely due to the downside risk of having to face shared losses. The inability to generate shared savings is particularly disappointing because many believed that the shift to preventive, coordinated care would lead not only to healthier populations but reduce the need for higher-cost, episodic care. Achieving shared savings is a critical milestone for ACOs to demonstrate success in the new reimbursement model, which many believe could become the prevalent model of care in the future. Many providers also want to increase the percentage of their revenue that comes from risk-based contracts in order to raise margins and pursue new revenue opportunities through commercial contracts. To execute that long-term strategy, ACOs must be able to demonstrate the ability to lower the cost of care for an at risk population. This is a critical time for ACOs to prove that the model can successfully lower costs as more skeptics express doubts about the program based on the initial results. Alan Weil, editor of Health Affairs and former executive director of the National Academy for State Health Policy said in a 2014 speech to the New York State Health Foundation that the initial results of the ACO program have not produced enough to show that the program will achieve a more cost-efficient and higher quality healthcare system. He explained: 2

3 There is no reason to expect that the people and institutions that were successful under the old model are the best people and institutions to charge with carrying out the new model.hospitals and health plans operate with inertia and under constraints that may prevent them from having what an observer might consider a rational response to the new incentives. Marginal changes in payment policy fail to disrupt the concentration of power held by expensive institutions, thereby limiting the likely effects. While many providers joined the ACO program to participate in a new model of care, the reality is that many have not yet truly innovated their overall approach, which is required in order to achieve greater results. This white paper will explore the issue of why many ACOs have struggled to generate shared savings and how they can evolve their strategies in order to achieve more success. Emerging ACO Best Practices Although the overall results are mixed, some ACOs have demonstrated noteworthy results that should give optimism and provide a path to success to other providers. Among the ACOs that did generate shared savings, significant dollars were earned by the top performers. The table below shows the top 10 MSSP ACOs by shared savings in 2014 who as a group earned an impressive $135 million. Top 10 ACOs ranked by earned payments 2014 Organization State Assigned Beneficiaries Earned Shared Savings Payments Total Generated Savings 1 Memorial Hermann Accountable Care Organization TX 34,430 $28,338,705 $57,834,092 2 Palm Beach Accountable Care Organization FL 36,268 $19,388,729 $39,568,835 3 Catholic Medical Partners - Accountable Care IPA NY 33,253 $13,682,060 $27,922,572 4 SEMAC MI 17,303 $12,094,617 $24,682,891 5 RGV ACO Health Providers TX 7,089 $11,900,756 $20,239,381 6 ProHEALTH Accountable Care Medical Group NY 28,651 $10,737,854 $21,913,987 3

4 We have increased our care management resources at the ER level as well as coordinating for and with the primary care community. This has had the greatest impact on our cost reduction as this is a population that is immediately actionable and without intervention will incur unnecessary costs. v - Michael Edbauer, D.O., CMO, Catholic Health System Organization Triad HealthCare Network WellStar Health Network MaineHealth Accountable Care Organization Accountable Care Coalition of Texas State Assigned Beneficiaries Earned Shared Savings Payments Total Generated Savings NC 40,944 $10,537,755 $21,505,622 GA 45,732 9,738,884 $19,875,274 ME 48,273 $9,406,443 $19,196,711 TX 33,739 $9,357,388 19,096,711 Best practices are beginning to emerge from these ACOs that have had initial success generating shared savings. Next, let s examine the commonalities and the high-level strategies used at four of the top performing ACOs iv. Note that the best practices listed below are taken from publicly available materials, examined from a technology agnostic point of view, and no claims are being made that any of these providers are Caradigm customers. Memorial Hermann ACO $28.34 million in shared savings Large not-for-profit health system in Southeast Texas Strategies: Full data transparency down to physician level combined with analytics and risk stratification tools Strong care management structure Strong network of primary care physicians already engaged in population health management Catholic Health $13.68 million in shared savings Buffalo, N.Y. based provider that includes four hospitals and an affiliated 900-physcian independent practice association (IPA) Strategies: Aggregation of clinical and claims data from across the network led to understanding and insights for improvement. Increased care management resources with a focus on ED and inpatient opportunities to drive savings. For example, better managed care transitions for key patient populations to reduce readmissions. 4

5 IT accounted for 40% of our costs, but the importance of proper reporting to our leadership team, and to CMS was at the top of our list. The ACO identifies its customized IT system as foundational to its success. vi - Dr. Jose Pena, Chief Medical Director, Rio Grande Valley Rio Grande Valley ACO $11.9 million in shared savings South Texas-based ACO was launched by six independent primary care practices, and has since expanded to include 13 practices. Strategies: Built own data collection and reporting repository to capture data from multiple EHR systems. Heavy emphasis on care management reduced hospital and emergency department use through more proactive management of chronic conditions. All practices have on-site care coordinators who focus on high-risk patients to develop individualized care plans, connect patients to services such as home health care, and make follow-up phone calls or home visits as needed. Triad Healthcare Network $10.5 million in shared savings Clinically integrated network serving the Central North Carolina market. Strategies: Developed information systems that would link the 800-plus doctors joining the ACO. Targeted specific patients that are high risk and high cost, and used case managers, social workers and pharmacists to troubleshoot. Care was better coordinated across different offices, the hospital and all of its departments, including the ER. Duplication of lab tests, imaging, specialist visits and readmissions to the hospital were reduced. Several best practices emerged from these top performing ACOs as they engaged in a similar set of strategies. The key takeaway is that for ACOs to generate greater shared savings, they need to have strong capabilities in each of the following three core strategies. Integrate information systems and leverage data across the network to connect all clinicians responsible for a targeted population. Stratify populations in order to prioritize limited resources where they will have the greatest impact. Increase efforts in targeted care management and primary care for prioritized patients. Why aren t more ACOs generating shared savings? Given the success of the providers profiled above, the pivotal question for ACOs is why aren t more able to generate shared savings? First, many ACOs are still trying to find the right care approach that works for their organization. There are many options to choose from such as developing Patient Centered Medical Homes (PCMH), clinical integration, care coordination, transition of care programs, partnerships with community resources, etc. These care approaches take time to implement, optimize and scale. It s also not uncommon for organizations to have mixed results while experimenting with different approaches before honing in on the right one. 5

6 Second, many organizations haven t acquired the new health IT solutions needed to support the care approaches mentioned above. In a 2014 Healthcare IT News survey of ACOs, 88 percent reported significant obstacles integrating data from disparate sources and 83 percent reported they have difficulty aligning analytics tools with their workflows vii. Keith J. Figlioli, senior vice president of healthcare informatics and member of the Office of the National Coordinator s Health IT Standards Committee says, Even when ACOs have successfully adopted and merged HIT systems, they aren t able to effectively leverage data and analytics to derive value out of their investments given the pervasive issues with data quality, liquidity and access, as well as issues with integrating data from disparate sources this is a pervasive problem among ACOs, and it could stymie the long-term vision for ACO cost and quality improvements if not addressed. viii Let s take a closer look at specific technology challenges ACOs are facing. Leveraging all data across a network ACOs face the challenge of improving the health of a geographically dispersed population often receiving care from a number of hospitals, clinics, skilled nursing facilities, and independent specialists. To coordinate care among all of these locations and effectively use analytics, ACOs must integrate all systems to bring together data from across the network. The lack of EHR interoperability makes the aggregation of clinical data a significant challenge if there are multiple EHRs within a network or among providers affiliated with a network. The challenge becomes even more difficult when considering the critical need to bring together other types of data (e.g. claims, financial) from potentially dozens of systems in an efficient and timely manner. Without an integrated health system with the ability to leverage all data, providers will have difficulty succeeding with population health initiatives because it is a foundational requirement that fuels other activities. Performing sophisticated stratification of patient risk While payer organizations have been evaluating and managing patient risk for decades, it is a relatively new activity for provider organizations. The most common risk management practice today for providers is to identify their most expensive patients and group them by disease categories such as diabetes, hypertension, etc. Next, providers typically try to identify proactive and preventive care management approaches for those patients to reduce the need for high-cost episodic-care. While this approach may seem logical and fundamentally sound, in reality, providers need more sophisticated tools such as predictive analytics in order to achieve better results. The shortcoming of this approach is that it does not provide a deep enough stratification of a targeted population. Having a list of many thousands of the highest cost patients in different disease categories has limited value. Among those thousands, an organization doesn t know where to focus constrained care management resources in order to achieve the highest return. In fact, it may not be the currently highest cost patients where all the focus should be as providers should also be addressing the next group of patients that are about to become the highest cost patients. It s these patients who generate unexpected costs that can be a major detriment to the achievement of shared savings. 6

7 A more sophisticated risk management approach applies predictive modeling and proprietary algorithms to a much wider array of data and considers factors such as movers risk and patient motivation to generate a manageable list of patients while also forecasting the cost savings potential more accurately. Predictive risk stratification is critical to generate the highest return on intervention. Care management efficiency and consistency Proactive, preventive care can help reduce the need for high-cost, episodic care. The challenge for organizations is how to scale care management activities and find efficiencies that can enable a care team to deliver that care more efficiently and consistently across a large population. For example, the process to get an untreated diabetic s glucose under control is fairly simple from a clinical point of view. The challenge arises when a high throughput care team must manage thousands of such patients seeking care in a variety of facilities. Manual processes and a lack of efficiency leads to delays in improved outcomes and inconsistencies in care, which contributes to higher costs. Providers need to streamline care management workflows to achieve the efficiency and scalability that can drive faster results across a population. Surfacing data and analytics in clinician workflows ACOs understand the value of using data and analytics to improve the quality of care and lower costs, but few have integrated data and analytics directly into clinical workflows where they can have the greatest impact. ACOs need to take the next step by surfacing valuable data and analytics (e.g. gaps in care, risk scores, full medication histories) into clinical workflows to improve care while a clinician is still in the presence of a patient. Given that the care for a population is a team-based activity involving a variety of clinicians in a variety of different facilities, data and analytics surfaced in clinician workflows is necessary to coordinate care, close gaps faster and improve outcomes for the patient. Reporting Another challenge for ACOs is the time and resources it takes to meet the reporting requirements necessary to qualify for shared savings. When data is housed in multiple systems it becomes a laborious, manual exercise to collect, measure and report on it, which can bog down an entire team of skilled clinical analysts. That team instead could be spending more time on identifying and driving quality improvement initiatives across the organization helping improve patient outcomes. ACOs must be able to measure and report on results efficiently, or it can take up a disproportionate amount of resource time. Population Health Is A Series of Interconnected Activities Providers should address population health as a series of interconnected activities rather than as distinct, siloed efforts. The weakness of siloed efforts is that deficiencies in any of the activities creates deficiencies in the others. For example, if you can t leverage all of your data, then that weakens your ability to use analytics, which weakens your ability to both understand your population and engage in efficient, targeted care management. 7

8 Population health is not just solely about data, not solely about analytics and not solely about care management. It s about all of those activities operating in an integrated manner and augmenting each other. This is known as an enterprise population health approach that integrates data, analytics, workflows, and clinicians across the entire organization. An enterprise approach leads to synergies and efficiencies across the organization that are the difference makers when trying to drive results as quickly as possible for a large targeted population. The speed with which providers can drive improved patient outcomes is a critical factor in their ability to achieve shared savings due to the annual time frame parameter. An Enterprise Population Health Approach Integrate Network & Aggregate Data Mitigate Gaps Define Populations & Stratify Risk Measure & Report Manage Care Engage Patients An enterprise population health approach delivers value across the organization Data Control With an integrated network that can aggregate and share all of your data you have: The ability to have a single source of truth that can be used with clinicians to drive quality improvement. 8

9 The ability to fully benefit from sophisticated predictive analytics that needs all your data to be effective. The ability to have single, longitudinal view of patients across the network. The ability to efficiently report on data, identify and close gaps. Predictive Analytics If you can apply sophisticated predictive analytics to a complete and near real-time data source you have: The ability to deeply stratify the risk of your population. The ability to accurately predict cost savings potential of patients receiving interventions. The ability to focus limited resources on those that will provide the greatest return on intervention based on their clinical risk and other factors including patient motivation. The ability to predict which patients are most likely to become the highest-cost patients, proactively improve their health and keep their costs down. Care Management If you can leverage all of your data and analytics then you can use that information to create new care management efficiencies that can improve patient outcomes faster: Care plans, task lists and interventions are automatically generated from assessment responses to get the highest risk patients to a better place faster and assure consistent work practices. Complete medication histories can be brought into single-patient views that display order history and fill history for easy review. High-risk patients can be tracked across the continuum through event-based alerts (e.g. admissions, discharges or Bluetooth device alerts). With a full 360-degree view of patients, care managers can see longitudinal data and patient responses over time, identify and address subtle changes and deliver patient-centered care by incorporating personalized goals into care plans. Patient workloads or specific tasks can be reallocated to other care managers or support staff, assuring top of license activity. Best practices of care managers can be identified and then shared across the team. 9

10 What could you do differently with your ACO? Approaching population health management as an integrated set of activities transforms how an ACO delivers care for a population at risk. Beginning of contract year Receive list of beneficiaries. With an integrated network aggregate all data relevant for those beneficiaries (e.g. clinical, claims, financial). Perform sophisticated risk stratification on the population factoring in patient motivation and movers risk to understand the risk in the population and forecast cost saving potential. Identify a manageable number of beneficiaries to prioritize in care management efforts that will yield the highest return on intervention and lead to shared savings. Enroll those beneficiaries into care management programs. Care managers have patient lists, care plans, task lists and interventions automatically generated based on evidence-based guidelines so they can begin improving outcomes faster for those beneficiaries. All clinicians across the network have a single, longitudinal view of beneficiaries that includes analytics and care plans, which improves efficiency and quality of care. Quality improvement analysts can look across the population to identify gaps in care then direct clinicians to close those gaps. They can also report on the ACO 33 measures with much less manual effort, which gives them more time to spend on quality initiatives. 10

11 ABOUT CARADIGM Caradigm is a healthcare analytics and population health company dedicated to helping organizations improve patient care, reduce costs and manage risk through the strategic, timely and compliant use of data generated across the healthcare continuum. Conclusion Many organizations joined the ACO program with the idea of using it as the first step in the transition to the new reimbursement models. CMS to date has provided little guidance around specific best practices and health information technology (HIT) infrastructure to adopt. What they did provide in the MSSP program was a track to forego the option for shared losses, which incentivized providers to dip their toes in the water without the risk of financial downside. This created an environment that encouraged participation and experimentation, but the shared savings results suffered because best practices from initial efforts are just beginning to emerge. When viewing ACO success in the context of being one of the most important strategic initiatives a provider will undertake today, it s paramount to engage in the right strategies and make the right investments in a timely manner. Not doing so can delay the timeframe for success by years because it takes most organizations approximately 6 12 months to evaluate and implement HIT solutions. Organizations that don t take significant steps to improve their capabilities this year will spend next year evaluating and implementing solutions and may not be able to drive real improvement until 2 3 years in the future. It s a critical time for more ACOs to demonstrate progress by generating shared savings. This white paper detailed the enterprise population health approach that can help ACOs achieve greater success. Providers need to acquire the tools that can enable that approach to help them integrate their data, analytics, and care management workflows to drive better patient outcomes in a shorter period of time. The synergies and efficiencies created by an enterprise population health approach are the difference makers that can help ACOs innovate care and generate more shared savings. i Wehrwein, P. (2014, November) An Accounting of ACOs. Managed Care Magazine. Retrieved from ii Evans, M. (2014, December 22) 89 ACOs will join Medicare Shared Savings Program in January. Modern Healthcare. Retrieved from iii Kocot, S., Mostashari, F., White, R. (2014, February 7) Year One Results from Medicare Shared Savings Program: What it Means Going Forward. Brookings.edu. Retrieved from: iv The ACOs profiled herein are not Caradigm customers and the information is based off of publicly available information. v (March 2014) MSSP Lessons Learned: What Worked, What Didn t and Why. AIS Health. Volume 5 Issue 3. Retrieved from: vi Mostashari, F. (2014, October 4). A Deeper Dive into the Rio Grande Valley. The Health Care Blog. Retrieved from: vii Miliard, M. (2014, September 25) ACOs held back by poor interoperability. Healthcare IT News. Retrieved from: viii Burns, K. (2014, September 24) Accountable care organizations struggling with HIT interoperability, according to survey. ehealth Initiative. Retrieved from: th Ave NE, Suite 300 Bellevue, WA Caradigm. All rights reserved. Caradigm and the Caradigm logo are trademarks of Caradigm USA LLC. This material is provided for informational purposes only. Caradigm makes no warranties, express or implied

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