Growing an ACO Easier Said Than Done By Jason Roberson

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1 Accountable Care Growing an ACO Easier Said Than Done By Jason Roberson In this article Take a look at the efforts under way in Texas to create an accountable care organization at Baylor. Kellie Kahveci, an advanced nurse practitioner, spent 45 minutes in David Hooten s living room, listening and explaining. Hooten, a 72-year-old retired police officer and grandfather of six, was about to die from end stage heart disease and bladder cancer. He was weighing whether to die at home or in hospice care. When all I have to offer are bad options we have to choose the least bad option, Kahveci says, with her hand on Hooten s shoulder. I d rather you be confused and comfortable, she says in suggesting a stronger dosage of morphine. I m already confused, so we re half way there, Hooten quipped. Before dying in July 2010, Hooten was in a new Baylor Health Care System program for high-risk heart failure patients designed to curtail costly emergency room readmissions. The Dallas-based not-for-profit hospital system is working to become an accountable care organization by 2015 in part because of the program s success. Reaching that goal will not be easy. Like others exploring ACOs, Baylor must contend with decades-old federal and state laws, once written to protect patients, but now outdated for new-age payment models. Internally Baylor still must manage an imminent cultural shock of physicians wages being determined by stacks of quality data. The term ACO has been used as a noun, a verb, an adjective, with capital letters and lower-case letters. The most consistent definition describes it as a system where physicians bear the responsibility of coordinating care for a group of patients to improve quality and drive down costs. Allison We see design elements within the ACO structure that encourage and preserve what we believe to be non-negotiable: The decision making found within a protected physician-patient relationship, said Baylor CEO Joel Allison. A core requirement of an ACO is physician alignment. There must be enough primary caregivers for patients to have a medical home. Baylor has a 15-year head start. In the early 1990s it looked as if the Clinton administration would pass health care reform and usher in a new era of individual insurance mandates and provider cost controls. In preparation, Allison and Gary Brock, Baylor s chief operating officer, organized doctors in a 501(a) physician organization under the Texas Medical Practice Act. HealthTexas Provider Network, formed in 1994, has grown from 10 doctors to more than 500 physicians practicing in 122 locations. Brock said Baylor is growing the number of physicians in HealthTexas by 10 percent a year. Last fiscal year patient visits to HealthTexas physicians surpassed 1.3 mil- Brock lion, including nearly 88,000 new patients. The Dallas/ Fort Worth region has more doctor-owned hospitals than any other region, mainly because of Baylor. The region has 22 of the country s 226 doctor-owned hospitals, and another 23 are in development here, according to the Physicians Hospitals of America. Of Baylor's nearly $3.5 billion in annual operating revenue, one-fifth is tied to hospitals that it owns with physicians. About one in every 10 of its nearly 4,500 affiliated doctors has an ownership stake in one of its 10 joint venture hospitals. To some degree Baylor s physicians already have demonstrated they can work together to improve quality. The U.S. Centers for Medicare and Medicaid Services said in July that Baylor Heart and Vascular Hospital, for the second year in a row, has the lowest readmission rate for heart failure patients in the country. 8 PEJ september october/2010

2 We re not creating an accountable care organization, we re becoming an accountable care organization, Brock said. If history is any judge, Baylor will be able to reach its goal. Payment reform is in its roots. In 1929, Justin Ford Kimball, an official at Baylor University in Dallas, introduced a plan to guarantee school teachers 21 days of hospital care for $6 a year. The plan grew into what is known today as the Blue Cross and Blue Shield Association. Baylor says its central motivation for becoming an ACO is to improve management of the uncoordinatedcare patients, the less than 20 percent of its patient population that drive 80 percent of the costs. The system s recent capital expenditures have ACO undertones. In June Baylor pledged $15 million to transform a dilapidated recreation center into a diabetes wellness institute in a poverty-stricken neighborhood where residents were three times more likely to die from diabetes. Now the center includes a fulltime physician, pharmacy with lowerpriced medication, nutrition and healthy cooking classes, farmer s market with fresh fruits and vegetables, and exercise and weight training programs. Baylor currently is visiting board rooms of large Texas employers with promises of lowering their employee health care costs if they join the ACO. We believe that our future ACO, anchored in our maturing patientcentered medical home strategy, will help us move successfully from a volume-based, fee for service model to a proactive, population health model, Allison said. Waiting on Washington Baylor and other providers interested in government support for their ACO will be watching Health and Human Services Secretary Kathleen Sebelius closely for answers in the coming months. The Patient Protection and Affordable Care Act signed in March officially recognized ACOs that will be responsible for Medicare patients and children on Medicaid or in the Children s Health Insurance Program. ACOs wanting to participate in the Medicare program can start Jan. 1, The ACO must operate for (Photo by Jason Roberson) Kellie Kahveci, an advanced nurse practitioner for Baylor Health Care System, checks vital signs of David Hooten, a 72-year-old retired police officer. Hooten recently died from heart disease and bladder cancer. at least three years, include plenty of primary care physicians, have a minimum of 5,000 Medicare patients and have a formal legal structure to receive and distribute payments. What s less clear are the quality performance standards, data reporting requirements, the government s definition of patient centeredness, ACPE.org 9

3 how Medicare patients will be assigned to particular ACOs, and what percentage of savings has to be reached before money can be shared among providers. Those answers aren t clear because Sebelius has yet to offer them. The ACO section of the 906- page law is peppered with phrases like, the Secretary shall determine, the Secretary shall establish, and the Secretary may. In general, Medicare payments to providers will continue to be made in the fee-for-service format, but the ACO will be eligible for payments of the shared savings. Few disagree with the need to change the way physicians are paid. Today s fee-for-service systems can financially dock physicians for keeping patients healthy, eliminating errors and limiting unnecessary care. Physician practices and health plans across the country are testing different payment reform models. In general, they are either accepting payments to support patient medical homes, receiving money for an episode of care rather than filing claims piecemeal, or collecting global payments, which are fixed payments for a patient s care in a given time period, such as a month or a year. In order for these new initiatives to become viable models for changes in the way patient care is delivered, physicians must be able to suc- Wilson cessfully participate and lead these efforts, said Cecil Wilson, MD, president-elect of the American Medical Association. This transformation will not happen overnight, and it s clear that the continuing threat of steep Medicare cuts will block efforts to transform the way health care is delivered. Physician Health Partners, a Denver-based management service organization, helps indepen- dent physician associations accept capitated, risk-based contracts for Medicare and commercially insured patients. Physician Health Partners handles provider relations, contracting, financial and data management, and utilization management. Baptist Health System in San Antonio, Texas, is testing the use of bundled payments and gain sharing for hospital and physician services for nine orthopedic and 28 cardiac services. This Acute Care Episode demonstration project, going until June 2011, tests whether aligning financial incentives between hospitals and physicians improves the coordination of care for patients. Medicare is sending a payment of shared savings directly to qualified beneficiaries 90 days after they are discharged from the hospital. Carilion Clinic in Roanoke, Va., currently is part of an ACO pilot program of the Engelberg Center and Dartmouth Institute. Anthem, CIGNA, UnitedHealthcare and Southern Health already have signed on to participate with Carilion. We ve been preparing ourselves for strong comprehensive medical homes for primary care and we ve focused our work to improve unnecessary hospitalizations, said Mark Werner, MD, CPE, FACPE, chief medical officer of Carilion Clinic and president of Carilion Clinic Physicians. We re conducting internal analyses to see where we can reduce costs of care and initiate bundled payments for hospital-based services. Werner said he recognizes the challenge physician groups have with ACOs and other new payment models. If done right, there ll be Werner a downward pressure on the revenue of doctors and hospitals, he said. If I m going to reduce the total cost of care in your community, then someone s revenue is going to go down, Werner said. But doctors and hospitals who believe they can compete and win on quality can actually grow market share, he said. You can t actually take the risk without thinking, Werner said. Doctors groups are going to have to figure out how they ll work on less revenue. They re standing over the abyss looking at a black hole, daring to jump in. Cultural and legal hurdles Baylor will have to overcome implementation challenges to reach its 2015 goal. Among them: physician manpower. Allison and Brock are taking note of the physician shortage in Massachusetts, where individual health coverage is required. The Massachusetts Medical Society says that 40 percent of family physicians no longer accept new patients, up from 30 percent in An estimated 60 percent of internists have stopped taking new patients, up from 49 percent in And the average wait for an appointment with a primary care doctor in the state is 44 days. Allison also will have to get physicians to trust quality data. If there are problems with the certainty or soundness of the quality measures used for determining payments, physicians may be unfairly rewarded or penalized. Collecting the data also means more administrative costs, which could potentially limit the net benefit of any revenue gained from improved efficiency. Take the Medicare Physician Quality Reporting Initiative, for example. Physicians nationwide have argued that the incentive payments aren t worth the real costs of collecting and submitting the data. 10 PEJ september october/2010

4 Seasoned experts share their expertise and insight regarding important issues in physician leadership. Envisioning the 21st Century Leadership Team Lois Dister Executive Vice President/ Managing Principal Michael Dunford Executive Vice President/ Managing Principal Deedra Hartung Executive Vice President/ Managing Principal LEADERSHIP LIBRARY The industry s transition toward accountable care creates the absolute necessity for physician leaders who will integrate teams and align incentives. Our managing principals personally evaluate candidates to fit your culture and deliver the leadership you seek. To learn more and access our physician leadership body of knowledge: Visit cejkaexecutivesearch.com/library At the password prompt, enter PEJ2010 Follow the directions to download and save the documents For more information, contact us at Placing the Best Healthcare Executives and Physician Leaders Nationwide for More Than 25 Years. The position is important to you. The fit is critical to us. CejkaExecutiveSearch.com ACPE.org 11

5 The term ACO has been used as a noun, a verb, an adjective, with capital letters and lower-case letters. Jeff Goldsmith, president of Health Futures, Inc. and a vocal critic of ACOs, said no one also has figured out how an Goldsmith ACO will influence a physician monopoly of a particular medical service in a hospital. Baylor, for instance, signed an exclusive contract with Dallas-based Pinnacle Anesthesia Consultants to handle all anesthesia services at its largest hospital. Baylor offered the contract because it was forced to pay millions of dollars every year in subsidies to anesthesiologists just to get them to work on uninsured patients. Under the contract, Pinnacle no longer has to compete for work at the hospital, but it also can no longer pick and choose which patients to treat. How will Pinnacle react when the Baylor ACO has to tighten spending on anesthesia services to meet cost targets? They are certainly not going to stand around the camp fire singing Kum Ba Ya while their incomes are being reduced, Goldsmith said. The shared savings promised through improved efficiency will not satisfy physician groups used to making money through exclusive contracts, Goldsmith said. Even after those problems are solved, Baylor faces legal hoops. The same federal and Texas laws created to prevent health care fraud may unintentionally block Baylor s ACO progress. Allison said he hopes for federal regulatory relief or creation of safe harbors from existing laws. Physicians, for example, can t suggest Medicare and Medicaid patients visit hospitals with which they have a financial relationship. The goal of the Ethics in Patient Referrals Act is to keep physicians from thinking about their paychecks when making referrals. But if Bayler uses bundled payments, physicians naturally would have to send patients to the hospital where their money is bundled. CMS has yet to finalize an exception to the law. Even if it does, Texas legislators must also approve changes. The Civil Monetary Penalty statute could penalize Baylor if it makes payments to physicians as bait to limit services to Medicaid or Medicare patients. The Office of Inspector General at the U.S. Department of Health and Human Services has expanded the interpretation of the law to include limiting services for commercially insured patients as well. Texas law also is unclear on how Baylor can discipline a physician in an ACO on grounds of quality or efficiency. If I take action against a physician, is that a reportable issue to take to the medical staff credentialing board, Brock asked. However, the government is clear on its punishment for an errant ACO. According to the Affordable Care Act: If the Secretary determines that an ACO has taken steps to avoid patients at risk in order to reduce the likelihood of increasing costs to the ACO, the Secretary may impose an appropriate sanction on the ACO, including termination from the program. Federal and state antitrust laws present another hindrance, as they can limit the cooperation between payers and providers to reduce costs and improve quality. Baylor could be in violation if it tried to reach agreements with Blue Cross Blue Shield of Texas, the state s largest insurer, and other health plans using a new payment approach. But the state of Texas could protect Baylor and other providers from anti-trust laws if it passes legislation similar to what the state of Washington passed in Washington s law declares the collaboration among payers, private health carriers, third-party purchasers and providers is in the best interest of the public, if the goal is to support primary care medical homes. Yet another hurdle, Texas insurance laws are written to protect patients from buying health insurance from companies that don t have enough money to pay claims. But this also means insurance companies hold all of the financial risk for medical care. Allison said he wonders whether an ACO s receipt from Medicare of shared savings, partial capitation or other model payments would require an insurance license. He would rather partner with an insurer. It would be a waste of our resources to become a health plan, Allison said. Coordinating care Despite the challenges, the potential benefits may be too great not to try. Cliff Fullerton, MD, a family physician at Baylor s Garland hospital, 20 minutes east of Dallas, said he likes the ACO goal. He sees 22 patients a day, but doesn t expect his workload to change if the entire 16-hospital system converts to an ACO. Fullerton said more advanced nurse practitioners like Kahveci, who can prescribe medication, would be used. When qualifying patients sign up for the free program, Kahveci visits 12 PEJ september october/2010

6 them in the hospital. After being discharged, she follows up with weekly home visits for the first month, and biweekly home visits for the next two months. One of the reasons we feel this is important is because she s not only connecting the patient and the patient s family with the hospitalists, but she then coordinates with their primary care physician, Fullerton said. She actually goes with the patient to the first doctor s appointment. She makes sure everything is properly coordinated. For Baylor, Fullerton s praise might come in a distant second to a patient s personal testimony. She s been a lifesaver, said Sue Hooten, David s wife of 48 years. I didn t know they made people like her. 8. The statistics were part of the 2009Physician Workforce Study. 9. Section 1877 of the Social Security Act is known as the physician self-referral law or Stark Law after Congressman Pete Stark of California cmp/index.asp 11. Washington s law states: The legislature declares that collaboration among public payors, private health carriers, third-party purchasers, and providers to identify appropriate reimbursement methods to align incentives in support of primary care medical homes is in the best interest of the public. The legislature therefore intends to exempt from state antitrust laws, and to provide immunity from federal antitrust laws through the state action doctrine, for activities undertaken pursuant to pilots designed and implemented under section 2 of this act that might otherwise be constrained by such laws. 12. Hirshfeld E. Assuring the solvency of provider-sponsored organizations. Health Aff (Millwood). 15(3):28-30, Fall Jason Roberson is a journalist and freelance writer based in Dallas, Texas. References 1. https://www.dfwdoctorjobs.com/pages/ PhysicianSearch.aspx. Last accessed 7/30/ AboutWellmark/CompanyInformation/ History.aspx. Last accessed 7/30/ COMMUNITY/Pages/JuanitaJCraft.aspx Last accessed 7/30/ patient-protection-affordable-care-actas-passed.pdf. See Section 2706 titled Pediatric Accountable Care Organization Demonstration Project and Section 3022 titled Medicare Shared Savings Program. Last accessed 7/30/ Last accessed 7/30/ Last accessed 7/30/ Brookings-Carilion+news+release. Last accessed 7/30/2010. Finally, a Fix for Peer Review! Undo 30 years of dysfunction & inefficiency Improve Quality & Safety Measure Clinical Performance Build a Culture of Excellence My PREP TM Everything You Need to Succeed in an Affordable, Evidence-Based* Package Program Management Software Policy/Procedure Review Forms Training Material Do-it-Yourself or with Collaborative Assistance Available only from QA to QI Consulting: Your Trusted Resource for New Tools for Healthcare Improvement Get a Free Program Evaluation at Software Demonstration Detailed Information Improvement Resources Act Now No-Obligation Bonus: Free 30 minute phone consultation (Limited to the first 12 ACPE members who seek more information) Outstanding Value Satisfaction Guaranteed Superior Service Marc T. Edwards, MD, MBA * See related articles in the Physician Executive Journal Sep & Nov 2009 ACPE.org 13

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