ACOs Are Slow to Catch on With Insurers Offering Plans on Insurance Exchanges

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1 Volume 5, Number 12 December 2014 Accountable Care Medical Homes Bundled Payments Coordinated Care Integrated Systems Contents Employers Are Still Skeptical of ACOs, Ask Where Is the Value? Two-Thirds of ACOs Still Plan to Skip Two-Sided Risk ACOs Show Promise in Other Countries Single- Payer Systems ACO Compliance Is Spotty As Waiver Rule Is Extended Selected Recent ACO Arrangements and Collaborative Agreements Mercy Parlays History Into MSSP, Commercial ACO Success Study: Some Patient Experiences Improve in Medicare ACOs ACOs Are Slow to Catch on With Insurers Offering Plans on Insurance Exchanges Accountable care organizations seem like they would show great promise as the driving force behind insurance products that are marketed on the public health insurance exchanges after all, they have the potential to hit the lower price points consumers want while still providing quality care. But in the second year of the public exchanges, only a handful of ACOs are featured as part of insurance products, and fewer still are being marketed as higher-quality networks. This comes despite predictions from health insurance industry insiders of a large potential role for ACOs as high-quality narrow networks (ABN 1/14, p. 6). There are [a few] ACOs accountable care partnerships being leveraged on exchange products right now, says Austin Bordelon, senior associate at Leavitt Partners, LLC, which has identified several places where it appears that ACO providers participate in networks offered as part of exchange-based products. But you can t necessarily recognize them. Leavitt Partners closely tracks ACO formation and contracts, and Bordelon partnered with Leavitt Senior Analyst Tom Merrill to take a look at what s happening in the world of public exchanges. Neither has seen a great deal of movement. This will happen we believe it already is, since ACOs or accountable care relationships can function as an effective way to drive down costs, Bordelon says. With the public exchanges, the No. 1 lesson learned is that price is king. If insurance carriers continued on p News Briefs CMMI Tests Beneficiary Opt-In to Pioneer Providers as Agency Debates ACOs Future You rely on ABN for monthly news and strategies on the industry s hottest topics. Visit your subscriberonly Web page anytime for recent stories of interest and hot topic articles grouped for convenient reading. Log in at com/newsletters/ acobusinessnews. Editor Jane Anderson Executive Editor Jill Brown The Center for Medicare and Medicaid Innovation (CMMI) is experimenting with allowing Medicare beneficiaries to opt into Medicare Pioneer programs to which they ve previously been attributed a trial that could be a sign of accountable care organization program designs to come from CMS. The opt-in experiment, which is being conducted with a handful of Pioneer programs for the 2015 performance year, is testing whether beneficiaries will voluntarily enroll in ACOs, says Colin LeClair, executive director of the Monarch HealthCare ACO in Irvine, Calif. Pioneer just gives [CMMI] a little more freedom in experimenting with new models, features and designs, LeClair tells ABN. They re considering incorporating voluntary alignment into future versions of the ACO model. LeClair says he believes about five of the remaining 19 Pioneer ACOs, including Monarch, agreed to the opt-in trial. We wanted to be part of it, he adds. CMS didn t respond to questions from ABN about the program. The trial involves patients who formerly were attributed to the Pioneer ACO, but who have dropped off the rolls, LeClair says. For Monarch, which currently has 22,500 attributed Medicare members, this means asking approximately 9,900 Medicare Published by Atlantic Information Services, Inc., Washington, DC An independent publication not affiliated with insurers, vendors, manufacturers or associations

2 2 ACO Business News December 2014 beneficiaries if they want to participate. The rationale, he says, was for all these patients who were previously aligned, for purposes of preserving the continuity of care, let s ask them if they want to stay in the program. This fall, CMMI provided Monarch with two different letters it wanted to test, LeClair says. The first letter was a short version that simply stated the beneficiary previously had been eligible for ACO services because of an affiliation with a particular primary care physician. It asked beneficiaries to confirm the relationship with their primary care physician, LeClair says. The second letter was a longer version that went into more detail about the purpose of ACOs. Both could be branded two different ways: either just with the CMS logo, or with both the CMS and ACO logos, he says. LeClair says he was impressed with the experimentation, in which CMS consulted with a behavioral economist. In our entire experience with CMS, this is really groundbreaking thinking. It s pretty impressive to see them experimenting. Monarch sent all four versions of the letters (LeClair says he believes other ACOs may have just used one or two versions), and there was really no difference in responses between them, he says. The most persuasive thing about the letters to beneficiaries was seeing their physician s name on paper, he says. We heard from ACO Business News (ISSN: ) is published 12 times a year by Atlantic Information Services, Inc., th Street, NW, Suite 300, Washington, D.C , , Copyright 2014 by Atlantic Information Services, Inc. All rights reserved. On an occasional basis, it is okay to copy, fax or an article or two from ABN. But unless you have AIS s permission, it violates federal law to make copies of, fax or an entire issue, share your AISHealth.com subscriber password, or post newsletter content on any website or network. To obtain our quick permission to transmit or make a few copies, or post a few stories of ABN at no charge, please contact Eric Reckner ( , ext. 3042, or Contact Bailey Sterrett ( , ext. 3034, or if you d like to review our very reasonable rates for bulk or site licenses that will permit monthly redistributions of entire issues. Contact Customer Service at or ACO Business News is published with the understanding that the publisher is not engaged in rendering legal, accounting or other professional services. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Editor, Jane Anderson; Executive Editor, Jill Brown; Publisher, Richard Biehl; Marketing Director, Donna Lawton; Fulfillment Manager, Tracey Filar Atwood; Production Director, Andrea Gudeon. Subscriptions to ABN include free electronic delivery in addition to the print copy, e-alerts when timely news breaks, and extensive subscriberonly services at that include a searchable database of ABN content and archives of past issues. To order an annual subscription to ACO Business News ($329 bill me; $279 prepaid), call (major credit cards accepted) or order online at patients that they didn t want to lose their primary care physicians, so why wouldn t they just say yes? Despite a short, three-week turnaround and a return envelope that didn t include pre-paid postage, Monarch received 882 responses before the late October deadline. Of these, only 106, or 12%, said they didn t want to enroll in the ACO, LeClair says. After the deadline passed, another 400 responses came in, and most of those beneficiaries agreed to participate as well, he says. Unfortunately, since their responses didn t meet the deadline, they can t opt in for next year, but there s a chance they ll be attributed again anyway, he says. If there s a next time, LeClair says he d like to see beneficiaries have more time to respond. Many of the former ACO members took the letter to their physicians and asked those doctors what they thought, he says. To prevent any introduction of bias into the test, Monarch hadn t prepared its physicians for this, even though we knew it would cause some disruption, he says. Now that the pilot [sign-up phase] is over, we re able to explain it to them, and they re strong advocates. Of course, CMS regulations prohibit physicians from marketing or recommending Medicare Advantage plans to their patients. But LeClair can see some benefit to relaxing those regulations for ACOs if CMS ultimately allows wide-scale opt-in enrollment to Pioneers and other ACOs, since physicians would be at risk for both quality and cost outcomes. New ACO Regs Are Due Out Soon CMS is considering a variety of options, including beneficiary opt-in, for the new proposed ACO regulations it could unveil in the last few weeks of 2014 or in early to mid-2015, LeClair says. Among the possibilities is a new full-risk Pioneer variant that looks more like Medicare Advantage, he says. This possible model could allow plans to waive certain copayments and to incentivize beneficiaries to take simple steps to improve their own health, such as filling out a health risk assessment, he says. Of course, it s unclear what CMS will propose when it finally releases its new proposed ACO rules. The agency had intended to issue those rules this fall to cover a possible second round of the Medicare Pioneer program along with the second three-year period of the Medicare Shared Savings Program, but the rules were delayed after the Office of Management and Budget sent the draft back to CMS for revisions (ABN 9/14, p. 6). Hoangmai Pham, M.D., director of the CMS Seamless Care Models Group, told attendees Nov. 12 at the Accountable Care Congress in Los Angeles, sponsored Web addresses cited in this issue are live links in the PDF version, which is accessible at ABN s subscriber-only page at

3 December 2014 ACO Business News 3 by Global Health Care, LLC, that CMMI is considering various specific program elements. For example, Pham said, the agency is looking at a trial waiving the rule that requires beneficiaries to first spend three days in the hospital before they can be admitted to a skilled nursing facility. CMS issued a request for information on future ACO initiatives last spring, and CMS and CMMI know from the comments received that ACOs want to see beneficiary churn addressed, Pham said, potentially with a new system that relies partly on an opt-in strategy. ACOs also want more tools to engage beneficiaries in their own care, she said. The agency sees support for higher-risk models, but providers are cautious about full risk, and need measures such as stop-loss, direct reinsurance or risk corridors to make sure a bad year doesn t scuttle an entire organization, she said. ACO stakeholders also said in their comments that access to pharmacy data is extremely important, Pham said. There s interest in integrating Medicaid and Part D accountability into ACOs, but providers are cautious about directly sponsoring Part D products. Pham added: There s a need for options at different risk levels. Contact LeClair at Contact CMS Public Affairs at (202) G Employers Are Still Skeptical of ACOs, Ask Where Is the Value? Even as aerospace giant Boeing Co. contracts directly with two provider organizations to offer its employees the choice of less-expensive accountable care arrangements (ABN 7/14, p. 1), many employers remain skeptical of ACOs and are focused more on price than on quality of care, top insurer executives say. Employer attitudes on value-based care will impact both providers and insurers who are struggling with health system transformation away from fee-for-service and toward a system that rewards results, not volume, the executives told attendees Nov. 10 at the Accountable Care Congress in Los Angeles, sponsored by Global Health Care, LLC. For employers, it s still price, price, price, said Samuel Ho, M.D., executive vice president and chief medical officer of UnitedHealthcare, Inc. Ho added that employers have assumed health plans were managing value and utilization well before the advent of ACOs. Also, in patient-centered medical homes that feature a monthly per-member per-month care management fee, employers have balked at paying the fee, he said. Therefore, as part of the movement to value-based care, employers want to see providers take on more risk, Ho said. Employers are asking, Where is the value? continued Two-Thirds of ACOs Still Plan to Skip Two-Sided Risk Accountable care organizations continue to rebel strongly at the idea of being forced to accept twosided risk in the Medicare Shared Savings Program (MSSP), even as CMS signals that it wants to increase the risk level for ACOs in the next iteration of the program, according to a survey from the National Association of ACOs (NAACOS). Two out of three MSSP ACOs reported that they were highly unlikely or somewhat unlikely to remain in the ACO program, according to the survey, conducted in October. Only 8% of ACOs say they are likely to sign a second contract, while the rest are undecided. The very future of the MSSP ACO program could hang in the balance as CMS prepares to issue proposed regulations for the next three years of the program, says NAACOS CEO Clif Gaus. [This] must be sufficiently addressed in the upcoming CMS proposed rules or the MSSP will no longer exist and the high hopes of D.C. policymakers to migrate ACOs to two-sided risk will be impossible. Two-Sided Risk Acceptance Highly unlikely, 54% Highly unlikely to sign and may not finish first three years 8% Undecided, 26% Somewhat unlikely 4% Somewhat likely 4% Highly likely 4% SOURCE: National Association of ACOs. Visit Subscribers who have not yet signed up for Web access with searchable newsletter archives, Recent Stories and more should click the blue Login button at then follow the Forgot your password? link to receive further instructions.

4 4 ACO Business News December 2014 The discussion is better than it was five years ago, but it s still very mixed. Employers are wary when they look at results from the Medicare Pioneer program, for example, which showed the ACOs generally improved quality of care but didn t necessarily have a dramatic effect on cost, Ho said. Our own findings are a little bit more favorable than Pioneer, he said, but noted that ACOs haven t really impacted medical trend. Meanwhile, consumers haven t even been engaged yet, he said. Added Charles Kennedy, M.D., chief population health officer for Aetna Inc. s population health division, Healthagen, The consumer is kind of the undiscovered country. One of the things we haven t seen yet as much as we will is service innovation. Kennedy said that large employer groups tend to be more interested in innovations like ACOs; small employers, meanwhile, just buy on price, price, price. However, if insurers and providers can show the value in innovative payment structures, it will pique employers interest, he said. The underlying issue is affordability, he said. You re going to see growth. Those organizations that can make products affordable will do exceptionally well. At the same time, the line between insurers and provider groups is blurring as provider groups buy health plans, he added. I can almost guarantee that if you introduce a cost-advantaged product, you re going to find growth. Aetna doesn t consider its accountable care partnerships as a contracting strategy, Kennedy said. We think of it as a business model. The challenge, he said, is to focus on how that business model should work both for the insurer and for the providers. We look at it from the delivery system s perspective how can they be a successful ACO? Medical Groups Must Replace Lost Volume That doesn t begin with shared savings, Kennedy said. Instead, it begins with growth for the provider group. Since accountable care almost certainly will decrease demand for any given provider group, Aetna views it as extremely important to help provider groups replace that demand, he said. Otherwise, those providers might not be able to successfully move to value-based care, he added. To offer the necessary help, Aetna gives providers in its ACOs advanced analytics and predictive modeling software, Kennedy said. The effort is paying off: Every single one [of Aetna s ACOs] is hitting or exceeding cost targets, Kennedy said. This allows new products that are 8% to 15% lower in cost. Kennedy said that growth in ACOs could be an oxymoron, because ACOs are supposed to help control health spending. However, what you really want is the right kind of growth growth that s value-based. The transition to value-based care is very disruptive to the delivery system, he said. Therefore, the delivery system needs to have a compelling reason to undertake the effort. Aetna helps by providing successful delivery systems with the opportunity to participate in narrow networks and other benefit designs that can drive growth, he said, and the delivery systems are rewarded for putting in the hard work to shift to value-based care. When Aetna began work on value-based care, it executed contracts with many large institutions, such as Carilion Clinic, the largest health care provider in southwestern Virginia, Kennedy said. Aetna and Carilion formed an ACO in March 2011 (ABN 6/12, p. 7). We did a discount-based price point strategy, but we also did enabling to help the providers move to value-based care, he said. As a result, the provider s margins will improve over time, he said. Employers Tie ACOs to Consolidation Sam Nussbaum, M.D., executive vice president and chief medical officer of WellPoint, Inc., said he s seeing employers demand lower costs and higher levels of patient engagement. They are enamored with patientcentered medical homes, he noted. At the same time, though, employers have mixed feelings about ACOs they believe higher-quality care is good, but are concerned about the potential impact of consolidation in the health care industry, particularly hospital consolidation. Employers are looking to health plans to drive a far better value equation, Nussbaum said. We have to find a way of reducing costs there s been no real wage growth, in part because health care costs have risen so steeply. At WellPoint, 40% of all payments now have a valuebased component, Nussbaum said. However, much more needs to be done. We ve been having mixed success, he said. Some of it is pretty breathtaking our early medical home pilots showed reductions of 12% but we have to think about it a little differently. For example, he explained, if all the savings come from reduced hospitalizations, that s not sustainable and it doesn t address any other shortcomings in medical care. This is really about how we apply medical resources wisely. Nussbaum added that the ACOs WellPoint plans have formed are doing better than many of the groups in the Medicare Shared Savings Program, where only 24% earned a shared savings bonus (ABN 10/14, p. 1). However, the transformation process for smaller practices will take time, he said. Copyright 2014 by Atlantic Information Services, Inc. All rights reserved. Please see the box on page 2 for permitted and prohibited uses of ACO Business News content.

5 December 2014 ACO Business News 5 Meanwhile, Cigna Corp. is bullish on what CEO David Cordani called the rapidly changing market for health care. Cordani, who spoke in the company s thirdquarter earnings conference call Oct. 30, said employers realize that health insurers need to move beyond just financing sickness, and must adapt programs that focus on health improvement, health risk reduction and value-based care delivery. Cigna now has 106 Collaborative Care arrangements with large physician groups in 27 states. The programs include more than 1.1 million commercial customers, more than 20,000 primary care physicians, and more than 20,000 specialists, according to the company. The insurer anticipates doubling its revenue base over the next seven to eight years by driving improved health outcomes and translating it into strong retention and meaningful new customer growth, Cordani said. Cordani particularly highlighted Cigna s Select Segment, where the company customizes solutions for self-funded employers with 51 to 250 workers. The insurer has achieved strong results in this segment with medical cost trends under 5% for several years running. One key is leveraging company-specific clinical reports and wellness program data to provide recommendations for improvements in care management, he said. Contact Ho via UnitedHealth Group media relations contact Tyler Mason at (714) , Nussbaum via WellPoint spokesperson Doug Bennett at Kennedy via Aetna spokesperson Sherry Sanderford at and Cordani via Cigna spokesperson Mark Slitt at cigna.com. G ACOs Show Promise in Other Countries Single-Payer Systems Accountable care is growing in the U.S. as one path for organizations to transition away from fee-for-service into risk-bearing payments. But ACOs also hold interest for policymakers in other countries with vastly different health care delivery structures, says a health policy fellow at the Imperial College London. I think accountable care will be of interest to all or most countries, says Stephen Beales, who co-authored Accountable Care Around the World: A Framework to Guide Reform Strategies in the September Health Affairs. How different systems implement accountable care will vary based on many factors, including how joined up their systems are, how well aspects of care are measured and recorded, and how populations are stratified. In the U.S., many policymakers tend to think of accountable care in terms of its prospects for payment reform, although they also stress quality improvements. But Beales tells ABN that regardless of the payment structure, the concept of accountable care helps health systems focus on value, not just cost. Broadly speaking, the main emphasis when it comes to incentives whether financial or otherwise is that it should be the value delivered that is rewarded, that is, the quality or outcomes for a given cost, and not just activity (e.g., the number of operations) or indeed just quality without consideration for the cost, Beales says. Spanish ACO Keeps Up to 7.5% of Revenue ACOs are forming in countries with single-payer health care systems, according to Beales study. For example, in the Valencia region of Spain, the private health care services company Ribera Salud cares for about 1 million Spaniards on a capitated basis under what s known as the Alzira model as part of Spain s universal health care system. Like other providers that are fee-for-service-based, Ribera Salud must meet minimum targets for key outcomes, and because Ribera Salud wants to renew its contract, it has strong incentives to keep standards high and reach the outcome targets, the study says. It also has incentives to keep costs low, because it retains profits of up to 7.5% of revenues. Patients residing in the area Ribera Salud serves also have free choice to go to providers in other health districts, and Ribera Salud must pay all the costs in those cases, so the company has a strong incentive to implement strategies that keep patients in-network, the study says. Ribera Salud uses an integrated care plan to treat patients with complex or chronic conditions, and is developing care pathways for various conditions. It also uses a universal electronic medical record. The Alzira model has produced impressive quality and cost results, according to the study. The capitation cost is barely 75% of the cost per resident elsewhere in the Valencia region. Additionally, waiting times are shorter and readmission rates are lower than the regional averages. In another example, Singapore s Agency for Integrated Care was set up to reform long-term care delivery, particularly for the sovereign city-state s fast-growing elderly population. Most people in Singapore obtain care through the public health system, and Singapore has both strong outcomes and low costs. For several patient groups or populations initially the frail elderly and patients near the end of life the agency defined specific outcome measurements, evaluation metrics, and care delivery pathways, the study said. The agency launched two programs that provided care Call Bailey Sterrett at , ext for rates on bulk subscriptions or site licenses, electronic delivery to multiple readers, and customized feeds of selective news and data daily, weekly or whenever you need it.

6 6 ACO Business News December 2014 in the home for elderly patients, rather than in a hospital setting. The programs set up outcome targets with an emphasis on wellness and patient preferences, and these measures stress patient satisfaction and include caregiver stress, the study said. One of the projects reduced hospital readmission rates by more than 40% and potentially saved more than $11 million, while the other cut in half the number of emergency department visits, according to the study. It s possible to pay for outcomes and value even within a publicly funded single-payer system, Beales says. Health entities that have been successful in creating accountable care programs have done so slowly, making lots of small changes and learning quickly from mistakes, he says. Systems looking to implement accountable care would do well to get started quickly and apply this iterative approach. View the Health Affairs study at healthaffairs.org/content/33/9/1507.abstract. Contact Beales at G ACO Compliance Is Spotty As Waiver Rule Is Extended Although Medicare accountable care organizations received another year of relief from fraud-and-abuse laws with the Oct. 17 extension of waivers from CMS and the HHS Office of Inspector General (ABN 11/14, p. 6), they may be dropping the ball on the public disclosure and other requirements. At the same time, ACOs face additional challenges as they travel up the learning curve of the Medicare Shared Savings Program (MSSP). They must embed compliance into numerous physician offices, for example, and ensure privacy and security are preserved while communicating quality data. ACOs were authorized by Sec of the Affordable Care Act. ACO participants, such as hospitals and physician groups, coordinate patient care, hopefully to achieve better outcomes and reduced costs. Medicare pays ACOs, which must be separate companies, on a fee-for-service basis, with shared savings payments if quality and cost-reduction goals are achieved. They must appoint a compliance officer who doesn t double as legal AIS s Management Insight Series Bundled Payment Models: Bottom-Line Strategies for Insurers Go to the Marketplace at and click on Books, Insight Series. counsel but does report directly to the governing body, report suspected violations of law to law enforcement and meet other requirements. Possibly most pressing from a compliance perspective are the fraud and abuse waivers because they can be important to ACO survival. In the fee-for-service world, hospitals court disaster under the Stark and antikickback laws if they give money, goods or services to referring physicians or patients. But the incentives are different in ACOs. That s why CMS and OIG in November 2011 set forth five fraud and abuse waivers for ACO participants, and in an interim final regulation extended them for another year, meaning they won t expire until Nov. 2, At that point, CMS hopes to have a final rule in place to address how ACOs need to comply with the Stark and anti-kickback statutes. If they use the waivers, it s an area of compliance they need to pay attention to, says Washington, D.C., attorney Troy Barsky, former director of the CMS Division of Technical Payment Policy. It can trip you up. Do ACOs Follow Waiver Rules? Barsky questions whether the substance of ACO board resolutions complies with waiver regulations. CMS and OIG require boards to assert that the activity protected by the waiver is necessary and reasonably related to the purpose of the ACO (i.e., improving care management and coordination). That may not, in fact, be universal. They think they are automatically protected by the waiver, but the board needs to determine whether the waiver is necessary, he says. For example, if the ACO gives seed money to a medical group for infrastructure, it needs to pass a resolution stating why the investment is necessary, and how it s reasonably related to the mission. And they need to officially invoke the waiver to get protection from it. Applying the beneficiary inducement waiver is easier said than done, says St. Louis attorney Chris Kanagawa, who is with Norton Rose Fulbright. On the one hand, it seems clear that providers can give beneficiaries blood pressure cuffs or scales. On the other hand, there is a Medicare Shared Savings Program regulation that bars providers and suppliers from giving goodies to beneficiaries for the purpose of encouraging their use of a particular provider or supplier, he says. What does that mean? You can give it but you can t induce it? It s a struggle, Kanagawa says. I think it s so new people are feeling it out. The best approach for now is for ACOs to document their activity and how they determined it was reasonably related to the purpose of the shared savings program, which, in this case, is the care of the patient, Kanagawa says. Web addresses cited in this issue are live links in the PDF version, which is accessible at ABN s subscriber-only page at

7 December 2014 ACO Business News 7 Waivers are far from the only compliance issue facing ACOs. Margaret Hambleton, vice president and chief compliance officer at Dignity Health in California, says they must also ensure the compliance program reaches every ACO participant. It s not that hard when the hospital joins forces with affiliated physicians. You can have the compliance officer of the hospital serve as the compliance officer of the ACO and report ACO activities to the ACO governing body, she says. Most commonly I have seen the compliance officer come from one of the partners and leased to the ACO at fair market value, Hambleton says. For example, the ACO will pay the hospital for use of its compliance officer. It s another story when ACOs have 100 participants, including physicians and other entities. There are significant challenges given the number of entities involved, Hambleton says. Sometimes the participants have competing compliance programs, and the governing body may get mixed messages, she says. What s the ACO s compliance philosophy? Who will be the compliance officer if he or she comes from one of the participating entities? Which hotline will be used? This must be negotiated and it can be painful. ACO compliance officers have dual responsibilities: ensuring participants understand the requirements of the Medicare Shared Savings Program, including the duty to report potential violations of law, and implementing compliance-program elements, including education, hotline reporting, standards, policies, auditing and monitoring, and enforcement and discipline. In particular, compliance officers must closely monitor compliance with the participation agreement or the ACO dream goes up in smoke. Participation agreements establish each participant s expectations in a number of areas, including reporting quality statistics, complying with standards of conduct and following policies. When a hospital compliance officer doubles as the ACO compliance officer, there must be safeguards, Kanagawa says. For example, they shouldn t commingle records. At what point are they acting as compliance officer on the hospital side vs. in the ACO role? Because CMS could look around and there are different recordretention requirements, he said. ACOs, after all, aren t really brick-and-mortar things; they may just have a small office. Diverse problems crop up with ACO compliance programs. Hambleton has gotten complaints about the distribution of shared savings (e.g., were quality statistics counted correctly?). Marketing materials are another concern because CMS has strict rules on them. CMS must approve ACO marketing materials, whether they are distributed to beneficiaries or providers and suppliers. It s different than what you see in the hospital, she says. For example, marketing materials can t be disseminated in a manner to avoid at-risk patients, says Mark Pastin, president of the Council of Ethical Organizations in Alexandria, Va. You have to distribute marketing materials effectively to a patient population that is most likely to hurt you financially, so that s a curve ball, he notes. The most effective ACO compliance officers tend to come from the physician side of the business because, at its heart, it is a physician-led organization, Hambleton says. ACO compliance is more like a physician-practice compliance program than a hospital compliance program. For example, the ACO requires the connection of unaffiliated providers. Compliance officers need to think of the security of data transmission. Does everyone understand their privacy obligations? Have they had privacy and security training? Do they know what data can and can t be shared between the participants? Make sure you re partnering privacy and compliance closely in the ACO compliance program, she says. G This story was reprinted from ABN sister publication Report on Medicare Compliance. For more information or to order, visit the MarketPlace at Selected Recent Health Plan ACO Arrangements and Collaborative Agreements Health Plan Providers Service Area Effective Date Aetna Anthem Blue Cross and Blue Shield Cigna Humana Pacific Medical Centers; The Polyclinic; Providence-Swedish Health Alliance; Rainier Health Network WA Early 2015 Indiana University Health Goshen IN Oct. 1, 2014 Connecticut State Medical Society - IPA CT Oct. 1, 2014 Primary Partners LLC FL Oct. 1, 2014 MDX Hawai i HI Oct. 1, 2014 Via Christi Health KS April 2014 (announced in October 2014) Summit Medical Group TN Jan. 1, 2015 Riverside Medical Clinic CA Jan. 1, 2015 SOURCE: Compiled by AIS from health plan press releases in fall Subscribers who have not yet signed up for Web access with searchable newsletter archives, Recent Stories and more should click the blue Login button at then follow the Forgot your password? link to receive further instructions.

8 8 ACO Business News December 2014 ACO PROFILE Mercy Parlays Long History Into MSSP, Commercial ACO Success Like many other accountable care success stories, Mercy Medical Center in Des Moines, Iowa, had a head start on initiatives aimed at managing the health of entire populations. We started doing population health at Mercy in the late 1990s, David Swieskowski, M.D., senior vice president and chief accountable care officer for Mercy Medical Center and CEO of the Mercy ACO, told attendees Nov. 11 at the Accountable Care Congress in Los Angeles, sponsored by Global Health Care, LLC. We had a diabetes registry in the late 1990s and by 2007 we had developed health coaches, Swieskowski said. A long history of doing this work is why we ve been successful. And successful it has been: Mercy ACO earned $4.4 million in shared savings from the Medicare Shared Savings Program (MSSP) this fall (ABN 10/14, p. 1) for its second performance year. The ACO saved money despite a benchmark that increased substantially from the first year, Swieskowski said. Mercy ACO also earned $3.7 million in shared savings and incentive payments from Wellmark Blue Cross and Blue Shield and $320,000 from Coventry Total Care, along with $778,000 for managing the care of Mercy Medical Center employees, he said. The provider also boasts a 4.5-star Medicare Advantage plan. Mercy ACO Nears $15 Million in Net Revenue Overall, Mercy ACO generated $21.71 million in revenues between June 2012, when it joined MSSP with 25,000 attributed beneficiaries, and August 2014, he said. That revenue figure encompasses $11.06 million in shared savings and care management fees from government and commercial programs, plus $10.65 million in grant awards, he said. Almost all the grant money comes from a $10.1 million CMS Health Care Innovation Award, which provides the funds for Mercy to expand the ACO into rural areas, he said. This grant will pay for 59 new staff positions and health information technology at 25 rural hospitals with 73 clinic sites, 165 physicians and nearly 165,000 patients. Mercy spent $7.2 million on the ACO between June 2012 and August 2014, making its net revenues $14.51 million. Mercy Medical Center, with 627 beds and 31,592 total acute admissions last year, is owned by Catholic Health Initiatives, Swieskowski said. Mercy Clinics employ 600 physicians and mid-level staff members, he said. Swieskowski hopes to turn the ACO s initial success into a broader success story in the next three to five years as the rural ACO development grant kicks in. Ultimately, he said, Mercy ACO wants to be a statewide high-performing and nationally recognized rural network, with no geographic or specialty gaps. Within that time frame, more than 60% of Catholic Health Initiatives Iowa patients will be in valuebased contracts, and shared savings will give way to contracts featuring capitation and a percentage of premium, he said. Swieskowski expects that Mercy will offer its own narrow network products both for Medicare Advantage and for the individual and small-group exchanges under the umbrella of Catholic Health Initiatives-owned health plans. He also said he anticipates capturing 10% of the Medicaid managed care market with a narrow network ACO-based product by 2018, and to sign contracts with private payers for population risk on Medicaid managed care members even sooner, by Finally, we re going directly to some large employers to try and engage them in contracts, Swieskowski said. Direct-to-employer care management already has started for Mercy employees, and features the elements of Mercy s overall population health management strategy, including coaching based on risk assessment, patient registry tracking and followup, and wellness programs, he said. Data Warehouse Is Key Tool The key tool we use is our data warehouse, Swieskowski said. Mercy utilizes McKesson for its data warehouse, and the product generates multiple reports, including percentage of patients whose blood pressure is under control, patients due for visits, patients with high emergency department visits, and pharmacy use. The software also can predict high-risk patients and analyze care episodes, he said. However, implementing the data warehouse and reports functions was far from seamless: The data warehouse didn t even work until last summer. Mercy also has had issues with its MedVentive Population Manager and Risk Manager software, he said, noting that data doesn t flow accurately Call Bailey Sterrett at , ext for rates on bulk subscriptions or site licenses, electronic delivery to multiple readers, and customized feeds of selective news and data daily, weekly or whenever you need it.

9 December 2014 ACO Business News 9 ACO PROFILE from [the Allscripts electronic health record] and our claims, and with the Allscripts electronic health record itself, which doesn t have discrete fields that are needed for data collection, and isn t able to produce the population reports the ACO needs, he said. Even basic issues with metrics posed unforeseen difficulties, Swieskowski said. For example, measurements for LDL cholesterol were entered into various places in the medical record and registries under literally 20 different names, and in one case, measurements for hemoglobin A1c were listed in one record simply as results, he said. These days, providers receive a monthly report showing their risk-adjusted per-patient costs; their compliance and rankings on diabetes, hypertension and well child immunizations; and their patients emergency department visits and readmissions, he said. The reports drill down to the individual doctor level to indicate their performance. Mercy Employs Coaches in MD Offices Mercy now employs one health coach for every 3,000 ACO patients, which currently works out to 50 coaches overall, although Mercy expects that to grow to 100 coaches in January, Swieskowski said. The health coaches, who are based in physician offices, employ patient self-management support in the form of help for health behavior change and motivational interviewing, and will assist patients in connecting to community resources, he said. They also will coordinate care and close the loop on referrals and transitions, he added. We re big on shared decision-making, Swieskowski said. Fully informed patients will choose less-expensive care and get better outcomes. The coaches utilize TAVHealth Customer Relationship Management software, which allows the ACO to track the patient and the patient s health relationships, he said. The software also can link patients to community resources and can highlight non-clinical barriers and needs that impact health, cost and risk, he said. In addition, the software also can track case management nurses productivity, Swieskowski said. This was very enlightening we found the coaches were not doing what we thought they were doing. Mercy had health coaches before it had valuebased care; at first, the health system persuaded the physicians to hire the coaches at the physicians expense, Swieskowski said. Now that we re in the value-based world, we pulled the coaches out of the doctors cost center so that they re financed and controlled by Mercy, he said, adding that the doctors didn t want to give up the health coaches because they had been billing for them. High-risk patients are identified by recent hospitalizations, multiple emergency room visits, multiple chronic diseases, physician referrals and high risk scores, he said. High-risk interventions start with initial face-to-face visits, and the health coaches follow up for four to eight weeks. For Mercy s transition coaching program, the ACO patients are identified while in the hospital and their risk level is assessed via their LACE score, which factors in length of stay and acuity of admission to determine a risk of readmission within 30 days. The ACO identifies some of these patients manually. We get a printed list every day [of admissions] and we pay someone to go through it and identify who s in the ACO. That s the state of our IT, Swieskowski said. Health Coaches Manage Transitions In Mercy s transition coaching program, the health coach facilitates the transition back to the medical home and communicates discharge information to the medical home health coach, he said. In addition, patients are tracked by the transition coach until they re seen back in the medical home. High-risk coaching then is initiated with the office visit the office health coach teaches the patient what warning signs to watch for and what to do if they occur, assesses medication issues, and helps with goalsetting through motivational interviewing, he said. The office coach makes weekly calls for four weeks. Mercy s health coaches also do disease case management for patients with heart failure, chronic obstructive pulmonary disease and diabetes, Swieskowski said. This program includes some telemonitoring and protocols for interventions based on symptoms. Mercy is showing success in lowering some key metrics. For example, Swieskowski said, the ACO s 30-day all-cause hospital readmission rate has fallen 12.5%, from per 1,000 just prior to the start of MSSP to per 1,000 in the second quarter of Contact Swieskowski via Mercy spokesperson Gregg Lagan at (515) Copyright 2014 by Atlantic Information Services, Inc. All rights reserved. Please see the box on page 2 for permitted and prohibited uses of ACO Business News content.

10 10 ACO Business News December 2014 Few Exchange Plans Feature ACOs continued from p. 1 can squeeze a little more bang for their buck with accountable care, this will happen. But there hasn t been a whole lot yet. Merrill tells ABN that the sticking point may not be accountable care so much as the very new nature of these public exchanges. Since insurers are in only their second years of offering products in these markets, they re hesitant about experimenting, he says. The movement to community rating is a whole new way of doing business for them, and their calculations of medical losses may or may not be accurate, Bordelon adds. Insurers competing on price wind up with all the lives, and also could wind up in a deep financial hole if they miscalculate. Do they want to be the lowest-priced carrier? he asks. For all these people who have been uninsured for years, it s a huge question mark what their health profile might look like. ACOs Are Not Lowest-Priced In fact, the analysis of 2014 plans and prices Leavitt conducted indicates that exchange products featuring ACOs are not the lowest-priced products in their markets. This seems to hold true for 2015, as well. For example, a 45-year-old nonsmoker shopping on the individual exchange in Scottsdale, Ariz., where Banner Health Network ACO has partnered with Aetna Inc., would find that the Banner Health-based products are much more expensive than the lowest-priced products in the market. In the Bronze category, Aetna/Banner s price for that 45-year-old is $216 a month, with a $6,300 deductible about 25% more than the $173-per-month, $5,000-deductible cheapest plan. At the more popular Silver plan level, Aetna/Banner charges $291 per month with a $3,750 deductible, more than half again as much as the lowestpriced silver plan, which clocks in at $187 per month with a $4,000 deductible. Aetna/Banner s deductibles for these plans tend to be a little lower than those featured in the other plans, but a consumer making the decision on price alone might not be persuaded. Banner Health, which includes 15 hospitals and about 3,000 providers in the Phoenix region, is one of the few ACOs that s openly named on the exchange as the network behind the product: plans are billed as Aetna Banner Health Network products. Banner Chief Operating Officer Lisa Stevens Anderson says the ACO also participates as part of the network for exchange products from Blue Cross Blue Shield of Arizona, Cigna Corp. and Meritus Health Partners, a Consumer Oriented and Operated Plan (CO-OP) but it doesn t get star billing on the exchange listings for those. Still, in most cases they do use our name and logo in the promotional materials, Anderson tells ABN. We believe more individuals will seek ACO-driven products as they become more familiar with the concept and advantages of value-based care, which focuses on ensuring health care is delivered in a high-quality, costeffective manner with an emphasis on member satisfaction and customer service, Anderson adds. But insurers not consumers control what s offered on the exchanges, and they have other reasons for possible reluctance to engage fully with ACOs for those products. In addition to the huge question mark of health costs for these previously uninsured exchange customers, insurers must grapple with turnover and churn individuals who make their decisions based solely on cost are more likely to jump from carrier to carrier during open enrollment each year, which could negate some of the effort an ACO might put into managing their care. There s no predictability for what the churn will be, but you can expect it will be more volatile than Boeing, says Bordelon. Aerospace giant Boeing Co. just signed direct shared savings-based contracts with two ACOs UW Medicine Accountable Care Network and Providence-Swedish Health Alliance and is offering those ACOs as lower-cost options to its employees beginning in 2015 (ABN 7/14, p. 1). Boeing tends to retain employees for years, meaning the promise of wellness programs and preventive care would have a chance to kick in. Large Carriers Hang Back Large insurers haven t made aggressive moves to link their ACO partners to their public exchange offerings. For example, Aetna spokesperson Sherry Sanderford says the insurer has ACO-based health plan products on the public exchanges in only four regions, based on partnerships with Banner Health in the Phoenix market; Memorial Hermann ACO in Houston; Innovation Health (a joint venture between Aetna and Inova Health System) in northern Virginia; and Aetna Whole Health-Coastal Virginia Health Partners in Roanoke, Va. Aetna also offers high performance networks, which are part of the overall value-based business model that includes ACOs, on the public exchanges in eight states, including Iowa, Illinois, Missouri, North Carolina, Nebraska, South Carolina, Utah and Virginia, Sanderford tells ABN. Meanwhile, WellPoint, Inc. spokesperson Jerry Slowey reports to ABN that the giant Blues insurer hasn t tried to integrate ACOs into the exchanges as of Currently our on-exchange products are not using ACO-based networks. We continue to evaluate our Subscribers who have not yet signed up for Web access with searchable newsletter archives, Recent Stories and more should click the blue Login button at then follow the Forgot your password? link to receive further instructions.

11 December 2014 ACO Business News 11 health insurance exchange offerings, including the provider network make-up and arrangements, in order to ensure the products we offer to consumers deliver affordable, quality care, Slowey says. The ACO industry may see more activity in smaller plans. For example, Centene Corp. subsidiary MHS Health Wisconsin said last month that it has penned a deal with ACO Integrated Health Network of Wisconsin for IHN to serve as the provider network for MHS Health s new line of commercial health plans, called Ambetter. The plans, which are the only products on the exchange that have IHN s providers as their core network, are being offered now for MHS Health President and CEO Sherry Husa touted IHN s network in a statement, saying it features a bestin-market selection of providers and resources includ- Study: Some Patient Experiences Improve in Medicare ACOs Medicare accountable care organizations seem to improve certain measures of patient experience, such as access, care coordination and overall ratings of care, especially in chronically ill beneficiaries, a new study published in the New England Journal of Medicine finds. The study, Changes in Patients Experiences in Medicare Accountable Care Organizations, compares assessments of more than 32,000 Medicare beneficiaries attributed to either the Medicare Shared Savings Program (MSSP) or Pioneer program to experiences of nearly 253,000 beneficiaries attributed to other providers, both before and after the ACOs opened. The researchers found that ACOs were associated with improvements in patients reports of timely access to care and their primary physicians being informed about specialty care they received. Among patients with multiple chronic conditions and high predicted Medicare spending, overall ratings of care improved in the ACO group as compared to the control group, the study found. In fact, the improvements in overall ratings of care reported by these medically complex patients were larger than previously reported differences in care ratings between Medicare fee-for-service and managed care programs, the study said. The effects on timely access to care and overall ratings of care by medically complex patients were quite sizeable, lead author J. Michael McWilliams, M.D., associate professor of health care policy at Harvard Medical School, tells ABN. There weren t any significant differences between results for patients assigned to Pioneer and those assigned to MSSP ACOs both groups improved. On the other hand, ACO patients who weren t considered to be medically complex didn t report improvements in overall care, according to the study. These patients were less likely to be the focus of ACO efforts to improve care. In addition, patients overall ratings of their physicians and their interactions with those physicians didn t change. Finally, Medicare beneficiaries served by organizations joining MSSP later in 2013 didn t report any improvements, including improvements in access or overall care for medically complex patients, when compared with beneficiaries who weren t attributed to ACOs, the study reported. The study pointed out that the improvements in patient experience seemed to occur in areas controlled by organizations in this case, provider organizations and the ACOs themselves as opposed to in areas where changes in physicians interpersonal skills may be required to achieve gains. The improved experiences reported by patients in ACOs may constitute important initial progress by the Medicare ACO programs in fostering patient-centered, coordinated care, McWilliams says. Accordingly, patients may benefit from choosing providers who are part of ACOs. These improvements indicate that Medicare ACOs may have the potential to improve quality of care and control utilization without adversely affecting beneficiaries perceptions of their care, the study said. Should preliminary evidence of savings generated by ACOs be confirmed, our findings would indicate that ACOs may be able to achieve savings in ways that do not adversely affect patient experiences, McWilliams says. In addition, improving patient experiences may encourage patients to become loyal to their ACOs, potentially addressing some of the care fragmentation and instability in beneficiary assignment that diminish incentives and rewards for ACOs, he says. The high amount of participation in the ACO programs and these findings suggesting early success in improving patient experiences indirectly suggests great willingness among providers to improve patient experiences. Contact McWilliams at harvard.edu. Web addresses cited in this issue are live links in the PDF version, which is accessible at ABN s subscriber-only page at

12 12 ACO Business News December 2014 ing eastern Wisconsin s only academic medical center, Level 1 Trauma Center and a regional burn center. We also offer rewards for healthy behaviors, and some of our plans include vision and dental benefits. As with the Aetna-Banner Health plans, the Ambetter products are not the cheapest in their market. At the Bronze level, the least expensive Ambetter premium for a hypothetical 45-year-old nonsmoker is $361 per month, compared with $294 for the least expensive plan overall. At the Silver level, the least expensive Ambetter plan costs $443 per month, compared to $340 for the least expensive silver plan overall. Contact Merrill and Bordelon via Leavitt spokesperson Jordana Choucair at leavittpartners.com, Anderson via Banner spokesperson Jennifer Ruble at and Slowey at (818) or com. G NEWS BRIEFS u Blue Shield of California launched a new lowpremium HMO product for employers that features a narrow network based on a subsection of health care providers participating in the company s accountable care organization program. The product, dubbed Trio, will offer premiums that are 12% to 15% lower than Blue Shield s traditional Access+ HMO product. The actual discount will depend on the plan design, according to Blue Shield. Trio also will include Shield Concierge, a one-stop service for members that helps them use their benefits, find providers and obtain prescription drug authorizations. In addition, the program will include a series of wellness services that blend increased physical activity with social gaming and rewards, according to the Blues plan. As in the insurer s regular HMO products, Trio ACO HMO plan members will be required to select a primary care physician to coordinate and direct their health care needs. The ACO-based HMO network will be available in Orange and San Francisco counties, plus parts of 14 other counties. Overall, Blue Shield of California s ACO model provides care to more than 260,000 HMO members, and has saved more than $250 million in health care costs since its inception in 2010, according to the health insurer. Contact Blue Shield s Carolyn Wang at (415) u In the first implementation year of Blue Cross Blue Shield of Massachusetts Alternative Quality Contract, providers saved about 2% in patient medical costs compared to a control group, according to an October 2014 study published in the New England Journal of Medicine. By year four, provider groups participating in the insurer s five-year global ACO contract saved 10% versus the control group. Most savings stemmed from outpatient services, including use of lower-cost setting and lower utilization of elective services, imaging and tests. The study compared Blues members who had a primary care physician in an AQC contract with a control group of commercially insured individuals across eight northeastern states: Connecticut, Maine, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island and Vermont. Visit com/n2rphx8. u A new report from the Office of the National Coordinator for Health Information Technology examines how technology solutions support valuebased payment models. The October 2014 report, Health Information Technology Infrastructure To Support Accountable Care Arrangements, prepared by Robinson & Associates Consulting LLC, also includes two case studies of communities Bangor, Maine, and Austin, Texas that have made substantial investments in an effort to transition away from the fee-for-service system. Visit oph7dd3. u Value-based reimbursement will overtake feefor-service by 2020, according to a new survey sponsored by McKesson Inc. The report also identified seven steps to take in the journey to value-based reimbursement, including reaching out to employers and building critical mass. The survey, conducted by ORC International, included responses from highlevel executives in 114 payer and 350 provider organizations. Visit u The Brookings Institution on Nov. 19 issued a new toolkit for physician-led ACOs, updating the original toolkit developed by the ACO Learning Network in The toolkit, Adopting Accountable Care: An Implementation Guide for Physician Practices, is intended to help emerging physicianled ACOs across four areas: (1) identifying and managing high-risk patients; (2) developing highvalue referral networks, (3) using event notifications, and (4) engaging patients. Visit lchdcgb. Call Bailey Sterrett at , ext for rates on bulk subscriptions or site licenses, electronic delivery to multiple readers, and customized feeds of selective news and data daily, weekly or whenever you need it.

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