ACOs are like unicorns mythical creatures. We know what they look like, but no one has seen one. *

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1 Understanding Accountable Care Organizations (ACOs): What s Worked and What Hasn t in California s 30 Year ACO Experience ACOs are like unicorns mythical creatures. We know what they look like, but no one has seen one. * Tom Williams, Dr PH, MBA, Executive Director Integrated Healthcare Association (IHA) Executive War College May 4, 2011, New Orleans * Attributable to many 2

2 Overview ACOs: Debunking the Myth ACOs: Debunking the Myth ACOs in California ACO Performance Measurement in California The Importance of Lab Data

3 ACO Characteristics: Accountable Performance Measurement for Quality and Cost Public Reporting Incentive/Penalties linked to Performance ACO Characteristics: Coordinated Care Population Management Coordinated Care Processes Structure EHRs, Registries, Staff Continuous Quality Improvement (CQI) 5 6

4 ACO Characteristics: Organization Integrated Physician and Hospital Delivery Systems Legal and Management Structure Alignment of Interest with Payer(s) Leadership and Culture What does the research evidence say? Do these capabilities improve quality? Use of EHRs/Health Information Technology (HIT) Performance Measurement/Public Reporting Continuous Quality Improvement (CQI) and Practice Redesign Payment Incentives for Quality (P4P) Totality of Evidence is not compelling when these approaches are done in isolation! 7 8

5 However, when done in combination there are notable exceptions Integrated delivery systems with substantial organizational and financial capability, with strong leadership, culture and typically payer alignment demonstrate significant improvement. These are not mythical creatures! They exist: Advocate Healthcare, Geisinger, Kaiser Permanente, Healthcare Partners, Intermountain Healthcare, SHARP, Veteran s Administration and many more.but However there s an elephant in the room Market Clout = > $$ 9 10

6 ACOs in California The California ACO Ecosystem California has 30 years of experience with several hundred prepaid physician organizations and physician hospital systems These organizations serve commercially insured patients (mostly HMO), plus Medicare Advantage and Medicaid managed care The majority are not fully developed ACOs, but most possess many of the characteristics that ACOs ought to have History of shared savings, performance measurement and public reporting Accept capitated risk for population management and care coordination

7 ACOs in California: Lessons Learned Organizational Structure: medical group, IPA, hospitals Payment methods: capitation, FFS, blends, shared savings Coordinated care and consumer choice Financial solvency regulation ACOs and under served populations IHA ACO Whitepaper ACOs in California: Organizational Structure Types of Physician Organizations (POs) Multi specialty medical groups, including community clinics, and medical groups with and without wraparound IPA components Independent Practice Associations (IPA) Permanente Medical Groups exclusively affiliated with Kaiser hospitals and insurance provision Hospital based foundation models (upward trend) All types of organizations can be successful, and no one is displacing the others Kaiser has a unique structure that is very hard to replicate 13

8 ACO HMO Enrollment as a Percent of Total Insured Californians, 2009 California Enrollees in ACO Model Insurance Type All Types (Total Enrollees) Commercial Medi Cal / Healthy Families Medicare Type Number of ACOs Commercial HMO Enrollees Medi Cal Medicare HMO Enrollees Total Coordinated Enrollees ACO HMO Enrollment 15,943,850 11,285,950 3,164,000 (20%) 1,493,900 (9%) Permanente Medical Groups 2 4,879, , ,173 6,659,879 Entire Insured Population 29,691,000 20,110,800 (68%) 6,036,300 (20%) 3,308,800 (11%) Integrated Medical Groups 131 2,682,600 1,305, ,350 4,425,100 ACO HMO Enrollment as a Percent of Total Enrollment 54% 56% 52% 45% IPAs 152 2,629,250 1,843, ,700 4,849,200 Total ,751,850 3,447,150 1,519,350 15,718,350 15

9 Distribution of ACO Size, 2009 Total HMO Enrollment Range Number of Groups Percent of Total Enrollment < 5, % 5,000 9, % 10,000 14, % 15,000 24, % 25,000 49, % 50,000 99, % > 100, % Total % Note: Some ACOs serve considerable PPO, Medicare FFS, Medi Cal FFS, and/or uninsured patients, which are not included in these numbers Data Source: Cattaneo and Stroud, #7: Active California Medical Groups by County by Line of Business, for Years 2004 through 2010, Sorted Alphabetically, May 1, Provided by W. Barcellona, July 27, ACOs in California: Capabilities Trump Organizational Type What is important is the set of capabilities Financial management and discipline Leadership and culture of cooperation Clinical information technology Care management processes and programs These are essential for: Population management Accepting capitation payment or shared savings Coordinating care for population of patients Reporting performance to stakeholders

10 ACOs in California: Payment Methods Major differentiator of physician organizations in California is the role of capitation Drives efficiency but also transfers risk Can result in turbulence California has seen capitation narrow in scope Retreat from hospital and pharmacy capitation This reduces risk as well as the incentive to manage the full continuum of care Physician organizations accept risk, but limit the transfer of this risk to individual MDs ACOs in California: Coordinated Care and Consumer Choice Californian physician organizations have traditionally focused on HMO, rather than PPO, populations Physician organizations emphasize coordination of care by channeling referrals within the organization, but many consumers value broad choice why would an ACO accept risk for a defined patient population if that population could receive services from providers outside the ACO? A major challenge facing the ACO movement is how to balance the virtues of provider collaboration with the virtues of patient choice 19 20

11 ACOs in California: Financial Solvency Regulation Capitation increases financial risk for medical groups Major turbulence between 1999 and 2003, when groups rapidly expanded and accepted low capitation payments led to bankruptcy of 150 groups, affected 4 million enrollees Since 2002, there has been major decline in turbulence due in part to stronger financial solvency regulation Requirements for financial reserves and disclosure of select financial ratios ACOs in California: Under Served Populations Like other large states and regions, California exhibits wide geographic variation in demographics, income, and access to care. The ability of ACOs to deliver high quality, efficient care depends in part on socio economic environment/geographic location. The quality of care delivered may be more a function of provider reimbursement than patient demographics

12 ACO Performance Measurement in California Original Goal of California Pay for Performance (P4P) Program To create a compelling set of incentives that will drive breakthrough improvements in clinical quality and the patient experience through: Common set of measures used by all payers Aggregation of multi payer results for total patient populations A single public report card Health plan incentive payments to physician organizations 24

13 California P4P Program Evolution Timeline CA P4P Measurement Evolution Original 25 measures have expanded to 87 measures Eight CA Health Plans: Aetna Anthem Blue Cross Blue Shield of CA CIGNA Program Participants Medical Groups and IPAs: Health Net Kaiser* PacifiCare/United Western Health Advantage * Kaiser medical groups participate in public reporting only, starting Physician Organization 35,000 Physicians 10 million commercial HMO/POS members 25 Measurements Clinical Preventive Clinical Chronic Clinical Acute Patient Experience Information Technology (IT) Systemness Coordinated Diabetes Care Efficiency/Resource Use Total

14 Summary of P4P Results and Trends 1. Clinical Performance Improvement Improvement on clinical measures: average clinical improvements of ~3 percentage points per year Weighted averages are up to 19 percentage points higher than simple averages Performance on some clinical measures is nearing the National HEDIS 90 th percentile POs with Advanced IT Have Better Clinical Performance Clinical Quality and Patient Experience Average Rates by IT Score Band Average Patient Experience improvement of under 0.5 percentage points per year has been disappointing 3. Dramatic uptake of health information technology (HIT) 27 28

15 Public Report Card Regional Variation in Clinical Performance California 2009 Average regional clinical composite scores range from 59% to 70% Prompted recognition and pay for improvement with the higher of attainment and improvement used for incentive payment Inspired research on potential causes e.g., socioeconomic and payment disparities 29 30

16 Regional Variation in Clinical Performance California 2009 Regional Variation in Clinical Performance California 2009 Area Characteristic Bay Area Inland Empire Per Capita Income $46,015 $23,540 Percent Persons of Hispanic or Latino Origin 22.1% 45.7% Uninsurance Rate 7.8% 15.1% PCPs per 100,000 residents IHA Clinical Quality Score (/100) IHA IT-Enabled Systemness Score (/15) IHA Coordinated Diabetes Care Score (/20)

17 Performance Measurement of ACOs under CMS Proposed Rules Under proposed ACO rules, there are 65 performance measures that ACOs must collect and report in order to qualify for shared savings Five domains: Patient/Caregiver Experience of Care Care Coordination Patient Safety Preventive Health At Risk/Frail Elderly Population The Game Changing Measure: Total Cost of Care CMS Shared savings based upon total cost of care for a Medicare population (2012) California IHA Pay for Performance Shared savings based upon total cost of care for commercial population (2012) 33 34

18 CMS Proposed ACO Shared Savings The Importance of Lab Data Shared savings bonus potential determined by total cost of care for Medicare population ACO receives points based upon results for 65 quality measures Shared savings bonus potential modified by level of quality points 35

19 Lab Data as a Building Block of Performance Measurement Retrospective lab data is integral to performance measurement 13 of IHA s measures can be collected using lab data, including Cervical Cancer screening, LDL C screening, and HbA1c tests Lab Data as a Building Block of Performance Measurement But there needs to be standards in place to increase efficiency and reduce errors in data exchange CALINX standards are statewide uniform standards for lab data They standards promise to increase the value of health information technology systems by boosting efficiency and reducing errors. Many health plans, provider groups, hospitals, and labs have endorsed the pharmacy and lab standards, and some have implemented the standards

20 Lab Data as a Building Block of Performance Measurement Conclusion Also need the exchange of data, which is hard to negotiate California who owns the data? Privacy? Lab results commodity or public resource? How can we open the flow of both retrospective and real time of lab data? 39

21 ACOs are like unicorns mythical creatures. We know what they look like, but no one has seen one. * * Attributable to many Conclusion ACOs are not mythical creatures (unicorns) ACO like Integrated Delivery Systems have demonstrated quality improvement and some capacity to lower costs but have more often leveraged market clout Measuring and incenting total cost of care and quality is a potential game changer Transition to a national ACO ecosystem is highly uncertain, and will be slow at best, but is possibly our best hope! 41 42

22 Integrated Healthcare Association For more information: (510)

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