Leaders like Banner Health, Montefiore explain what it took to succeed in the first ACO model, and look towards new programs that give them shared risk incentives for care quality.
The Centers for Medicare and Medicaid Services’ Pioneer ACO program has experienced notable financial success, but the number of Pioneer ACOs also has dropped from 32 original providers to 19 as of last fall.
In the second performance year, Pioneer ACO participants generated an estimated total model savings of over $96 million, and qualified for shared savings payments of $68 million. Given the program’s departures, it’s important to ask how the remaining providers have been able to realize the financial successes that eluded those participants that withdrew.
“Population health management, whether you call it an ACO or an IPA, is a business strategy, not an experiment or demonstration,” said Stephen Rosenthal, vice president of network management at Montefiore Health System, a New York-based health system that includes eight hospitals, an extended care facility, and primary and specialty care providers at more than 150 locations across the Bronx and Westchester County region. “Those who will be most successful in any population strategy are those who made the decision that this is the way business will be handled in the future, and focused on how to best change the business model to accommodate the strategy of managing a population’s health.”
Montefiore had a head start. The organization’s strategy of managing population health as a business model goes back almost 20 years, and now accounts for about 56 percent of its business.
“Currently in our all value-based contracting we are approaching 400,000 lives that we are financially at risk for, either through global capitation or shared savings arrangements similar to the Pioneer ACO,” Rosenthal explained. Montefiore worked on Medicare fee-for-service demonstration projects with CMMI (Centers for Medicare and Medicaid Innovation) several years before the launch of the Pioneer ACO program. It was natural to work with CMS as one of the original group of 32 Pioneer ACO providers.
Montefiore had already honed key core competencies, and was committed to ongoing investment in infrastructure, analytics and staffing to support its Pioneer ACO efforts. In 2012, Montefiore helped Medicare save over $23 million and realized $14 million in earned shared savings. In 2013, it earned roughly the same amount in shared savings – close to $13.5 million, based on helping Medicare save $24.5 million.
The health system already had information about many of the 23,000 new Medicare patients in collective systems across its facilities. It also used business intelligence to discover that about nine percent of the new patients were generating 80 percent of the entire population’s medical expenses. The patients typically had significant chronic issues, such as uncontrolled diabetes.
“If we could get to them and help them, we stood a chance of improving on those medical expenses,” said Rosenthal. Getting high-risk patients to the right healthcare provider at the right time – in the right setting – would be critical to ensuring that Montefiore met the Pioneer ACO program’s quality metrics and not jeopardize its ability to earn shared savings dollars. An intense focus on quality led to a 45 percent reduction in diabetes inpatient admissions in the first year, and a 35 percent reduction in all-cause readmissions.
Other key success factors were Montefiore’s use of predictive analytics to identify individuals who, based on information about their past histories and current medical conditions, were most susceptible to potential readmission in the 30 days following hospital discharge. The health system made sure these patients received necessary care either at home, or at nursing facilities, to help avoid high-cost readmissions. Montefiore also helped patients with end-stage renal disease avoid hospital stays by placing primary care doctors in the dialysis centers that patients visited, allowing easy access to medical professionals who could address their other healthcare problems.
Additionally, Montefiore created an emergency room navigator job in its hospitals. A nurse, nurse practitioner, or social worker checks in with patients after registration in the ER to help expedite the hospital triage process or provide options for more appropriate care settings that might be less expensive and more comfortable for the patient.
A solid foundation
Before joining the Pioneer ACO program, Beth Israel Deaconess Care Organization (BIDCO) – whose hospital and physician network includes more than 2,400 primary care physicians and specialists and seven hospital institutions in Massachusetts, as well as has a tertiary affiliation with Beth Israel Deaconess Medical Center – also had experience in population health management.
BIDCO already had in place alternative payment model contracts with local health insurance carriers where it received a budget to care for members. In year one, the ACO’s Medicare savings added up to about $15.6 million, with BIDCO receiving about $7.8 million in earned shared savings. In year two, it saw those numbers rise to $17.3 million and $10.6 million, respectively.
BIDCO president and CEO Christina Severin said that between years one and two the ACO grew “more sophisticated around what tools and expertise we were bringing to bear to drive program success.” BIDCO had programs and medical economics tools in year one, “but it didn’t become turnkey and fully automated until year two,” she said.
For example, BIDCO improved stratification methodologies to identify patients not only at high risk for upcoming hospitalization in the next six months, but those who could benefit from interventions to avoid that outcome. To support the latter population, BIDCO has a House Calls Medicine program where nurse practitioners conduct regular home visits with patients who have multiple chronic morbidities.
Not only does the program make meaningful improvements on total medical expenditures, but it “creates opportunities, since we now have engagement with these patients and their families for a number of other programs and services to prevent an adverse event or readmission,” Severin said.
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All Pioneer ACO participants face their share of challenges. Engaging community physicians to implement electronic medical records and achieve meaningful use was one for Montefiore, Rosenthal noted. It was an important challenge to meet, as electronically documenting interactions with patients is required to meet Pioneer ACO quality metrics.
Montefiore used some of its year one earned shared savings to help physicians get access to EMR technology, and to provide additional monetary incentives to help physicians make other changes that contribute to overall savings. “Many times the savings accrue because physicians or their staff see patients more frequently in their office or telephonically” and they need to be compensated for that, Rosenthal said.
BIDCO needed to work with its provider community to improve Pioneer ACO quality scores in a targeted manner to help increase earned shared savings. It drew on its past experience of supporting doctors in trying to improve quality scores for previous budget-based contracts. The ACO reinvented the role of individuals who had done that work, creating electronic health record optimization specialists who educate doctors about ACO quality measures, speak with them about where they are underperforming, and ensure they are appropriately entering quality metric information into EHR systems.
BIDCO physicians also needed to adjust the skill set they’d bring to bear on the Pioneer ACO Medicare population, which tends to skew older and have different morbidities than the commercial HMO populations for which they had experience managing risk. For instance, about a year ago it became an option for ACOs to apply for a skilled nursing facility (SNF) waiver that allows primary care providers to refer select Pioneer ACO patients – perhaps those who have experienced a fall or mild case of pneumonia – directly to a CMS-approved SNF and bypass the required three-day hospital stay if it is clinically unnecessary.
“A nursing facility bed can be a safe, low-cost and more desirable alternative to an acute care setting to the beneficiary and their caregivers,” Severin said. But primary care providers must know that a patient is in the Pioneer ACO program and must be educated about that option. Providers work with BIDCO to get patients approved for a waiver.
The first year of the Pioneer ACO program proceeded fairly smoothly at Arizona’s Banner Health Network, which is comprised of 13 acute-care hospitals and other services throughout the state. The organization saved Medicare about $19 million in 2012 and realized approximately $13 million in earned shared savings, said Greg Wojtal, BHN’s chief financial officer.
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Year two was a bit tougher, though the health network still saved Medicare about $15 million and earned approximately a $9 million share. Banner felt the impact of rising financial and quality targets, and was hurt by an increase in specialty drug costs. In one quarter in 2013, the cost curve for such drugs rose from 6 to 8 percent of Banner’s expenses to approximately 10 to 15 percent, Wojtal said.
But thanks to its care management model, information technology and network development, Banner succeeded. Wojtal said BHN believes the healthcare industry cost curve is “not sustainable, and we wanted to be part of the solution.” To that end, it was able to consistently improve its utilization of business intelligence and analytics technology to keep certain patient populations out of the hospital.
“We were able to offset some surprises,” such as the rise in specialty drug costs, Wojtal said, and to generally meet targets for reducing readmissions.
While the contribution from each “attributed member” to Medicare savings was less in year two than in year one, BHN had more members overall. “We did fairly well in terms of overall performance,” said Wojtal. He said Banner found that engaging with physicians – especially primary care doctors – is critical. “You need to communicate with your network about what’s happening so that you get the right care at the right time in the right setting.”
Future for the Pioneers
All three organizations are committed to continue growing value-based care. There is real momentum behind value-based contracting in Medicare and Medicaid, Rosenthal said. “There will be less incentive to do things that aren’t necessary, for the purposes of revenue generation, and instead there will be incentives to do things that make sense for the best care of the patient.”
The recently announced Next Generation ACO Model continues to move the Medicare program and the healthcare system toward paying providers based on quality rather than quantity of care. While the Pioneer program is still in year four of its five-year cycle, Banner has filed a non-binding letter of intent to participate in the Next Generation ACO effort, Wojtal said, as it evaluates the new model. Montefiore and BIDCO are exploring it as well.
“The Next Generation focus is about is taking all the good qualities, and eliminating the bad qualities, that we’ve discovered through the Pioneer ACO learning experience,” said Rosenthal.