We have talked before about ACOs (more info here and here and here). US Oncology today announced plans to develop a cancer-related physician-payor risk contracting model. Check it out.
UPDATE: Health Finance News picked up on this story on Sept. 2. Here is an excerpt:
The initiative comes at a time when providers across the country are preparing for the new landscape expected under the Affordable Care Act. The Centers for Medicare and Medicaid Services will pursue alternatives to the fee-for-service model through its Medicare Innovation Center, as well as its Medicare Shared Savings Program slated for 2012, whereby Medicare will implement accountable care organizations.
Due to the size of its physician network, which numbers more than 900 oncologists, along with an electronic health record that includes more than 1.6 million patient charts, US Oncology and Milliman officials see this data as the foundation of creating effective risk-based contracts.
“Physician-led organizations are ideally positioned to assess and balance the clinical, quality and cost demands of today’s healthcare environment,” said Bruce Pyenson, principal and consulting actuary of New York-based Milliman. Through Milliman’s work with US Oncology, Pyenson said they can “help oncologists create the healthcare delivery and reimbursement models of the future.”
Accountablity
ACOs, Bruce Pyenson, Cancer
Accountable care organizations (ACOs) must manage toward actuarial targets, which is a key means to attain the end of more efficient care. This process requires both “supply-side” medical management and “demand-side” medical management. Here is an explanation of each:
Supply-side medical management services are what many consider the more challenging side of medical management but they are also what produce the savings. These services are intended to reduce utilization and payment for medically unnecessary services and also ensure that care is delivered in the most appropriate setting, which for an ACO should mean delivered by an ACO-associated provider. Clinical guidelines help evaluate the medical necessity of requested (or, retrospectively, rendered) services…
Demand-side medical management services optimize a population’s health so that demand for services will be lower. In particular, these services can impact ambulatory care sensitive admissions, preference sensitive admissions, readmissions, and ER visits.
For more on managing to actuarial targets, read the recent paper, “Nuts and bolts of ACO financial and operational success.” For more on medically unnecessary services, view this blog post or this paper.
Accountablity, Cost
ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
Accountable care organizations (ACOs) need to properly deploy medical management in pursuit of certain utilization and cost targets. This dynamic is explained as part of a recent briefing paper on the nuts and bolts of ACOs. Here is an excerpt:
ACO’s should focus initial medical management efforts on reducing leakage to hospitals and specialists that are not part of the ACO. This will increase volume to ACO providers and help offset revenue loss due to improved utilization management. Inpatient utilization management is another target for initial medical management efforts particularly since inpatient costs make up approximately 30% of total costs for a commercially insured population and 37% of total Medicare Part A and B spend. Successful ACOs will focus medical management efforts both on avoiding potentially unnecessary admissions and on reducing inpatient hospital leakage (admissions to hospitals not associated with the ACO). Potential reductions in admission vary significantly by admission type, so identifying real opportunities requires analyzing historical data to identify impactable and non-impactable admissions. In particular, ambulatory care sensitive admissions, preference sensitive admissions, and readmissions are considered as impactable (see Definitions). Claims data logic available from the Agency for Healthcare Research and Quality and published reports can help identify benchmark rates for these impactable admissions—and a sense of how many can actually be eliminated.
See the full paper for more detail and for citations.
Accountablity, Reform
ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
Here are some key concepts for anyone who wants to understand accountable care organizations (ACOs):
Ambulatory care sensitive admissions (ACSA) are those for which good outpatient care can potentially prevent the need for hospitalization, or for which early intervention can prevent complications or more severe disease. ACSAs are considered a measure of the quality of ambulatory care delivery in preventing medical complications. High rates of ACSAs might indicate inadequate access to high-quality ambulatory care, including preventive and disease management (DM) services. DM programs focus on individuals with chronic conditions to aggressively monitor and educate patients in self-management of these chronic conditions. ACSAs that involve complications of diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), coronary artery disease (CAD), asthma, and hypertension are admissions that are directly impacted by effective DM/primary care coordination efforts. Based on a Milliman analysis of Medicare claims data, 14% of total admissions are considered ambulatory care sensitive admissions.
Potentially preventable hospital readmissions are an important indicator of quality care and cause unnecessary expense. Preventable readmissions can occur because of inadequate discharge planning, inadequate post-discharge follow-up, or lack of coordination between inpatient and outpatient healthcare teams. Transition of care programs, case management, and disease management services aim to coordinate care at discharge and after; with effective care coordination and oversight, preventable readmissions should be reduced. The rate of preventable readmissions within 30 days has been reported at 11% from a study of all hospital admissions in Florida. The rate of all readmissions reported from a recent Medicare analysis is 19% with the majority reported to be preventable.
Preference sensitive admissions are admissions for elective surgical procedures where the evidence does not suggest greater efficacy between surgical management and medical management for treating particular conditions in some patients. Examples include spinal fusion, joint replacement, hysterectomy, bariatric surgery, cardiac catheterization, percutaneous transluminal coronary angioplasty (PTCA), coronary artery bypass graft (CABG), benign prostate surgery, and others. There is significant variation in the rate of these procedures by region suggesting that local medical opinion and practices have a strong influence on the choices of treatment. There has been a recent focus on the need for patients to be better informed about the treatment options along with consideration for a patient’s personal values and preferences when making medical treatment decisions. This recent trend in patient decision support has been reported to reduce the rate of these procedures. A Milliman analysis identified that, for a commercial population, approximately 16% of non-maternity admits are preference sensitive admissions.
Leakage is defined by services delivered by non-ACO providers that could be delivered by providers associated with the ACO.
For more information, see the recent healthcare reform briefing paper.
Electronic Health Records
ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
The Patient Protection and Affordable Care Act (PPACA) calls for the creation of accountable care organizations (ACOs) as a more cost-effective way of paying for healthcare. In order to succeed, ACOs will have to establish actuarial cost and utilization targets and use medical management to achieve those targets. This process of benchmarking and managing toward targets requires a delicate balance of actuarial and clinical know-how.
A new briefing paper offers a practical guide for approaching this analytic and management imperative. In addition to identifying the steps required, it identifies the medical management priorities for an effective ACO and highlights some of the risks involved.
Accountablity, Reform
ACOs, Cathy Murphy-Barron, David Mirkin, Kate Fitch
We have blogged before about accountable care organizations and the need for an alternative to the fee-for-service payment model. Now a new paper looks at the kind of technology needed if provider organizations are going to start taking on the financial risk and reward that has typically been held by insurers.
What kind of technology are we talking about? The ideal platform can measure utilization and determine if care adheres to certain evidence-based measures. Many insurers already employ this kind of analysis, but it is likely to be new in most provider organizations.
Accountablity, Electronic Health Records
ACOs, MedInsight, Paul Leonardo, Rich Moyer
The latest Atul Gawande article examines how pilot programs in the Senate healthcare reform bill may help to moderate healthcare cost increases:
The bill tests, for instance, a number of ways that federal insurers could pay for care. Medicare and Medicaid currently pay clinicians the same amount regardless of results. But there is a pilot program to increase payments for doctors who deliver high-quality care at lower cost, while reducing payments for those who deliver low-quality care at higher cost. There’s a program that would pay bonuses to hospitals that improve patient results after heart failure, pneumonia, and surgery. There’s a program that would impose financial penalties on institutions with high rates of infections transmitted by health-care workers. Still another would test a system of penalties and rewards scaled to the quality of home health and rehabilitation care.
Other experiments try moving medicine away from fee-for-service payment altogether. A bundled-payment provision would pay medical teams just one thirty-day fee for all the outpatient and inpatient services related to, say, an operation. This would give clinicians an incentive to work together to smooth care and reduce complications. One pilot would go even further, encouraging clinicians to band together into “Accountable Care Organizations” that take responsibility for all their patients’ needs, including prevention—so that fewer patients need operations in the first place. These groups would be permitted to keep part of the savings they generate, as long as they meet quality and service thresholds.
The bill has ideas for changes in other parts of the system, too. Some provisions attempt to improve efficiency through administrative reforms, by, for example, requiring insurance companies to create a single standardized form for insurance reimbursement, to alleviate the clerical burden on clinicians. There are tests of various kinds of community wellness programs. The legislation also continues a stimulus-package program that funds comparative-effectiveness research—testing existing treatments for a condition against one another—because fewer treatment failures should mean lower costs.
Looking for more reading on some of these concepts? Try these:
Cost, Reform
ACOs, admin, Atul Gawande, Convergence, Wellness
We weighed in several weeks ago with our perspective on accountable care organizations. Since then we’ve seen some interesting new information come out on this emerging topic:
Electronic Health Records
ACOs, Group Health, Kate Fitch, Rob Parke
Both Medicare and the state of Massachusetts are reviewing alternatives to healthcare’s fee-for-service models with an eye toward greater integration and coordination in the delivery system. These population-based payment models, or accountable care organizations (ACOs), provide a possible foundation for controlling healthcare costs by rewarding providers for efficiently coordinating services and achieving measurable quality outcomes. We spoke with Milliman principals Rob Parke and Kate Fitch for the early outlook on this new strategy.
Q: What is an accountable care organization?
A: While an ACO can take many forms, essentially it is a group of healthcare providers—primary care physicians, specialists, and hospitals—that have been incentivized with a system of rewards (or penalties) to join forces to more efficiently and effectively deliver their services. The much-discussed “medical home” model is a primary care delivery approach that can be used by ACOs to help accomplish these goals.
The ACO is “accountable” for specific population spending targets and clinical outcome improvements. When the ACO meets, or exceeds, these targets, it is rewarded with a share of the overall savings. In some of the proposed ACO arrangements there are also penalties for failing to meet the targets.
This provider accountability approach has been implemented in programs like Medicare’s Physician Group Practice (PGP) demonstration, which measures and rewards cost savings and quality improvements for large group practices.
Read more…
Accountablity, Cost, Reform
ACOs, Kate Fitch, Rob Parke
For those of you who spent the weekend reading the full text of the amended America’s Healthy Future Act and now have nothing to do, here is some other pertinent reading from the weekend:
The working definition of actuarial value that has been proposed has a number of problems or limitations. Here, then, is another: Will this reform potentially install both a ceiling and a floor without leaving room to even stand up? The ceiling is based on fixed dollar amounts, while the floor is based on specified actuarial values (ratios of benefit value to total cost). It is certainly not out of the question for situations to arise where the ceiling for a given employer group could be lower than one or more of the prescribed floors.
Click here to read the full paper about Cadillac plans.
Accountablity, Electronic Health Records
ACOs, Cadillac plan, EHR
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