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Heritage Medical Systems’ Wagar: Pioneer ACO Lessons Abound

July 29, 2014
by Mark Hagland
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At the Northridge, California-based Heritage Medical Systems, president Mark Wagar is helping to lead a broad-based initiative around ACO development—with many lessons already learned

As the accountable care revolution rolls forward, it is inevitable that some of the most innovative leaders of that revolution are senior executives of multispecialty medical groups. After all, it is physicians who work most closely and regularly with patients, particularly the high-risk, high-cost patients whose utilization is leading the bulk of expenditures in the current healthcare system nationwide.

One of the pioneering organizations in the accountable care organization (ACO) space is the Northridge, Calif.-based Heritage Medical Systems, which is operating the largest of the Pioneer MSSP ACOs, with about 90,000 members, called the Heritage Pioneer ACO, and the largest physician-led managed care provider organization in the country. What’s more, Heritage Pioneer ACO, reports president Mark Wagar, was one of two ACOs that generated 40 percent of the savings documented in 2013 in the Pioneer MSSP program (the other was the Montefiore Pioneer ACO in New York City). What’s more, Wagar notes, the Heritage Pioneer ACO is composed primarily of independent (non-salaried) physicians in California, Arizona, and New York, making that achievement even more noteworthy.

Wagar was one of a number of healthcare leaders interviewed by HCI Editor-in-Chief Mark Hagland for the magazine’s July-August cover story. Below are excerpts from his interview with Hagland this spring.

Tell me about Heritage Medical Systems.

Heritage is a physician organization that takes care of about a million patients in California, New York, and Arizona. About 800,000 are in prepaid, capitated, fully delegated care contracts. So we manage the care through our physician groups and independent practices, pay the claims, and so on.


Mark Wagar

How many physicians are involved?

In our groups, there are a couple of thousands, and then several thousand independent practices. In California we have 50 different physician groups with an employed model and then we wrap IPA groups around them on contract basis.

How long has your organization been in existence?

For over 30 years. The origin of this—over 30 years ago, Dr. Richard Merkin was an emergency physician and he founded the group, based on the need on the part of the local Blue Cross plan for better organization of a physician network, back in 1979.

So it was initially something like a contract group like ED physicians?

Actually, Dr. Merkin separated from the ED physicians and created an early capitation agreement. These days, it’s quite formal, but back then, nobody knew quite how to arrange this. So Dr. Merkin had to post the title on his house and car. He was a young, practicing emergency physician. Working together, the  health plan, Dr. Merkin, the hospital, and doctors, put together an organization.

This group has been around a long time, and has helped doctors and everyone begin to achieve the Triple Aim.

Tell me about your Medicare MSSP involvement.

We have one of the largest pioneer ACOs, with about 90,000 members, and several regular ACOs. That’s the Heritage Pioneer ACO. And in terms of recently released recent results, 11 or 12 ACOs out of 29 showed cost savings, and two of those generated 40 percent of the savings; one was Heritage, and the other was Montefiore out of New York. And we did this not only with our employed physician groups; in fact, the majority of physicians involved were independent, and practicing in small practices. The takeaway was that we were able to extend to these independent physicians the same kind of outreach and infrastructure we do here at core Heritage. So it shows if you’re attached to the right entity, you don’t have to be owned or salaried per se—it’s about having the information, having access to the extenders you need to do longitudinal health management. Our entire traditional health system is set up to help people when they present with a problem.

But the value-based system—once you’re able to move it into the hands of providers and extenders, the approach is entirely different. If you’re a pulmonologist, you want to be able to take care of every COPD [chronic obstructive pulmonary disease] patient who comes to you. If you’re responsible for 20,000 people in a county, in a population health context, you want to know about every COPD patient, even if they haven’t come to see you, and want to know about their economic circumstances, their family and social circumstances, etc., and the whole objective is to embrace them in a holistic way.

What have been the biggest challenges in establishing and operating the Pioneer MSSP so far?

I would say that the single biggest challenge upfront has been the issue of patient attribution. And most ACOs have experienced this where, upfront, initially, in the early going, it was really difficult to nail down whom we were responsible for. And it moved around—the population you were responsible for moved around. And some patients who didn’t have a lot of activity when they were identified, were removed from our ACO attribution. Well, those might have been patients who were proactively managed, and who didn’t have difficulties because we managed them the way we were supposed to. Once we worked that out, then we were able to move forward in getting these Medicare beneficiaries comfortable with the fact that they’ve been assigned to something.

And a lot of patients were confused as to what it meant to be attributed to an ACO. So we actually spent a good deal of time meeting them in person, educating them in different ways, and explaining that we were and are extending their doctors’ practices. So the message is, we can help you, we’re a part of your doctor’s practice. And that was key; once people understood we weren’t taking anything away, we were actually doubling down on what your doctor could do for you—and of course, word of mouth was very powerful. So one Medicare recipient would talk to another and find out it was good.

Tell me about the role of data analytics and IT so far?

We’ve created a combination of systems to accomplish what we’ve accomplished so far. We took systems we had, and then built some new ones, but built them in a way that would apply to all of our populations. So if you’re a patient in an ACO patient now and want to go to a Medicare Advantage plan or vice versa—we should still be able to work with you and your doctor.

So you’re beginning to treat all patients the same way, then?

Yes. That’s a core philosophy of Dr. Merkin that if there’s a right approach, there’s a right approach. Now you might have to arrange things differently depending on what kind of system you’re in, such as a government program or not, etc.—but in terms of the clinical intervention, in terms of the proactive outreach and gains for a population, we’re applying the same principles of care to all of our patients now. Now in the prepaid population, then the provider system is really empowered [800,000 patients] to use those scarce resources in the most effective way. In ACO care, you still have a foot in the fee-for-service camp, and a foot in the ACO camp.

But in a fully capitated environment, it’s ‘all systems go,’ correct?

Yes. Because you’ve got most of the money upfront, so you don’t have to guess about whether something will be covered, or whatever.

What kinds of analytics programs are you using?

We have analytics that do risk stratification; we’ll combine as much as we can get. One of the challenges of the ACO program is that you’re downstream from the data, longer even from in a commercial situation. So the closer you get to access to all the information at the point of the service, the more traction you get. But it’s an evolution involved: the ACOs have to evolve into some kind of population-based payment in the future. And they’ve got to fix physician payment, per the SGR, to compound that. Heritage and I personally participated in trying to help both sides of the aisle understand the facts around how that would work.

If you look at the gulf between the admission rate for traditional Medicare and this kind of group—you’re talking about 300-350 admits per thousand versus 200 or fewer, because these people are proactively managed, and they avert events. So there are about 15 million or more admissions per year in Medicare. And if you were able to lop off about one-third of them,  that would mean a savings of $70-80 billion a year. Now, it doesn’t happen for nothing; we have to invest in doing things. You probably have to expend 20 percent of the savings to get the savings. Everybody has to have an EMR and information, and then you’ve got to have people doing other things like the care managers—and all the helpers who go with them. So you’ve got to pay money in other places, so you’ve got to pay doctors and hospitals differently. So you spend some, but you’ve still got 70-80 percent left.

And in terms of getting done what needs to be done, information will be at the core of that. You have to have actionable information, you have to be able to sit down with a group of doctors, and you have to be able to tell them, here’s what you look like.

So you’re incorporating dashboards and outcomes measurement reporting into your initiative, then?

Yes, down to the individual physician. And we endeavor to get down to the level of physicians with relatively small panels of a few hundred patients. And we can show you what your population looks like, and how much different your outcomes would be if you took a different course, and how different your practice would be financially. I used to run the BCBS plan in New York City, and 60 percent of the things we pay for are things we do to ourselves or things that we can have some effect on.

How have you and your colleagues been able to change the physician culture, in terms of moving physicians to a new understanding of what’s going on in healthcare?

Yes, that’s definitely the other key. You have to collect a group of physicians who believe we need to change. So all but some tiny percent who are just jerks, are trying to do the right thing and are already mostly doing the right thing. So if I’m really, really good at managing diabetics, and I’ve got a full practice, if this all works, those visits go away. So how do I make that shift? I still have an office, have nurses, still have some diabetics who need to be seen? But what happens if 30 percent of my visits go away? So you have to help them see a new economic model. The same thing is true with a hospital. How do you get from one side of the river to the other?

What role does clinical decision support play in all this?

Obviously, in the groups with employed physicians, we do provide a more consistent set of CDS solutions. And obviously, with independent physicians, we’ll go out and help them think through how to make their practice more effective. And that’s where getting this information and being able to get back to them, is so vital.

And you obviously use data warehouses?

Yes.

What your advice be for CIOs and CMIOs, as their organizations move forward with ACO development?

That they should be more thoughtful about how to make the business case. One of the challenges you see all across the industry is that well-intentioned IS moves die on the drawing table, because it’s not clear how such systems will improve the core clinical-operational model. It’s not just putting in an EMR or a data warehouse—what are the outcomes we’re expecting from doing such things? How much different would we look from a health status standpoint, from an incidence rate? What would our outcomes look like as a result? So that’s one of the challenges for our information executives, determining that. And analyze while you’re implementing, and make corrections as you go along. You try to implement well and nothing works perfectly. So [healthcare IT leaders need to] be able to say what’s working well and what’s not, and be able to fix what’s not working well.

 

 

 


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