Insufficient IT and analytics capabilities are retarding the ability of even the largest and almost advanced medical groups in the U.S. to take on financial risk in risk-based contracts either with the federal government, or with private health insurers. That reality is reflected in the results of a survey of medical group senior executives released on Sep. 17 by the Alexandria, Va.-based American Medical Group Association (AMGA), whose member medical groups are among the largest and most highly evolved in U.S. healthcare.
Indeed, Chet Speed, AMGA’s vice president, public policy, says that he and his colleagues at the association are learning that the senior executives in AMGA member groups are finding themselves distressed at how challenging the taking on of financial risk in accountable care organization (ACO) contacting is turning out to be. That is the case whether such contracting is taking place under the aegis of the Medicare program—through its Pioneer ACO Program, its Medicare Shared Savings Program (MSSP), or its new Next-Generation ACO Program—or whether it is through any number of commercial ACO contracts that virtually all of the major private U.S. health insurers are now offering.
The “AMGA Survey on Risk Readiness,” conducted this summer, captured the views of 115 respondents, representing 101 member organizations. Those who responded to the survey represented the following types of organizational structures: multispecialty medical groups (43 percent), multispecialty medical groups with their own health plans (5 percent), integrated delivery systems (37 percent), and integrated delivery systems with their own plans (15 percent). In terms of the numbers of physicians involved, the bulk of the organizations involved encompass 151-500 physicians (42 percent), and 51-150 physicians (31 percent). Smaller numbers of organizations encompass 500-1,000 physicians and 1,000-plus physicians (10 percent each), and 3-50 physicians (7 percent).
Meanwhile, the revenue sources of survey respondents’ organizations are indeed shifting, though not as rapidly as some might think. On the federal side, their current mix as of this summer was an average of 45 percent fee-for-service Medicare; 22 percent Medicare Advantage; 11 percent MSSP/Pioneer ACO, or NextGeneration ACO; 10 percent Medicaid managed care; 10 percent Medicaid fee-for-service; and less than 4 percent bundled-payment. Those numbers will shift in 2016 to: 41 percent fee-for-service Medicare; 24 percent Medicare Advantage; 12 percent MSSP/Pioneer/NextGeneration ACO; 11 percent Medicaid managed care; 9 percent fee-for-service Medicaid; and just under 4 percent bundled-payment. In 2017, the averages will be: 34 percent fee-for-service Medicare; 27 percent Medicare Advantage; 15 percent MSSP/Pioneer ACO/NextGeneration; 12 percent Medicaid managed care; and 8 percent fee-for-service Medicaid.
Things are shifting more rapidly on the commercial insurance side. In 2015, 78 percent of surveyed organizations’ revenues are coming from fee-for-service health insurance payments; 7 percent from shared savings and ACO programs; 5 percent from shared risk programs; 4 percent from partial-capitation contracts; about 2 percent from full-capitation contracts; and less than 2 percent from bundled-payment contracts. In 2016, those averages will be as follows: 68 percent from fee-for-service payment; 12 percent from shared savings/ACO contracts; 8 percent from shared-risk contracts, 4 percent from partial-capitation contracts; 5 percent from full-capitation contracts; and 4 percent from bundled-payment contracts. In 2017, the averages will be 59 percent from fee-for-service payments; 14 percent from shared savings/ACO contracts; 11 percent from shared risk contracts; 6 percent from partial-capitation contracts; 7 percent from full-capitation contracts; and four percent from bundled-payment contracts.
In a key set of measures, executives responded to the question of how long it would be before their organizations can accept downside financial risk in contracts. Just 18 percent said they would be able to do so within one year; 24 percent said they would be able to do so in between one and two years; 41 percent said between three and five years; and the remaining 17 percent said it would take at least 6six years to do so. Among different types of organizations, multispecialty medical groups with their own plans, not surprisingly, had the highest percentages of readiness, with 80 percent saying they could do so within a year, and the remaining 20 percent in between one and two years. Among survey respondents from all the other types of organizational structures, only between 12 and 17 percent believed they could accept downside risk in a year, and another 17-33 percent said they could do so within two years.
Now, what are the impediments to taking on risk-based contracts? Here were the responses on the federal side. On a scale of 1 to 5, with 5 being the highest, the average responses are thus: ineffective attribution methodology (4.4); non-standardized data submission/feedback process (4.2); risk adjustment methodology (4.1); benchmarking methodology (4.1); insufficient IT/analytics infrastructure (4.1); insufficient patient engagement opportunities (3.8); insufficient care management capabilities (3.7); physician compensation issues (3.7); ineffective quality measurements (3.6); insufficient administrative/financial structure (3.6).
On the commercial insurance side, the impediments cited were these: lack of full claims data (4.3); lack of transparent cost/quality data feedback (4.3); ineffective data sharing process/methodology (4.2); ineffective attribution methodology (4.0); duplicative quality programs/reporting requirements (3.9); insufficient IT/analytics infrastructure (3.8); payers not offering risk arrangements in local market (3.7); insufficient care management capabilities (3.6); physician compensation issues (3.5); insufficient administrative/financial structure (3.5).
In other words, the leaders of large medical groups place the issue of “insufficient IT and analytics infrastructure” in the middle of a range of issues, as a significant barrier to taking on financial risk, both on the Medicare and on the private health insurance sides of the business.
AMGA’s Chet Speed spoke recently with HCI Editor-in-Chief Mark Hagland about the issues uncovered in the survey. Below are excerpts from that interview.
Overall, when you look at the results of the survey, were you at all surprised?
There were some surprises, one of them being that one of the impediments to taking risk is the fact that if there’s no one offering risk in your market, of course, you can’t take risk, and that number was relatively high. So 70 percent said that between 0 and 19 percent of insurers were offering risk-based products in their market, and that’s a fairly high figure. So one of our initial conclusions was both that many providers nationwide aren’t experienced in risk-taking, and many insurers aren’t experienced in offering risk-based products. And this certainly confirmed what we had heard from our members anecdotally. There are significant variations by region, of course.
So generally speaking then, we are we still pretty early and emergent with medical groups and insurers taking risk, in the broader scheme of things?
I would say so, yes. We had a kind of large-scale experience with this in the 1990s. But with exceptions in California and the Pacific Northwest, for the most part, it’s been a discounted fee-for-service environment for most providers since then. And I think what’s changed now, and in part by the ACA [Affordable Care Act], but even more so with the passage of the SGR repeal bill [the Medicare and CHIP Reauthorization Act, or MACRA, passed in the U.S. Senate April 14, and signed into law on April 16 by President Barack Obama], you have the whole of the federal government essentially telling providers they want them to go into risk-based payments.
Sylvia Mathews Burwell [Secretary of Health and Human Services since June 2014] announced [in January 2015] that she wanted 50 percent of payments under Medicare to be tied to alternative payment models by 2018, and 90 percent of fee-for-service payments tied to some sort of quality or value metrics by 2016. That’s a very ambitious agenda. And you have two mechanisms, MIPS, or ACM. So they’re really pushing the risk-taking in a fairly obvious way; and the private market’s sort of going that way, too.
Even those AMGA members that had been in the Physician Group Practice Demonstration project ended up finding the Pioneer ACO program challenging, correct? I thought that that was very interesting.
Most of those groups actually went into the MSSP, though some did go into Pioneer. But the experience that our members had in both Pioneer and MSSP, and which is reflected in our survey results, is that there are some operational challenges within the management of those programs. In the MSSP, attributions have been an issue. And if you talk to any CMO [chief medical officer] from any of our groups, that’s the biggest operational issue. There have also been data exchange issues; they’ve found the data exchange process cumbersome. They got loads of data in different formats [from the Centers for Medicare & Medicaid Services], and that required tons of staff time to work with. And the data wasn’t always timely. And in both programs, the financial models have been challenging. What’s more, achieving savings every year has been difficult, because if you’re comparing yourself to yourself year over year and you’re already efficient, it’s difficult to achieve continuously improving efficiencies.
Overall, where is the trendline heading in terms of contracting and risk?
Value-based products are replacing fee-for-service payment contracts now; the biggest growth is in commercial ACOs, which makes sense, because groups can negotiate those contracts fairly easily with commercial insurers, either shared savings or shared risk, and commercial ACOs allow you to learn how to take full capitation in the private sector, and help you learn how to do Medicare Advantage, whether percentage-of-premium or modified fee-for-service, or full capitation. But many medical groups are looking for full capitation in the next few years. Our members are anticipating full-cap experience with Medicare Advantage after they get learnings from a commercial ACO and MSSP.
What have the hardest challenges been around data?
Everything has turned out to be challenging. I look at it as a series of levels, actually. Nearly 100 percent of our members have EHRs [electronic health records] implemented in their hospitals and in their groups, and that’s the foundation for taking risk, but that’s just the start. Then you have to hire analytics people to take all that rich data, which is increasingly becoming structured, and create predictive analytics structures to predict which patients will be admitted or readmitted to hospitals, or who will visit EDs. And it’s challenging and expensive to create the predictive models; and then designing and redesigning the care processes after the analytics has been developed, takes time, effort, money, and leadership. I saw all this firsthand when I was at Cleveland Clinic for a few years. And it is challenging, challenging, challenging, challenging, challenging. And part of the cultural change as you get to value is that you have to measure your physicians. And that’s a sea change.
Tell me about that sea change?
We actually just published a compensation survey. And what’s happening is that many of our member groups are beginning to pay their physicians partly based on clinical outcomes; for example, did you hit
We have a consulting company, you should talk to them. And I’m speaking unscientifically now, but many of our members do pay—did you hit your a1c level did you do your diabetic screening, etc., but not all; a lot of our member groups are still based on doctors’ RVU production. And a lot of the survey questions were based on changes taking place around quality and cost goals. That’s an area where they think they must go. And that’s an area where a 58-year-old surgeon says, no, I won’t do that. And that’s where you need leadership that says, yes, you need to do that. And some physicians will say goodbye. And when I was a lawyer in private practice, I would have been incensed by such measures. And this is a sea change, and a challenge. And our members talk about culture and change management, and those aren’t soft words, they’re real things that take tremendous effort.
What will happen in the next few years around risk?
Looking at the survey results, it’s fairly clear that fee-for-service reimbursement declines from here until the end of 2017, by 26 percent, and that’s replaced proportionally by an increase in value-based products. So the members are already beginning to transition to taking on risk, whether upside-only or downside, but they understand that that’s where the market’s going, and that’s where they anticipate going. And for those that have not invested in the analytic capabilities they need to manage risk, they’re in the process of doing so.
What are your thoughts on the results around IT and analytics capabilities to support the taking on of financial risk by providers?
As you saw in the survey results, when we asked what the impediments were to taking risk in federal and commercial programs, we broke them down into two categories—external (largely payer-driven), and internal (largely provider-driven), with all those factors ranked on a scale of 1 to 5. As you saw, the responses around the insufficiency of IT and analytics infrastructure were relatively high on both the federal and commercial sides.
And what I liked about the responses is that the members were reflective about things. It wasn’t just that “payers were terrible,” or something like that. They considered the fact that you have to get the IT right to get the care management right, and obviously, medical group leaders have to up their game.
What should healthcare IT leaders think about those results?
Probably that there’s more work to be done. It’s one thing to implement an EHR, but now you need to do the analytics behind the EHR.
What would your advice be based on everything we’ve talked about just now?
My advice would be that, as healthcare financing transitions to value, groups need to be ready with sophisticated IT systems and care management processes to manage a population of patients, and they need to partner with the payer community, so that they can have the tools they need to be successful in a risk environment.