A healthy partnership between accountable care organizations (ACOs) and payers is the linchpin for successfully using the ACO model to better coordinate care, improve population health and reduce care costs. That’s one of the main takeaways of “Transforming Payer Arrangements to Align with New Care Models,” a webinar hosted last week by the Charlotte, N.C.-based Premier healthcare alliance. The webinar’s participants discussed lessons learned from Premier’s Partnership for Care Transformation (PACT) Population Health Collaborative, an initiative launched in 2010 to help its member health systems implement ACOs in local markets, and to identify the gaps and capabilities necessary to launching an ACO. During the webinar two Premier member organizations, Fairview Health Services and Mountain States Health Alliance, discussed their experiences developing ACOs and how they worked with payers to develop sustainable ACO models.
As noted by Premier’s senior vice president of public affairs, Blair Childs, payer-provider partnerships are a necessary part of establishing successful ACOs, which require enormous investments in infrastructure and new care models, making it critical for ACOs to capture the savings and get a return on the investment. It’s also important to be able to access the data, to understand the data management and being able to identify the key populations to focus your attention on, he said. Health systems and insurers need is to be able to work together to access and use the data they have, both from measurement and a population analytics predictive modeling standpoints, he said, adding that for providers and insurers should share responsibilities around care management.
Childs noted that various types of payer arrangements exist from care management fees and infrastructure funding, to bundled payment, shared savings and partial and full capitation. Among the elements for a successful partnership are a solid relationship between payer and provider, an integrated contracting mechanism, collaboration to maintain the population experience, and transparency of information.
Many ACO-Payer Models
Last week’s webinar coincided with Premier’s release of a report on the early experiences of its members that have set up ACOs, and how they have worked with the government and state and commercial payers. Joseph F. Damore, vice president of population health at Premier, noted that the ACO initiative is part of a journey toward population health management. “The organizations we work with are in the process of redesigning care, and they are also in the process of redesigning payer arrangements, in order to support the new care models,” he said.
He said that its members have about 80 value-based contracts across the country, with slightly less than half in the Medicare arena. Other arrangements exist in state Medicaid programs, self-insured major employers, and provider-owned health plans in the commercial market. He said the pace is beginning to pick up on the commercial side.
Regarding shared risk models of its members, the most prevalent arrangement on the Medicare side is a one-sided risk model, with a per capita expenditure target and shared savings with the federal government or with the commercial payer. “Not as many of those have occurred on the commercial side as we were hoping,” Damore said. On the commercial side, the care management model is prevalent, in which the commercial insurer pays a primary care practice a care management fee. There has been very little capitation as yet. About 1.8 million covered lives are under some form of value-based contract; 41 percent of whom are covered under the no-risk shared savings agreement, led by the Medicare Track 1 Medicare shared saving ACO model.
According to Damore, the main reason for the prevalence of the shared savings model is that organizations need to build infrastructure, whether that’s information technology, care management systems, or patient-centered medical homes, as well as gain experience in managing risk. “One-sided risk is a good way to gain that experience,” he said.
Regarding shared saving models on the Medicare side, the most popular shared saving model is a 50-50 shared savings model, or the Medicare Shared Saving Track 1 model, Damore said. On the commercial side, there is a variety of shared savings splits, typically between 50 percent and 75 percent; on the employer side, direct contracts between employers and ACOs with a 50-50 split of shared savings are the most popular.
Damore noted that strategic IT plays a central role in setting up successful population health models. The first step is to develop a predictive modeling program that will allow an organization to analyze historical claims and identify high-risk patients, such as those with four or five chronic diseases. It will also allow an organization to identify patients with a single chronic disease, and to build a registry of those patients who can be enrolled in a chronic disease management program. Second, electronic medical record development and integration across the care continuum is very important to building an integrated platform. The third piece is care management software that will allow the organization to communicate with providers and patients.
He said that the accountable care model represents a massive cultural change for organizations that are moving from managing a short-term episode of care for a short term to managing a population over the long term. He noted that ACOs must work with payer-partners that are willing to be transparent and are willing to share both historical and real-time claims data. “If you are going to manage a population, you must know who the really sick patients are and those who have chronic diseases,” he said.
Underestimating the scope of cultural change is among the most common mistakes of organizations trying to develop an ACO model. Others include contract terms with unrealistic performance expectations, under-investment in operating activities, underestimating the effort to change physician behavior and practice patterns, and poorly designed incentives for providers, and lack of broad buy-in from operational managers.
Joseph F. Damore
Despite the challenges, Damore says the ACO concept is gaining momentum as a way reducing costs and improving quality and improving health. Critical success factors include upfront financial due diligence; the ability to receive and share analyze data on a timely basis; clearly delineated responsibilities of the partners; and a move integrated activities to support population management.
Fairview: Participating in a Range of Risk Models
R. Andrew McCoy is vice president of revenue management for Fairview Health Services, a seven-hospital system with 1,426 staffed beds, and headquartered in Minneapolis. He says that Fairview has been on this journey for several years now. It’s first agreement, about 10 years ago, was with a local Medicare Advantage product, in which it had shared risk with that care.
In 2009, Fairview and Medica, the second largest plan in the Twin Cities market, entered into an ACO contract with shared savings. From there, Fairview began negotiating similar agreements with other payers in that market; and Medica has negotiated similar arrangements with other provider systems, he said. He added that in the Twin Cities market, most of the provider systems have shared savings arrangements with the local health plans.
Fairview participates in a variety of other reimbursement and risk-sharing models. It owns 50 percent of the PreferredOne Health Plan, which has 300,000 enrollees, and it has been taking risk through that plan for many years, McCoy said. It became a Pioneer ACO member in the Medicare Shared Savings Program in 2012, and it has begun setting up new arrangements with health plans, in which it has limited network products with enrolled memberships and is sharing in the premium costs that are generated from the members. It has a contract with the state of Minnesota for about 5,000 state employees, and is sharing risk directly with the state. In addition, the health system provides patient-centered medical home services for which it receives payment from the state Medicaid program.
Because most of Fairview’s effort has been around the total cost of care of the member and not around specific episodes, the health system has had only limited involvement with bundled payments,. Nonetheless it has done bundled payments around tertiary care type services, like transplant services at the University of Minnesota Hospital, McCoy said.
McCoy made several observations about Fairview’s experience. One is that the various payers that the health system has been working with have different levels of capability. Those payers have invested different amounts of their resources into creating analytic capabilities to help Fairview determine which members are at risk and identify variations in cost, so that it can identify potential areas for improvement.
He said that Fairview is starting build penalties for non-performance into its contracts. “We want to make sure that the reporting that we get from the payers is timely and has enough detail that is actionable for us,” he said.
McCoy said that Fairview is working out overlapping duties around care management—a traditional role of health plans that the health system is now taking on as well. He added that the health system is also coordinating reporting requirements, which payers need to maintain their National Committee for Quality Assurance (NCQA) certification.
McCoy noted that the Twin Cities market is largely open-access, so that when a patient signs up with a health plan he or she is free to go to any provider for care. That makes it difficult for a provider system to manage its patient population with regard to risk. “The methodology that we use with the health plans is a retrospective attribution methodology, where the patient is assigned to a system, based on the previous 12 months of activity and where they sought care, but that makes it more difficult for us to identify patients up front, who may need care,” he said. One possible work-around is limited network products that restrict members’ access, giving Fairview greater ability for Fairview to proactively manage the patient’s health because it knows that the patient is in its risk pool, he said.
McCoy noted that Fairview is trying to determine where to cap risk, i.e., figure out how much cost the provider system can take on as medical risk versus insurance risk, and where to set the threshold for the provider system for a stop-loss on per member per year cost.
He noted that Fairview has been fortunate because it had a single electronic medical record used throughout its network of hospitals and clinics, enabling it to look at a patient’s care across the system. About 60 percent of its members get care in the Fairview system, and the remainder gets care through ED visits at other hospitals or specialists outside the Fairview system. For those patients, it relies on information from the health plans. Fairview has been working on a homegrown database to collect and analyze the data from payers, which allows doing acuity scoring of members so it can identify high risk patients.
Overall, Fairview’s efforts have been paying off, McCoy said. He cited at cost trend of 1 percent inflation over 2011 on a per member per year basis.
MSHA: A Community-Based Approach
Rob Slattery is president and CEO of Integrated Solutions Health Network (ISHN), an affiliated company of the Mountain States Health Alliance (MSHA), headquartered in Johnson City, Tenn. The MSHA health network consists of 13 hospitals and 1,749 beds across northeast Tennessee, southwest Virginia and parts of North Carolina. Slattery said his organization has taken a community-based approach to unlock the value of integration.
He noted what he termed “payer slowness” in his region to be innovative around new models, specifically around payment reform and care model reform. That perceived lack of participation from payers in his area is one factor that led the health system to move to new care models on its own.
About four years ago, MSHA engaged an outside firm to assist it in creating a 10-year vision. The initiative was based on the realization that the system that was in existence was not sustainable, particularly given the changes under healthcare reform. Key points of that strategy were the development and implementation of care models based on evidence-based practices, smart growth, and operational cost efficiencies.
As it moved to take the strategy and put it into actionable plans, it established a “True North” that aligns with Triple Aim objectives of quality health outcomes, consumer satisfaction, and affordability. (Triple Aim objectives were developed by the Cambridge, Mass.-based Institute for Healthcare Improvement, which call for improved population health, enhanced quality and reduced costs.) Slattery said the Triple Aim objectives set MSHA’s strategy apart from earlier HMOs, a gatekeeper model focused on cost only. “The Triple Aim has been our guiding star in implementing the plan,” he said.
Slattery said the health system has migrated from a loosely affiliated network to implementing care management capabilities, the launch and deployment of patient-centered medical homes, and, ultimately, becoming an accountable care organization. As part of that transformation, it started to focus in on the fundamentals, around pricing transparency for services that we provide, the costs associated with those services.
He said the health system has made significant investments—$50 million to date—to update its core systems, such as claims, billing and acute care among its 13 hospitals, and to share data seamlessly. It also has invested in it ambulatory setting to link employed and community-based physicians through a community-based health information exchange (HIE).
It has also made investments in infrastructure around informatics, to be more predictive and to put treatment cost calculators into the community, not only for physicians but also for consumers. Investments were directed at creating physician performance profiling capabilities, introducing social media around personalized messaging, to help close care gaps, and creating registries that would allow the application of utilization metrics.
Through ISHN, the health system has created two business verticals. One is CrestPointHealth, a self-funded insurance plan with 15,000 lives. CrestPointHealth is a licensed insurance company in Tennessee and a Medicare Advantage plan with 233 members.
In addition, it has created the AnewCareCollaborative, a community-based ACO to provide the full continuum of care, and made contract arrangements with employed and community-based providers to be participants. The ACO has a Medicare Shared Savings Program contract with the Centers for Medicare & Medicaid Services (CMS), so it is focused on the Medicare beneficiary population, with just over 13,000 lives. In addition, Slattery said, it is migrating some of its network agreements it has around the Medicaid program that will move under the AnewCare banner. This July, ISHN is launching the first commercial ACO in its market with AnewCare. In 2014 it will partner with another provider-sponsored health plan based and licensed in Virginia, to launch “ACO-centric products,” Slattery said.
“We have a solution for most any need in the marketplace, and we did it this way recognizing the investment that is going to be required, that we really needed to create a sustainable vision, for what we were developing,” Slattery said.
Slattery noted that the health system is on a common medical record among its facilities. It has established a health information exchange that links its pharmacy data, lab data and ambulatory data. “From the group practices the physican practices, we are linking that all in to a common repository,” he said. Community-based providers are able to talk to the systems, and through data use agreements is able to pull data modeling efforts and treatment cost calculators and utilization metrics.
He said the health system has been able to fine-tune the financial component of price and cost. In his view, one of the challenges that are going to take effort over the long term is being able to get to a level of transparency within a community and also with the payer-partners, “to where we can really get to a level of predictability, to measure our success with a high degree of confidence.”
More Payer Participation is Needed
Premier’s Damore observed that the new mechanisms for care management, chronic disease care, patient-centered medical homes and information technology are adding significant costs to the care delivery systems are adding significant costs to delivery systems. Those initiatives are driving down hospitization rates along with revenues, while overall cost savings are being enjoyed by insurance companies. “We want some of those shared savings to come back to fund the infrastructure costs, so we can continue this journey, because the early results are positive,” he said.
Childs agreed, saying that many payers don’t step up and seek a partner, while others do. In his view, many (commercial) payers are benefitting from the care redesigns that are reducing costs, improving patient satisfaction and improving outcomes, but are not really involved and taking the necessary risks or sharing the savings in the end.