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Heritage Medical Systems’ Voyage to Value—and How Physicians are Leading the Way

October 11, 2018
by Rajiv Leventhal, Managing Editor
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“If you have no risk at all, how hard you work at something is different than if you have some risk,” says one healthcare leader

As the accountable care train continues to speed up, innovative healthcare leaders are realizing that physicians—the ones who are working side-by-side with patients on a regular basis—will be key to making the transition to value successful. In California, Heritage Medical Systems, which also has providers operating in New York and Arizona, has been at the forefront of the accountable care revolution, and its senior executives point to its physicians as the ones who are leading the change.

Mark Wagar, president of Heritage Physicians Organization, which operates under the broader Heritage Medical Systems umbrella, recently spoke with Healthcare Informatics about his organization’s value-based care journey, its accountable care organization (ACO) progress, and how physician culture can be changed as providers take on more risk for their patients. Below are excerpts of that interview.

Where do things stand regarding Heritage’s value-based care evolution?

Heritage Physicians Organization is part of Heritage Medical Systems, which has lots of medical organizations in several states. I believe we have about 3,700 primary care physicians and 12,000 specialists that are involved in our ACO endeavors. This has been driven off the original and largest piece of our business in California. And it was a policy decision early on, from our founder, Dr. Richard Merkin, to get into [the Center for Medicare & Medicaid Services’] Pioneer ACO model, even though it was not our core business.

We have been involved in value-based care, the full-risk version, for decades, but we wanted to demonstrate that if you can surround private fee-for-service physicians with the kind of capabilities and infrastructure that we give our traditional business, an ACO has potential. So we did that and are continuing to move forward with that program. But we also believe this: the country would benefit if this all moved faster.

Heritage has evolved from the Pioneer ACO model, to the MSSP (Medicare Shared Savings Program), now to the Next Generation ACO model. Can you talk about the biggest lessons learned so far?

Generally, it’s a step in the right direction. The ability to get more of the funding earlier enables provider organizations to have the funding, change the system, and change what we do. You don’t have to drive off billable events only. We finally have this exploding recognition suddenly that social determinants and behavioral health are important. But that has been apparent to any physician organization for decades, particularly for us as we have been involved in value-based care and risk arrangements since the 1970s.

It became obvious that depending on the patients and the circumstance—what happens in their home and community, what surrounds them, and what their other issues are—may be more important than the physical interaction with their providers. You have to know that in order to manage their health. Once you move away from the mindset of, “I just need to be excellent when you fall in the door, sick or injured,” and move toward, “I will try to help you not fall in the door sick or injured,” or at least have it take longer for it to happen, or maybe you won’t be as bad when you do fall in the door, that’s when the light bulb goes on. We are happy that it’s becoming a broad part of the equation.

Mark Wagar

What are some of the most important IT and data elements to being successful in this transition?

I think as much real-time data and access as you can get is extremely important—so what care a patient is getting, and where, and what is happening in his or her life. If you work from the traditional basis, we pay claims in partnership with our health plan partners, and we pay the claims on the vast majority of our business. And when we do that, our physicians, nurses, pharmacists, social workers, and everyone else involved in the patient’s care, don’t have to wait every three to six months for a review of the data. We see the data today—this hour.

If someone shows up with a conflicting set of prescriptions, or an event that the primary care physician didn’t know about, you want to find out about that right away, and find out what’s happening and what’s wrong. Looking back at trends is important in terms of a future planning perspective, but in terms of what is happening with the patient right now, especially those who are at risk, you want to have that information right now—today, tonight, this hour—and do something about it.

Dr. Merkin’s next question after he talks with physicians about a patient is, “So you know this information, and what are we doing about that right now?” It’s much different than the traditional fee-for-service system where the data just isn’t available to the provider at the level until much later.

What are your thoughts on the recent policy developments on the ACO front these days? Are the government’s proposals to push providers into risk more aggressive than some would like?

Yes, it’s more aggressive than some would like. But this is not about what all of us would like; it’s about how you get to where things are optimal and most effective faster. If you fully embrace both the access to the resources, and the risk, and you are able to spend the money on the resources—in terms of changing the system, changing the way you do business, and not accepting the status quo—you can make a significant difference.

The one-sided risk models are a very important way for providers who may be uncertain to get started, but we are talking about managing a human being-based system of care. If you have no risk at all, how hard you work at something is different than if you have some risk. Providers always want more dollars to do something with, but you don’t get dollars if you aren’t in a position to do something materially different, and essentially guarantee that at least some of it will happen.

We still have a fee-for-service-based system and much of the value-based payments that health plans have moved to is a positive thing that has stimulated some change, but it’s paying you a year or a year-and-a-half later—maybe a little differently if you happen to administer a result as a bonus—but you are still getting that underlying fee-for-service payment. If you are in a one-sided model, it masks and slows down how quickly you get to what could be done if you had more of the resources.  

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?

In Heritage’s markets where the models are most mature, it’s a combination of physician groups where the doctors are employed, as well as significant numbers of independent practices and smaller offices in the community, and we can blend those. But the physicians individually are not at personal material downside risk. There is an organizational structure that manages the money that comes in when we are fully at risk, but regardless of whether they are employed or an independent practice, they are all tied to a payment at the individual physician level.

That’s one of the things that is missed in the whole conversation over providers being put more at risk—an individual practice office with a few thousand patients is not in a position, actuarily, to accept all that risk. You have to be partnered with some kind of system.

In our instance, in our most mature markets, it’s a blend of employed physicians and independent practices, but in some markets all we have are independent practices. So we can do this if we surround them with the infrastructure if you aggregate enough members from the plans that give you an actuarily valid risk base, and then you have the money up front, so you can help them with information and give them information faster. Then, they can do good things for their patients faster.

What advice can you give to others who are just starting out on this journey?

I [wouldn’t] sit and stew about how difficult it is to be in your position and be surrounded by all these regulations and requirements that can become tough to manage. You can talk about that all day, but it’s ultimately the people’s money and they are asking for better quality, better service and access, and more moderated costs. The only people that can ultimately change things on all those fronts, for the better, are provider organizations—predominately those led by physicians.

But we cannot afford to take decades to make the next set of changes, unless we want government intervention that breeds mediocrity as a result. Physicians and providers should lead this change, and moving this faster will bring the best things for their patients in the long run. Demand more of the dollar in your control immediately, and in order to do that you have to have the structure around you and the willingness to accept responsibility for that dollar. We are trying to show people out there that you can partner with others, and it’s possible to get net better across these factors if you enable the physicians to manage more of the dollar from a clinical perspective, to the patient’s benefit.


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When It Comes to The Big Debate on ACOs, What Is “Big Enough” Savings?

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The back-and-forth interaction between CMS Administrator Seema Verma and the ACO community is unfolding at a key inflection point in the evolution of the MSSP program

Intense debates on every subject are constantly swirling in the healthcare policy sphere; that has always been the case. But one debate that is both impactful and being closely watched is the intensifying argument between the Centers for Medicare and Medicaid Services, particularly CMS Administrator Seema Verma, and some leader organizations in the accountable care organization (ACO) area.

At its base, the proposal on the part of CMS, as outlined in a proposed rule published in August, to push more ACOs into two-sided risk, is being pushed back against by many ACO leaders, particularly by their nationwide association, NAACOS (the Washington, D.C.-based National Association of ACOs). As Managing Editor Rajiv Leventhal noted in his report Dec. 5, CMS’s “core aim” is “to push these organizations into two-sided risk models—so that Medicare isn’t on the hook when ACOs overspend past their financial benchmarks—suggested to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years.”

As Leventhal noted, “One option, per CMS’ proposal, would be the BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk. The second option would be the ENHANCED track, which is based on the program’s existing Track 3, providing additional tools and flexibility for ACOs that take on the highest level of risk and potential rewards. At the highest level, BASIC ACOs would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program. But where CMS, in its proposals, truly clamped down was through two core recommendations that stakeholders took issue with: shortening the glide path for new ACOs to assume financial risk, reducing time in a one-sided risk model from the current six years to two years; and cutting potential shared savings in half, from 50 percent to 25 percent for one-sided risk ACOs. These proposals, if finalized, will certainly deter new entrants to the MSSP ACO program. So far, the proposed rule has been met with varying degrees of scrutiny.”

Clifton Gaus, Sc.D., NAACOS’s president and CEO, recently gave Leventhal an interview, and in that interview, he confirmed his association’s stance that the reduction of shared savings and the shortened time allowed in one-sided models are two of the biggest problems the group has with the proposal. Indeed, Gaus said in that interview that the reduction in potential shared savings “would be very devastating to the growth of new ACOs.”

In fact, Gaus said, in polling their members, NAACOS’s leaders asked them whether they would in theory join a federal ACO program knowing that, at least at first, they would be limited to 25 percent of shared savings at most; and, in fact, “the near universal response was no, they wouldn’t have joined the program,” Gaus said, adding that “The potential of 25 percent savings just isn’t enough to offset our investment costs of starting and operating the ACOs,” noting that ACOs have to obviously put up money to get going, and sometimes it’s very hard for medical group practice-dominant ACOs to buy IT systems, not to mention the whole clinical transformational aspect of ACOs where they are typically hiring nurse coordinators, and in some cases opening 24/7 call centers. “There is a real start-up and operational cost that’s involved, and [getting] 25 percent of the shared savings doesn’t return enough income to offset those,” he said.

Meanwhile, this morning, NAACOS issued a new press release focused on the value that the MSSP program has created for CMS. “In the latest data proving the financial benefits of accountable care organizations (ACOs), Medicare’s largest value-based care initiative – the Medicare Shared Savings Program – saved $859 million in 2016, an independent analysis published today shows,” the press release began. “Since 2013, the first full year of the program, ACOs have saved Medicare $2.66 billion, well above the $1.6 billion calculated by the Centers for Medicare and Medicaid Services (CMS).” What’s more, the press release reported, “After accounting for bonuses paid to ACOs for hitting spending and quality targets, the program, which accounts for 561 ACOs and 10.5 million patients nationwide, netted more than $660 million to the Medicare Trust Fund between 2013 and 2016, contrasting the net loss of $384 million CMS estimates.”

And the press release quoted NAACOS’s Gaus as stating that “These results are the latest data point in a growing body of evidence unequivocally proving ACOs’ value. ACOs are saving American taxpayers hundreds of millions of dollars at a time when it’s most needed.” Indeed,  he added, “Given the natural lag time in collecting and analyzing data and the well-established trend that ACOs need a few years to start demonstrating results, we are only seeing the beginning of the nation’s return on investment in accountable care. This data doesn’t even mention the quality benefits ACOs have generated, which have also been substantial.”

Further, the press release noted, “A sizable amount of recent data show ACOs are saving money: 472 Shared Savings ACOs generated gross savings of $1.1 billion and netted $314 million in savings to the Medicare Trust Fund last year; CMS’s August 17 proposed rule estimates the overall impact of ACOs, including ‘spillover effects’ on Medicare spending outside of the ACO program, lowered spending by $1.8–$4.2 billion in 2016 alone.”

So now we reach the rubber-meets-the-road place. Here’s the fundamental question: Do Seema Verma and her fellow CMS and HHS (Health and Human Services) senior officials truly understand the complexities involved in what they’re asking of provider leaders? Verma and her fellow federal healthcare officials are facing a kind of Scylla and Charybdis situation right now. On the one hand, as everyone knows, the Medicare actuaries have predicted that total U.S. healthcare spending will explode from $3.1 trillion annually (in 2014) to $5.4 trillion annually (by 2024), in the next several years, amounting to a 70-percent increase in less than a decade, and bringing the percentage of GDP spent on healthcare in this country from 17.4 percent in 2013 to 19.6 percent in 2024.

On the other hand, as Clifton Gaus and the NAACOS folks have pointed out, based on surveying their membership, patient care leaders are going to recoil at the over-intensification of change mandates coming out of CMS. That feeling is quite widespread. As one ACO CEO told me just two weeks ago, Seema Verma is deluded if she thinks that ramping up the downside-risk requirements in the Medicare Shared Savings Program is going to inspire more patient care leaders to join the MSSP program or renew their participation in it. And, as this morning’s press release notes, ACO community leaders are documenting real progress in capturing savings.

The million-dollar (or maybe, $1.1 trillion-dollar?) question is, is the broad level of savings that ACOs are netting for CMS, progress enough? Indeed, what is “enough”? And what is “fast enough”? Because Administrator Verma and her fellow senior federal healthcare officials seriously risk cratering the MSSP program, the core federal ACO program, if they push too hard on the downside-risk issue. On the other hand, if they don’t push hard enough, the progress made so far could simply be dwarfed, in the broader scheme of things, by the current acceleration of overall U.S. healthcare spending inflation.

So right now really does feel like an inflection point—but one without an obvious resolution. Only time—and the interactions of federal healthcare officials and providers—will tell.

 

 

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At UPMC, Turbo-Charging Quality Improvement Efforts through Data Analytics

December 11, 2018
by Mark Hagland, Editor-in-Chief
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At UPMC, Dr. Oscar Marroquin is leading a team of data analysts whose work is facilitating intensive efforts around readmissions

At a time when the leaders of patient care organizations are facing intensifying pressure to shift away from a dependence on volume-based payment and to plunge into value-based care delivery, some U.S. hospitals, medical groups, and health systems are helping to lead the way into a future of continuous clinical improvement and of clinical transformation. That topic—of organized continuous quality improvement—was the subject of the fourth-quarter 2018 Healthcare Informatics cover story. Numerous leaders of pioneering organizations were interviewed for their insights into the health system change focused-quality improvement movement that has been emerging across the U.S. healthcare system.

Among the leaders interviewed for that cover story was Oscar Marroquin, M.D., a practicing cardiologist and epidemiologist, who is helping to lead a team of clinical data experts at the vast, 40-hospital UPMC health system in Pittsburgh. Dr. Marroquin and his colleagues have been busy harnessing the power of creating and nurturing purpose-specific teams focused intensively on the management of data to power performance improvement, particularly in the clinical area. Marroquin’s team, of about 25 data specialists, was first created five years ago. Of those, half are IT- and infrastructure-focused, and, says Dr. Marroquin, “The rest are a team of folks dedicated to data consumption issues. So we have clinical analysts, data visualization specialists, and a team of data scientists who are applying the right tools and methods, spanning from traditional analytical techniques to advanced computational deep learning and everything in between. Our task is to use the clinical data, and derive insights”—and all 12 clinically focused data specialists report to him.

And that work—“allowing people to ask questions to generate opportunities”—has paid off handsomely. Among the advances has been the creation of a data model that predicts the chances of patients who are being discharged, being readmitted. The model, based on the retrospective analysis of one million discharges, is also helping case managers to more effectively prepare patients for discharge, specifically by ensuring that patients being discharged are promptly scheduled for follow-up visits with their primary care physicians. “If those patients are seen within 30 days of discharge,” he notes, “there’s a 50-percent reduction in their 30-day rate of readmission.” The program is now active in six UPMC hospitals.


Oscar Marroquin, M.D.

Below are excerpts from the interview for that cover story that Healthcare Informatics Editor-in-Chief Mark Hagland conducted with Dr. Marroquin this summer.

From your perspective, what does it really mean to be data-driven, in the pursuit of continuous quality improvement and clinical transformation?

From my perspective, I’m very passionate in that I feel that you really can’t do any of the things that doing in terms of moving towards value, without having a robust data infrastructure, a robust strategy on how to use data and analyze it, and without then deriving evidence for how you’re going to transform your organization. There are a lot of buzzwords involved in all of this, but the only way to get from a buzzword to a true action of transformation, is if it’s data-driven.

I’m a cardiologist by training and an epidemiologist; I still practice. Over the past five or so years, I’ve been asked to oversee how we’ll derive insights from clinical data in our system; in other words, this work is around anything related to big-data analytics, with those analytics being used to help our clinicians. In order to do that, we’ve had to do many different things, including more intelligently aggregating our data, and focusing on specific analytical purposes. They’ve been structured as databases for transactional systems, but not with the intent of improvement.

So we’ve spent a lot of time creating a purpose-built environment for analytics. That’s involved a lot of technical work, to create tables, what we call our consumable layers, for analytical purposes. And we’ve created a team whose only job is to do analytics. We’ve had folks in the past managing back-end databases, who have generated reports, but that doesn’t lead to a sustainable way of using data. And so we have a team that is dedicated to maintaining the warehouse and consuming the data.

With regard to the team of 25 data analysts, do all of them report to you?

The 12 who do data consumption report directly to me; the others have a dotted-line report to me. They sit on our infrastructure team within our IT Information Services Division. Both teams are part of the Clinical Analytics Team. Data analytics—Health Services Division. Integrated team. Two sides of the same coin.

When did these teams come together?

There have been different phases. The analytics program development started in 2012, and we learned a lot of lessons. A lot of the work early on had to be dedicated to technical issues—identifying data sources, etc. That was a pretty labor-intensive process. We really got enough aggregated data to use it consistently in 2015, so from 2015 on, we’ve had this structure of teams dedicated to doing this as I’ve described.

Can you share a few examples of key advances that your team has made so far?

When asked what our team does, I tell folks we do work at the higher level in three different buckets. The first bucket is the entry point for the majority of projects. Not everybody in the system necessarily knows which questions to ask.

We allow people to ask questions to generate opportunities. Off of that, two things will happen. One, hypotheses can be generated, and so we can do hypothesis testing, we can do comparative effectiveness studies, we can formal testing of hypotheses. Also, when insights get generated, one can say, oh boy, there’s a lot of heterogeneity in this population, why is one group more at risk? So we can identify who is at high risk of a condition, and who within the high-risk category is at high risk of developing specific conditions? And the third level or bucket, we apply machine learning and AI tools to develop models that allow us to do a variety of things, from more precise phenotyping of our populations; we can build predictive models to identify patients at various levels of risk. And we also use these models to do unsupervised learning, where we can start to generate hypotheses. So most people in this space love to talk about the latter part, the predictive modeling, and we have done a fair amount of work there, with things like identifying patients at highest risk of rehospitalization after 7 or 30 days of discharge, and we’re using that in our hospitals to guide clinicians. There are resources everywhere.

So we developed a model derived out of retrospective analysis of one million discharges, and we’ve prospectively verified that the model allows us to identify patients at the highest risk of readmission, so our case managers can help us identify plans to help those patients transition from hospitalization to post-acute care in a more effective way. And we see that if they’re seen within 30 days of discharge, there’s a 50-percent reduction in their 30-day hospitalization if they get in to see a clinician. So we make sure that the patient has an appointment made and is ready to see their doctor once they’re discharged, to address any issues.

When was that program put into place?

We spent a lot of last year validating the data. And then this year, we started rolling this out to our hospitals in a phased approach, so throughout 2018, we’ve been deploying this to our hospitals, and we’ve trained and educated different hospitals to use the model, and we’re actively following patients to measure the impact of the tool. And as an epidemiologist, I’m always cautious about declaring victory too soon. We’re seeing good trends, our smaller hospitals are seeing decreases in patients coming back early.

So you don’t have any metrics to share yet?

We have three hospitals, smaller ones we started the program with first, that different units, have shown that this program has had an impact. The numbers are still small enough that I have reservations about absolute certainty. But already, we’re using the program in 20 of our hospitals.

What would your advice be for CIOs, CMIOs, and other healthcare IT leaders, as they consider these kinds of initiatives?

If we all are serious about transforming the way we care for patients, we need to do it in a data-driven way. There has to be a philosophical belief and commitment to do that. Number two, as a result of the institutional commitment and philosophy, then there has to be a team that’s dedicated to this work. I don’t think this is achievable in an ad hoc way, when people just have time. And three, it’s not for the faint of heart; it takes time and effort, but if you have the philosophical belief and institutional commitment, it’s doable. If I say to myself, I don’t ever want to leave my house and get drenched because I wasn’t prepared for a storm, then I need to check the weather app before I leave my house. In medicine, we haven’t yet taken that approach, but the data and analytics are there to guide us in helping us to make decisions, and making it a part of the everyday decision-making process. And in the same way I use examples of rehospitalization prediction, we also do condition-specific predictive analytics, around patients with asthma, kidney disease, etc., so there’s a lot of work going on there. And the message I give clinicians is, there will be companies that say they don’t’ sell you the predictive models they’ve developed; but in our experience, the models have to be a part of an organic process that leads to the building of the models. Clinicians won’t feel alienated, disenfranchised, or threatened, if you bring them in and engage them from the beginning.

 


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EXCLUSIVE: NAACOS President Foresees “Shrinkage in Accountable Care Movement” Pending MSSP Final Rule

December 5, 2018
by Rajiv Leventhal, Managing Editor
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If CMS doesn’t scale back some of its proposed changes to the MSSP, the government’s largest value-based payment program will be significantly affected, says one ACO leader

When the Centers for Medicare & Medicaid Services (CMS) released its proposals to overhaul the federal Medicare Shared Savings Program (MSSP), it was expected that industry associations, along with the ACOs (accountable care organizations) themselves, would push back strongly.

After all, in the August proposed rule, CMS, which has the core aim to push these organizations into two-sided risk models—so that Medicare isn’t on the hook when ACOs overspend past their financial benchmarks—suggested to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years.

One option, per CMS’ proposal, would be the BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk. The second option would be the ENHANCED track, which is based on the program’s existing Track 3, providing additional tools and flexibility for ACOs that take on the highest level of risk and potential rewards. At the highest level, BASIC ACOs would qualify as an Advanced Alternative Payment Model (APM) under the Quality Payment Program.

But where CMS, in its proposals, truly clamped down was through two core recommendations that stakeholders took issue with: shortening the glide path for new ACOs to assume financial risk, reducing time in a one-sided risk model from the current six years to two years; and cutting potential shared savings in half, from 50 percent to 25 percent for one-sided risk ACOs. These proposals, if finalized, will certainly deter new entrants to the MSSP ACO program. So far, the proposed rule has been met with varying degrees of scrutiny.

One of the trade groups that has done much of the heavy lifting when it comes to pushing back on the government’s proposals, and offering evidence as to why ACOs need more time in one-sided risk models while being able to reap more of the shared savings, is NAACOS (the National Association of ACOs,) an association comprised of more than 360 ACOs across the U.S.

In a recent interview with Healthcare Informatics, Clif Gaus, president and CEO of NAACOS, confirmed that the reduction of shared savings and the shortened time allowed in one-sided models are two of the biggest problems the group has with the proposal. Specifically, Gaus says that the reduction in potential shared savings “would be very devastating to the growth of new ACOs.”

He explains that after polling NAACOS’ members, asking them if they would hypothetically apply to be an ACO knowing that at first, they would be limited to 25 percent of shared savings at most, “the near universal response was no, they wouldn’t have joined the program.” Gaus adds, “The potential of 25 percent savings just isn’t enough to offset our investment costs of starting and operating the ACOs,” noting that ACOs have to obviously put up money to get going, and sometimes it’s very hard for medical group practice-dominant ACOs to buy IT systems, not to mention the whole clinical transformational aspect of ACOs where they are typically hiring nurse coordinators, and in some cases opening 24/7 call centers.

“There is a real start-up and operational cost that’s involved, and [getting] 25 percent of the shared savings doesn’t return enough income to offset those,” he says.

Regarding the proposal to shorten the time in a one-sided risk model from the current six years to two years, Gaus points to CMS’ own data which shows that more experience in a federal ACO model drives more savings, but typically the first few years are not profitable for the ACO.

“We have many examples where an ACO has been in the program and was able to turn the corner by the fifth or sixth year,” he says. “Medicare has to have a long-term view of this. We are investing in a totally new redesign of the healthcare system, so give us time to learn how to transform that care into more efficient and higher-quality care. We are troubled by two years,” Gaus frankly admits. He believes that capping the time in a one-sided risk model at three to four years “is reasonable,” and is what many other associations have proposed.

Indeed, while NAACOS and other industry groups have made their arguments to CMS clear, the federal agency has so far taken a firm stance that upside risk-only ACOs have not been effective. A such, CMS seems to be fine with these ACOs leaving the MSSP— by far the largest federal ACO model, with 561 participants—if they are unwilling to take on more risk.

But Gaus believes that even though CMS did come out of the box with an “aggressive negative message” about one-sided ACOs, the agency has now moderated its views. To this end, a recent study from NAACOS and Dobson Davanzo & Associates, based on a different way of measuring financial success—by comparing actual costs over time in the ACO’s market as opposed to CMS’ method of calculating an initial risk-adjusted spending benchmark for each ACO based on its historical spending, without considering underlying market factors—revealed that MSSP ACOs generated gross savings of $1.84 billion for Medicare from 2013 to 2015, nearly double the $954 million estimated by CMS.

“The whole dialogue has changed,” says Gaus. “We have met with Seema and a number of her staff over the last two months, and the driving factor to this change in dialogue is that the 2017 data, from CMS’ benchmarks, turned the corner and showed that net-net the ACO program was saving Medicare money. You don’t see CMS coming out anymore arguing that the program is losing money,” he says.

What a Final Rule Might Look Like

Gaus acknowledges that a core challenge for CMS is being in the precarious position of pushing down too lightly in its regulations, which could result in the pace of change being too slow, or pushing down too hard, which could result in provider organizations fleeing value-based care initiatives.

“We know the government is wrestling with this issue, and so are we,” Gaus says. “In the crafting of our comments to CMS, as well as the comments from the AHA [American Hospital Association], AMA [American Medical Association], and others, we felt that the balance is the issue here, and there needs to be some movement toward the direction that CMS is pushing. We do respect their concerns, to a degree, but we just thought they were too aggressive in their speed to risk, or speed to remove an ACO from the program,” he says.

Gaus is hopeful that the final rule on the future of the MSSP—which he believes could come by the end of the year, but no later than the end of January—will reflect the industry’s concerns. “History says that this administration, like many others, does listen to input from stakeholders that the rule affects. I believe that they really do understand our positions,” he adds.

At the same time, NAACOS’ position is that the reduction in potential shared savings, as currently proposed, is a “total deal breaker,” and that there is no wiggle room for a number between 25 and 50 percent, Gaus asserts. He adds, “If they don’t go back to 50 percent, we will see a long-term significant shrinkage in the ACO movement and a significant emanation of accountable care.”

Importantly, Gaus also notes that ACO programs are voluntary in nature, a key consideration that he believes CMS often forgets. “Nobody has to be an ACO. [Providers] are making a bet of their capital, that they can invest that capital in cost containment, in care transformation, and [in return], they will get back in the shared savings more than they invested. It’s almost like buying stock—you made the investment and you hope the return is worth it,” he says.

Gaus says that he has told Verma in their many conversations that in many ways “we are at a crossroads, and we have to get the balance right, or we are going to see a denigration of what still remains the largest government value-based payment program.”


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