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The Push Towards Value-Based Care Is Forcing the HIT Vendor Market Forward

June 4, 2018
by Heather Landi
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When it comes to meeting providers’ needs and offering the IT capabilities required to support value-based care, experts say there is much work that still needs to be done
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The healthcare policy and payment landscape is rapidly evolving, with the move to value-based care models a driving force behind current healthcare reform efforts. Case in point: in a recent speech at the World Health Care Congress, Health and Human Services (HHS) Secretary Alex Azar laid out his agency’s overall policy strategy and cited accelerating the value-based transformation of the healthcare system as a top priority.

In this landscape, healthcare provider organizations across the country are advancing forward with population health management, accountable care organization (ACO) development, bundled payments and interoperability initiatives that require robust data and analytics capabilities.

This ongoing evolution is, in turn, fueling healthcare providers’ demands on healthcare IT vendors to provide solutions and capabilities to fit their needs for population health management and value-based care models, with core IT capabilities needed around data aggregation, data analytics, care management and patient engagement, to name a few.

Facing these health IT demands, the major electronic health record (EHR) vendors have built out their own population health and analytics capabilities, such as Cerner’s HealtheIntent platform, Epic’s Healthy Planet and athenahealth’s Population Health platform. According to many healthcare IT experts, EHR vendors are making inroads in the PHM space and are challenging some of the best-of-breed vendors.

Liam Bouchier

“About five years ago, there were maybe between 15 to 20 population health tool vendors in the market, but the major EHR vendors were not interested in that space, and that has changed dramatically with the large EHR systems in the past five years, Epic in particular,” Liam Bouchier, principal at healthcare IT consulting firm Impact Advisors, says. “Epic, at this point, is Best in KLAS for their tool set that they provide. Another major competitor, Cerner, also has an incredibly powerful platform. Are these platforms perfect? No. Why? The main reason is, beyond the structured information that you get from health systems, approximately 40 percent of health outcomes are determined by your behaviors, and that’s really where the gold is in terms of data that is needed to drive some of these health outcomes in a positive fashion,” Bouchier says.

A Booming Health IT M&A Market

The evolving payment and policy landscape, shaped in many ways by the drive towards value-based care models, is also driving developments in the health IT mergers and acquisitions (M&A) landscape.

A recent white paper by Berkery Noyes, a New York City-based independent investment bank that provides M&A advisory and financial consulting services, notes that the healthcare technology industry is undergoing a rapid transformation and structural shifts due to reform, cost pressures, and shifting responsibilities between payers and providers. “Private, best-of-breed technology-enabled healthcare IT companies that effectively address market niches and have some level of scale are in high demand by both financial and strategic buyers,” the report states.

The white paper, which examines activity in the pharma and healthcare information and technology M&A trends over the past two years, notes that the breadth of acquirers for healthcare IT companies continues to expand as buyers look to capitalize on the size, rapidly evolving dynamics and growth characteristics of the healthcare market. Acquirers are aggressively looking to broaden product suites, leverage distribution channels, and realize revenue and cost synergies, according to the report, also noting that M&A-driven expansion of strategic healthcare technology platforms is a dominant trend.

According to Berkery Noyes, there were 922 industry M&A transactions from the beginning of 2016 through the end of 2017. Among these deals in the past two years, enterprise value multiples have been strong, with deals averaging about 2.1x revenues and with a median EBITDA (earnings before interest, tax, depreciation and amortization) multiple of 12.5x in 2016 and growing to 13.2x in 2017.

“There’s a boom time in healthcare IT M&A. It’s a great time to be a seller if you have a growth company of scale in healthcare today,” Thomas O’Connor, managing director, healthcare investment banking at Berkery Noyes, says. “The market right now for a recurring revenue growth business of scale is unbelievable. We’re very deep in an M&A cycle; there’s $1.2 trillion of private equity money chasing deals, they can’t find deals of scale and it’s come way downstream in the marketplace today. Most of the deals you’ll see are add-ons to the portfolio companies.”

Thomas O'Connor

The healthcare technology space continues to be tremendously attractive to investors, O’Connor says, because there are significant opportunities going forward. “There’s lots of niches where there are opportunities to solve pain points along the healthcare continuum. You see that in the marketplace; there are a tremendous amount of companies on the market right now,” he says.

Due to large macro/regulatory changes in healthcare and a massive shift to electronic solutions, there is a very favorable climate for sellers with unique offerings, scale, recurring revenue models and rapid growth in attractive niches, including patient engagement, population health and related data analytics, treatment plan adherence, mobile solutions, and regulatory compliance, the Berkery Noyes report states.

These trends are evident in the population health-related activity seen in the market in the past few years. In August, NextGen Healthcare Information Systems acquired EagleDream Health, a cloud-based, value-based care analytics platform. Back in July 2016, Philips acquired Wellcentive for $165 million and also purchased another population health vendor, VitalHealth, last year. athenahealth also expanded its population health portfolio with its $15 million purchase of care coordination vendor, Filament Labs (dba Patient IO). Another population health transaction of note was GE Healthcare’s purchase of the balance of Caradigm from Microsoft. And, IBM has made significant moves in this space, buying Truven, a payer solution, for $2.6 billion, which followed its acquisitions of Explorys, an integration and big data platform;  Phytel, a population health vendor; and Merge.

From an investment and M&A perspective, all this activity adds up to a robust health IT vendor market. However, there are indicators that when it comes to meeting providers’ needs and offering the IT capabilities required to support value-based care, there is much work that still needs to be done.

Are IT Vendors Hitting the Mark?

Many healthcare IT leaders at patient care organizations contend that there are still significant gaps in the capabilities and functionalities of population health management tools on the market today, and many hospitals and health systems use multiple population health solutions working in tandem.

“There is no one vendor that does everything in population health. Nobody has hit the mark yet, as to a solution that delivers everything,” Bradley Hunter, research director, population health at KLAS Research, says. “That being said, everybody is improving and investing a lot in this, and we hear about that from providers. The EHR vendors, they know that there’s a lot of functionality that they can offer that will be helpful to their clients, and they are working on developing that.”

Bradley Hunter

Provider organizations’ needs in managing population health, a key part of value-based care, are as varied as the capabilities of the IT solutions designed to assist them, according to a KLAS report on the population health management market. New vendors have emerged, and longstanding vendors are evolving, resulting in a diverse array of technologies that may address one or all of the different areas of value-based care, such as data aggregation, data analytics and care management, says Hunter.

 “I think the best of the vendors are making real solid progress in these areas, but this has been a space with a lot of different vendors, not just EHR vendors, but other niche players also have rushed into the marketplace, so it can get kind of confusing as to who is doing what and who is good at what,” says George Reynolds, M.D., a retired healthcare CIO and chief medical information officer (CMIO) and currently principal of Reynolds Healthcare Advisors, based in Omaha, Nebraska. He adds, “As far as population health, what parts are you going to look at? Are you just looking at data aggregation and how you’re presenting the analytics of a population of patients? Or are you looking at patient engagement tools? Those are very different ends of a spectrum that wraps into the idea of value-based care, and different players have different strengths in those spaces.”

A survey of healthcare executive leaders conducted by Sage Growth Partners, a Baltimore-based business management consulting firm, found that two-thirds of respondents say EHRs have failed to deliver better population health management tools, and about half claim they would be willing to switch EHRs to get these capabilities. The survey also found that, by and large, providers’ value-based care needs are not being met. Sixty-four percent of providers said EHRs have failed to deliver many critical value-based care tools. Only a quarter of respondents believe that their EHR can deliver on core KLAS criteria for value-based care. And 60 to 75 percent of providers are seeking third-party solutions outside their EHR for value-based care solutions.

“The EHR vendors are certainly players and they need to be a part of your tool set, but you need interoperability components, and you need patient portal components, from a patient engagement perspective,” Chuck Podesta, CIO at the University of California Irvine Health, says. “You see a lot of niche vendors out there in each of their areas, and it makes it tough for CIOs, because we have to cobble things together based on the needs of the organization, rather than relying on one or two of our partner vendors that we already work with, to solve the problem for us.”

Finding solutions with the analytics capabilities required for value-based care is particularly challenging, Podesta says. “There really hasn’t been a single company to figure that out. They are all trying to move in that direction, such as Epic with Caboodle and Healthy Planet, and Cerner has some things it pushes on population health as well, but neither one has really come up with all the various parts and pieces that you need,” he says, adding, “Similar to what you would have in an EHR for an organization, you’re looking for that type of single vendor approach, and in population health you’re not going to find it. A lot of it is because the analytics side hasn’t matured enough in these companies yet to call them a one-stop solution for value-based care.”

Chuck Podesta

Podesta also points out that in the past, health IT vendors have pivoted to keep up with policy and payment changes, such as the passage of the American Reinvestment and Recovery Act (ARRA) in 2009, which included the Health Information Technology for Economic and Clinical Health (HITECH) Act and the advent of the meaningful use program.

“Everyone realized you needed a single system that had all the functions and features integrated, so you could pull all the information together from a meaningful use perspective. Now, with value-based care, we really don’t have that. We have all these best-of-breed solutions right now. Just like we chose one solution to solve MU for us, it would be nice to choose one solution that would solve value-based care. But, the value-based care side is more complex that meaningful use ever was; it’s going to be awhile before you see one vendor come to the forefront that has an end-to-end solution,” Podesta says.

Larry Kocot, a principal at New York City-based advisory services firm KPMG and also national leader of the firm’s Center for Healthcare Regulatory Insight, says, “I think vendors are trying to go directionally where providers need them to go, but, in defense of the vendors, the transition is not smooth and frankly, it’s not uniform. Vendors are in a difficult spot trying to match the needs of a community that is in transition, and there’s no homogeneity across the country in terms of where physicians are on this journey. You can either get out in front of them and give them more capabilities than they need, or you can lag behind in what they want.”

Ralph Fargnoli, managing director, advisory at KPMG, notes that population health and analytics tools are evolving, and he sees vendors’ capabilities improving. With population health efforts, he says, the end-state goal is for providers to have a complete picture of a patient, including social and environmental factors: “We’re still years away from having that capability. We can see what we need; we’re getting a much clearer vision of where we need to go, but we’re still in an evolution.”

A Shifting Vendor Market, and Potential Collaborations

The sea of changes occurring in healthcare have already significantly impacted the vendor market and more changes are on the horizon, many healthcare IT experts say. 

Reynolds says, “One of the universal truths of the big players, the major EHR vendors, is that the burden on the customer, the cost of moving away from a given vendor, is quite substantial. Historically, that has been the case that once you’ve signed on with them, it costs too much to change. I’ve been hearing that most of my career in health IT. Yet during that time, I’ve seen the top vendors of five to seven years ago being acquired or getting out of the market entirely and vendors that were not at the top of the food chain back in 2002 to 2010, are now at the top of the food chain. It would suggest that there is going to continue to be significant change.”

George Reynolds, M.D.

He continues, “Now where is that change going to come from? Someone might ask, will Cerner or Allscripts be going out of business in 10 years? I doubt it, but they may be in a very different business, in terms of how they provide that service, how modular that service is. Is it a menu system, is it all cloud-based? They are either going to adapt, get acquired by someone else or go out of business because the market is going to continue to drive change.”

And, Podesta notes, there continues to be some uncertainty around the Trump administration’s plans for healthcare reform and the administration’s continued interest in dismantling the Affordable Care Act, which has implications for the healthcare IT market. “We’re in a bit of a stagnation period if you’re looking towards the future. A lot of venture capital companies that are investing in these startups to fill some of these niches are struggling with the idea, is this where value-based care is going? Is this where care is going in the U.S.? That’s one side of it. The other side is you’re seeing a lot of players that typically weren’t in the healthcare market moving in rapidly, such as Amazon, Google and Apple, and all these large organizations have a lot of money to spend.”

Many of these companies, through their public cloud offerings, are already working with health IT vendors, such Epic’s partnership with Microsoft Azure and Amazon collaborating with Cerner to use its cloud service, AWS, for Cerner’s HealtheIntent platform. “He who owns the data, wins, when it comes to value-based care and if they can be the aggregator and do something with it, that’s very powerful. I think that’s what you’re going to see from them,” Podesta says.

“It’s hard to say how all of that is going to play out. I think what you’re going to see is a lot of organizations joining forces and picking solutions together rather than just going forward by ourselves, with consortiums starting to happen as well. Everybody is trying to come up with what they think the solutions might be going forward and it’s fascinating watching it play out,” he notes.

Bouchier with Impact Advisors sees an interesting intersection between the entrance of new disruptors in healthcare and the evolving healthcare reform efforts. “The policy and payment landscape is changing the paradigm of how care is delivered. It’s not a fee-for-service model anymore, it’s about the quality of care that is being delivered, and part of the metrics being tracked are about the patient experience and the patient satisfaction with the service that’s being offered. The starting point for that is already there.”

Companies like Apple and Google will change how healthcare information is delivered to patients and consumers, making it more convenient and efficient, Bouchier says, although he doesn’t see those big technology companies going into the EHR market. “The lift to do what EHR vendors do today is challenging. There’s always the possibility that another big EHR vendor will come along. But, I think that everybody is coming to the table with their capabilities, Amazon, Microsoft, Apple, and Google. They know what their strengths are and won’t deviate beyond that. It’s going to be more about partnerships, and leveraging strong partnerships, to attract a patient population,” he says.

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CMS’ MSSP Proposed Changes Slammed by Leading ACO Organization

August 10, 2018
by Rajiv Leventhal
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Industry stakeholders fear that ACOs will drop out, while CMS doesn’t seem to mind if upside-only ACOs that are costing the government money leave the program if they aren’t willing to take on more risk

The National Association of ACOs (NAACOS) called CMS’ (the Center for Medicare & Medicaid Services) proposals to redo the Medicare Shared Savings Program (MSSP) “misguided,” noting that the changes, if finalized, “will upend the ACO movement by creating havoc with a significant overhaul introducing many untested and troubling policies.”

Late yesterday evening, CMS proposed a rule that included major changes to the existing MSSP ACO (accountable care organization) program. As Healthcare Informatics reported last night, referred to as “Pathways to Success,” CMS’ proposal, which has been expected for a few months, looks 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: the BASIC track and the ENHANCED track.

Much of the discussion following the rule’s release will likely center around the BASIC track, which essentially limits ACOs to stay in “upside-only” risk models for just two years, compared to the existing allowance of six years. What’s more, those ACOs in an MSSP Track 1 upside-only model would only be able to get 25 percent of any savings they take in, compared to 50 percent, which is the current max.

When ACOs are in a one-sided risk model, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains. As such, in these one-sided risk models, CMS is on the hook for any losses all on its own.

Indeed, CMS has a clear goal to move ACOs more quickly into two-sided-risk models as the agency has noted that upside-only ACOs are not reducing costs and are costing Medicare money. “We project these changes will result in $2.24 billion in savings to Medicare program over next 10 years,” CMS Administrator Seema Verma stated yesterday.

Stakeholders Show Concern

As expected, NAACOS—a coalition whose members include more than 300 ACOs—had plenty of gripes with CMS’ proposals. Previously, following a survey of its members, NAACOS urged CMS to refrain from mandating ACOs to assume more risk. The organization, earlier this year, specifically reached out to Track 1 ACOs that were about to enter the final agreement period in 2019 before moving into two-sided risk models. The results of their survey showed that 71 percent of ACO respondents indicated they would likely leave the MSSP as a result of having to assume risk.

In a statement released last night, NAACOS President and CEO Clif Gaus noted, “The administration’s proposed changes to the ACO program will halt transformation to a higher quality, more affordable, patient-centered healthcare industry, stunting efforts to improve and coordinate care for millions of Medicare beneficiaries.”

According to Gaus, “The downside financial risk for patient care would be on top of the significant financial investments ACOs already make, jeopardizing years of effort and investment to improve care coordination and slow cost growth.” He continued, “CMS discusses creating stability for ACOs by moving to five-year agreements, but they are pulling the rug out from ACOs by redoing the program in a short timeframe with untested and troubling polices.”

In the proposal, CMS itself is predicting that more than 100 of the 561 MSSP ACOs will drop out of the program in the next 10 years as a result of this rule. But Gaus said that the number of ACOs who will leave will be far greater than that, referencing NAACOS’ survey from earlier this year. “Given the proposals put forth today, 70 percent could be an underestimate, with even more ACOs leaving the program,” he said.

“It’s naïve to think that ACOs that aren’t ready can be forced to take on risk, given that the program is voluntary. The more likely outcome will be that many ACOs quit the program, divest their care coordination resources and return to payment models that emphasize volume over value,” Gaus said. “This would be a significant setback for Medicare payment reform efforts and would undermine implementation of the overwhelmingly bipartisan Medicare Access and CHIP Reauthorization Act (MACRA), which is designed to move providers into alternative payment models such as ACOs,” he added.

CMS, however, doesn’t seem to have a problem if upside-only ACOs that are costing the government money leave the program if they aren’t willing to take on more risk. Verma said yesterday on a press call that “[Upside-only] ACOs have no incentive, at all, to reduce healthcare costs while improving outcomes, as they were intended.”

On the contrary, NAACOS believes that “The best scientific evidence shows that the Medicare Track 1 ACOs overall are returning millions of dollars of savings to Medicare and improving the quality of care for millions of beneficiaries. To shrink and disable this leading alternative payment model in its early stages defies logic.”

Premier Inc., which has some hospital-led ACOs in its population health management collaborative, released a statement agreeing with NAACOS when it comes to forcing ACOs into more risk. Blair Childs, senior vice president of public affairs, Premier, said, “First, the level or investment and change required to move to two-sided risk is far greater than CMS clearly appreciates by providing only a two-year onramp of no risk for organizations newly entering into an ACO.  Forcing providers to accept risk too quickly will deter participation.”

Further, the American Hospital Association (AHA) also believes that CMS’ proposals are too aggressive. Tom Nickels, AHA’s executive vice president, noted that “drastically shortening the length of time in which ACOs can participate in an upside-only model ignores the reality that providers are starting at vastly different points and will have vastly different learning curves when moving toward value-based care.” He added, “The proposed rule fails to account for the fact that building a successful ACO, let alone one that is able to take on financial risk, is no small task; it requires significant investments of time, effort and finances… A more gradual pathway is critical for hospitals and health systems that are interested in participating in risk-bearing models – particularly those that are exploring such models for the first time.”

Some Show Positivity

It should be noted that not all of the reaction that has come in thus far has been negative. Leaders from Orange Care Group, a South Florida-based organization that owns and operates four independent, physician-led Medicare ACOs—including one of the first risk-based Track 3 ACOs—are pleased that CMS is “formally recognizing downside risk ACOs as the future of the model and evolving ACOs to better service Medicare and its patients,” according to Frank Exposito, Orange Care Group’s executive vice president of finance and strategy.

Exposito, in response to e-mailed questions from Healthcare Informatics, also agreed with Verma’s comments yesterday when she said upside-only ACOs have not lived up to the accountability part of their name. “ACOs, by definition, need to be accountable and ACOs who have continually failed to generate savings and improve quality are not contributing to the model and the industry at-large. With the entire market shifting to risk, the ACO model will gain strength in the communities they serve because all ACOs will be incentivized for moving the needle forward,” he said. Exposito further noted, “This will foster more innovation in the space as ACOs seek to mitigate their risk through novel partnerships with high-quality and high-performing acute and post-acute providers, while placing primary-care physicians at the center of their patients’ care. This will ultimately help extend the efforts of Medicare reform across the healthcare continuum.”

Overall, America’s Physician Groups (APG) also considers the proposed rule a very balanced approach to various stakeholders’ concerns as well as a positive step forward in the movement from volume to value, the organization said in a statement, also noting that physician-led ACOs that take on two-sided risk provide superior quality at a lower cost than other ACOs, while saving Medicare money.

Valinda Rutledge, vice president, federal affairs, APG, added that the CMS proposals build in a transitional pathway for those ACOs who are looking to take on more risk. “We know that many of today’s ACOs have experience in upside risk only. The proposed rule acknowledges this and provides for a transition period instead of forcing groups into downside risk right away. We believe that no group should be forced into risk; however, when groups decide to accept the opportunity for shared savings, we also believe that they then should take on the responsibility of saving money for our healthcare system and the people and communities they serve,” she said.

The Health Care Transformation Task Force, meanwhile, said it welcomes the release of CMS’ proposal. “This is an important step to promote value-based transformation and to push industry momentum forward. At first pass, the proposed rule presents novel ideas and careful thinking on how ACOs may better lower cost and improve patient outcomes,” said Jeff Micklos, the group’s executive director.

Official public comments on the rule are due Oct. 16.

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BREAKING: CMS Proposes Sweeping Changes to MSSP ACO Program

August 9, 2018
by Rajiv Leventhal and Heather Landi
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CMS is proposing to push ACOs into two-sided risk models by shortening the duration of one-sided risk model contracts

The Centers for Medicare & Medicaid Services (CMS) is proposing a new direction for ACOs (accountable care organizations) in the Medicare Shared Savings Program (MSSP), with the goal to push these organizations into two-sided risk models.

Referred to as “Pathways to Success,” CMS’ proposal, which has been expected for a few months, looks 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: the BASIC track, which would allow eligible ACOs to begin under a one-sided model and incrementally phase-in higher levels of risk; and 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.

Currently, the MSSP model includes three tracks and is structured to allow ACOs to gain experience with the program before transitioning to performance-based risk. The vast majority of Shared Savings Program ACOs have chosen to enter and maximize the allowed time under Track 1, which is an “upside-only” risk model. MSSP Tracks 2 and 3 involve downside risk, but participation in these tracks has been limited thus far.

When ACOs are in a one-sided risk model, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains. As such, in these one-sided risk models, CMS is on the hook for any losses all on its own.

Broadly, CMS is now essentially proposing that the contract agreements of upside-only ACOs be two years, rather than allowing six years (two, three-year agreements) like the government has previously permitted. Overall, there are 561 MSSP ACOs out of 649 total Medicare ACOs, with 82 percent of those 561 MSSP ACOs taking on upside risk only.

While ACO contracts normally renew at the start of the year in January, CMS is giving ACOs whose contracts expire this December a one-time-only six-month extension, until July 2019, so they can apply for a new agreement beginning on July 1, 2019, if they so choose. Moving forward, CMS would resume the usual annual application cycle for the performance year starting on January 1, 2020 and subsequent years.

As the federal agency continues to steer ACOs away from upside-only models, CMS noted that some Track 1 ACOs are generating losses (and therefore increasing Medicare spending) while having access to waivers of certain federal requirements in connection with their participation in the program. These ACOs may be encouraging consolidation in the market place, reducing competition and choice for Medicare FFS beneficiaries, according to agency officials.

CMS Administrator Seema Verma previously has criticized upside-only ACOs, remarking that they have not generated enough results to date. And today, she hammered this point home on a press call. “[Upside-only] ACOs have no incentive, at all, to reduce healthcare costs while improving outcomes, as they were intended. Thus, the program has not lived up to the accountability part of their name,” Verma asserted.

Meanwhile, the ACOs in twosided risk models “have shown significant savings to the Medicare program and are improving quality,” CMS said in today’s announcement. As such, Verma said today that requiring ACOs to take on downside risk more quickly, matched with increased risk and flexibility, would reframe the Medicare Shared Savings Program to deliver value to the 10 million patients currently in ACOs, and taxpayers. “We project these changes will result in $2.24 billion in savings to Medicare program over next 10 years,” she stated.

How will Upside-Only ACOs Respond?

Indeed, as it stands today, MSSP Track 1 remains by far the most popular option for ACOs. Recently, the National Association of ACOs (NAACOS) surveyed Track 1 ACOs that were entering their third agreement period and found that 71 percent of ACO respondents indicated they are likely to leave the MSSP as a result of having to assume risk.

In CMS’ proposed rule, the agency internally estimates that more than 100 ACOs will drop out of the program over the next 10 years. CMS said in the rule that “The overall drop in expected participation is mainly due to the expectation that the program will be less likely to attract new ACO formation in future years as the number of risk-free years available to new ACOs would be reduced from six years (two, three-year agreement periods in current Track 1) to two years in the BASIC track, which also has reduced attractiveness with a lower 25 percent maximum sharing rate during the two risk-free years.”

Verma was asked on the press call about the expected drop in ACOs, to which she noted that since the two-sided risk ACOs are the ones who are generating savings, having organizations who are losing the government money eventually leave the program is not a bad thing. “We know that they are losing money when they are only taking on upside-only risk. So, we’re only allowing them to do that for the first two years of the program.”

Verma continued, “The other change we’re making is that for six years we’ve been allowing [ACOs] to only take upside risk while also take in 50 percent of the savings. Now, we’re saying you can only do this for two years and only get 25 percent of the savings. So, that’s why we’re mitigating the losses that we’re having in the program.”

It remains to be seen how stakeholders will respond to CMS’ proposal today, but with the survey NAACOS administered in May, the organization stated that it encourages ACOs to prepare to move to risk and strongly supports ACOs that are ready to do so, but that it does not support forcing ACOs to assume risk if they are not ready.

Verma, when asked on the press call about the new proposals, said that it’s simply time for the program to evolve. “When we developed this program, we wanted to move the entire program towards providers taking more risk because we know that works. We want to work with ACOs that are serious about participating in the program and investing in the type of changes that are going to deliver value to patients,” she stated.

The CMS chief acknowledged on the press call that, “For some, change is always difficult, and we understand that there are those who say they haven’t had enough time to live up to their commitment to achieve value."

Proposal Specifics

In its proposal, CMS said that the BASIC track’s glide path would offer an incremental approach to transitioning eligible ACOs to higher levels of risk and potential reward. The glide path includes 5 levels: 

  • A one-sided model available only for the first two years to eligible ACOs (ACOs identified as having previously participated in the program under Track 1 would be restricted to a single year under a one-sided model);
  • And three levels of progressively higher risk and potential reward in years three through five of the agreement period. Under the one-sided model years of the glide path, an ACO’s maximum shared savings rate would be 25 percent based on quality performance, applicable to first dollar shared savings after the ACO meets the minimum savings rate. The glide path concludes with a maximum 50 percent sharing rate, based on quality performance, and a maximum level of risk which qualifies as an Advanced APM for purposes of the Quality Payment Program.  

ACOs in the BASIC track glide path would be automatically advanced at the start of each performance year along the progression of risk/reward levels, or could elect to move more quickly to a higher level of risk/reward, over the course of their agreement period.

In the end, ACOs entering the BASIC track’s glide path for an agreement period beginning on July 1, 2019, would have at most 2 ½ years under a one-sided model (with ACOs identified as having previously participated in the program under Track 1 restricted to 1 ½ years) and their first automatic advancement would occur at the start of performance year 2021, CMS explained.

What’s more, ACOs identified as “low revenue”—typically composed of physician practices and rural ACOs—could participate in the BASIC track for up to two agreement periods.  For instance, a low revenue ACO that participates in the BASIC track’s glide path could renew under the BASIC track, at the highest level of risk and reward, for a second agreement period. ACOs identified as “high revenue”—typically ACOs that include hospitals—would be required to transition to the ENHANCED track more quickly, after no more than a single agreement period under the BASIC track.

CMS has observed that low-revenue ACOs have outperformed high-revenue ACOs, but that some low-revenue ACOs lack a pathway to transition from a one-sided model to more modest levels of performance-based risk. Agency officials noted its Medicare Track 1+ ACO Model, a time-limited Center for Medicare and Medicaid Innovation (Innovation Center) model which began this past January, demonstrates that a lower-risk, two-sided model is an effective way to rapidly progress to performance-based risk. 

Related Insights For: Value-Based Care


A Pioneering M.D. Leader Shares Insights on Successfully Navigating the Massachusetts Healthcare Market

August 9, 2018
by Rajiv Leventhal
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Dr. Barbara Spivak details her organization’s long, but rewarding journey to value

On the ongoing journey to value-based care, provider organizations are all over the map when it comes to how advanced they are. Some are just starting out on that road while others are much further along.

In Massachusetts, the Mt. Auburn Cambridge Independent Practice Association (MACIPA), based in Brighton, includes 500 affiliated physicians and operates an ACO (accountable care organization) that is in Track 3 of the federal Medicare Shared Savings Program (MSSP) model—the track in which ACO participants take on the most risk for their patients. Indeed, the organization, headed by Barbara Spivak, M.D., CEO, has been engaged in risk-based contracting since the 1980s. Needless to say, MACIPA is on the advanced side of the road.

At the Boston Health IT Summit on August 8, Dr. Spivak joined Healthcare Informatics Editor-in-Chief Mark Hagland on stage to discuss MACIPA’s value-based care journey, the core health IT and policy-related issues physicians are facing these days, and much more as it relates to healthcare in the state.

Massachusetts healthcare, said Spivak, a local practicing physician for the last 30 years, is unlike most U.S states in that nearly every doctor belongs to some type of health system. But the biggest issue doctors face today, she contended, is that when they belong to a network, they are supposed to keep business inside it. At the same time, the healthcare market is moving more into “open access,” she said. “Patients choose health plans [in which] they can go anywhere [for care]. And now, more patients are expecting that no matter where they go, their primary care physician and specialist should know what happened to them, even if they go to other physicians [in other systems],” she said. 

As such, preventing patient “leakage” out of the system has become an enormous pressure on physicians, Spivak attested. “We have talent in every system so it’s not like you will get good care in system A but bad care in system B. They are all great systems that will provide great care. So you can’t deny people based on quality because the quality is great everywhere,” she asserted.

Regarding health IT, Spivak noted that years ago, MACIPA was doing population health management even before the organization ever got an EHR (electronic health record). She said that when EHRs started to gain traction, MACIPA applied for a state grant to get the funding to implement one. And although MACIPA just missed out on that funding request, Spivak said by that time she had already convinced her colleagues to get the EHR anyway, so they did. “And over the years we have done more and more population health, using real clinical data, not just claims data. We were also one of the first Pioneer ACOs, and now we’re in MSSP Track 3 with significant upside/downside risk,” Spivak said, speaking to how far along MACIPA has come.

As such, Spivak said that when MACIPA was considering which ACO model to join, an endeavor that would involve taking on risk for Medicare fee-for-service patients, Mt. Auburn physicians were already accustomed to managing care for their patients via their Medicare Advantage contracts. “Those patients got a lot of support. They were provided social workers, health coaches, and had care managers,” Spivak recalled, noting the biggest complaint from physicians at that time was why MACIPA couldn’t do these things for their Medicare fee-for-service patients as well. “But we didn’t have the data on them and there was no risk involved,” she said.

Spotting Flaws in Quality Metrics

Spivak went on to note that for all of issues facing the healthcare industry, as physicians continue to manage populations of patients, they have to “staff up” and getting the data and documenting is quite challenging. “One of key factors in physician burnout, particularly in primary care, is the documentation required for all of the quality metrics,” she said.

Even though MACIPA is a small organization, its physicians are still held accountable for hundreds of quality metrics that differ across various health plans. But Spivak said her physicians are taught just one set of metrics. For example, if there are 50 diabetic quality metrics spanning across all MACIPA’s health plan contracts, Spivak and her team narrow those 50 down to eight and then teach the physicians just those eight.

Nonetheless, Spivak believes that there are some major flaws in how certain quality metrics are measured, offering CMS’ (the Centers for Medicare & Medicaid Services) measure for screening for future fall risk as an example. Originally, she explained, physicians had to simply ask at-risk patients if they had two or more falls in the past six months and if they were injured. But a new CMS proposal may make things more complicated than that, Spivak noted. If the proposal passes, starting in 2019, physicians will have to ask these patients many more questions, including finding out details about stairs in the patients’ home as well as their vision.

But there are timing issues, Spivak continued. The final rule on this proposal will come out in October and the mandated start date for complying would be in January 2019, meaning EHR systems will have to remove those two original questions and replace them with another seven or eight. “Once that happens, I have to go out and teach all of my doctors, nursing homes, advanced practitioners, and others that the old [method] is out while the new questions are in. And that takes three to four months. Think about health systems that have 1,500 doctors. It’s an impossible situation,” she attested.

What’s more, Spivak offered, there are plenty of quality metrics that don’t measure quality. She noted one measure that looks at whether or not the physician prescribed antibiotics for bronchitis. This, Spivak, asserted, is a “coding measure” and has nothing to do with the amount of antibiotics the physician gave, since it all depends on if that physician coded for viral bronchitis or bacterial, as it’s OK to give antibiotics out for the latter, but not for the former. “Am I a trained or untrained rat?” Spivak jokingly asked. “That’s what this measure is about.”

Indeed, Spivak advised providers to not to blindly listen to the EHR companies who say that quality metrics are imbedded inside their systems, and that physicians can document easily. “Everyone’s quality metrics are a little bit different across the U.S. and its important to work with clinicians on them,” Spivak offered. “One advantage for me is that I still see patients about one-third of the time and it’s not the healthy 20-year-olds who I am seeing. I see chronically ill patients who are tough to document for. So you have to run things by your clinicians, and ask them if the [EHRs] work for them as is or if they’re making documentation [harder].  Don’t just rely on what your vendor tells you.”

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