Tag: Accountable Care Organizations

Seriously Testing The ACO Waters

Brian Klepper

Published April 2013 in Accountable Care News

BK 711If necessity is the mother of invention, then tentativeness and ambiguity are the parents of procrastination. In health care, fee-for-service remains the dominant paradigm, so the ACO movement, lacking almost any semblance of true financial risk, is far more bark than bite. What’s the point of health systems going to all the trouble – and there’s no question it will be an overwhelmingly complicated overhaul – required to move from volume to value if it isn’t a pressing concern? Or, as several health system CFOs have expressed it, “Why should we change what we do and take less money until we have to.” There is no immediate imperative.

But there are some strategic imperatives. Overall health care cost has continued to explode. Kaiser Family Foundation data show that, for more than a decade, health plan premiums have risen 4.5 times as fast as general inflation and more than 3.5 times workers earnings. A recent RAND calculation showed that $4 of every $5 of household income growth is now absorbed by health care. It doesn’t seem likely that much more revenue can be squeezed from group and individual purchasers. (Though many of us have been saying that for decades.)

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Following the Money

Brian Klepper

Posted 12/06/12 on Medscape Connect’s Care & Cost Blog

On The Health Care Blog, veteran analyst Vince Kuraitis reviews a report from the consulting firm Oliver Wyman (OW), arguing that the trend toward reconfiguring health systems to deliver more accountable care is more widespread than any of us suspect.

“The healthcare world has only gotten serious about accountable care organizations in the past two years, but it is already clear that they are well positioned to provide a serious competitive threat to traditional fee-for-service medicine. In “The ACO Surprise,” our analysis finds that 25 to 31 million Americans already receive their care through ACOs-and roughly 45 percent of the population live in regions served by at least one ACO.”

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The Economics of Being a Practicing Physician: Greater Frustration, Lower Income, More Defensive

Jane Sarasohn-Kahn

Posted 4/26/12 on Health Populi

One-half of physicians believe they’re not fairly compensated for their work – in particular, those working in primary care. Only 11% of doctors considering themselves “rich.”Medscape’s 2012 Physician Compensation Report compiled data from over 24,000 U.S. physicians across 24 specialties and found the bulk of physicians to see themselves working harder and 1 in 4 making less money than last year.

This has led to growing frustration and worry, where some physicians are resenting the large pay gap between specialists and primary care. That frustration looks poised to increase with doctors concerned that accountable care will further eat into incomes, and increased regulation and administrative hassle “take the joy out of medicine,” as Medscape coined the feeling.

In 2011, pediatricians earned on average about one-half of what radiologists took home in pay: about $150K versus $315K. The top physician earners along with radiologists were cardiologists, urologists and orthopedic surgeons. The lowest-earners were pediatricians, internists and family medicine doctors. Still, while they are top-earners, orthopods’ and radiologists’ income declined an average of 10% between 2010 and 2011.

Physicians in single and multispecialty group practices, and those within healthcare organizations, earn higher incomes compared with colleagues in academia, outpatient clinics and solo practitioners.

If they had to do it all again, would physicians choose to be physicians? 54% would still pick medicine as a career…the other 46? Not so much…

Health Populi’s Hot Points: Economics is driving physician discontent in the United States. Not only are at least half of medical specialties seeing falling incomes, but the future potential for money looks dire in at least two respects: accountable care is seen by at least one-half of physicians as a cause for income to decline; and, regulations and paperwork eat further into profit margins for physician practices.

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Surveyed Physicians Are Gloomy About Health Care Reform

Patricia Salber

Posted 3/12/12 on The Doctor Weighs In

Recently, The Doctors Company (TDC), the country’s largest insurer of physician and surgeon medical liability, decided to survey doctors to determine what they are thinking and feeling about health reform.  The results are pretty gloomy.

To put this in context, it is important to understand a bit about how TDC conducted the survey.  First of all, the universe of doctors they reached out to were doctors insured by The Doctors Company.  That means large self-insured medical groups, such as those affiliated with Kaiser Permanente, were not included.  Nor were doctors whose insurance was provided by their employers or doctors using other insurance carriers.  This matters because if the TDC insured physicians are not representative of doctors as a whole, the results of this survey would not necessarily reflect the attitudes of all doctors.

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What’s the Difference Between ACOs and “AC-Like” Arrangements?

Vince Kuraitis

Posted 3/09/12 on the e-CareManagement Blog

A lot. AC-Like arrangements will be MUCH simpler to create and maintain.

The health care market is moving toward accountable care. There are at least two broad paths forward:

1) Formal Accountable Care Organizations (ACOs) by which care providers contract with Medicare

2) Informal Accountable Care-Like (AC-Like) arrangements between care providers and commercial health plans

What are the differences between these routes? I see at least 5 factors at play:

  • Transaction costs
  • Timing
  • Incrementalism
  • Flexibility
  • Capital cost

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Medicare Providers Don’t Want Less Revenue

Roger Collier

Posted 2/9/12 on Health Care Reform Update

The Congressional Budget Office’s January issue brief on the failure of almost all of more than thirty Medicare demonstration projects to cut costs generated considerable discussion. Judging from the reactions of some health care policymakers, the CBO’s findings came as a surprise.

They shouldn’t have.

Aside from the fact that the results of virtually all of the demonstrations had previously been published, the failure to reduce Medicare spending is exactly what should have been expected.

Let’s take a look at the three payment models used by CMS for the demonstrations:

  1. Regular Medicare reimbursement plus a guaranteed no-risk fee or bonus for participating
  2. Regular Medicare reimbursement plus a fee or bonus dependent on performance
  3. Bundled payment for demonstration services

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A Thousand Dollars Says Dr. Ezekiel Emanuel Is Wrong About ACO’s Long Term Prospects

Jaan Sidorov

Posted 2/1/12 on the Disease Management Care Blog

Approximately 15 years ago, the Disease Management Care Blog was a speaker at a conference with an audience mostly made up of managed care leaders. It boldly argued the nation’s disease management vendors were going to help put the nation’s health insurers out of business by simultaneously assuming risk and lowering costs.

Hows that for chutzpah. The DMCB was never invited back, but not because it isn’t an outstanding conference speaker who deserves fat fees.

It was because it was utterly wrong.

And so is this online commentary on accountable care organizations (ACOs) courtesy of the The New York Times. In it, Dr. Ezekiel Emanuel boldly predicts that by 2020, ACOs will drive health insurance companies out of business. They’ll do that by assuming full risk, dropping patient barriers to care, coordinating services, fostering communication, promoting health, banning fee-for-service, increasing efficiency, relying on evidence-based care, being locally responsive and competing against other ACOs on cost and quality

Dr Emanuel is being astonishingly overconfident for four reasons.

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Let’s Wake Up About ACOs

Paul Levy

Posted 11/30/11 on Not Running a Hospital

Comments by two folks recently should reawaken our concern about how to hold accountable care organizations accountable and whether creation of ACOs will lead to market dominance that will not bring value to patients.

Back in 2009, I noted: 

Here in Massachusetts, there is only one such entity that approaches the definition of an ACO, Partners Healthcare System. But there is no sign that it has used its size and scale to deliver care at a lower cost. Indeed, there is evidence that it has used its market power to extract higher rates from insurance companies. Likewise, there are no data to show that quality, safety, and efficacy in the delivery of care throughout the Partners system is better than other community hospitals or academic medical centers.

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The Leavitt ACO Report: Does it Overstate or Understate Accountable Care Activity?

Vince Kuraitis

Posted 11/30/11 on the e-CareManagement Blog

Accountable Care Organizations (ACOs) have been likened to

a unicorn — a fantastic creature that is vested with mythical powers. But no one has actually seen one.

a camel — a horse designed by a committee, one that already has its nose in the tent

With this background, you can begin to appreciate the difficulty of conducting an accurate census of ACO animals in the wilderness.  Yet, this is exactly the task undertaken in the excellent Leavitt Partners report measuring ACO activity in the US.

As I will explain, the Leavitt report has the potential both to overestimate and underestimate ACO and accountable care-like activities. In my judgment, however, it’s far more likely to be understating just how much accountable care activity actually is going on.

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Accountable Care Organization Regulations – The ACO is a Camel, Not a Unicorn

David Harlow

Posted 10/31/11 on HealthBlawg

232323232-fp53393-nu=3238-235-766-232923585737;ot1lsiThe final Accountable Care Organization regulations are out, the initial flurry of commentary is out (including my own ACO webinar with simultaneous  #ACOchat tweetchat –available for download/replay soon; slides here now: “ACOs, Bundled Payments and the Future of Health Care“), and we can now all catch our collective breath and contemplate the draft vs. final ACO regulation comparisons, the meaning of this new, final set of regulations, guidances and statements from CMS, FTC, DOJ, OIG, and IRS on ACOs and Medicare Shared Savings Programs, and all of the attendant antitrust, antikickback, Stark, and other fraud and abuse matters, and of course tax issues.

So, now that these final regulations are out, and the mythical characteristics of the ACO will soon be dispelled (see under: unicorn), I propose a new animal kingdom metaphor for discussion of Accountable Care Organizations:

The Camel’s Nose is in the Tent.

The definition of a camel, as those of you who tuned into my ACO webinar already know, is a horse designed by a committee.  And, given the nature of the legislative and rulemaking processes, that’s exactly what we have before us – a camel.

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ACOs: The Good and the Bad

To muted applause and some sighs of relief from providers, HHS released the final ACO regulations last week. 

The final version superseded the much-criticized draft regs published several weeks earlier. This previous draft was widely regarded as imposing overwhelmingly complex rules for the chance of sharing in any gains. As one commentator noted: “The promise of integrated, coordinated and cost-effective care provided by hospital-physician networks had run into the reality of having to invest millions dollars with a questionable ROI, a complex maze of up and downside risk calculations, reams of burdensome quality measures and overlawyered antitrust regulations.”

So the final less-unwieldy rules have been relatively well-received. On the other hand, fundamental questions about the viability and impact of ACOs remain:

  1. Will the potential “bonuses” justify the financial investments? Major hospital systems (likely to be the primary ACO sponsors) seem to be willing to play so long as the regulations are not too onerous. And as with other HHS initiatives, those willing to participate are likely to be those who are most confident that they can readily cut costs and gain the savings bonuses. On the other hand, ACOs that aren’t able to do a much better job of coordinating care will be unable to recoup their investments.
  2. Will there be losers? Physicians and hospitals who don’t participate in ACOs may find HHS squeezing rates to be in line with costs of competing ACOs. And even in successful ACOs, hospital staff and individual physicians may be in danger of losing their jobs as the ACOs try to reduce variable costs in order to achieve the “bonus-eligible” level.
  3. Why are hospitals so interested in ACOs? It’s a great opportunity to tie physicians more tightly, thereby guaranteeing referrals and admissions and strengthening the hospitals’ rate negotiating positions.  At the same time, the hospital risk is small; the ACO component is expected to be tiny relative to the size of the Medicare program, and with beneficiary assignment made prospective in the final rules, the costs and risks for participating providers are even less.
  4. Will ACOs really enhance cost-effectiveness? In some cases the answer will be yes, with the ACOs achieving the objectives of their government designers. In other cases, however, the pros of better integrated care will be more than outweighed by the cons of quasi-monopolistic hospital systems able to dictate their terms to insurers and other payers.

There is one more fundamental problem with the present ACO design: by randomly assigning Medicare beneficiaries to ACOs, much of the opportunity to impact the highest cost cases may be lost. A more targeted approach might begin to show the savings that the Medicare program desperately needs. On the other hand, HHS’ track record of success with its chronic care demonstrations gives little confidence that the government could indeed achieve these potential savings.

The bottom line seems to be: ACOs will generally demonstrate the virtues of integrated care (something that was known already), while in too many cases encouraging monopolistic hospital systems to become even more entrenched.

Roger Collier used to be CEO of a large health care consulting practice. Now he writes at Health Care Reform Update.

CMS Wants Docs To Ante Up To CMS Poker Game

Michael Millenson

Posted 10/20/11 on Forbes

In a high-stakes political, clinical and economic poker game that goes by the name of Accountable Care Organizations (ACOs), the Centers for

Medicare & Medicaid Services (CMS) has just issued a call for doctors and hospitals to grab some chips and ante up.

The set-up goes like this: one of the biggest potential changes in how health care is actually delivered contained in the Accountable Care Act was ACOs.

They’re voluntary, but they allow doctor- or hospital-led organizations that take responsibility for coordinating the care of at least 5,000 Medicare beneficiaries to get reimbursed at a higher rate for providing better-quality, lower-cost care. It’s supposed to be a win-win-win for providers, patients and taxpayers and part of a more general move towards “value-based purchasing.”

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Nurse Care Managers: The Mortar Holding the Bricks of Medical Homes

Jaan Sidorov

First posted 9/22/11 on the Disease Management Care Blog

It’s no secret that the Disease Management Care Blog is an enthusiastic believer in nurse care managers. In its humble opinion, it makes no difference what “bricks” are used to build a Patient Centered Medical Home, an Accountable Care Organization, a Population Health Management Program or an employer-based care support/wellness initiative, the nurses are the mortar.

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Another Skeptical ACO Paper

Jaan Sidorov

First posted 9/19/11 on Disease Management Care Blog

Adding to a continuing drumbeat of skepticism about Accountable Care Organizations (ACOs), Gail Wilenksy offers a “sobering” Perspective in the New England Journal about their underlying business model.  She draws on the lessons of the Physician Group Practice Demonstration, where – despite “glowing” press releases – the financial savings were decidedly elusive.  Summarizing things nicely, Ms. Wilensky points out that only 2 out of the 10 Demo participants were able to achieve savings in the first year of operation and that only half of the group had savings after three years.

Why did this happen?  She agrees with many of the criticisms noted by your Disease Management Care Blog: there were some important “design” issues involving the comparator groups (the use of “rural” settings may have set the baseline too low), CMS struggled with providing timely claims data and the risk adjustment methodologies may have fallen short (for example, the Demo participants had high-cost specialty services which may have inflated their cost).

While Ms. Wilensky previously served in a Republican administration, the Disease Management Care Blog has always found her to be a reasonable pundit.  That’s why it’s telling that she concludes her paper with a damning observation candy-wrapped in bureaucrat-speak: as currently envisioned, she says, the proposals “seem inconsistent with the hopes that have been pinned to ACOs as a viable alternative to both traditional Medicare and traditional managed care.”

Jaan Sidorov MD writes at Disease Management Care Blog.

Payment Transformation: From Volume to Value

Jaan Sidorov and Vince Kuraitis

First posted 7/7/11 on eCareManagement Blog

This is the 2nd installment in a series on the Strategic Realignment among Physicians, Hospitals and Payers

In our introductory posting, we suggested that a huge shift is underway in the health care industry.  Decades of hospital-physician cooperation are not only eroding, we suggest this trend could accelerate.  Instead of a natural clinical and economic affinity with hospitals, we foresee the potential for physicians forming a new dyad with insurer-buyers.

In this post, we will examine what we and many other commentators view as inevitable: the demise of volume-based payment systems and how the drive for greater value will cause physicians and insurers re-examine their normally antagonistic relationship.

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