Ten Things to Know About The Comprehensive Primary Care Plus (CPC+) model

By Clive Riddle, April 15, 2016

1.  CPC+ is a CMS five-year initiative starting in January 2017 to create a national advanced primary care medical home model that aims to strengthen primary care through a regionally-based multi-payer payment reform and care delivery transformation.

2. CPC+ will be implemented in up to 20 regions and can accommodate up to 5,000 practices, which would encompass more than 20,000 doctors and clinicians and the 25 million people they serve.

3. The multi-payer approach involves Medicare partnering with commercial and state health insurance plans to support primary care practices in delivering advanced primary care.

4. Advanced primary care has five key components:

• Services are accessible, responsive to an individual’s preference, and patients can take advantage of enhanced in-person hours and 24/7 telephone or electronic access;
• Patients at highest risk receive proactive, relationship-based care management services to improve outcomes;
• Care is comprehensive and practices can meet the majority of each individual’s physical and mental health care needs, including prevention. Care is also coordinated across the health care system, including specialty care and community services, and patients receive timely follow-up after emergency room or hospital visits:
• It is patient-centered, recognizing that patients and family members are core members of the care team, and actively engages patients to design care that best meets their needs:
• Quality and utilization of services are measured, and data is analyzed to identify opportunities for improvements in care and to develop new capabilities.

5. CPC+ lists five patient care objectives to help primary care practices:

• Support patients with serious or chronic diseases to achieve their health goals;
• Give patients 24-hour access to care and health information;
• Deliver preventive care;
• Engage patients and their families in their own care; and
• Work together with hospitals and other clinicians, including specialists, to provide better coordinated care

6. CPC+ will include two primary care practice tracks with incrementally advanced care delivery requirements and payment options. Practices in both tracks will receive up-front incentive payments that they will either keep or repay based on their performance on quality and utilization metrics. Practices in both tracks also will receive data on cost and utilization.

7. Track 1 practices will receive a monthly care management fee in addition to the fee-for-service payments under the Medicare Physician Fee Schedule for activities.

8. Track 2 practices will be expected to provide more comprehensive services for patients with complex medical and behavioral health needs. Track 2, practices will also receive a monthly care management fee and, instead of full Medicare fee-for-service payments for Evaluation and Management services, will receive a hybrid of reduced Medicare fee-for-service payments and up-front comprehensive primary care payments for those services. Track 2 practices’ vendors will sign a Memorandum of Understanding (MOU) with CMS that outlines their commitment to supporting practices’ enhancement of health IT capabilities.

9. CPC+ was developed through the ACA enacted Center for Medicare and Medicaid Innovation, and is an outgrowth of the Comprehensive Primary Care (CPC) initiative, a model tested through the Center for Medicare & Medicaid Innovation that began October 2012 and runs through December 31, 2016

10. CMS will accept payer proposals to partner in CPC+ from April 15 through June 1, 2016. CMS will accept practice applications in the determined regions from July 15 through September 1, 2016. CMS will select regions for CPC+ where there is sufficient interest from multiple payers to support practices’ participation in the initiative.

Here’s where you can find out more:

• CMS April 11^th 2016 CPC+ Press Release
• CMS CPC+ Fact Sheet
• CMS CPC+ FAQs
• JAMA April 11, 2016 Article: Medicare’s Vision for Advanced Primary Care

Truven Examines Scope and Drivers in Bundled Commercial Spend for Lower Joint Replacement

By Clive Riddle, March 4, 2016

Truven Health Analytics has just released a twelve page research brief:  Bundled Pricing for Total Joint Replacements in the Commercially Insured Population: Cost Variation Insights by Bundled Care Components, which follows up on their recently released eight page brief on this same topic: Geographic Variation and Cost-Driver Insights.

Truven “found that the primary drivers of cost variation for major lower joint replacement are tied to hospital cost and length of stay. For facility costs, the study attributes up to $1,944 per additional day in total cost variation. That variation is independent of professional costs. The study builds on previous research that found more than $10,000 in commercial bundled spend variation for the same surgeries based on geography.”

Truven shares these key findings:

• The increase in facility cost only (removing professional cost) for each additional day a patient is hospitalized after the procedure varies from $313 per day in the East North Central region to $1,944 per day in the Pacific region, a difference of more than $1,600.
• On average, the cost to treat a patient at a rehab facility was $10,600 per patient, versus $5,300 per patient at a skilled nursing facility, and $1,300 using home health services. And, the cost for rehab facilities varied widely by region, with the cost per patient in the Pacific totaling close to $22,500 compared with roughly $7,000 per patient in New England.
• The cost per bundle for readmissions varied from $538 in the East South Central to $918 in the West South Central division. This lower cost in the East South Central resulted from both a low rate of readmission (3.3 percent) and a low cost per discharge ($16,340).

In their most recent brief, Truven notes that “in our previous research, we estimated the marginal impact of one extra day in the hospital after a TJR to be about $880 per day across all geographic divisions.  To further analyze that finding, we used a mixed effects regression model, with fixed average professional costs, to quantify the increase in facility cost only for each additional day a patient remains hospitalized after the procedure…. The average impact varied from $313 or 1 percent of the base price per additional day in the anchor facility after initial day of hospitalization in the East North Central division, to $1,944 or 6.2 percent of the base price in the Pacific. That’s a difference of more than $1,600.”

Bob Kelley, senior research fellow, advanced analytics, at Truven Health Analytics tells us “as providers and payers begin to consider bundled payment programs for these procedures, it is increasingly important to understand the cost implications of each additional inpatient day, as well as post-acute care and readmissions. Once claims-based, actual patterns are recognized and understood, guidelines and standard best practices can be put in place to guide discharge planning and post-acute care based on patient risk for readmission and other factors contributing to a successful recovery.”

Provider Collaboration – Bundled Payments Top Survey Results for Impact on Medicaid Transformation

by Clive Riddle, December 11, 2015

MCOL has just released results from its second annual Medicaid Transformation e-poll of stakeholders interested in Medicaid transformation. Last year, when respondents were asked to a rank of topics for their impact on Medicaid Transformation, with 1 being the top rank, Provider Collaboration/Engagement and Risk Sharing virtually tied with State Medicaid Funding and ACA participation for the top spot (based on weighted average rank). This year, there was some separation between the two, with Provider Collaboration taking the top spot. Breaking down these results by category of respondents, providers definitively gave collaboration the top ranking, while purchasers and vendors/others results were more mixed.

When asked which type of provider collaboration would have the most impact, last year’s results were mixed, but this year bundled payments and other new payment models emerged as the clear top choice. Interestingly, perceived Medicaid ACO impact reduced this year from last, with providers seeing ACOs having less impact than purchasers or vendors/others.

Below are table of the results broken out by respondent category, along with 2015 and 2014 totals:

Taking an early Post ICD10 Transition Pulse from Five Surveys

by Clive Riddle, December 3, 2015

As time ticks by after the October 1st ICD10 transition, early survey results are coming in regarding the impact and implications for providers. Let’s take a look at these initial findings:

KPMG has just released results from a survey of 298 attendees of a Nov 9th ICD10 webcast for providers, which found:

• 28 percent saying the transition has been smooth
• 51 percent found “a few technical issues, but overall successful.”
• 11 percent described the transition as a “failure to operate in an ICD-10 environment.”

 Survey respondents listed challenges they see with ICD-10 as:

1. rejected medical claims
2. clinical documentation and physician education
3. reduced revenue from coding delays
4. information technology fixes

The survey found 42 percent of respondents said all of these challenges are part of ICD-10. 11 percent of claimants said they did not expect those challenges to arise.

46 percent of respondents said they were thinking of pursuing initiatives in clinical documentation improvement, revenue cycle optimization, and electronic health record and IT system optimization. 25 percent were pursuing none of those options.

Last month, Healthcare Informatics reported on a survey from Himagine Solutions that found “Large hospitals have reported a 30 to 45 percent productivity reduction on the inpatient side and a 20 to 40 percent productivity reduction on the outpatient side since implementation the ICD-10 codes.”

Also last month, the vendor Kareo announced that 99 percent of client claims submitted in the first month of the ICD-10 coding transition were successful, and 87 percent of clients have already been paid for at least one submitted claim. 11 days was the average time to payment for ICD-10 claims. Kareo also surveyed its customer base directly to gauge its experience with the transition. Based on customer responses, 57 percent of respondents considered the ICD-10 transition “easy” or “very easy.” Just three percent of respondents considered the transition “difficult,” or “very difficult.” The remaining 40 percent considered the event “moderate.”

Executive Insight reported that “in early October, Navicure, a claims management and patient payment solutions provider, only processed 50% of the medical claims processing it would've in pre-ICD-10 months, which could have been a result of providers' caution along with a mix of ICD-9 claims from the previous month. Towards the end of October, however, data showed that claims gradually increased to 90% of the pre-transition volume. Rejections, too, are staying in a manageable range rather than spiking like many healthcare experts anticipated.”

Finally, Information Management reported on a SERMO survey in which “physicians were asked if the new requirement to use ICD-10 has taken away time from patients. Two-thirds of responding doctors said yes. The poll of 1,249 physicians was conducted from November 20 to 30. Although doctors strongly indicated that the code switchover has detracted from patient care, that percentage is down significantly from a SERMO poll last month that asked members if ICD-10 was taking their time away from patient care. At that time, 86 percent said it had negatively impacted patient care while only 14 percent said it had not.”

Track 3 For Medicare ACOs

by Clive Riddle, June 5, 2015

CMS has just issued a 592 page MSSP ACO final rule resulting from their proposed rule issue in December, which received 275 stakeholder comments.

Here’s what CMS, in their own words, says the new final rule will accomplish:

• Creates a new Track 3, based on some of the successful features of the Pioneer ACO Model, which includes higher rates of shared savings, the prospective assignment of beneficiaries, and the opportunity to use new care coordination tools;
• Streamlines the data sharing between CMS and ACOs, helping ACOs more easily access data on their patients in a secure way for quality improvement and care coordination that can drive critical improvements in beneficiaries’ care;
• Establishes a waiver of the 3-day stay Skilled Nursing Facility (SNF) rule for beneficiaries that are prospectively assigned to ACOs under Track 3; and
• Refines the policies for resetting ACO benchmarks to help ensure that the program continues to provide strong incentives for ACOs to improve patient care and generate cost savings, and announces CMS’ intent to propose further improvements to the benchmarking methodology later this year. 

CMS notes that “over 400 ACOs are participating in the Medicare Shared Savings Program, serving over 7 million beneficiaries.” With respect to basing their new Track 3 on selected components of their Pioneer ACO model, they tout that Pioneer ACOs “generated over $384 million in savings to Medicare over its first two years – an average of approximately $300 per participating beneficiary per year – while continuing to deliver high-quality patient care.  The Pioneer ACO Model is the first that meets the tests to have its elements incorporated into other Medicare programs.” 

California Healthline reports that “the new track for ACOs will allow them to retain up to 75% of what they save but also be responsible for up to 75% of their losses (California Healthline, 12/2/14). ACOs in the new track also will be given a fixed set of beneficiaries for which they must provide care (Modern Healthcare, 6/4)….. CMS said that it expects the rule change will help ensure that 90% of MSSP ACOs stay with the program.”

Not One Penny More

By Kim Bellard, May 21, 2015

If you've been to a doctor's office or seen some other health care provider, chances are you've had to sign a patient consent form that, among other things, makes you promise that whatever they end up doing to you, and however much they choose to charge you for it, you're responsible for paying.  If your health plan happens to get you a negotiated rate and perhaps covers some of the expenses, that's great, but the provider is still looking to you for payment.

Maybe you shouldn't be so quick to sign.

I don't know which is worse: that providers don't think they should tell you in advance what they plan to do to you, or that they don't want to admit how much they will try to charge for it.  Honestly, why do we keep falling for this?

I thought about this when reading Kaiser Health News' Radical Approach to Huge Hospital Bills: Set Your Own Price.  It profiles benefits consulting company ELAP Services, which goes beyond traditional services like benefits design, direct contracting, and medical bill reviews by also vowing to go to court if necessary to support their customers in disputes over medical bills.

The KHN article cited the example where an employee of one of ELAP's clients had back surgery and was billed $600,000 by the hospital.  ELAP analyzed the hospital's Medicare's cost reports, and advised the client to pay a much lower amount.  "We wrote a check to the hospital for $28,900 and we never heard from them again," said the client's CFO.

ELAP CEO Steve Kelly says "overwhelmingly, the providers just accept the payment."  ELAP has clients write their process for determining reimbursements into benefit plan documents to give greater legal weight.  They already have a federal court ruling in support of their process.  The contract requires them to defend patients from any collections efforts, in return for a percentage of the savings.

Most health plans base their out-of-network payments on "reasonable charges," which is how most health insurance plans worked prior to the advent of network plans like PPOs, when negotiated payment rates became the norm.  

Whether it has worked as intended is not entirely clear, but what is clear is that providers can come after patients for amounts not paid out-of-network by the health plans, all the way up to billed charges, not just to the "reasonable charges."

What I want to know is, if health plans truly believe their limits on charges are reasonable, why don't more of them act like ELAP when providers' charges exceed them?   ELAP makes it clear whose side they are on; health plans, not so much.

I view the charge structure of most providers as a pernicious symptom of much of what is wrong with our health care system.  They rarely have much to do with either actual costs or market forces, and they reflect an arrogant attitude that consumers are there to be gouged as much as possible.  Or, more charitably, if not arrogance, then a certain benign neglect to patients' financial well-being.  

I'd love to see a health plan whose EOBs not only detailed how much they were paying and how much of the remaining balance the consumer had to pay, but also said, "by the way, we think $X is the most your provider should charge you for this service, and we don't think you should pay a penny more.  If they try to charge you more, let us know and we'll help you fight it."

Now that would be a health plan that consumers would think more of, one that is truly on their side.

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

What exactly is Qliance?

By Clive Riddle, January 16, 2015

Qliance, recently discussed in Time Magazine as they are quick to tell you, just issued a news release  that their New Primary Care Model Delivers 20 Percent Lower Overall Healthcare Costs, Increases Patient Satisfaction and Delivers Better Care.

Qliance conducted a study "of insurance claims data from 2013 and 2014 for approximately 4,000 Qliance patients covered by employer benefit plans, and compared the cost of their care to that of non-Qliance patients who worked for the same employers. The results revealed a savings of $679,000 per 1,000 Qliance patients on total claims –19.6 percent less than the total claims for non-Qliance patients during the same period."

Here’s data from a table they provided:

	Incidents Per 1,000 Qliance patients	Incidents Per 1,000 Non-Qliance patients
ER Visits	81	94
Inpatient (days)	100	250
Specialist Visits	7,497	8,674
Advanced Radiology	310	434
Primary Care Visits	3,109	1,965

Impressive enough data, albeit its hard to know how much is apples to apples in the comparison. But the bigger question from examining this, is what is Qliance, what the heck is a Direct Primary Care model, and how is it different from other, more familiar models?

The first question is how exactly does one pronounce Qliance? The website FAQs didn’t have an answer for that question – like “clients” one would assume.

The next question would be, is Qliance a form of health coverage? The answer would be yes and no. Yes – you can contract to receive their medical services for a fee, but no – they are not an insurance plan.  One might think so when first arriving at their website – the navigation menu  refers to Members, Clients, Locations, etc, so one might assume Qliance is an integrated health plan.

But it is not.  As their FAQs will inform you, they are NOT insurance.  Instead they charge a monthly fee to provide primary care, with no fee for service charges.  Here’s what they say:  “We work directly for our patients to provide direct primary care. Your monthly care fee pays for our primary and preventive care services. Qliance does not bill any insurance carrier for our services, and Qliance monthly care fees are not reimbursable by any health insurance company, and may not be applied to any insurance plan deductible. Your insurance plan may be billed by others for services such as emergency, hospital, specialty care, laboratory tests, diagnostic imaging, prescription drugs or other goods and services that are ordered by your Qliance health care provider but are not performed or provided in our offices.”

So with or without health insurance, you can pay Qliance a monthly fee, and receive all the coordinated direct primary care services you want. But you or your health insurance, and not Qliance, will pay for any healthcare services Qliance does not provide. And depending on the type of managed care plan you have. your health insurance won’t pay for outside services ordered or prescribed by your Qliance doctor.

Sounds like a major stumbling block. Except that Qliance also works with self-insured employers to integrate with their health benefits.  Again, quoting from Qliance FAQs:  “We can work with any type of insurance plan. Most employers that incorporate Qliance into their benefits plans save 10% or more, with some employers saving over 40%”

Reading up on all the bells and whistles of Qliance – they seem to be a hybrid of a patient-centered medical home, concierge care, retail/urgent care clinic, with some purchaser-like capabilities. So the question is, in an age where integrated care holds much potential promise – why not keep moving bit by bit down the spectrum towards the purchaser end of the bar?

Perhaps first Qliance will just need to keep moving – to some additional locations. Right now you’ll just find them in the Seattle – Tacoma metro area of Washington.

Scorecard on Value Based Payments

By Clive Riddle, October 3, 2014

Catalyst for Payment Reform has just released their second annual National Scorecard and California Scorecard on value based payments and payment reform made to providers by purchasers, funded by The Commonwealth Fund and the California HealthCare Foundation.

The universe they utilized to track and measure provider payments was based on the National Business Coalition on Health’s eValue8 health plan survey platform, in partnership with NBCH and these business coalitions: the Colorado Business Group on Health, HealthCare 21, the Memphis Business Group on Health, the Mid-Atlantic Business Group on Health, the Northeast Business Group on Health, the Pacific Business Group on Health, and the Washington Health Alliance.

What meets their definition of value oriented payments? They say they are in-network payments that are “either tied to performance or designed to cut waste” and that 40% of commercial payments meet this definition. What makes up the other 60%? They say payment types without quality incentives that include “traditional feefor-service (FFS), bundled, capitated and partially capitated payments.”

What comprises the 40% that is value oriented? Quality incentive driven Bundled Payments (0.1%) + Non FFS Shared Savings (0.2%) + Non FFA Non-Visit Payments (0.6%) + Shared Risk (1.0%) + Partial or Condition Specific Capitation (1.6%) + FFS and Shared Savings (2.0%) + FFS Based Pay and P4P (12.8%) + Full Capitation (15.0%) + All Other (6.7%) = 40.0%.

Here’s more of the numbers shared in this year’s scorecard:

• 53% of value-oriented payments put providers at some financial risk if they fail to improve care or spend over budget
• 38% of payments to hospitals are value-oriented,
• 10% of payments to specialists and 24% of payments to primary care physicians are value oriented
• Of these value-oriented payments to physicians, 71% of the total goes to specialists, and 29% to PCPs
• 15% of participating health plans’ patient members are formally “attributed” to a provider participating in a payment reform contract

Put Your Money Where Your Scalpel Is

By Kim Bellard, September 22, 2014

I propose taking value-based purchasing from the payor-provider contractual backroom and putting it in the health plan benefit design, where consumers directly see and are impacted by it.

One of the most troubling things about our health care system is the lack of accountability. Providers get paid pretty much regardless of how patients actually fare under their care, and often even if demonstrable errors are committed.

Patients don't get a pass when it comes to blame either.  They don't often take good care of themselves, they don't always follow instructions, and they sometimes opt for high risk and/or unproven procedures with limited chance of success.

The mantra to combat all this is "value-based purchasing," a phrase whose meaning, like beauty, is largely in the eye of the beholder.  In theory, it involves adding performance-based financial incentives to payment arrangements, and may also include bundled payments, shared savings programs, pay-for-performance, or even penalties.

Frankly, I think none of these go far enough, nor do they adequately involve the patients.

I want to accomplish a few things with my proposed plan design approach.  One, I want to more directly relate provider payment to patient outcome -- not in the aggregate, as many incentive programs try to do, but at individual patient level.  Second, I want to reduce how much other health plan subscribers have to subsidize care that is of little benefit.  And third, I want to stop rewarding providers for care that has little or no positive impact.<

The following chart outlines how these might be accomplished (assume the "base" plan design was 80/20):

					Estimated Prevalence
	Percent of Allowable Charges:
	Insurer	Patient	Provider
Condition much improved	100	25	0		50%
Condition a little better	80	20	0		25%
Condition no better	60	15	0		10%
Condition a little worse	40	10	0		10%
Condition much worse			-100		5%
					100%
	Total Weighted Costs
	80	20	-5

In other words, a surgical procedure whose allowable charges were $10,000 would pay the provider $12,500 (125%) if things went really well for the patient, only $7,500 (75%) if the patient was no better after it -- and the provider would actually owe the patient $10,000 if he/she ended up much worse after the surgery.  Providers would not be able to balance bill patients for any of the reductions.

If I've done my math right, with the assumed prevalence rates shown above, the payouts are revenue neutral for payors (weighted cost of 80) and patients (weighted cost of 20), prior to the provider payback. 

Health plans and providers who want to test this approach would probably want to do at least a year of data collection so they can fine-tune the final payment levels for the different stages, based on the measured prevalences.  I think we might be surprised by what we'd learn.

There is good evidence that direct engagement by physicians can boost patient use of portals, and I can't

think of anything that would give physicians more incentive to do so than directly tying their payments to such use. 

Ideally, I'd like to see this approach applied not just to the surgeon's fees, but to bundled payments including the hospital/facility and any ancillary providers.  The more providers who have a direct financial stake in the actual outcome, the better.

What we need is a surgical practice and/or health system that has enough confidence in its outcomes to bet on it, and a health plan (or self-funded employer plan) who are willing to take not just the financial risk but also the risk of how to communicate the approach to members.

The question is -- is anyone bold enough to try?

This post is an abridged version of the posting in Kim Bellard’s blogsite. Click here to read the full posting

Goldman Exec: Economy is Growing, but…

By Cyndy Nayer, CEO, Center of Health Engagement, June 18, 2014

Goldman's top economist, Jan Hatzius, believes that the US economy is now growing at an above-trend pace. This is great news regarding economics and income security. For most.

But Hatzius calls out the high student debt and overall slow pace of job creation as a hindrance to the recovery and expansion of the marketplace.  

And there is still the issue of those without health care coverage or those with income insecurity--making less than the cost of living, managing multiple jobs, or at risk of losing their pensions.  

A video was recently published on the relationship of poverty to readmissions, featuring the Detroit Henry Ford health system. When there is low income, lack of access to pharmacies and healthy food, and poor public transportation, patients discharged from hospitals are often readmitted due to poor compliance in follow-up recommendations. They skip drugs, they eat poorly and they miss regularly scheduled physician checkups. Many are readmitted to emergency rooms and inpatient stays.

This, then, becomes not only a patient risk (for both increased costs and poorer outcomes) but also a health system risk (since CMS is penalizing health systems for avoidable readmissions). Costs go up for the patient (copays, deductibles, new prescriptions, more outpatient visits). Costs go up for payers (avoidable medical and drug costs, among others; absence management if the payer is the self-insured employer). Costs go up for the community (unreimbursed medical costs go up, tax dollars are used for some of these and needed infrastructure, education, and job creation are left behind).

A new study from Mannatt and Commonwealth Fund clearly lays out the advantages of clinicians helping patients to get the community services needed to overcome these inequities.

"Before physicians can substantially cut costs and improve outcomes, they must first address patients' social needs, including whether a patient has a home or heat or access to healthy food, according to findings from a new report," says the report.

This is another opportunity for value-based reimbursements to those entities that can coordinate care beyond clinical intervention. The study calls for patient-centered medical homes (PCMH) to onboard these tasks.  

But ACOs, public health and even business entities can become allies in this effort to identify resources to improve access to healthy food, needed pharmaceuticals, expanded consumer debt counseling and educational resources.

Using value-based reimbursement strategies, payers, health systems and public entities could benefit by providing clear increases to those clinical practices that use care coordination and document better health and health cost outcomes.

Sometimes, health is achieved through non-clinical, social determinants (influences) that are improved by using the trusted resources in a patient's life. The physician, nurse, and pharmacist are 3 of the most influential.

athenahealth Annual PayerView Report Ranks Human Top Plan Again For Providersa

by Clive Riddle, June 6, 2014

athenahealth recently released their 2014 PayerView Report, which ranks “commercial and government health insurers according to specific measures of financial, administrative, and transactional performance. These measures provide an objective, comparative benchmark for assessing how easy or difficult it is for providers to work with payers.” For the second year in a row, athenahealth found Humana the top performing plan out of 148 plans analyzed.

Here are their rankings for local and national Commercial plans:

1. Humana
2. HealthPartners
3. BCBS of MA
4. Cigna
5. Group Health Cooperative
6. Capital Blue Cross - PA
7. Care First BCBS - DC
8. Unicare
9. BCBS of NC
10. Neighborhood Health Plan

Four major insights were provided by athenahealth regarding the report:

(1) “ Medicaid's Lackluster Performance Continues - For the 9th straight year, Medicaid performed worse than commercial plans and Medicare on key metrics such as Days in Accounts Receivable (DAR), Denial Rates, and Electronic Remittance Advice (ERA) transparency. “

(2)  “Providers' Burden to Collect on Claims Varies Widely - PayerView data indicates that provider collection burden (PCB), measured as the percent of charges transferred from the primary insurer to the next responsible party after the time of service, is increasing slightly. ..PayerView results reveal that Medicare and many Blue Cross Blue Shield plans require providers to collect large percentages of payments from patients, while Medicaids require minimal collection. “

(3) ”Blue Cross Blue Shield Plans Pay Providers the Fastest - As a category, Blue Cross Blue Shield plans reimburse providers most quickly, with an average of three fewer Days in Accounts Receivable compared to all other payers. On this measure, Blue Cross Blue Shield plans represent 20 of the top 25 performers.”

(4) “Commercial Payers Offer the Most Efficient Enrollments - While Medicaid enrollment proves particularly burdensome, national commercial payers' enrollment proves simplest. “

athenahealth notes that rankings from their report “are derived from athenahealth's athenaNet® database, which to date includes more than 52,000 providers across 50 states. The 2014 PayerView data set analyzes 108 million charge lines and $20 billion in health care services billed in 2013.”

Practice Profitability Index: Physicians Bearish on the Year Ahead

By Clive Riddle, May 9, 2014

CareCloud, in partnership with QuantiaMD, has just released their second annual Practice Profitability Index report. The ten-page 2014 report, “intended to serve as an annual barometer for the operational wellbeing of U.S. medical groups in the year ahead,” finds that “U.S. physicians are now more than twice as likely to foresee eroding, not increasing, profits in 2014,” as they illustrate with survey results in this portion of an infographic provided in conjunction with the report.

Of course, as the healthcare landscape evolves and trends for integration continues to gradually gather steam, those remaining in private practice may view themselves in an increasingly embattled or even endangered species. Albert Santalo, CareCloud Chairman and CEO  tells us, “physicians are experiencing increasing strain on their practice operations as a result of healthcare reform and government mandates. This strain, in turn, affects patients – including the millions of new ones entering the system as a result of the Affordable Care Act.  Nearly half of physicians say they cannot take on these patients, foreshadowing an access to care issue. Meanwhile, despite the hype about emerging reimbursement models, physicians are most likely to seek improvements through programs that help them engage with their sickest and most vulnerable patients.”

The Practice Profitability Index involves gathering insights via an interactive online questionnaire and related discussion groups. This year, 5,064 physicians participated during March, 2014. Here’s highlights of findings presented in the report: 

• Physicians with a negative outlook increased from 36% to 39% during the past year
• Physician optimists declined from 22% to 19%.
• The detailed breakdown of responses for profitability trending was 5% very positive; 14% somewhat positive; 30% about the same; 29% somewhat negative; 10% very negative; and 12% not sure.
• Their top financial concerns are: declining reimbursements (60%); rising costs (50%); requirements from the Affordable Care Act (49%); and the transition to ICD-10 (43%).
• The percentage of doctors spending more than one day a week on paperwork rose sharply between 2013 and 2014, from 58% to 70%.
• 23% spend more than 40% of their time on administration, up from 15% last year.
• 40% of physicians indicated patient engagement programs hold the greatest promise for improving their practice performance in 2014.
• Other responses for improving performance including new alliances with other providers (21%), ACO participation (11%) and mobile technologies (11%)
• The survey was taken before the minimum one-year delay to the ICD-10 code transition, originally scheduled for October 2014, but at that time 44% did not know whether they would be ready. Another 25% were certain they would not be prepared and faced high transition and upgrade costs.
• Of the 48% of respondents that own their practice, 24% of these physicians are considering selling the practice, up from 21% in 2013. 53% are not looking to sell at all, down from 50% in 20

Physicians: Unhappy Campers in Affordable Care Act Land

By Clive Riddle, November 22, 2013

Jackson & Coker, the healthcare staffing company, has just released survey results on current physician views of the ACA, in their 33-page report- Survey: Physicians on the Affordable Care Act. The results shouldn’t be that surprising – physicians aren’t happy campers in this brave new world.

Jackson & Coker highlighted these findings from their survey, which yielded 3,072 self-selected practicing physician respondents from a survey were emailed to subsets of a database totaling 277,778 physicians, which included physicians who have been placed by Jackson and those who have not:

• 80 % believe those patients with current coverage will wind up paying higher healthcare costs
• 765 said overall healthcare costs would go up due to the new health reform law
• 73% said patients would have less choice in picking their doctor
• 66% said they would have to spend more time on administrative duties
• 61% said their opinion of the law has changed for the worse
• 60% said the quality of patient care would be negatively impacted
• 57% said the law would have a negative impact their treatment decisions for patients
• 56% support repealing or defunding the law
• 44% said they would not participate in the Exchange

The general population’s view of the Act often boils down to political perspectives. Physicians would not seem to be immune from red and blue polarization. Indeed, a Mayo Clinic study published in the Journal of General Internal Medicine June 25, 2013 issue: Specialty, Political Affiliation, and Perceived Social Responsibility Are Associated with U.S. Physician Reactions to Health Care Reform Legislation, addressed this issue, and concluded “significant subsets of U.S. physicians express concerns about the direction of U.S. health care under recent health care reform legislation. Those opinions appear intertwined with political affiliation, type of medical specialty, as well as perceived social responsibility.”

The Mayo Clinic authors reported that “(41 %) believed that the ACA will turn U.S. health care in the right direction and make physician reimbursement less fair (44 %). Seventy-two percent of physicians endorsed a general professional obligation to address societal health policy issues, 65 % agreed that every physician is professionally obligated to care for the uninsured or underinsured, and half (55 %) were willing to accept limits on coverage for expensive drugs and procedures for the sake of expanding access to basic health care. In multivariable analyses, liberals and independents were both substantially more likely to endorse the ACA …respectively), as were physicians reporting a salary …or salary plus bonus … compensation type…..Those who agreed that addressing societal health policy issues are within the scope of their professional obligations …, who believe physicians are professionally obligated to care for the uninsured / under-insured …, and who agreed with limiting coverage for expensive drugs and procedures to expand insurance coverage …., were all significantly more likely to endorse the ACA. Surgeons and procedural specialists were less likely to endorse it.”

But beyond the impact of political persuasions and social viewpoints raised in the Mayo Clinic study, it would seem some fundamental business interests are driving the Jackson & Coker results, that boil down to these three things:

1. Concerns about impact on reimbursement levels
2. Issues regarding access to participation in applicable plans
3. Concerns about “hassle factor” of administrative requirements

MedPage Today this week published an article that seems to support these points: Docs Unhappy With ACA Exchange Plans resulting from their press coverage of the AMA’s Interim Meeting Conference. They cite Steven Larson, MD, board chairman of the California Medical Association: “the patients nor the physicians know if they're in network or not," and state “it has been a common complaint thus far, as plans have been slow to report or update provider networks for exchange plans.” With respect to reimbursement, they note “some providers have reported rates as much as 70% below what commercial plans pay, with negotiations starting at Medicaid payment levels.”

The MedPage Today article cites another survey from last month with similar results: “the Medical Group Management Association reported 55.5% held an ‘unfavorable’ or ‘very unfavorable’ view of the impact the ACA's health insurance exchanges on them,” and concludes “with these stories starting to mount, the fear is that patients -- with their insurance card in hand -- either won't be able to find a doctor who is seeing patients with that plan, or will have to travel great distances to find someone who does.”

Certainly, as with the Exchange website enrollment, much needs to still get sorted out with respect to the status of provider networks with participating Exchange plans across the country.

It Depends on the Outcome: Payments for Providers – Benefits for Consumers

By Clive Riddle, May 10, 2013

Two separate studies released this week took the pulse of the outcomes-based financial landscape in healthcare at different ends of the spectrum: Availity released a sixteen-page white paper: Health Plan Readiness to Operationalize New Payment Models for providers, while the Midwest Business Group on Health released a twenty-page report: Employer Survey on Incentives, Disincentives & Outcomes-Based Incentives for employees.

The Availity study was conducted by Porter Research in the fourth quarter of 2012, involving interviews of 39 health plans. 82% of the plans consider payment reform a ‘major priority. 90% expect value-based payment models to impact their top three business objectives ( 46% expect a ‘major’ impact, while 44% anticipate ‘some’ impact.)

That doesn’t mean value based payments are mainstream today.  Just 20% say value-based models

support more than half of their businesses today.  But 40% predict that in three years, value-based models will support more than half of their businesses; and nearly 60% forecast that more than half of their business will be supported by value-based payment models in the next five years. And, of those, 60% are at least mid-way through implementation.

While the ACA uses Medicare as a primary tool to promote provider payment reform, the marketplace seems to be focusing health plans even more on the commercial side. More than 75% say they are focusing value-based payment efforts on their Employer Group plans, compared to 54%  for Medicare plans  and 46% and 44% citing Medicaid plans and Individual plans..

Availity noted that “transitioning to payment models that base compensation on outcomes requires physicians and health plans to exchange new kinds of information – different than what is required under today’s predominant fee-for-service arrangements. 90% of health plans agree that automating the exchange of ‘new’ information required under value-based payments is critical to success, with 85% saying the highest value will come from real-time exchange, though less than half have real-time capabilities.”

Meanwhile, the Midwest Business Group on Health employee incentive study was conducted during April 2013, with responses from 94 self-funded employers that represented multiple industries and locations around the US.  They found that “80% of responding employers are utilizing some form of incentives, with 41% using or planning to use outcomes-based incentives to increase engagement and participation as well as motivate healthy behaviors in employer-sponsored programs.”

Here MBGH findings from the study regarding outcomes-based Incentives:

• Employers responded that 13% are already offering outcomes-based incentives and 28% are planning to launch programs over the next one to two years, while 40% indicated interest, but need more information.
• Of those currently offering outcomes-based programs, 54% tie incentives to both outcomes-based measures (i.e. meeting specific targets such as BMI of 25) and improvements in outcomes (i.e. percentage decrease in BMI), versus one or the other.
• Onsite clinical screening programs are used by 94% of employers as the way to capture biometrics with the top measurements being: 86% blood pressure, 81% BMI, 73% cholesterol, 68% glucose, and A1c and waist circumference tied at 59% each.
• Employers said that 18% are experiencing participation levels of over 90% for outcomes-based programs; while the majority (60%) is experiencing participating levels of 40 to 80 percent.
• Employers indicate that 98% of employee feedback is “somewhat positive” to “very positive.”
• Degree of difficulty is notable with 95% of employers finding some level of difficulty in implementing an outcomes-based program.

Also, MBGH shared this data regarding the overall offering of incentives/disincentives:

• Of the 18% of employers who reported not offering incentives or disincentives, 53% indicated the reason was that it was not part of their corporate culture and 47% are not sure it works.
• For those employers offering incentives, 62% reduce premiums, 38% use gift cards and 35% offer merchandise.
• Of those employers that use disincentives, 43% increase employee share of premiums for non-compliance and 14% have higher plan deductibles or out of pocket fees.
• Activities that most employers’ incented included biometric screenings (70%) and health risk assessments (78%), with the greatest disincentive (78%) being used for tobacco use.
• The monetary value of incentives programs varies widely, with $250-500 for 27% of those offering programs, $100-250 for 22% of employers and $500-1,000 for another 22% of companies.
• Employers indicated that 71% found their incentive strategy was “very successful” or “successful” and 45% viewed their disincentive strategy as “very successful” or “successful.”
• With the Affordable Care Act (ACA) in 2014 allowing employers to increase their incentives from 20 to 30 percent of total coverage, almost 67% said they are “very likely” or “likely” to do so and almost 36% are “not very likely” or “not likely.” For tobacco users, the ACA allows employers to increase the value from 20 to 50 percent, with employers indicating 48% “very likely” to “likely” and 52% “not very likely” to “likely.”

ACO Explosion

Bill Demarco, October 1, 2012

Medicare Shared Savings

Feasibility studies for three ACOs in North Carolina, a medical group in Arizona, a physician alliance in Illinois, a hospital system in Indiana and consultation with several Pioneer Plans has kept us very busy over the last several months. Most of these are physician owned medical groups, while several are IPAs with medical homes who want to collaborate with one another to form the primary care base of a Medicare Shared Savings ACO.

Over 490 applications for new ACOs are in process and due to CMS by September 6th. Add to this the several hundred earlier ACOs approved in April and June of this year and it becomes clear that the 600% growth rate in ACOs since November of last year when final rules were published brings excitement to the marketplace.

This easily represents 20% of Medicare beneficiaries who will be connected to Medicare through their ACO by January 1, 2013. When adding the Medicare Advantage beneficiaries that represent 27% of the Medicare population and growing, it is a factual statement to say that 50% of all Medicare beneficiaries will be receiving their benefits through Medicare contractors instead of Medicare directly. These contractors are all being held accountable by CMS to follow stringent guidelines including patient satisfaction.

This means Medicare has been permanently changed by focusing on shares savings for improving quality instead of merely paying claims. We anticipate ACO mergers and acquisitions will be the next step as investors and hospitals catch up to the opportunity to invest in the new chronic care business model.

We are excited for the plans with whom we have worked and their enthusiasm and innovation encourages us to expand our own resources and capabilities to serve this emerging transformation of the local delivery system.

Cautioning new applicants for next spring

We are talking to people about getting their Notices of Intent (NOI) submitted in the spring. This would make them eligible for submitting an application in fall of 2013 with a start date of January 1, 2014.

Applications that look simple are not acceptable by CMS with simple answers. Some of the key points we have heard from CMS include:

• Several workflow adjustments need to be made to make the patient process coordinated and all encompassing.

• Early charge reconciliations indicate the patient population notified by CMS may be different than the original ACO defined population discussed in early planning.

In addition, beneficiary engagement is a vital area of the application and connects with population management which is the backbone of successful care management. Tools and techniques vary by service area.

What’s an AHO?

What is the difference between a Medicare Shared Savings ACO and an Accountable Health Organization (AHO)? Is an AHO a private ACO?

Many people continue to be confused by private ACOs such as those sponsored by Cigna, Aetna and Blue Cross versus the Medicare Shared Savings opportunity to contract for Medicare lives in their area. While many of these private ACOs represent more of a bundled payment experiment paying global fees to doctors and hospitals tied to some sort of risk banding, the Medicare ACOs have a stronger focus on quality scores versus production of services and in so doing are able to raise the bar for both quality and cost. Private ACO sponsors are slowly making this transition but providers need to read closely what they are obligating themselves to in the future. Some are asking insurers for 2 side risk on day one and some are asking for one side risk only.

Remind Me Why We Have Insurance

By Kim Bellard, September 24, 2012

A recent article in The Columbus Dispatch reported on the practice of doctors providing discounts to patients if they paid directly instead of using their insurance.  It got me thinking about far health insurance has strayed from its original purpose.

We ask health insurance to do a lot of things: lessen concern about catastrophic expenses, reduce financial barriers to care, smooth out cash flow of health expenses, even help us manage chronic conditions via disease management and wellness programs.  Insurance does these things because, frankly, there haven’t been many good alternatives.  But that doesn’t mean there couldn’t be.

The Affordable Care Act -- ObamaCare -- requires expanded coverage for preventive care with no cost-sharing, on the premise that this will help people get those serves.  It troubles me that some, perhaps most, people won’t get necessary preventive services unless it is “free” to them at point-of-care.  That tells me something is really, really wrong with how we look at health.  But why does health insurance needs to be the mechanism for providing incentives to take care of one’s own health?

The Dispatch gave several examples of physicians and hospitals offering significant discounts – up to 40% - to patients who pay directly, in order to avoid the administrative burdens of dealing with health insurers.  It also quoted Tom Blue of the American Academy of Private Physicians as indicating they believed there were 4400 physicians nationally who replied in part or entirely on direct payments from patients, although that would seem to include uninsured patients. 

A more direct patient-physician financial relationship may be an idea whose time has come…again.  So-called “concierge medicine” started several years ago, and has developed to the point where it has its own trade association, the aforementioned American Academy of Private Physicians.  The concept of concierge medicine is that patients pay a fixed fee, monthly or annually, and in return they get guaranteed 24/7 access to their personal physician.  No insurance, no billing, no out-of-pocket payments.  

Examples of concierge practices include EliteHealth, MDVIP, and SignatureMD,  There’s even a television series featuring a concierge practice, USA Network’s Royal Pains.  Prices for concierge service vary widely, with some practices aimed at wealthy families and costing tens of thousands per year, while others are more affordable at $1,500 - $2,000 annually.  Proponents believe it greatly reduces the number of patients physicians have to see, reduces hassles with third party payors, and ensure a closer, more accessible physician-patient relationship.

Then there’s “direct primary care” model.  Like concierge medicine, patients pay flat fees for access to personal primary care physicians.  The lines between the two approaches are somewhat blurry, at least to me, but direct primary care tends to use monthly fees instead of annual retainers, and appears to be generally less expensive, often under $100 per month.  It also has its own trade association – Direct Primary Care – and has had legislation passed in both Oregon and the state of Washington to specifically allow the approach. 

Examples of direct primary care practices include Qliance and MedLion.   The DPC website lists over 80 practices in 19 states, some of whom are also listed in the American Association of Private Physicians website.   DPC argues that by cutting out insurers and the practices expenses devoted to billing and administrative hassles associated with third party payors, direct primary care can save 40% of the health care dollar.   

Concierge medicine and direct primary care both emphasize primary care and flat payments to cover essentially unlimited access to primary care services (and, in some cases, many routine services).  Both seek to eliminate insurers from the equation.  It’s interesting that while these efforts are happening, Medicare and many insurers are experimenting with patient centered medical homes (PCMH), which also seek to reestablish primary care as the centerpiece of a patient’s health care needs.  In the PCMH model, of course, insurance is still very much part of the picture, providing additional financial support to the involved primary care physicians.  In an ACO world, though, health insurance may be less integral to PCHM practices.

For all these models, I can’t help but be reminded of 1990’s capitated gatekeeper approaches, which also featured fixed per-member payments (from insurers) and primary care physicians coordinating all care.  It will be interesting to see how these new approaches – concierge, direct primary care, or PCMH – deal with patients with complex needs.  Just as there was with capitation, there will be financial temptation to triage them off to specialists who are still on fee-for-service, and there will be similar concerns about such practices skimming off healthier patients, not to mention wealthier patients. 

I don’t know if concierge medicine or direct primary care will ever evolve out of niche offerings, and their development will be interesting to watch.  The model I think is potentially even more disruptive to the current system is the encroachment of corporate approaches to retail medicine – e.g., TakeCare, Minute Clinic, Walmart’s recent entry into immunizations, among others  All of them work with health insurance, because that’s where the money is now, but all are also quite happy to take consumer’s money directly and to do so in a way that is more like we buy other goods and services, with clearly delineated lists of services and prices.  If other parts of the health care system think those kinds of approaches aren’t coming to them, they are deluding themselves.

Two things I feel strongly that our health care financing mechanisms should achieve is that low income people need assistance with paying for health care services, and no one should have to go broke due to medical bills.  Even for those, though, I can think of solutions which do not require health insurance.  As for cash flow management and chronic condition management, health insurance may actually be one of the less efficient solutions to address those. 

I am not saying there shouldn’t be any sort of health insurance, but given the mess we find out health system in – expensive, uneven access and quality, high administrative costs, etc. – maybe it’s time we rethought what it looks like.  It’s too bad that, as we start to decide what constitutes essential benefits under ObamaCare, we’re still playing small ball.

How are Providers Managing the Transition with Conflicting Incentives in Payment Structures?

Clive Riddle, September 7, 2012

In the just released September issue of Accountable Care News,the monthly subscription newsletter covering Accountable Care, a thought leader panel was asked: “Given the conflicting incentives of ACO and other FFS lines of business, how are providers managing the transition? Stratifying patient populations based on payment incentives? Managing all patients the same and absorbing the revenue losses? Structuring compensation differently for care team members and individual physicians?

It’s an interesting question. Here’s what the Accountable Care News thought leaders had to say about this issue:

Joel C. Hoffman, ASA, MAAA, FCA, Senior Vice President, OptumInsight Payer Solutions responds that “Provider-sponsored organizations (PSOs) are not going to change who sees which patients, how they manage/coordinate their care, or what they pay their salaried physicians depending on the type of reimbursement received.   Physicians must move to delivering value regardless of how they are reimbursed.   The historic fee-for-service (FFS) incentives for volume and high-intensity services are already shifting to a blended volume/value system, and this transition will continue to accelerate over time in favor of value.  Many of the leading PSOs are already acutely focused on simultaneously improving patient quality/safety while reducing costs of care, even in their legacy FFS reimbursement relationships. Provider reimbursement will evolve to keep pace with the delivery of clinically integrated, coordinated care – case in point, the growth of value-based reimbursement that is expected to help expedite the transformation of the nation’s healthcare delivery system and make it stick.  But FFS reimbursement by necessity will never totally disappear -- today’s PSOs are showing they can positively transform regardless.”

Douglas A. Hastings, JD , Chair, Board of Directors, Epstein Becker & Green, PC, states in part that  “there is not, nor should there be, any single or simple answer to managing the transition.  The pace of change varies around the country due to historical circumstances, current market activity, and a variety of other variables.  The constants are the need to perform well on evolving consensus quality measures and to contain costs in order to absorb reduced reimbursement in whatever actual form that takes.  In addition, there are affirmative investments necessary to make a successful transition, further underscoring the need for capital and operating cost reductions…..Nevertheless, even the most progressive providers will have a foot in both fee-for-service and value-based payment for a period of time.   Approaches to patient care and financial incentives while different payment methodologies co-exist will vary.   My sense from watching and talking to the most recognized and advanced “Triple Aim”– oriented delivery systems is that they aggressively align treatment protocols and financial incentives within the system toward Triple Aim goals from the outset, even though this approach may cost more in the short run.  They argue that such costs are the price of innovation and doing the right thing and that this approach will pay off in the long run.  I think that they are correct.”

Tom Cassels, Executive Director of Research & Insights, The Advisory Board Company says “disciplined providers aren’t waiting for the conflict created by today’s uncomfortable ‘foot in two boats’ transition to value-based contracting to sort itself out.  Rather they are executing clear strategies to identify areas where investments of time and resources in new care models can yield real near-term returns. For instance, these providers realize that they are already at risk for the total cost of their employee health benefits plans as well as the expense of uncompensated (e.g., uninsured) and under-compensated care (e.g., chronically ill Medicaid patients seeking primary care in the ED).  By following the flow of dollars to areas where reduced spending falls directly to their bottom lines, these organizations are making principled decisions to target segments of the populations they serve where their incentives match the objective of reducing the total cost of care.  This is why some of the most exciting innovation in enhanced primary care, patient navigation, and support for patient self-management is coming out of health systems’ management of their own employees and their dependents.  In the words of one progressive health system CFO, ‘Our own spending shows us where we have the opportunity to create value, and if we can learn to shave on our own face we’ll be more credible to other purchasers as a population health manager in the future.’ ”

Nalini K. Pande, JD, Principal Policy Director, American Institutes for Research  reports that “a recent Commonwealth Fund study has recommended that ACOs align as much of their business as possible with value-based payments.   In fact, providers are currently transitioning to a value-based model that uses incentives to reward value and moving away from the traditional fee-for-service (FFS) model that rewards volume.   How are providers managing this transition?   They have focused on changing their systems and the way they do business.  They are utilizing new care practice models to optimize utilization of services.  This includes predictive modeling to risk stratify a population to identify individual opportunities for intervention.  Providers are also engaging patients in managing their own care and using IT systems to assist with clinical decision support, medical error reduction, and patient safety.  Providers have also adopted new care coordination models with continuous quality improvement and a payment structure that recognizes the added value to patients.  Further, they have set up new infrastructures and systems that allow a shift from quality and efficiency ‘measurement’ to quality and efficiency ‘management’.”

Finally, Peter Boland, PhD, President, Boland Healthcare states in part that “hundreds of organizations are still struggling with variations of the ‘what do we want to be when we grow up’ syndrome. The realists understand that bearing increasing levels of financial risk (and reward) with payers and purchasers is becoming the norm. The straddlers still cling to fee for service and volume-based reimbursement despite the inability of Medicare and employers to support such payment. Many providers have recently taken the plunge into the ‘brave new world’ of Medicare Shared Savings Program with an eye towards a gradual transition to modest risk and gain sharing over a five-year period. ….It is an illusion to think that health delivery organizations can have it both ways.  The industry is at the tipping point where accountability for price and service (the value equation) is ‘the new normal’. Good medicine dictates that patients not be stratified by type of payment.  Good business requires meaningful performance metrics to be agreed upon – and tracked -- as the basis for compensation.”

Accountable Care News includes the Thought Leaders panel answering a timely question of the month in each issue, in addition to several feature stories, industry news briefs, and a profile interview with a prominent person involved with accountable care. You can check it out at www.accoutnablecarenews.com.

ACOs by the numbers

By Clive Riddle, July 27, 2012

CMS now touts that with the 88 ACOs brought on line effective July 1, 2012. “the total number of organizations participating in Medicare shared savings initiatives to 153, including the 32 ACOs participating in the testing of the Pioneer ACO Model by the Center for Medicare and Medicaid Innovation (Innovation Center) that were announced last December, and six Physician Group Practice Transition Demonstration organizations that started in January 2011.  In all, as of July 1, more than 2.4 million beneficiaries are receiving care from providers participating in Medicare shared savings initiatives.”

On the commercial side, Cigna has been a national leader in the ACO arms race, with Aetna also making waves, and a wide range of plans have well-developed regional initiatives. Cigna states they are now engaged in 38 patient-centered initiatives in 19 states, including six multi-payer pilots and 32 Cigna-only collaborative accountable care initiatives, covering more than 300,000 Cigna customers, with more than 4,500 participating primary care physicians. Aetna Inc. is developing commercial ACO and Aetna currently has 10 commercial ACO agreements in place and hopes to 20 by the end of the year.

Perhaps the most prevalent commercial strides with attributed membership to date involve the self-funded employee populations of the hospitals and physician organizations that have developed ACOs, using their own employees as the initial pilots for their respective programs.

Using MCOL research in compiling Version 2 of the Accountable Care Directory 2012, the following are ten identified ACOs with large attributed membership (combining Medicare and Commercial when applicable) at this juncture:

1. Advocate Health Partners, serving Illinois with 350,000 attributed members
2. Partners for Kids, serving 37-county coverage area, stretching from urban Columbus to rural Appalachia with 290,000 attributed members
3. Healthcare Partners Medical Group, serving Los Angeles and Orange Counties, CA with 89,000 attributed members
4. Accountable Care Coalition of Texas, Inc. , serving Houston/Beaumont area, Texas with 70,000 attributed members
5. Heritage Provider Network, serving Southern, Central, and Costal California with 70,000 attributed members
6. Aurora Accountable Care Network, serving Eastern Wisconsin and Northern Illinois with 58,000 attributed members
7. Sharp Healthcare ACO, serving San Diego County, California with 56,700 attributed members
8. Atlantic Accountable Care Organization, serving Bergen, Morris, Somerset, Sussex, and Union counties, New Jersey with 50,000 attributed members
9. Hill Physicians Medical Group, serving Sacramento, El Dorado, Placer counties, California' with 46,000 attributed members
10. Partners Healthcare, serving Eastern Massachusetts with 45,000 attributed members

Guy D'Andrea on Pitfalls and Practical Solutions with Shared Savings

By Clive Riddle, May 10, 2012

Guy D’ Andrea, Managing Partner at Discern Consulting, was one of the featured speakers in this week’s Contracting Web Summit 2012, and spoke on  Shared Savings: Pitfalls and Practical Solutions.

For those who need a refresher in what Shared Savings are all about, Guy summarized these core concepts:

• Retrospective calculation of provider’s cost savings (usually relative to overall trend) for a defined population
• Provider is eligible to receive some percentage of the savings as an incentive payment
• Usually (but not always) a “one-way” risk arrangement
• Can include some prospective, fixed payment (essentially a pre-payment for expected savings)

Shared Savings, of course, are a centerpiece of accountable care and medical home initiatives. But stakeholders do run into pitfalls as they try to come to agreement, and implement such arrangements. Before moving on to discuss building a payment model for shared savings with readmissions, Mr. D’Andrea discussed these pitfalls and some general potential solutions.

The prospective payment is a sticking payment. Guy notes that providers will always want the maximum possible prospective payment, since it is “risk-free” revenue.  Payers will want to delay payments until savings are achieved.” His solution: “treat prospective payments as an investment, and discount expected savings to present value.”

Then the argument comes up that is more difficult for high-performing providers to generate savings, because they tend to get penalized for having already done well, leaving less room for future improvements. His solution: “use a ‘blended’ model, in which the target budget is set using a combination of the provider’s own cost history, and that of the peer group.”

Next  comes the concern that  a provider’s experience, particularly when the population isn’t large enough to adequately spread the risk, will be influenced more by luck with outliers than factors under the provider’s control. The D’Abdrea solutions: (1) Establish minimum population sizes and savings rates;  (2) Tie payments to performance on clinical process measures; and (3) Exclude “random, rare, and expensive” events from cost of care calculations.

Lastly,  he addresses the concern of sustainability: he notes that “if savings are a “one-time” event, providers may be worse off financially in the long-run than if they saved nothing (especially for integrated systems).” His solutions: (A) Use a multi-year model that partially credits providers with savings in earlier years; and (B) In the long-term, seek to evolve from shared savings to “two-tailed risk” payment models, such as bundled payment or global capitation.

Walgreens and Express Scripts: The PBM-Pharmacy Feud

By Clive Riddle, March 16, 2012

Once upon a time, pharmacies and PBMs seemed like one happy family – experiencing minimal conflict in the health benefits arena while hospitals and health plans duked it out.  But as the marketplace pressures matured, a full blown family feud  - or pharmacy feud – has erupted in the form of the ongoing Walgreens – Express Scripts saga.

Walgreens walked away from their Express Scripts contract effective January 1^st, due to an impasse over low reimbursement.  Stock analysts so far say the loss of volume does not bode well for Walgreens. But will Walgreens, and other major pharmacies for that matter attempt to turn the table through the merger & acquisition arena, consolidating to improve their contracting clout just as hospitals somewhat successfully did to health plans at the dawn of the new millennium.  Or is it that PBMs will out merge them?

Here’s what’s been expressed in this saga’s script during the past year:

Walgreen’s owned their own PBM, but decided to get out of the business (just as many hospitals shed their regional health plans before going into consolidation mode in the late 90’s and subsequently). Express Scripts was a strong suitor to purchase Walgreen’s PBM, but then Walgreens sold to Catalyst Rx in March last year.

Express Scripts and Medco Health Solutions entered into a Definitive Merger Agreement for the two PBM giants in July 2011, which is still undergoing regulatory scrutiny and thus under a veil of uncertainty.

Walgreens couldn’t re-negotiate a PBM contract with Express Scripts to their satisfaction for 2012 and beyond, so as of January 1^st, they were no longer a participating pharmacy provider.  Walgreens touted its Prescription Savings Club was helping them keep Express Scripts patients, but Reuters reported earlier this month that Walgreen Co's comparable sales fell more than expected in February, the second month that the largest U.S. drugstore chain did not fill prescriptions for patients in the Express Scripts Inc.  pharmacy benefits network.  Reuters cited that the “number of prescriptions filled at Walgreen's comparable stores decreased 9.5 percent during the first 28 days of February after falling 8.6 percent in January. No longer being part of the Express Scripts pharmacy network slashed 10.7 percentage points from comparable prescriptions filled in February, Walgreen said. In February 2011, 12.6 percent of Walgreen's prescriptions were for Express Scripts.”

Adding fuel to this fire were various articles across the country, such as in the March 6^th Oregonian, that Express Scripts users settle in with new pharmacies.  Then this week PCMA, the PBM association, released survey results that tout the headline: New Survey: Walgreens’ Customers Flock to Independent Pharmacies.

But the future may not be so gloomy for holders of Walgreens stock, despite a rash of analysts saying “sell” earlier this year.  Now a possible Rite Aid – Walgreens merger is rumored with the New York Times reporting that a major motive must be that “a merger could create a big new drug store company capable of pushing back against increasingly strong pharmacy benefit managers like Express Scripts.”

Stay tuned.