The Essence of Accountable Care
HFMA KY
January 24, 2013
®
Jill E. Sackman, D.V.M., Ph.D.
Senior Consultant
Numerof & Associates, Inc.
Introduction to NAI
 NAI is a strategic management consulting firm with over 20 years
experience serving Fortune 1000 companies, with a focus on
industries in transition
 Our work across the industry with healthcare delivery, payers,
and manufacturers is focused on redesigning and implementing
new business models that sustain profitable growth under
changing market conditions.
 We have made the evolving requirements of “better care at lower
cost” a core part of our healthcare consulting practice. We’ve
done cutting-edge work focused on accountability and bundled
pricing, as well as helping our clients develop new payment and
care delivery models designed to improve health outcomes and
lower costs.
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Roadmap for Today’s Discussion
 Healthcare in the U.S.: Between a Rock and a Hard Place
 The ACO Response
 Holes in the Case for ACOs
 Potential Solutions/Strategies for Success
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Roadmap for Today’s Discussion
 Healthcare in the U.S.: Between a Rock and a Hard Place
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Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
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Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
 U.S. healthcare costs are growing faster than other countries
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Numerof & Associates, Inc.
Copyright 2013 Numerof & Associates, Inc., St. Louis, MO
Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
 U.S. healthcare costs are growing faster than other countries
NAI
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Numerof & Associates, Inc.
Copyright 2013 Numerof & Associates, Inc., St. Louis, MO
Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
 U.S. healthcare costs are growing faster than other countries
NAI
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Numerof & Associates, Inc.
Copyright 2013 Numerof & Associates, Inc., St. Louis, MO
Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
 U.S. healthcare costs are growing faster than other countries
 Rising insurance premiums
are a growing burden for
employers and consumers
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Healthcare in the U.S.: Between a Rock and a Hard Place
 Healthcare costs are growing faster than other goods and
services
 U.S. healthcare costs are growing faster than other countries
 Rising insurance premiums
are a growing burden for
employers and consumers
 Higher spending does not
translate into better outcomes
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Bottom Line:
Everyone is demanding better quality at lower cost
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What has led us here?
 Financial incentives that promote
volume, not quality outcomes
 Increased cost
 Fragmented delivery of care
 Questionable value
 Variability in treatment practices
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 Increased utilization
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Roadmap for Today’s Discussion
 Healthcare in the U.S.: Between a Rock and a Hard Place
 The ACO Response
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The ACO Response
 “Accountability for care” is not a new concept.
 It entered the spotlight in the 1990s through programs intended to
create “greater accountability on the part of providers for their
performance.”
 The underlying intent of the ACO model was to address the lack
of financial incentives for reducing costs while improving quality,
coordination, and consistency of care.
 The incentive for ACOs would be to increase efficiency -- ACO
members would share the savings resulting from lower costs.
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2011 – 2014 Timeline
2007
2010
2012
2011
2014
Beyond
1/1/12 its
Shared Saving
Elliott Fisher of Dartmouth
PPACA signed into
• 3/31/11:
law
CMS releases
All first year ACOs will have
Program
begins. There
willthe
beshared risk stage, if
Medical School publishes
proposed
the “Shared
• Outlines a “Shared
Savings rules for
reached
twoinviting
tracks for ACOs:
“Creating Accountable
Care
Savings Program,”
Program.”
they have continued with the
Organizations: The
Extended
commentary
before
rules
are
• CMS will determine how this
• One allows the ACO
notSavings
to
Shared
Program.
Hospital Medical Staff.”
He
is
finalized.
program is to be implemented.
share in risk for the first two
generally credited with coining
• 6/6/11 Comment period
closes.
years of
the program,
the phrase “Accountable Care
• Final rule will be•released
after
One shares risk from the
Organization.”
all comments have
been
beginning,
for a larger share of
reviewed.
potential cost savings.
• CMS will accept applications
for ACOs and will approve or
reject by 12/31/11.
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Sources: Focus on Health Reform, Kaiser
Family Foundation and healthcare.gov
Roadmap for Today’s Discussion
 Healthcare in the U.S.: Between a Rock and a Hard Place
 The ACO Response
 Holes in the Case for ACOs
 Potential Solutions/Strategies for Success
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Copyright 2013 Numerof & Associates, Inc., St. Louis, MO
What’s an ACO?
 A legal entity consisting of groups of physicians and other
providers that work together to manage and coordinate care for
Medicare FFS beneficiaries.
 Governing body: 75% ACO providers; at least one Medicare
beneficiary.
 These groups must meet defined quality-performance standards.
 Through “shared savings” programs, ACOs receive a portion of
the savings if they “sufficiently” reduce costs and improve
quality.
 ACO agreements may be terminated by either the ACO or CMS.
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What’s an ACO? (cont.)
Pioneer ACO
ACO Shared Savings Program
Launch Date
12-2011
2nd round applications due 3-2012
Participants
32 (160 LOI, 80 apps)
TBD
Duration
3 yrs., optional 2 yrs. more based on
performance
3 yrs.
Risk Exposure
Significant -- “Benchmark expenditure” TBD
7.5% cap for losses/savings yr. 1-3
10% cap for losses/savings yr. 1-3
Metrics
“Outcomes-based”
33 “quality” measures
Payment Methods
Year 1-2: FFS Shared savings/losses1
Year 3: Population based (PMPM)
Years 1-3: FFS
Beneficiary Status
15,000 Medicare (if rural, 5,000)
Assigned by PCP
Informed
Free to move in/out
5,000
Assigned by PCP
Naïve
Free to move in/out
Commercial Link
ACOs required to engage in similar
arrangements
N/A
Advance Payment
Model
N/A
Financial support to physician-owned
and rural providers needing start-up
funds for staff, IT, etc.
1Benchmarks
will be calculated based on average growth % for reference population and absolute dollar growth for the reference
pop. If the difference is >1%, ACO is held accountable for a portion of the losses or rewarded with a portion of the savings.
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Key Facts about ACOs (shared savings)
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 Quality is measured relative to national averages (65 categories).
 Results used to calculate % of savings ACOs are eligible to receive.
 Quality performance data is made publicly available.
 Savings judged against historical Medicare expenditures, trended
forward.
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Key Facts about ACOs (cont.)
 Quality Domains: Patient Satisfaction (7) (e.g. overall doc ratings,
access to
specialists)
Care Coordination/Patient Safety (6) (e.g. screening for falls,
%PCPs successfully
qualifying for EHR (X2))
Preventive Health (8) (e.g. colorectal screening, flu vaccines)
At-Risk Pop. Mgmt. (12) (e.g. diabetes management,
A1C LDL <100)
 Scoring: Each domain gets an average score
ACO gets a total score
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Key Facts about ACOs
The goal is better health outcomes, but the measures are
generally inputs...
Year 1: Pay-for-reporting on 33 measures
Year 2: Pay-for-performance* on 25 measures, R on 8
Year 3: Pay-for-performance on 32 measures; R on 1
(i.e. functional status)
... to be eligible for savings, ACOs need to achieve minimum
performance level (30%) on at least 70% of the items in each domain
*Benchmarks will be defined by the end of year 2.
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Getting to the Goal: Better Outcomes at Lower Cost
Accountable Care Requires:
 Real transparency in cost and outcomes
focused on the consumer
 Integration and coordination across the care
continuum
With or
without an
“organization”
 Real cost reduction and variability management
Financial incentives and payment models need to be realigned
to reward quality outcomes, not volume.
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Approach:
 Health systems – improve operational model through better
understanding of cost drivers and their relationship to clinical
outcomes and health maintenance
 Providers must improve care coordination, reduce unnecessary care,
streamline and standardize care pathways, effectively and proactively
manage patients with chronic conditions, etc.
 Clinicians – improve current guidelines and treatment approaches to
engage, motivate, educate, and support patients and focus on
outcomes
 Promote wellness and prevention, enable communication with care
providers to improve early or preventative care
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Degree of Complexity and Risk Sharing
Getting to the Goal: Better Outcomes at Lower Cost
Range of Strategies for Improving Healthcare Cost and Quality
Care Coordination /
Partnerships
Bundled Payments across
the Continuum of Care
Predictive Care Paths
Quality & Efficiency
Improvements
Full Capitation
Bundled Payments for
Episodes
Pay for Performance
Fee-for-Service
Degree of Comprehensiveness
Alternate payment models require quality improvements
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Methods:
 Improve clinical effectiveness – create predictive care paths
and require physician and institution accountability
 The predictive care path captures evidence-based guidelines on
clinical decisions, decision criteria and recommended
interventions.
 The provider organizations can monitor actual care against the
care path and track outcomes so data can be used to manage
variability.
 The care path provides insight into the processes that drive
variation in costs and outcomes.
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Methods (cont.):
 Improve coordination across the care continuum
 Hospitals should improve collaboration with providers, social
agencies and other specialized organizations (hospice, home
health, etc.).
 Prepare for and/or implement alternative payment models
 ACO alternatives and payment reform shift risk to providers (and
move away from traditional fee-for-service payments)
 Pay-for-performance / Bundled payments / Medical home – all
require establishing quality performance targets, care efficiency,
and care coordination
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Evidence-Based Predictive Care Paths
A high-level outline of treatment approaches (not minutia procedures),
identifying key steps to take and corresponding decision points.
 require clinical performance, care continuum and integration –
hospitals will have to expand the view of the care episode (beyond the
hospital walls) and create partnerships that include post-acute care
providers
 impact how service lines are designed – need to be aligned with
physicians…and have data on outcomes (the “right” metrics)…
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Evidence-Based Predictive Care Paths (cont.)
 can serve as the basis for alternative payment models, such as
bundled pricing.
 Bundled pricing is based on a defined set of services with a specified
quality outcome delivered at a fixed price.
 Care path development is a starting point for calculating revenues and
costs.
 Evidence-based care paths help ensure consistency, quality outcomes,
clinical flexibility, and cost-effectiveness.
Providers that effectively use predictive care paths and
collect outcomes data can establish the economic and clinical
value (ECV) of their services to patients and payers.
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Getting to the Goal: Better Outcomes at Lower Cost (cont.)
Predictive care paths and
alternative payment models
(e.g., bundled pricing)
Aligns provider and payer interests
around increased efficiency, better
care, and improved value
&
Realigns financial incentives and
payment models to reward quality
outcomes, not volume of services
provided
Key steps to create
transparency, cost reduction,
manage variability, and
coordinate care
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Requirements for Success -- ECVSM
 Regardless of whether an organization becomes an ACO,
providers and delivery organizations must be able to
demonstrate that their services deliver economic and clinical
value.
 Accountable care requires: transparency, cost and quality
management, and a strong economic and clinical value case -- all
of which are necessary, regardless of whether you decide to form
an ACO
ECV as a source of competitive differentiation
ECV represents a core competency that needs
to be embedded throughout the business!
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