The Transformers: ACO’s, Bundled
Payments and Implications for
Physician Practice
STUART J. GLASSMAN, MD, FAAPMR
CLINICAL ASSISTANT PROFESSOR, GEISEL
SCHOOL OF MEDICINE AT DARTMOUTH
CLINICAL INSTRUCTOR, TUFTS UNIVERSITY
SCHOOL OF MEDICINE
PRESIDENT, GRANITE PHYSIATRY, PLLC,
CONCORD, NH
Financial Disclosure Slide
 Nothing to Disclose
Concord Hospital/Capitol Region Health Care
(Concord, NH)
 New CEO (Robert Steigmeyer) came from Geisinger
Community Medical Center
 Non-profit, Level 3 Trauma Center, 295 Beds
Dartmouth Hitchcock Medical Center/Geisel
School of Medicine (Lebanon, NH)
 Level 1 Trauma Center, 396 beds
 CEO/President—Dr. James Weinstein
(Orthopedics/Spine Care)
 Health System/Clinics serve 1.5 million population
in NH and Vermont
Accountable Care Organizations
 What's an ACO?--Accountable Care Organizations
(ACOs) are groups of doctors, hospitals, and other
health care providers, who come together voluntarily
to give coordinated high quality care to their
Medicare patients (www.cms.gov)
 Incentive payments for cost-effective healthcare
outcomes
ACO Categories
 Medicare Shared Savings Program—a program that
helps a Medicare fee-for-service program providers
become an ACO
 Advance Payment ACO Model—a supplementary
incentive program for selected participants in the
Shared Savings Program
 Pioneer ACO Model—a program designed for early
adopters of coordinated care
 ACO’s must manage 5,000 Medicare beneficiaries
for at least 3 years (Obamacare)
ACO Data 2014
 Currently over 600 ACO’s in the United States
(CMS/government contracts, private commercial
ACO’s)
 Over 20 million lives covered-www.leavittpartners.com
 CMS indicates over $372 million in shared savings
for ACO programs, with improvements in quality
data reporting
 ACO penetration map:
Business Issues in Health Care Delivery Systems
 Bundled Payments for Care Improvement Initiative
(BPCI)
 Announced by CMS Jan. 31, 2013
 Organizations will enter into payment arrangements
that include financial and performance
accountability for episodes of care
BCPI (cont.)
 BCPI Locations:
4 Models of Bundled Payments
 Model 1: Retrospective Acute Care Hospital
Stay Only
 Under Model 1, the episode of care is defined as the
inpatient stay in the acute care hospital. Medicare
will pay the hospital a discounted amount based on
the payment rates established under the Inpatient
Prospective Payment System used in the original
Medicare program. Medicare will continue to pay
physicians separately for their services under the
Medicare Physician Fee Schedule..
Bundled Payment Model 2
 Model 2: Retrospective Acute Care Hospital
Stay plus Post-Acute Care
 In Model 2, the episode of care will include the
inpatient stay in the acute care hospital and all
related services during the episode. The episode will
end either 30, 60, or 90 days after hospital
discharge. Participants can select up to 48 different
clinical condition episodes.
Bundled Payment Model 3
 Model 3: Retrospective Post-Acute Care Only
 For Model 3, the episode of care will be triggered by an
acute care hospital stay and will BEGIN at initiation of
post-acute care services with a participating
skilled nursing facility, inpatient rehabilitation
facility, long-term care hospital or home health
agency. The post-acute care services included in the
episode must begin within 30 days of discharge from the
inpatient stay and will end either a minimum of 30, 60,
or 90 days after the initiation of the episode. Participants
can select up to 48 different clinical condition episodes.
Bundled Payment Model 4
 Model 4: Acute Care Hospital Stay Only
 Under Model 4, CMS will make a single, prospectively
determined bundled payment to the hospital that would
encompass all services furnished during the inpatient
stay by the hospital, physicians, and other practitioners.
Physicians and other practitioners will submit “no-pay”
claims to Medicare and will be paid by the hospital out of
the bundled payment. Related readmissions for 30 days
after hospital discharge will be included in the bundled
payment amount. Participants can select up to 48
different clinical condition episodes.
Triple Aim (cont.)
 Has 3 simultaneous areas of focus:
 1. Improving the health of populations
 2. Improving the patient experience of care
(including quality and satisfaction)
 3. Reducing the per capita cost of health care
 Emphasis on evidence-based medicine outcomes and
comparative scientific research for healthcare
decisions
Triple Aim (cont.)
Patient Centered Medical Home
 Patient-Centered Medical Home Recognition
 The patient-centered medical home—one of modern health
care’s most important innovations—is a model of care that
emphasizes care coordination and communication to
transform primary care into “what patients want it to be.”
NCQA Patient-Centered Medical Home (PCMH) Recognition
is the most widely-adopted model for transforming primary
care practices into medical homes.
 Clinicians, insurers, purchasers, consumer groups and others
know the patient-centered medical home is a proven
alternative to the nation’s costly, fragmented delivery system.
Research confirms that medical homes can lead to higher
quality and lower costs, and can improve patient and provider
experiences of care
PCMH (cont.)
 Safety Net PCMH Model
Accountable Care Organizations in NH (2013)
 Pioneer ACO—Dartmouth Hitchcock ACO (NH/VT)
 Granite Healthcare Network/Cigna
 North Country ACO (Littleton, NH)
 New Hampshire Citizens Health Initiative Accountable
Care Project
 Concord Elliot ACO LLC (Medicare Shared Savings
Program)
 Northern New England Accountable Care Collaborative
(Maine, NH, Vermont)
 ElevateHealth (Shared-Risk Arrangement between
Harvard Pilgrim, DHMC and Elliot Hospital)
Accountable Care Organizations in NH (2014)
 Lahey Clinical Performance Accountable Care
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Organization, LLC
OneCare Vermont Accountable Care Organizations,
LLC
The Premier Health Care Network, LLC
Winchester Community CO
Circle Health Alliance, LLC
New Hampshire Accountable Care Partners ACO
Darmouth-Hitchcock ACO
North County ACO
NH Accountable Care Partners ACO
 Made up of 4 health systems—Concord Hospital,
Elliot Health System, Southern NH Health System,
Wentworth-Douglass Health System
 Based in Concord, NH
 965 Health Care providers
 Cover 40,000 Medicare beneficiaries
A Cautionary Tale—Where Is Rehab?
 NO involvement of PM&R at any leadership level in
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the various ACO’s
Lack of involvement in Post Acute Care Committees
Most physiatrists in NH are NOT employed by
hospital systems—are we outside looking in?
NH has 2 IRF hospitals (Concord, Salem), 3 IRF
units (Manchester, Nashua, Keene), 4th to open in
March 2015;various SNF level facilities (Genesis),
NO LTACH
No PM&R residency
PM&R in the Brave New Healthcare World
 Post Acute Care Issues and Outcomes within ‘shared
care dollars’—Variable Care costs? (IOM variation
was 73%)
 Based on patient needs, NOT patient location (2012
Medicare post acute care costs: $62B)
 Functional Outcomes and Quality of Life Measures
in ACO’s; 2 separate bundled payments (Acute/Post
Acute Care)
Variation in Post Acute Services (IOM)
Physician Practice Concerns in ACO/Bundled
Payment Models
 Upside only risk: Medicare Shared Savings, Medicare
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Advantage—no penalties if physician/hospital does not meet
savings goal; can get bonuses if goals are met; up to 60% of
savings goes to physician/hospital (one-sided risk)
Downside risk—hospitals/physicians lose money if savings
goals are not met (two-sided risk)
Flat management fee—no bonus if savings goals are met (fee
usually $3 to $5/month per patient)
Public versus private payors—much more downside risk with
private payor ACO; can’t tolerate losses in early years of the
program
Contracts may switch from one-sided to two sided after a few
years
Risk Versus Reward
 Loss of practice independence when joining an ACO
 Significant financial up-front costs
 Risk of exclusivity (usually for PCP’s) in a single ACO
 Balance of quality measure outcomes and cost
savings generated (CMS Shared Savings program has
33 quality measures for reporting)
 PCP’s will likely want to have routine follow up care
stay within their offices and NOT refer to specialist
physicians
Global Risk Contracting
 Becoming popular in Minnesota and Massachusetts
 Fixed-dollar payment amounts per patient for a
specified time period (one month, one year)
 Large incentive on controlling costs
 Bundled services at the patient level, not the episode
of care level
 May include supplemental payments based on
quality measure outcomes
Avoiding Specialist Exclusivity Clauses
 ACO exclusivity analysis focuses on whether ANY
physician in a single-specialty or multispecialty group
practice provides services under E&M codes for office,
outpatient, home or nursing facility visits, and whether
the Medicare patient sees a PCP during the applicable
time period
 Must be careful to avoid triggering the ACO exclusivity
clause, which will limit the specialist to that ACO only
 Specialists should encourage patients to see their PCP
 Consider providing services under a separate entity that
bills under a separate TIN (federal tax ID number)
Bundled Payments
 Covers payments to 2 or more providers during a
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single episode of care or over a specific period of time
Already seen in ‘global surgery periods’
‘Actual’ bundle—single payment to one entity (i.e.
ACO) which then splits up the payment to multiple
physicians
‘Virtual’ bundle—the payer makes payments to
multiple providers, based on the negotiated predefined rules of the contract
It IS risk-contracting; physicians should know how
payments and risk adjustment factors are calculated
Commercial Bundled Payments Map
Bedford (NH) ASC/Harvard Pilgrim Healthcare
Bundling Pilot Program
 Applies to routine colonoscopies—bundled payment
for surgeon, anesthesiologist, facility and pathologist
 44 patients participated in the first quarter of 2014
 Has a built in 5% price discount
 Follows quality metrics from the American College of
Gastroenterology (number of screening that identify
polyps/cancer, type of anesthesia used)
Post-Acute Care Services and the Triple Aim
 $62 billion spent in 2012 by Medicare on post-acute care
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services (11% of Medicare outlays)
IOM report shows that there is a 73% variation in total
Medicare spending due to utilization of PACS
Hospital referral regions (HRRs) with high PACS also
have the highest overall spending
Quality Outcome Measures for ACO’s in 2015 will likely
add in a ‘SNF 30 day “all-cause” readmission’ quality
metric
Improved patient outcomes do correlate with
appropriate PAC utilization (SNF, IRF, Home Health,
LTCH)
Engagement Spectrum of ACO’s and PAC
Providers
 Minimal—no formal engagement. ACO informs
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physicians of their referral patterns
Conditional Collaboration—shared standards,
protocols and data utilization; stay within preferred
provider network
Partnership—shared quality metrics and discharge
data; have ‘care transition coordinators’
Financial and Data Integration—PAC provider has
access to EHR; shared financial risk; share
technology
Full Integration—PAC providers are owned by ACO
Coordinated Model of Acute and Post-Acute Care
 Integrated-Care markets—full array of PAC services
 Transitional hospital care (LTACH), short-term
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rehabilitation (IRF), sub-acute, skilled nursing, home
health, palliative care, hospice
Joint ventures for bundled payments initiative (i.e.
Cleveland Clinic)
Manage the transition of care for the patient, improve
outcomes, decrease costs
Attractive to payers, ACO’s and hospital systems
Example—Kindred Healthcare Inc. (Louisville, KY; KND;
annual revenue $5B;
What Does the Physiatrist Bring to the
ACO/Bundled Payment Table?
 Ability to work within a team format
 Focus on functional, Triple-Aim outcomes
 Understanding of care transitions in the post-acute
world
 Ability to treat multiple organ system issues (brain,
spine, musculoskeletal, cardiac) and disease states
(diabetes, CHF, cancer, pain, obesity, asthma)
 Understanding of Durable Medical Equipment needs
 YOU MAY HAVE TO CRASH THE PARTY—the ACO
leaders may not understand what we do!!