What is an ACO and Why should you care?

1. What is an ACO and Why should you care? Mike Scribner, SHP

2. What is an ACO? • “An organization of health care providers that agrees to be accountable for the quality, cost, and overall care of beneficiaries who are assigned to it.” • Typically will be for Medicare enrollees, but could apply to any payer situation.

3. Congress and CMS: ACO has at least one hospital, minimum of 50 physicians (primary & specialists), serve at least 5,000 patients If ACO meets pre-established quality goals, incentive payment achieved. Penalties assessed if care doesn’t meet quality goals. Incentive payments and penalties split between members of the ACO. Providers in ACO to follow best practices, be patient-centered & contribute to best clinical practices to build evidenced-based medicine standards. ACO- Medicare Shared Savings Program

4. Primary care (and possibly specialists) in group practice arrangements. Networks of individual primary care (and possibly specialitst) practices. Partnerships or JVs between hospitals and physicians. Hospitals employing physicians. Other groups of providers that the Secretary determines appropriate. Who can be an ACO?

5. By analyzing patient experiences across a population to implement quality improvement strategies. Vertical integration of primary care, specialty, hospital providers who share risk for quality and total healthcare costs. ACOs achieve this by addressing 3 barriers: Tackle fragmented payment/delivery systems by fostering local, organizational accountability for continuum of care including outcomes, quality and costs. Focus provider payments on improved health outcomes, better quality, and reduced costs. Support patient choice by providing information on treatment risks and benefits. How are ACOs supposed to work?

6. Why does CMS think this is such a big deal? ACO Bundled Payments Medical Home

7. Why is this different from the Provider Sponsored HMOs of yesteryear? • Health technology is more capable in several ways: • Ability to predict high cost/high risk members. • Ability to connect providers more real time to avoid duplication of diagnostic testing and improve on the spot diagnosing. • Ability to discern cost effective/high quality providers.

8. ACO opportunities for rural hospitals • ACA calls for CMS to create ACO demonstrations • for critical access hospitals. • New Center for Innovation at CMS has latitude to • create ACO or similar payment models focused on • rural communities. • Private insurers, large employers looking for new • models.

9. Implementation challenges in rural communities • Achieving capacity and variety of services. • Aggregate patient volume a/k/a critical mass. • Risk adjustment and predictive modeling accuracy. • Start up costs. • HIT and data demands. • Managing expectations of cost savings. • Anti-trust, Stark, civil monetary penalty restrictions.

10. ACO Options for Rural Hospitals • Participate with or respond to larger ACO/ • Nearby Tiertiary Facility • Vendor or contractor or referral relationship • Geographic-sensitive services • Organizational strengths (high quality, low cost) • Affiliate, join, integrate • Must leverage strengths • Geographic-sensitive services • Organizational strengths (high quality, low cost) • Local provider relationships critical

11. ACO Options for Rural Hospitals • Regional co-ops • Aggregate multiple hospital(s), clinics, individual providers across region. • Aggregate patients across region to get critical mass (e.g., 5,000 Medicare beneficiaries). • Identify potentially unnecessary duplication or gaps of service. Contract to close gaps. • Beware of existing anti-trust, Stark, civil monetary penalty restrictions.

12. ACO Options for Rural Hospitals • Micro-ACOs • Specify smaller geographic region, fewer patients, fewer services and less financial risk. • Focus on total cost of care coordination, not necessarily total cost of care delivery. • Develop referral and other agreements with other providers to provide services not offered in the network. Attempt to contract on quality improvements and cost containment.

13. ACO Options for Rural Hospitals • Uncoupled-ACOs • Develop ACO (cost/quality accountability) for providers within community/region. • Carve out CAH and other cost-based providers from direct ACO/risk participation, but provide incentives for quality and cost performance. • Create financial rewards for ACO providers based on total cost and quality (excluding CAH incentives).

14. Implications of ACOs on CAHs (or a guess at it, anyway….)

15. Some kind of ACO will likely happen near you • Typically, they will be started by the tertiary facilities who have : • The internal clinical decision support/ • IT infrastructure to get going. • The likely pattern: • It will likely start with Medicare volume, • Develop the tools/processes to manage care • Then shift to commercial/Medicaid managed care

16. Implications • This will drive the following: • Large flow of Medicare money flowing through the ACO • mechanism typically controlled by the large hospitals. • A huge push to connect providers through health exchanges: • allowing better care coordination, • but also likely pulling the covers back on real outcomes data • for the rural providers. • Most providers are probably not sure what that data would • reflect. • Pay for performance mechanisms. While they may start with the • ACOs, successful models will be replicated in the commercial and • possibly Medicaid CMO worlds.

17. Power Shifts • There will likely be a major power shift among providers: • Recently • Balance of power has swung away from hospitals toward surgical specialties and ancillary providers who have picked off the profitable hospital volume to shift into practice or ASC settings for those physicians to benefit financially. • Potential Future model • Large hospitals will likely be the principle sponsors of ACOs. • Which will control large sums of money which places them in a position of strength in how the rural providers are compensated. • While this may not be necessarily a horrible outcome vs. those $’s being controlled by another payer, it does shift power back to those hospitals who lead those efforts.

18. PCP’s are Key • Primary care physicians are key going forward. • Their role as gatekeepers will be funded more substantially . • It is probable that they will take a more active role in • managing downstream costs. • As such, it will be in their best interest to know if their referrals are made to cost effective providers and avoid duplicative testing, etc. • A shift in power in the market will likely be experienced to acknowledge their role in the market.

19. Revenue Growth • Fee for service pricing mechanisms are going away or • will be deemphasized in the future. • Therefore, growth strategies built around “add • ancillary services or another doc” solely may not • drive additional growth. • In the future: • The key to revenue growth will be to coordinate care and manage costs better. • More IT/clinical decision support resources will be needed.

20. Overhaul Needed • Providers need an overhaul: • IT resources to track and share data real time to participate in ACO type • mechanisms. • Internal processes to account for real care coordination/cost management • responsibilities that are not considered currently. • Having the tools are only half the issue: • Most practices do not take seriously their “administration” functions for the Medicaid population • And do not have substantive outbound mechanisms to ensure: • Meds are obtained • Appointments are kept • Or any serious internal monitoring of patient population health • to chart a course to improve outcomes.

21. Initial issues for rural hospitals to consider • Nail down primary care provider relationships. • Other provider relationships important but secondary • Assess relationship with nearby tertiary facility. • Know where they stand in ACO development (if anywhere). • Understand if they think you’re replaceable with a 24/7 Urgent Care clinic. • Develop your leverage. • Get upstream if conversations ongoing. • Focus aggressively on quality improvement and • patient safety. • Know your quality data. • Readmissions • CHF, other chronic conditions with local needs • Know your “total cost of care” or “continuum of • care” (parts A and B, long-term care, RX drugs).