Stalking the ACO Unicorn May 2011 Health Research Institute (HRI)
-
Upload
kathleen-oneal -
Category
Documents
-
view
213 -
download
0
Transcript of Stalking the ACO Unicorn May 2011 Health Research Institute (HRI)
Stalking the ACO Unicorn
May 2011
www.pwc.com
Health Research Institute (HRI)
PwC Health Research Institute
Agenda
Health Reform Landscape
Physician and Hospital Alignment
Stalking the ACO Unicorn
Q&A
2May 2011
PwC Health Research Institute
Health Reform Landscape
3May 2011
PwC Health Research Institute
Federal budget pressure: Record deficits projected over the decade
4
Sources: Congressional Budget Office, January 2011
Health research institute May 2011
-12.0%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Pe
rce
nta
ge o
f GD
P
Federal budget deficit as a percentage of GDP: 2010-2021
CBO January 2011 Projection assuming: - Extension of all expiring tax cuts and AMT indexing - Phase-down of Iraq/Afghanistan spending - Discretionary spending grows with GDP - Medicare “Doc Fix” extension
CBO January 2011 Baseline
40-Yr Historical Average = -2.8%
Previous post-war max = -6.0% in 1983 (reached -30.3% in 1943)
2010 Actual -8.9%
PwC Health Research Institute
Healthcare entitlements accounts for 60% growth in spending over the budget period, 2011-2021
5
Sources: Congressional Budget Office, January 2011
Health research institute May 2011
PwC Health Research Institute
Costlier care is often worse care
The June 1, 2009, Atul Gawande New Yorker article, “The Cost Conundrum: What a Texas town can teach us about health care,” compares healthcare costs (using 2006 Medicare data) in McAllen vs. El Paso, two Texas cities with similar demographic characteristics
6
Market
Medicare Spending per Enrollee
Utilization
Quality
El Paso
~ $7,500
See below
Hospitals on average performed better on 23 of 25 Medicare quality metrics (than McAllen average)
McAllen
~ $15,000
Significantly higher per capita rates (than El Paso) of: specialist visits, diagnostic studies, surgeries, implantable devices, home health visits, etc.
Hospitals on average performed better on 2 of 25 quality metrics (than El Paso average)
Source: The Cost Conundrum, The New Yorker, June 1, 2009; Atul Gawande: The Cost Conundrum Redux; The New Yorker; June 23, 2009
May 2011
PwC Health Research Institute
Physician and Hospital Alignment
7May 2011
PwC Health Research Institute
Interest in hospital and physician alignment
8May 2011
Cardiologists
PCPs
All SpecialistsAll
Physicians46%
PwC Health Research Institute
Top 5 reasons physicians want hospital alignment compared to the top 5 reasons they think hospitals want them
9May 2011
Why physicians
want hospitals
Why physicians
think hospitals
want them
PwC Health Research Institute 10
Most physicians considering hospital employment expect their income to remain the same or increase
10
May 2011
PwC Health Research Institute
Stalking the ACO unicorn: What the proposed rules tell us
11May 2011
PwC Health Research Institute
The draft rules select for “DNA” traits that are more likely to result in ACO status
12
IDS, PGP Stand aloneStructure
Technology
Community
Care
More likely to be an ACO
Less likely to be an ACO
Sticky Transient
Population focused Individual/episodic
100% meaningful use Partial meaningful use
Traits Why?
Estimates of over $1.5M in infrastructure cost in addition to EMR.
Data reporting requirements around quality and cost require EMR and care coordination.
It’s difficult to manage care with an estimated 25% population turn. Snowbird effect.
Cost savings are often found through chronic disease management
May 2011
PwC Health Research Institute
“Top 10” key findings
13May 2011
PwC Health Research Institute
“Top 10” key findings
1. The draft rules favor health organizations that are ACOs in everything but name – much of the draft rules are based on the experience from the physician group practice (PGP) demonstration project . PGP participants qualify for an expedited application and review process. In addition the barriers to entry are high so that large integrated delivery systems with infrastructure in place will be more likely to meet these requirements than smaller, start-up organizations.
14May 2011
PwC Health Research Institute
Pacesetters…
Physician group practice (PGP) demonstration project participants:
Billings Clinic, Billings, MT
Dartmouth-Hitchcock Clinic, Bedford, NH
The Everett Clinic, Everett, WA
Forsyth Medical Group, Winston-Salem, NC
Geisinger Health System, Danville, PA
Marshfield Clinic, Marshfield, WI
Middlesex Health System, Middletown, CT
Park Nicollet Health Services,
St. Louis Park, MN
St. John’s Health System, Springfield, MO
University of Michigan Faculty Group Practice, Ann Arbor, MI
15
Five healthcare organizations are forming a new consortium to share patient e-health records on-demand and serve as a national model for data interoperability:
Kaiser Permanente
Mayo Clinic
Geisinger Health System
Intermountain Health
Group Health Cooperative
May 2011
PwC Health Research Institute
“Top 10” key findings
2. ACOs will be measured on more quality metrics than any other federal program – the draft rules require organizations to track and perform against 65 quality measures set forth in 5 quality “domains.” The PGP program required only 32 and the new Medicare value based purchasing (VBP) program requires only 25.
16May 2011
PwC
ACOs require quality like no other CMS program
17
Value-Based
Purchasing
Accountable
Care
Organizations
SCIP
7
measures
AMI
3
measures
Pneumonia
4
measures
Patient Experience
8
measures
7
measures
Care Coordination
16
measures
Patient Safety
2
measures
Preventive Health
9
measures
At Risk Population
3
measures
31
measures
Diabetes
10
measures
Heart Failure
3
measures
7
measures
Coronary Artery Disease
6
measures
Hypertension
2
measures
COPD
3
measures
Frail / Elderly
3
measures
Total
Measures
25
measures
65
measures
17May 2011
PwC Health Research Institute
“Top 10” key findings
3. Only 50% of physicians participating in the ACO need to meet meaningful use requirements – This brings up a question of timing because certification of meaningful use may not be complete for a 2012 ACO application to CMS. Additionally ACOs without a complete meaningful use capability will find it difficult to track and manage care.
18May 2011
PwC Health Research Institute 19
Implementing meaningful use can enhance hospital-physician alignment which is essential for success under the accountable care model
Source: PwC Health Research Institute Survey of CHIME CIO members
May 2011
PwC Health Research Institute
“Top 10” key findings
4. There are many barriers to managing the ACO population – beneficiaries are free to seek care outside of the ACO and they are free to opt out of data sharing. ACOs may not even know the population they are managing until the end of the plan year. Although ACOs will see a prospective list of beneficiaries, up to 25% of participants may turn over in any given year.
20May 2011
PwC Health Research Institute
Communication with patients may be a challenge --only 28% of consumers know what ACO stands for
21
Source: PwC Health Research Institute Consumer Survey, 2010May 2011
PwC Health Research Institute
Stickiness matters -- only half of consumers say they would always stay with a hospital or group of physicians responsible for their care
22
Source: PwC Health Research Institute Consumer Survey, 2010May 2011
PwC Health Research Institute
“Top 10” key findings
5. It’s not easy money for three reasons – 1) miss a single quality domain measure and the ACO may not qualify for shared savings. Even if your costs are below the benchmark 2) If the per capita cost per beneficiary is less than 2% below the benchmark there is no shared savings. 3) If the ACO does qualify for shared savings CMS requires a 25% hold back to hedge against future losses in the three year contract.
23May 2011
PwC Health Research Institute
Is the risk worth the reward?
24
Shared Savings Distributed (Loss)
ACO 1
ACO 2
Benchmarked cost of care per beneficiary*
$8,000
$8,000
Number of beneficiaries
5,000
60,000
One-sided model:
Assuming 5% decrease in costs**
$231,000***
$7,560,000
Assuming 5% increase in costs
N/A
N/A
Two-sided model:
Assuming 5% decrease in costs**
$1,300,000
$15,600,000
Assuming 5% increase in costs
($420,000)
($5,040,000)
*For example purposes - same as that used in example calculation of estimating an ACO's maximum potential downside risk and estimating the ACO's yearly losses in proposed rules
**Total amount of shared savings distributed includes the 25% of potential savings that would be withheld from organizations to offset any future losses. Organization that experience savings over the course of the 3-year contract are able to recoup these withholds at the end of three year contract.
***Minimum savings rate of 3.9% used in calculation of shared savings for ACO with 5,000 beneficiaries as described in proposed rule
****Illustrative exampled assumes all quality measures are met and FQHC/RHC bonus is met
Estimated impact of a decrease and increase in spending of 5% against the benchmark for ACOs with 5,000 beneficiaries (ACO 1) and 60,000 beneficiaries (ACO 2)…
May 2011
PwC Health Research Institute
“Top 10” key findings
6. FQHCs and RHCs are the ace in the hole–ACOs that provide some of its beneficiaries services through FQHCs or RHCs are eligible for up to a 2.5%-5.0% bonus depending on whether they are in the one or two-sided model. This also works in the reverse to decrease potential pay-backs if targets are not met.
25May 2011
PwC Health Research Institute
The incentive bonus for providing services through FQHCs or RHCs will make them attractive partners for those pursuing the shared savings program
26
Federal Qualified Health Centers Rural Health Centers
May 2011
PwC Health Research Institute
“Top 10” key findings7. There are 16 ways to be kicked out – ACOs must comply with communication, marketing, and service guidelines in addition to meeting quality and cost saving requirements. There is a process for a second chance under a corrective action plan (CAP). If you are terminated from the program you forfeit any shared savings you may have earned including the 25% withhold.
27May 2011
PwC Health Research Institute
Monitoring and Termination of ACOs
28May 2011
PwC Health Research Institute
“Top 10” key findings8. You can partner with other entities as long as your market share is under 30% – the DOJ and FTC are going to review competitors plans to jointly work in an ACO by each service line. This is going to be a granular analysis of market penetration that may further accelerate physician employment by hospitals and larger groups.
29May 2011
PwC Health Research Institute
Physician alignment is key – here is what physicians believe
30
Source: PwC Health Research Institute Physician Survey, 2010May 2011
PwC Health Research Institute
“Top 10” key findings9. You are either in or you are out – by participating in the ACO program you are precluded from other CMS programs. This means the ten participants in the PGP program must choose between the two. The same holds true for the new payment pilots developed by the Center for Medicare and Medicaid Innovation (CMMI).
31May 2011
PwC Health Research Institute
Can’t have your cake and eat it too…CMS have determined that the following existing shared savings programs overlap with the proposed ACO Shared Savings Program and that no organization can participate in both:
32May 2011
PwC Health Research Institute
“Top 10” key findings10. Decisions, decisions, decisions – the draft rules point to many decisions that will need to be made by applicants. Who do you form an ACO with and who are its participants? Do you apply for the lower risk one-sided model or higher risk/greater reward two sided model? The application process will be arduous; is it worth it to pursue this given the required commitment and the high bar to receive any savings?
33May 2011
PwC Health Research Institute
Opportunities
34
Barriers
The draft rules have both opportunities and barriers to ACO implementation
• First year quality domains are reporting only
• ACO HIT requirements are aligned with meaningful use requirements
• Using the “opt-out “patient consent approach to data sharing will be less burdensome than “opt-in”
• If specialists delivering primary care in the ACO are defined as PCPs it could expand the universe of providers for ACOs. For purposes of beneficiary assignment, specialists can provide primary care, but cannot count their patients as assigned beneficiaries
• Strong incentives for hospital and physician collaboration with the inclusion of future inpatient quality measures
• ACO’s are not permitted to participate in several other CMS programs
• Beneficiaries can opt out of sharing data with ACO
• ACO risk and marketing rules may not align with state regulations
• The FTC/DOJ is reviewing ACO's market share at the service line level which will be time consuming and the denial of an application is not appealable
• Organizations could hesitate to become ACO because many quality measures are not currently reported publically
• If under a CAP, ACO’s cannot receive the shared savings payments and can’t reapply for participation until the end of the 3 year agreement
May 2011
PwC Health Research Institute
The 4 key decisions any organization contemplating ACO status must make
Integration - Can the applicant realistically deliver all that is required for shared savings? How integrated is the applicant now? Will physicians be sufficiently engaged?
Cost-Benefit - The bar is set high to qualify as an ACO and to obtain any significant shared savings. Is it worth the cost to prepare and file an application? Should a provider wait and see how this works out in the first round?
Stickiness - Beneficiaries are in an open model and can seek services anywhere so the ACO must analyze and determine how "loyal" its patient population is since the ACO will be responsible for the cost and quality of the services provided to them.
Risk-Reward - Does applicant apply for the one -sided risk model (first two years --no down side risk but lower reward of shared savings and third year becomes two-sided risk) or the two-sided risk model (greater reward and risk all three years)?
35May 2011
PwC
Questions and Answers
http://www.pwc.com/us/en/health-industries/health-research-institute/
Benjamin Isgurdirector, Health Research [email protected]