Will providers taking on more risk produce create cost savings and better healthcare for the underserved? Healthcare experts April Wortham Collins and Dutch Dwight weigh in.
The ACO. It was hailed as the care delivery and payment model that would cure healthcare’s inefficiency ills and financial woes. While we’ve seen some quality improvement from Medicare’s Shared Savings Program, the U.S government has yet to see actual savings. Now, CMS has unveiled a more enticing model for providers to take on more risk—but will it work?
According to Kaiser, last year Medicare paid $60 billion to 353 ACOs (Accountable Care Organizations) to take care of nearly 6 million Medicare beneficiaries. Some ACO’s were successful in reducing the use of hospitals and other costly resources. Nevertheless, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund after paying the bonuses to the strongest performers; a far cry from Medicaid’s 2011 predication of the anticipated savings between $10 and $350 million.
The problem? Too many providers were not willing to take on the risk. Only seven percent of ACOs opted for high-risk/high reward in 2014, where they had the potential to earn larger bonuses but would have to accept the risk if those patients cost Medicare more than anticipated. Most ACO’s opted to avoid the potential financial punishment even if it meant the potential bonuses would be smaller. Risk aversion was so great, in fact, Medicare increased the participation period to up to six years without fear of penalty. However, it seems CMS knew it needed a better plan to get more providers on board.
“As we’ve seen from the Medicare Shared Savings Program, far too many ACOs have been content to take the safer, yet less effective, shared-savings approach to population health management,” said April Wortham Collins, Senior Analyst at Decision Resources Group, a healthcare research and consulting firm based in Burlington, MA. “Yet, the Pioneer model has proven too ambitious for many of the country’s most advanced integrated delivery networks. The fact that at least five of the first 21 Next Generation ACOs are former Pioneer ACOs, and most of the remainder are shared-savings model ACOs now moving to risk, tells me that these organizations have not given up on accountable care — and neither has CMS.”
The new model announced on January 11th, allows participants to take on higher levels of financial risk (up to 100 percent), than those participating in current initiatives. The risk may be greater but so are the opportunities to share in the model’s savings through better care coordination and care management. Those participating will receive their budgets prospectively to plan and manage care around these financial targets from the outset as well as choose from more flexible payment options.
As Collins had mentioned, there are currently 21 ACOs participating in the Next Generation ACO program in the following states: Maine, Massachusetts, Pennsylvania, North Carolina, Florida, Michigan, Indiana, Wisconsin, Illinois, Minnesota, Iowa, Texas, Arizona, and California. It’s an ambitious yet necessary step in the process; for the program to pay off, providers are going to have to pay up.
“If ACOs are ever going to reach their full potential, participating providers must take on financial responsibility for clinical quality and patient outcomes. There is no accountability without downside risk,” said Collins. “CMS recognizes this, and the Next Generation Model is its latest effort to nudge ACOs into accepting risk by allowing them access to the necessary tools— telemedicine, as an example— and ‘sweetening the pot’ when they meet or exceed quality metrics while reducing overall spending.”
The move is reflective of the push and promise of telehealth services touted to improve population health management initiatives by filling in those care coordination gaps and reaching the underserved. “The re-evaluation by CMS is evident in their messaging: ‘test the use of pre-paid shared savings to encourage new ACOs to form in rural and underserved areas and to encourage current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk,’” said Timothy H ‘Dutch’ Dwight, vice president of business development for Medullan, a digital health innovation firm based in Cambridge, MA. “Critical access hospitals can now potentially become profit centers while serving their constituents, versus consistent centers for losses. I believe that this change will create opportunities to innovate in these regions in such great need.”
Still, the question as to how far one can reach the underserved via technology will continually be called into question. With both ACO adoption and telehealth still in the age of infancy, it will be interesting to see how its effectiveness matures and what true impact it will have on healthcare delivery.
“Telemedicine is not an ‘Internet of Things’ solution. Remember, the vast majority of these households are reachable only through land lines, not wireless,” said Dwight. “These critical access hospitals could become the true test beds for innovation and investment. These patients want to be touched. They are not adverse to relationships with people. The more you touch these patients and help them, the more they will respond and the lower the cost of care will be. In the end, healthcare is about people and communities of people helping each other.”
There may be more questions than answers as to what will happen with this new payment model in the works. Yet, one things seems certain, the “A” in accountable care means someone other than the U.S government has to be held accountable. The system can no longer fit the bill. Looks like the true cost of healthcare’s transformation will be more evenly divided—let’s hope it pays off in the end, for providers and patients alike.