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Dr. John Hippen of the Sharp Rees-Stealy Medical Group, San Diego
Sharp's ACO, which includes Dr. John Hippen of the Sharp Rees-Stealy Medical Group, has found that a number of its Medicare patients don't have a primary-care doctor.

The early returns on accountable care

Newly minted ACOs grapple with allocating resources and adjusting operations to put the theory to work

By Melanie Evans
Posted: July 28, 2012 - 12:01 am ET

Sharp HealthCare in San Diego, which formed one of the first Medicare accountable care organizations, began to comb through lists of seniors for whom its doctors must manage care and costs only to find a number lacked primary-care physicians.

The development presents a challenge for the newly created ACO, which seeks to promote care coordination, wellness and disease prevention through primary care.

Sharp has started to contact seniors to persuade them to select a primary-care doctor, but cannot force them to visit. “These patients have choice,” says Alison Fleury, senior vice president of business development for Sharp and CEO of its ACO. “Patient engagement is our No. 1 opportunity and our No. 1 challenge.”

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As accountable care moves from theory and policy to practice, hospitals and doctors are grappling with new strategies and investments that they hope will be the most likely to achieve higher quality and lower costs, said respondents in Modern Healthcare's second annual Accountable Care Organizations Survey. This year's survey includes 26 ACOs.

Under accountable care, hospitals and doctors receive financial incentives to achieve quality gains and reduce healthcare spending. The payment model has gained a foothold among commercial insurers, such as Blue Shield of California—which reported results for five accountable care contracts to the survey—and Medicare.

Providers surveyed by Modern Healthcare reported private and public accountable care contracts, and executives say the diversification was a push to move away from traditional payment to reimbursement that will cover costs of prevention and health promotion.

“This isn't our strategy for Medicare, this is just our strategy,” says Dr. Timothy Ferris, medical director of the Mass General Physicians Organization at Boston's Massachusetts General Hospital, of the Partners HealthCare System ACO.

Accountable care went from a hotly debated theory to the basis for new companies and contracts within the past year.

Since January, Medicare has announced nearly 150 accountable care contracts and more than 400 organizations have said they will seek to apply for 2013. Medicare launched its accountable care initiative this year under a provision for the payment model in the Patient Protection and Affordable Care Act.

Jonathan Blum, principal deputy administrator and director of the Center for Medicare, touted the program's growth in July as he named the latest crop of 89 Medicare ACOs. He says the degree of provider interest in Medicare's accountable care efforts, which now cover roughly 2.4 million seniors, was significant. “And I think, contrary to some fears that were expressed last year, we have a very strong program that exceeds our goals that we had for the first year,” he says.

Medicare's early proposals for accountable care met with criticism and dampened interest in the federal initiative, but officials heavily revised the final rules to providers' approval. Medicare's major changes included reducing the quality measures to 33 from 65. Federal officials also agreed to offer one of two payment options without the risk of a potential penalty.

Blum says no data was yet available in July on performance of Medicare's first ACOs. Public reporting of the ACOs' performance won't begin until next year, he says.

“I think, honestly, it's too early,” he says. “The organizations just came into the program. So it's too early to give an indication of quality improvement, cost savings. Obviously, this is going to be a key factor that we're going to track very carefully. We have a very strong interest to ensure that beneficiaries get better services than they do today,” Blum says.

Medicare's accountable care initiatives served as a model for organizations as they planned their own efforts, executives says.

That was the case for Mercy Health in Cincinnati. Paul Hiltz, president of the Cincinnati health system's ACO, Mercy Health Select, says officials relied on Medicare's initiative to formulate plans even as legal challenges to the Affordable Care Act remained unsettled.

A U.S. Supreme Court case this year threatened to strike down the entire law. In June, the court largely upheld the Affordable Care Act.

Mercy officials believed that preparation for Medicare accountable care would not go to waste despite the uncertainty ahead of the decision, he says. If the court threw out the ACA—and with it, Medicare accountable care—fledgling commercial efforts would nonetheless continue and Mercy would be ready, he says.

'A great starting point'

Charles Vignos, chief operating officer for Summa Health System's ACO, the NewHealth Collaborative, says early planning efforts were developed with Medicare's initiative in mind. Alternatives such as bundled payments do not as comprehensively tackle the goals of improved care and reduced costs, he says.

He described Medicare's ACO as “a great starting point” that he says he expects to evolve. “We need to start somewhere.”

Summa's experience with Medicare managed care, which began in January 2011, and its accountable care effort with employees, which began six months ago, prepared the system for Medicare's ACO, he says.

As more patients come under accountable care contracts, it will be easier to persuade physicians to be more proactive about managing patients' health rather than waiting to care for someone who grows acutely ill. Summa's enrollment includes about 25,000 seniors in a Medicare ACO launched July 1 and 17,500 members in Medicare Advantage and private self-funded plans.

Hospital and medical groups have begun hiring as they seek to more closely manage patients' care under ACOs.

Akron, Ohio-based Summa partnered with about 225 independent doctors, who provided some seed money for capital investments, including information technology and the hiring of data analysts and care coordinators, Vignos says.

In Cincinnati, Mercy Health Select will continue to expand its staff of care coordinators, who will team up with behavioral health and social work professionals to manage patient care within primary-care practices, says Luisa Hurtado, director of operations for the ACO.

It's a model that has helped reduce readmissions within six physician practices that have served as pilot sites within the past nine months, Hiltz says.

Mercy is expected to employ one care coordinator for every 350 patients, she says. The Medicare ACO is expected to include 22,000 seniors.

Officials do not expect an immediate payoff from invested capital. “In terms of a return on investment, in the short run, we're looking at this as more research and development,” Hiltz says.

Sharp will spend $800,000 toward expanding its case-management staff through 2012 and another $85,000 for its nurse triage line.

Partners HealthCare will double its number of care coordinators from the 25 it hired for a demonstration that predated the Medicare ACO, Ferris says. Each will work with 200 to 250 high-risk patients and will be embedded within a primary-care practice. Ferris says the organization is working hard to get infrastructure in place, “knowing that the clock is ticking.”

Executives at the earliest organizations to adopt accountable care say they are learning and adapting as they go.

At the University of Michigan, the faculty practice group was one of 10 medical groups in a five-year Medicare pilot that became the model for accountable care. That pilot ended in 2010, but the university's doctors entered a transition contract before being named in January one of the first Medicare ACOs created under the Affordable Care Act.

Thanks to that history, the University of Michigan already operates the data analytics and care coordination that others are seeking to build, says Dr. Caroline Blaum, medical director for the ACO and assistant dean of clinical affairs and associate medical director of faculty group practice at the university.

The ACO has begun to focus on how to best manage complex patients, such as the frail elderly or those with congestive heart failure. Accountable care is designed around primary care, but the costliest patients often rely on specialists to manage complex diseases, she says. Indeed, 1 out of 4 patients within the Michigan ACO lacks a primary-care doctor.

New strategies may involve joint efforts to manage patient care between primary-care and specialty physicians. “This is now the new frontier,” she says.

The group practice also learned from earlier efforts. The ACO discontinued a program for patients to speak with a pharmacist as they left the hospital as it proved too costly and reached too few patients, she says. Patient calls will now be directed to care coordinators within physician offices instead of a central call center.

And its Medicare ACO for the first time includes independent doctors, Blaum says, in an effort to expand its network capacity and the number of Medicare enrollees included in the ACO. Integration of an independent practice into the ACO faces some challenges, including diverse IT systems. The partners meet every two weeks to discuss data, she says.

Setting new goals

Dr. John Hippen of the Sharp Rees-Stealy Medical Group, San Diego
Dr. Stephen Wilson practices at Mercy Health-Forest Park Internal Medicine and Pediatrics in Cincinnati, which operates as a patient-centered medical home and was part of a pilot Mercy Health ran in advance of its ACO.
Advocate Health Care, based in Oak Brook, Ill., entered the second year of its accountable care contract in January with Blue Cross and Blue Shield of Illinois.

Advocate successfully met its first-year goal to keep its patient days per 1,000 patient months at 5% below the market, a key measure of utilization, says Dr. Lee Sacks, executive vice president and chief medical officer. The hospital is the most expensive place to care for patients, and efforts to reduce hospital visits will reduce healthcare spending.

But officials introduced new measures for the second year that Sacks says give doctors more concrete goals. The first-year goal was a target, but it left doctors to figure out what actions to take to accomplish the goal.

Now Advocate's ACO tracks performance using five new measures: emergency department visits, admissions, readmissions, length of stay and network care coordination. If the system can reduce utilization—visits to the emergency room and time spent in the hospital—and improve care coordination, financial results should improve as well, Sacks says.

The Illinois Blues ACO includes 370,000 patients and Advocate launched an employee ACO for roughly 8,000 workers and their dependents in January. The Medicare ACO adds another 130,000 to the system's accountable care efforts and Advocate may extend its program into Medicare managed care next year, he says

“It's an exciting time,” Sacks says. “The feedback from patients and physicians and care coordinators is that everybody sees the opportunities and the value that this has allowed us to provide and it gives me a confidence that a good number of the 154 (Medicare ACOs) will be successful and provide better care at a lower price.”

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