Redesigning healthcare

Healthcare innovation doesn't happen overnight, or even within three years.

On March 23, the U.S. reached the third anniversary of President Barack Obama's signature on the Patient Protection and Affordable Care Act. Much of the attention on the law is trained on the administration's rush to assemble the necessary infrastructure and public awareness in every state to carry out a massive expansion in health insurance coverage in 2014.

But policymakers also are nervously fixated on the slow progress of the push to refashion the way healthcare is delivered, which is the unheralded heart of the law.

Healthcare providers are experimenting with new ways of doing business. Many of them, such as accountable care organizations and retail health clinics, are nurtured by a combination of the reform law's changes in Medicare payment policy—providers will get less for hospital care—and competitive responses to a changing marketplace.

Great hopes for fundamental shifts in healthcare delivery are pinned on the Center for Medicare & Medicaid Innovation at the CMS, an agency created by the Affordable Care Act to test new healthcare delivery and payment approaches. That office, which received its first oversight hearing last week, has yet to produce any findings.

“It takes time, but at the same time, people—at least in Congress—are going to be a little bit impatient,” Sen. Max Baucus (D-Mont.), chairman of the Finance Committee, said at the hearing. “They want results that are quantifiable, demonstrable, that you can put your finger on and see; not just grand goals and platitudes.”

It's a lot of pressure on an office that has yet to finish hiring all of its staff. But health policy experts and Baucus, who championed the new agency as a way finally to bring federal healthcare spending under control, saw its $10 billion budget and power to implement its recommendations across Medicare and Medicaid as a key policy breakthrough.

“There's probably nothing more important in Medicare policy today than what is going on at CMMI,” said David Kendall, a senior fellow on health policy at Third Way, a centrist Democratic think tank.

But three years into the agency's operations and $3 billion of its budget committed to test pilot healthcare delivery and payment projects, the office has yet to produce recommendations. Its director, former Geisinger Health Plan CEO Dr. Richard Gilfillan, delivered a promise at the March 20 hearing that those insights will start emerging “within the next two years.”

“Of course, we're all eager to see the results of these models, but we need to be realistic; this change is difficult,” Gilfillan said. “Some models will work and some will not; it will take time to see the improvements we're after.”

Critics said the slow pace is a result of the office's myriad initiatives, which include pilot tests of 17 new models of care delivery and funding, and administration of 20 healthcare demonstration projects that predated the innovation center.

Sen. Orrin Hatch (R-Utah) said last week that the center suffers from “confusion and a clear lack of focus” and would achieve results quicker if it limited its energies to a few efforts, such as ACOs and bundled-payment reforms.

The pressure for results led CMMI to develop “a rapid cycle evaluation group” that will review pilots' results on a quarterly basis, and Gilfillan promised to provide those results to Congress.

The earliest data is expected from two primary-care projects: the Multi-payer Advanced Primary Care Practice demonstration and the Federally Qualified Health Center Advanced Practice Primary Care demonstration, Gilfillan said. First-year results from pioneer ACOs are expected this summer.

Karen Davis, a health policy professor at Johns Hopkins University and a longtime Washington policy leader, said the innovation center has faced challenges collecting data that's strong enough to support expanding its ideas broadly across Medicare and Medicaid. Those obstacles have included the need for large-scale pilots to provide statistically significant results—something the innovation center has tried to address by enrolling more than 50,000 providers in its initiatives.

“It's going to be messy and people are just going to have to be patient, and I know that's not a natural quality for those paying the bill or eager for solutions,” Davis said.

Here are snapshots of the Top 5 innovations happening in healthcare delivery right now:

Medicare launched its first and most ambitious experiment with the payment model known as accountable care in January 2012. The new payment method also is gaining a foothold in the private market with a variety of ACO-like agreements among providers and health plans.

Accountable care means hospitals, medical groups and other providers agree to manage the medical care for a group of patients with the goal of achieving quality and cost-control targets. If successful, providers are eligible to keep a share of the savings. The Affordable Care Act established the Medicare Shared Savings Program for ACOs, and the innovation center allowed a handful of health systems already prepared to deliver sophisticated, integrated care to test the model before the CMS finished writing its regulations on the broader program.

CMMI launched the Pioneer accountable care initiative roughly 15 months ago, with 32 organizations that agreed to one of five payment contracts. Unlike the Shared Savings Program, the innovation center required all Pioneers to accept potential penalties by the second year of the contract if they fail to slow health spending.

Meanwhile, the CMS' ACO effort has expanded to include 220 organizations, including 35 small or rural ACOS eligible through CMMI to receive some upfront payment of potential bonuses for start-up costs.

A final take on the Pioneers' first year won't be available until June. But some Pioneers say early results suggest gains.

“It's positive,” said Patrick Flesher, director of payer contracting and the Pioneer ACO for Allina Health in Minneapolis. Based on six months of data, healthcare spending for Medicare enrollees in Allina's accountable care program increased more slowly than national trends. Allina sought to reduce unnecessary care and costs by trying to better coordinate care for patients who leave the hospital in order to prevent avoidable repeat visits.

Pioneers are negotiating with the innovation center to revise the agency's proposed quality performance targets this year. They are seeking to extend the first year's performance standard, which ACOs met simply by reporting their performance, one more year. ACOs have not yet received a reply and talks are ongoing. “I'm confident we will come up with a solution,” he said.

—Melanie Evans

When innovation center launched its Comprehensive Primary Care Initiative last August, one of the participants proclaimed that the demonstration project could “fundamentally change the economics of primary care” with its mix of private and public payers contributing monthly care-coordination fees.

Seven months later, Patrick Gordon, associate vice president of Rocky Mountain Health Plans and director of the Colorado Beacon Consortium, said he hasn't changed his opinion. “I categorically, absolutely find it living up to its promise, but that's not without some challenges along the way,” he said.

The initiative and a companion program working with federally qualified health centers seek to show that primary-care providers can improve outcomes with the medical home model of care coordination. And, policymakers hope, paying them to do it will help establish a critical foundation for routine care sought by millions of Americans gaining coverage next year under the Affordable Care Act.

Providers traditionally have not been reimbursed for the work involved in coordinating care. Under the CMMI program, Medicare is paying a risk-adjusted, per-member, per-month fee (averaging about $20 for the first two years of the program) to cover the costs of care-coordination staff. Private payers are also involved, though they might not be paying at the same rate as Medicare.

There are 502 practices with about 2,150 providers taking care of 313,000 patients in the project. They are split between seven markets, including Colorado, where 74 practices are participating.

“By any measure of performance, it's been successful,” Gordon said. He acknowledged, however, that some providers have expressed disappointment in the level of risk adjustment and by the payment variation among participating health plans. But they are not dropping out because of it. “They are still doing the work, still participating in the learning collaborations and still completing their milestones,” he said.

—Andis Robeznieks

Retail clinics, once a controversial care approach, have become a mainstream part of healthcare.

The concept of offering basic services such as flu shots and throat cultures in a retail environment, with longer hours and no appointment needed, was opposed initially by some physician groups and in some communities.

But the healthcare industry gradually accepted the concept—some even are embracing it—and as it turns out, retail clinics are a potentially important avenue of care within the models being pushed by the federal government and private payers under reform.

“From a population health standpoint, this should make a big difference,” said Ken Berndt, CEO of Careworks, a retail clinic company owned by Geisinger Health System, Danville, Pa. Retail clinics fill a gap in care by making certain services more accessible, and can therefore divert patients away from costly emergency room care.

A number of systems are partnering with national chains, forming their own clinics or in a few instances, like Geisinger, are selling their expertise in the area to other systems. “We're seeing a plethora of health systems that want to start getting into this,” Berndt said.

Geisinger has been involved with retail clinics for years, but has sharply expanded plans for its own clinics in recent months after its health insurer won a contract to cover Medicaid patients in part of Pennsylvania, Berndt said. Geisinger has 21 new clinics either built or in the works, he said.

The industry itself also is growing. There were about 1,450 clinics as of last week, up from about 1,200 at the end of 2011, said Tine Hansen-Turton, executive director of the Convenient Care Association, a trade group. “I would say there's a lot of interest in the model,” Hansen-Turton said.

—Paul Barr

California is not yet part of a controversial pilot program attempting to improve care and reduce the expense of beneficiaries covered by both Medicare and Medicaid. But the project is already having an effect.

Dr. Ted Mazer, a San Diego otolaryngologist, recently had to explain to a 92-year-old woman that she could return to him for care. The longtime patient had called to say she was unsure if the state Medicaid program would allow it. Another physician, she said, warned that a new federal program meant she would have to visit a different, in-network ear, nose and throat surgeon.

“The lack of information breeds confusion, confusion breeds physicians and plans and everybody trying to protect their own interest and giving false information and moving people around instead of educating them,” Mazer said.

The CMS' Financial Alignment Initiative aims to move 2 million of the beneficiaries into three-year managed-care pilots. Only four states have been approved to participate, in part because advocates raised concerns over the size and scope of the experiment.

The CMS appears to have scaled back somewhat and added some protections for beneficiaries, said Robert Berenson, a senior fellow at the Urban Institute. “It was and continues to be overly ambitious, but it has moved in the right direction,” he said.

The CMS added more oversight requirements for participating insurers and is requiring closer monitoring of the conditions of the beneficiaries, who are frequently frail and vulnerable.

The CMS continues to negotiate pilot agreements with states that offer beneficiary protections. For instance, the pending New York application is at least partially based on the dual-eligible experience of New York City-based CenterLight.

That Program of All-inclusive Care for the Elderly, or PACE, is referral-based and allows enrollees to retain their physicians rather than compelling them to choose new providers. “Years ago, we recognized that that wasn't necessarily the best way to go,” said Joe Healy, senior vice president and chief operating officer at CenterLight. “Continuity of care is important; having a physician who really knows that patient, really knows their history and who they are comfortable with is all very important.”

—Rich Daly

Anticipating new payment models on the horizon, San Francisco-based Dignity Health in the summer of 2010 began developing clinical integration networks with physicians and hospitals working together to improve quality and lower costs.

“What we're trying to transition to is more of a fee-for-value system, where we're focused on outcomes, where we're focused on quality and we're focused on delivering efficient care,” said Dr. Robert Lerman, vice president and medical director of physician integration for Dignity Health.

That concept is the underpinning of the healthcare reform law's Bundled Payments for Care Improvement initiative. The CMS innovation center is testing four payment models that aim to reward for quality rather than volume.

In one, for instance, awardees agree to provide a standard discount to Medicare from the typical Part A hospital inpatient payments, and hospitals and providers are able to share any gains that come from the way they redesign care. In another, the provider receives a lump-sum prospective payment for the entire episode of care.

In California, Dignity's clinical-integration efforts have shown promise. The CMS innovation center selected the system's St. Bernardine Medical Center and Community Hospital of San Bernardino as two of 32 healthcare organizations—and the only two hospitals in California—named as awardees in the first model of the initiative, which begins April 1. Those two facilities lead and manage the Southern California Integrated Care Network formed last summer. The CMMI initiative is the first “contract equivalent” for the network, Lerman said.

And Steven Barron, president of St. Bernardine Medical Center and senior vice president of operations for Dignity Health's Southern California eastern service area, said the network hopes to apply what it learns in the program to Medicare HMOs and commercial plans.

“We want the patients to get all of the care they need,” Lerman said. “But not to get more care at more cost.”

—Jessica Zigmond

TAKEAWAY: Experiments in healthcare delivery are real and significant, but only time will tell whether the results are, too.