“To expect health system leaders to take necessary risks, strong federal and state and public-private partnerships will be needed to coordinate all payers in each region and, thereby, ensure that high-value care is rewarded consistently,” the authors wrote.
ThedaCare and Bellin Health agreed in 2012 to jointly enter the Medicare Pioneer ACO program. During the first year, fewer Medicare patients were hospitalized and Medicare spending dropped by 4.6% for seniors included in the ACO test, wrote John Toussaint, a physician and executive with ThedaCare, along with co-authors Dr. Arnold Milstein and Stephen Shortell of Sanford University and the University of California, respectively.
ThedaCare and Bellin received a bonus of $5.2 million under the Medicare accountable care test, an amount based on how much they saved and on the health systems' compliance with quality reporting requirements. This year's bonus will be tied to how well the systems performed on quality measures, not merely reporting performance.
But beyond Medicare, the incentives were stacked against the two Wisconsin health systems. Private insurers continued to pay based on volume for roughly 80% of their patients.
“Thus, when Bellin ThedaCare achieves savings by reducing its overall volume of services, such as decreasing patient readmissions to 7.9% year-to-date in 2013, revenues still decline,” Toussaint and his co-authors said.
ThedaCare saw revenue drop 0.7% during the first six months of the year compared with the same period last year. The drop is more pronounced when you consider that the five-hospital system projected last August that revenue would grow 3% this year.
For Toussaint and his co-authors, the solution is this: a rapid switch by public and private insurers to incentives for efficiency instead of volume, such as accountable care. State policymakers and the CMS should encourage that switch, even with the private sector cannot be forced to comply, the said. The authors also listed other payment models, such as reference pricing or global budgets.
Without that switch, the financing is unsustainable, they said. “Unless all payers quickly move to value-based payment systems or give insurers incentive to preferentially use healthcare organizations that provide greater value to patients, more organizations (especially those unable to shift costs to other payers) will discontinue participation in both of Medicare's ACO programs and other related arrangements.”
Follow Melanie Evans on Twitter: @MHmevans