ACOs reluctant to move to advanced risk-taking models

Top-line indicators paint the Amita Health Care Network as a success.

The accountable care organization's quality scores in the Medicare Shared Savings Program are in the 90th percentile. It saved Medicare about $60 million last year. And the whole process has enhanced its providers' abilities to not only manage their patients' care, but collaborate with one another.

“The physicians in the system I think are working more closely together than they've ever worked,” said Don Franke, senior vice president of population health for Chicago-based Amita Health and CEO of the Amita Health Care Network.

But like many others, the Amita Health Care Network would consider calling it quits if it had to move the ACO into the more advanced Track 3 of the program, the Medicare ACO option that requires organizations to take on the most risk. The ACO is now in Track 1+ of the Shared Savings Program, which carries a shared-loss rate of 30%. Franke calculates its Track 3 loss could reach up to $30 million under a worst-case scenario.

“That's a significant amount of money for a collection of doctors and a faith-based health system,” he said. “That's a significant downside for us.”

Shouldering meaningful risk is still a scary proposition for many healthcare providers, and that leap to Track 3 may be big enough that it is dampening the momentum to shift into value-based payment. Adding to the fear is a presidential administration that has cast ambiguity over what proportion of Medicare payments it wants tied to alternative payment models such as ACOs; that's a change from the Obama administration, which set a goal of 50% by the end of this year, though CMS Administrator Seema Verma has signaled the agency will push ACOs to take on more risk.

Nonetheless, countless healthcare experts maintain that the shift away from fee-for-service is inevitable, and providers must take the plunge or be left behind.

The Shared Savings Program has created a clear delineation between providers that are ready for risk and the majority that aren't. The CMS says 82% of ACOs in the program aren't currently taking on any risk.

Even if the Shared Savings Program has been slow to push providers into risk, healthcare industry experts, ACO leaders and researchers say the experiment has been going on long enough to yield instructive information about how ACOs can succeed in taking on risk.

Three key qualities in an ACO that's ready to take on risk are investment, infrastructure and experience, said Jeff Micklos, executive director of the Health Care Transformation Task Force, a group of payers, providers and others championing value-based payment arrangements. Right now, the CMS seems to be trying to find the right “glide path” for moving ACOs toward two-sided risk, he said.

“There's certainly concern that maybe there have been some ACOs that have not necessarily committed to getting to that level,” Micklos said.

As of January, 82% of ACOs were in Track 1 of the Shared Savings Program, which doesn't put them at any downside risk, according to the CMS. Far fewer were in tracks that place ACOs at incrementally higher risks, including Track 1+, Track 2 and Track 3; the latter puts them at the highest level of risk. Only 10% of ACOs were in Track 1+, 1% in Track 2 and 7% in Track 3.

Tyler Blanchard, executive director of the Aledade Delaware ACO, said there are a number of ACOs that have financial arrangements—perhaps reliance on fee-for-service hospital operations—that allow them to coast without having skin in the game. “Those are the ACO squatters that may be just sort of taking up space in the ACO world,” he said.

The Aledade ACO, by contrast, was the first in Delaware to achieve its Shared Savings Program cost-savings targets last year. It's now in Track 3 of the program, after spending three years in Track 1.

A report released in August gleaned characteristics of successful ACOs from 15 studies on the subject. One was having physicians in leadership roles who act as “clinical champions” and create a culture of shared commitment among clinicians, staff and administrators. Another key trait was simply having experience with value-based care, including coordinating care, identifying high-risk patients and using information technology to get timely feedback. Strong ACOs also tend to use care coordinators, such as home health nurses or social workers, who help reduce unnecessary emergency room visits, emphasize primary care and manage high-risk patients.

Another finding was that ACOs with higher proportions of primary-care physicians were associated with better cost and quality outcomes.

“We think that the evidence is strong that any good delivery system has to be built on a strong basis of primary care,” said Christopher Koller, president of the Milbank Memorial Fund, one of the supporters of the report, released by the Patient-Centered Primary Care Collaborative.

There's simply no magic bullet when it comes to having a successful ACO, said David Muhlestein, chief research officer with consultancy Leavitt Partners. While ACOs with physicians in leadership positions on average tend to perform slightly better, there are examples of those that do very poorly. The same is true for having sophisticated, integrated electronic health record systems with “all the bells and whistles,” including population health management platforms.

“It's, 'Are you able to act on the information you glean?' ” Muhlestein said. “The challenge is information overload. The data is only useful if it directs you to make an intervention.”

Rather, ACO leaders describe employing a combination of several of those strategies. John Grigson, CEO of Covenant Health Partners, Texas-based Covenant Health's ACO, said having the right technology platform is the “holy grail” of managing populations. His ACO uses data to show physicians their cost and quality results, even sharing with physicians the 10 top- and bottom-performing physicians, according to the metrics.

“This is the No. 1 thing everyone that's doing this is trying to do—find the right technology that will give them the right information,” Grigson said. “In our world, we call it actionable data. We need information that we can actually go do something about.”

Amita Health Care Network also regularly shares with physicians the top and bottom performers. The ACO also uses data to zero in on annual wellness visits and has improved that metric among its members from 18% in 2014 to 60% as of June 30, Franke said.

Franke, the Amita ACO's CEO, has high hopes for a proposed overhaul to the Shared Savings Program that the CMS announced in August called Pathways to Success, which the agency said would move ACOs into risk faster. In a news release, the CMS said that ACOs wind up increasing Medicare spending in aggregate. Pathways to Success, by contrast, would save Medicare an estimated $2.2 billion over 10 years by creating two tracks: one basic and one enhanced, akin to Track 3 of the Shared Savings Program. ACOs would only be able to remain in one-sided risk for two years under the proposal, versus the current six.

Rather than move into Track 3, Franke said he likes the idea of staying in the basic track of Pathways, which would keep the ACO's risk effectively the same as it is today. If that wasn't an option, he said he'd also consider taking on risk through a Medicare Advantage plan, given that the Chicago market has room to grow in that area. The CMS has said it wants to launch an experiment that allows doctors in Medicare Advantage plans to qualify as participating in an alternative payment model, or APM.

Melinda Durr, a partner in consultancy Oliver Wyman's health and life sciences practice, said taking on risk on behalf of a Medicare Advantage plan might be a good transition for providers moving out of the Shared Savings Program because it's the program of choice for many seniors, especially those coming from commercial insurance who understand managed care.

“There is the opportunity for a win-win in terms of providers assuming risk on the part of Medicare Advantage plans and payers allowing providers to do that,” she said. “Because they can better manage the outcomes their patients are receiving.”

Some ACO leaders say the fact that Medicare patients don't have to be assigned primary-care providers and don't need referrals to see specialists makes it tough to manage their care under the Shared Savings Program, especially if they frequently see doctors outside of the network.

The Health Care Transformation Task Force's Micklos said ACOs today have greater flexibility than in the past to offer incentives for getting care from particular providers—such as through high-value networks or even gift cards—while preserving beneficiaries' freedom of choice.

Executives with the Aledade Delaware ACO have overcome that problem by making sure its physicians understand and agree to its strategy around referring to in-network specialists and keeping patients informed about the importance of staying in-network. That's led to strong partnerships with local specialists, said Blanchard, the ACO's executive director. A cardiology practice even opened up a separate phone line just for those ACO patients who need urgent access, he said.

At the Amita ACO, that issue is addressed through patient education, including on the importance of having a primary-care provider who knows what tests a patient needs, for example.

“It's not a forced relationship, but based on the data, it becomes apparent,” Franke said. “In a majority of the patient cases we can see who they rely on for most of their primary care, and we just try to formalize that by reaching out to the patient, engaging them with annual wellness visits and conversations.”

When it comes to taking on more risk, ACOs tend to focus on the amount they'd lose in a worst-case scenario, but that's unlikely to happen. When MyHealth First Network, an ACO serving 13 counties in western South Carolina, considered moving from the Shared Savings Program's Track 1 to Track 1+, it faced potential downside risk of up to $15 million, said Valinda Rutledge, vice president of public payer strategy for SC Health Co., the health system formed through the union of Greenville Health System and Palmetto Health in South Carolina.

“It sort of takes your breath away,” she said, “and so your immediate, gut-level reaction is, 'Oh my heavens, we don't want to do that.' ”

But once the health system combed the data and learned how unlikely it would be to perform that poorly, its leaders felt more comfortable, Rutledge said.

A few ACOs are taking the unique step of reinsuring the risk they're assuming in APMs using commercial insurance policies, although most ACO leaders interviewed weren't familiar with such policies. Leavitt Partners' Muhlestein said few ACO leaders are savvy about buying such policies, although they could help the organizations move toward risk before they have significant experience doing so. Micklos agreed they could be useful, but haven't gained much traction yet.

One reason the ACO Accountable Care of Nevada felt comfortable moving to Track 3 of the Shared Savings Program was because it had secured a commercial insurance policy that covers all of the downside risk it's taking on under the program, said Dr. Navneet Sharda, the ACO's CEO. He said the ACO's physicians decided to move to Track 3 after about three years of success in Track 1 because the majority of them felt it might be more lucrative. He declined to say which insurer the policy is through, but said the physicians probably wouldn't have been willing to take on the risk of Track 3 without it.

“Most of the doctors are very risk-averse,” he said. “Doctors just don't take risk.”