The Value-Based Care Crossroad: Have ACOs Reached a Tipping Point?

Nov. 23, 2020
The movement toward alternative payment models is surging ahead, and CMS’ new ‘Pathways to Success’ regulation could serve as a defining moment for many ACOs. Those on the leading edge, however, have plenty of learnings to share.

The healthcare industry’s collective movement toward value-based care is an incredibly complex one, filled with twists, turns and hurdles that oftentimes seem daunting. Within this ever-changing dynamic, however, there remains one constant: a bipartisan realization that traditional fee-for-service healthcare incentivizes providers to run up services and, therefore, costs, leading the federal government to continue its push—albeit too aggressively to some—toward a value-based care and payment environment. Indeed, senior officials at the Centers of Medicare & Medicaid Services (CMS) have said that they want to have 100 percent of providers taking on some downside financial risk by 2025.

There is no shortage of value-based contracting initiatives that patient care organizations could partake in today as they continue on their journeys, from accountable care organizations (ACOs) to bundled payments, and other incentive-based forms of payment. The ACO landscape specifically has been one that some industry observers see as a key step to healthcare system redesign. One such person is Jeff Coughlin, the senior director of federal and state affairs at the Chicago-based Healthcare Information and Management Systems Society (HIMSS), who last year at a Healthcare Innovation Summit went as far as pronouncing that “ACOs are probably our best bet in terms of really doubling the shift from volume to value-based care.”

Success in ACO initiatives is undoubtedly hard to accomplish, and takes a commitment in achieving physician buy-in, as well as significant investments in technology infrastructure. And as if things weren’t dramatic enough already in U.S. healthcare, a “battle of the narratives” has developed between senior officials at CMS, especially CMS Administrator Seema Verma, and the leaders of NAACOS— the National Association of ACOs—which have been locked in an ongoing war of words with each other for many months now.

Core to the debate is a fundamental difference in how each side views the federal ACO ecosystem, particularly in the areas of cost savings that Medicare ACOs produce, as well as how aggressively the government should be pushing organizations into two-sided financial risk models in which Medicare isn’t on the hook for money if the ACO outspends its financial benchmarks. Comparatively, when ACOs are in a one-sided risk model, they do not share losses with the government when they overspend past their benchmarks, but they do share in the gains.

The Medicare Shared Savings Program (MSSP), launched in 2012, is by far the largest federal ACO model, and is inclusive of 541 ACOs that delivered care to more than 11 million beneficiaries in 2019. Last year, these ACOs collectively generated $1.2 billion in savings for Medicare after accounting for shared savings bonuses and collecting shared loss payments. Nonetheless, tensions have been particularly flaring since late in 2018, when the Trump administration finalized its “Pathways to Success,” final regulation, an overhaul of Medicare’s ACO program that redesigns its participation options, while reducing the amount of time an ACO can remain in the program without taking accountability for healthcare spending from six years to two years for new ACOs, and three years for new “low-revenue” (physician-led) ACOs, including some rural ACOs. This final rule also reduces the amount of shared savings that ACOs in downside-only risk models can collect.

Put all together, the result of these recent developments could be that many ACOs will be deterred from continuing along in the program, or even participating at all, since thresholds “jump to unrealistic levels in 2021,” which will prevent them from receiving a critically important 5 percent financial bonus, according to NAACOS. CMS has thus far taken the stance that if these ACOs aren’t prepared to take on more risk, and quickly, they aren’t fit for the program anyway.

The keys to ACO success

In the meantime, as the feud between NAACOS and CMS continues, important lessons learned can be learned from those ACOs that are producing positive results in the MSSP model. One such organization, Advocate Aurora Health—one of the largest integrated health systems in the U.S., serving nearly 3 million patients annually in Illinois and Wisconsin—has three affiliated (ACOs) that combined to generate the most savings of any health system in the nation in the 2019 Medicare Shared Savings Program. Advocate Aurora generated $85.7 million in 2019 across its 209,000 Medicare beneficiaries, bringing its total savings for the federal government and taxpayers to more than $280 million since joining the program in 2012, the health system’s officials touted in a recent announcement.

Leaders at Advocate Aurora point to several initiatives across the organization’s continuum of care that contributed to improved patient outcomes and cost savings, including: appropriate reductions in post-acute utilization; a “home-first” program driven by ACO physicians, integrated care management and post-acute teams aimed at discharging patients to the appropriate next care setting, ideally home if clinically appropriate; an expansion of predictive analytics and care management programs that identify patients at high risk for hospitalization or readmission and facilitate interventions to reduce incidences of adverse and costly health events; and improvements in primary care services, preventive health services and wellness visits in alignment with a clinical integration program.

Advocate Aurora’s Chief Medical Officer, Gary Stuck, M.D., acknowledges that the health system has had “the luxury of time,” since they adopted the program when it first started in 2012, allowing the organization to be “early innovators.” Stuck notes, “We have had some time to remodel and to practice in this program. It takes an engaged group pf physicians, and we do have a very large stable network of physicians who are engaged. Remodeling the incentives transforming the care, and getting the buy-in of physicians and clinicians is incredibly important. But that does take time and it is a cultural change,” he admits.

Indeed, the evidence is growing that those Medicare ACOs that have had more time in a given program fare better than the adopters. A 2018 analysis from consulting firm Avalere Health found that ACOs with four or more years in the MSSP accounted for nearly all of the $314 million in savings the program achieved in 2017. Conversely, that analysis found, ACOs with one to two years’ experience in the program increased Medicare spending. In a recent piece on the state of ACOs in Medical Economics, Elias Matsakis, JD, senior partner of law firm Holland & Knight in Chicago, said the biggest differentiator for ACO success does truly come down to experience. ACOs that have experience in improving outcomes with efficient interventions or pathways to more appropriate sites of care fare better. Those with care coordination and chronic disease management tools will meet more quality benchmarks than will groups of providers that are essentially just rebranding themselves under an ACO label, Matsakis said.

From Advocate Aurora’s perspective, the changes to the Medicare ACO program made by CMS are reasonable since success in the program requires a massive commitment to it, as well as major investments in technology and innovation. If an organization isn’t willing to do those things, it would be very difficult for them to generate positive outcomes, anyway, notes Stuck. Speaking to the larger need to lower the cost of care, he says, “We have made that commitment and we know that the U.S. healthcare system requires reimagining, and it needs disruption just like Amazon, Uber and Netflix [provided] in their respective industries. The [system] is not sustainable and our taxpayers cannot afford it. Everyone is now aware of the Congressional Budget Office announcement that the Hospital Insurance Trust Fund will be insolvent in three years. So we need to look for solutions and partners together.”

Few organizations are broadly better positioned to discuss the necessary elements for ACO success than Premier’s Population Health Management Collaborative, (PHMC) an initiative from the Charlotte, N.C.,-based Premier, Inc. that helps hundreds of hospitals and tens of thousands of clinicians work together to align, measure and improve population health. In the MSSP for 2019, 75 percent of Premier’s Population Health Management Collaborative ACOs earned savings for the government. Of those, 44 percent performed well enough to qualify for shared savings payments from Medicare.

Since 2012, there have been 18 ACOs across the country that have been able to generate shared savings every single year of the program, and the PHMC works with three of them. Seth Edwards, vice president of strategy, innovation and population health at Premier, and the leader of the Premier PHMC, says common ACO success attributes among those on the leading edge include being physician-led and professionally managed. “If you're going to make wholesale changes to clinical workflow and the approach that is going on across the continuum, you certainly need clinicians as leaders—physician leaders and nurse leaders—to be the champions to drive the work that they're doing.”

Another important element, he notes, is evolving the primary care model “to what we call an ‘advanced primary care’ or a ‘patient-centered medical home’ type of philosophy so that you're actively using primary care as a way to coordinate the care for the patient to assure that they're getting the best care at the right place at the right time, which is so critical in these models.”

What’s more, Edwards offers, as organizations are being asked to take on more and more financial risk in these models, it’s important to have programs that cover different payer segments. For example, when the MSSP first started, a lot of organizations were only doing population health and accountable care in the MSSP. But now, he explains, “there are broader opportunities to do it in the Medicare Advantage space, and to have value-based arrangements with your own employees in the Medicaid space, as more states shift into managed Medicaid, and even direct-to-employer. The more of those types of relationships you have—with a focus across your payer segments on managing populations and implementing accountable care—you will have more consistency and alignment, and you’ll be in a better position you become to be successful across each of those models.”

The importance of buy-in, system-wide

In 2018, the Altamonte Springs, Fla.-based AdventHealth ACO was approved by CMS to join the MSSP, and has since served some 68,000 patients through the accountable care model. A member of Premier’s PHMC, AdventHealth also has an internal Population Health Services Organization (PHSO), which has helped the system gain useful experience with value-based programs via its co-branded Medicare Advantage plan. That experience helped inform its approach and implementation of the MSSP, says Jennifer Jackson, chief population health officer for AdventHealth.

“We quickly leveraged care coordinators to partner with providers who could arrange appropriate, lower-cost alternatives for our beneficiaries' care. We used technology solutions to identify beneficiaries with chronic conditions and even gaps in care that we could then address,” Jackson notes.

She adds that AdventHealth’s PHSO also developed physician education and provider-specific reports that focused on appropriate documentation and coding. “This overall approach has helped solidify our ability to identify opportunities for clinical interventions that will improve the population's care,” Jackson says.

As AdventHealth continues to grow in the program—Jackson says the organization expects to move forward to the Pathways to Success track in 2022—the ACO’s leaders continue to discover and learn more ways to build and adjust their operational efficiencies. For instance, she offers, “We have learned that success with risk-based arrangements requires the engagement and participation of providers who fundamentally understand value-based care and embrace a team approach to care—which includes an aligned network of specialists—and those who can offer their patients the personalized care that meets their individual needs.”

To help identify and engage those providers who demonstrate proficiency in managing utilization, total cost of care, quality, and patient experience, Jackson explains that AdventHealth developed an assessment tool to gauge a provider's level of risk-readiness. The ACO also created a preferred post-acute network, requiring participants to align with AdventHealth on quality of care and clinical measures of success while managing the length of stay and reducing readmission rates. To this end, one key focus area going forward, Jackson says, is to help beneficiaries get more of their care at home, “which we find many of them prefer instead of being in a facility.”

Ultimately, Jackson doubles down on the critical importance of gaining the buy-in and engagement of both clinical leaders and providers. “When we started in the program in 2018, we quickly realized the need for increased awareness, education and alignment. As we progressed within the MSSP, we have made a concerted effort to identify and partner with our more engaged providers.”

Stakeholders ponder what’s next

One massive challenge, industry-wide, that healthcare stakeholders will need to overcome as they further progress in their value-based care efforts, is that most patient care organizations are still adapting to “a split-screen payment landscape,” in which they will continue to receive a significant portion of their reimbursement in the form of discounted fee-for-service payment, even as they move ahead into value-based reimbursement. Edwards notes that in the near-term, ACOs could be seen as a transitionary model to get to an end state of capitation or some form of population-based payment, but that still creates a challenge because it puts organizations in a world where they're also living in a fee-for-service operational environment.

“For many of them, a large portion of their revenue is tied to fee-for-service. So they have to figure out how to navigate having one foot in the value-based world, and the other in the fee-for-service world,” he says. Edwards adds that once these organizations get through these ACO transitionary programs, they will get to the other side and start to get closer to fully operating on population-based payments, leading to many of them ultimately being a lot more successful.

What’s more, some healthcare policy experts believe that the future of ACOs is a bit uncertain. The highest ACO risk model, the Next Generation ACO program, was set to sunset at the end of 2020, though in light of the operational challenges brought on by the COVID-19 pandemic, CMS has extended the model’s final performance period through the end of December 2021. Similar to the MSSP model, ACOs in the Next Gen program, which began in 2017, have fallen short of convincing CMS that they’re substantially lowering healthcare costs. In a Health Affairs post earlier this year, Administrator Verma said that Next Gen ACOs in 2017 actually led to a statistically significant increase in spending of $115.6 million across the 44 participating ACOs.

Another option for organizations that will now begin in April 2021 is the Direct Contracting model, which was originally intended to be the successor to the Next Generation program before CMS extended it. Direct Contracting creates three payment options for providers to take risks and earn rewards based on quality outcome, and leverages lessons learned from other Medicare ACO initiatives.

Premier’s Edwards says one organization the PHMC is working with that has been in the MSSP is now looking at evaluating whether or not to participate in the new Direct Contracting model. The reason being, he says, “is that they want to move their primary care clinicians to a capitated arrangement, because they don't believe that the fee-for-service/RVU approach is congruent with the goals of being in a Medicare ACO. They believe they can be a lot more successful by aligning those incentives for their payment to that capitated model where there they can use those dollars to really manage the patients in a way that will be most meaningful and impactful for their patients.”

In the end, regardless of which directions the policy winds end up blowing, the value-based care train is moving, and those who haven’t gotten on board yet will need to—or they’ll be left behind. “Taking on additional risk certainly presents challenges, [and] providers that are willing and able to participate in these programs in their early stages will be building the competencies that foster success as programs become more advanced,” AdventHealth’s Jackson contends. Ultimately, she adds, “It's all about providing personalized, proactive and affordable care for our patients.”

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