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Small physician-led Accountable Care Organizations (ACOs) have shown success in reducing costs while improving quality. But they need more support to continue down that road, according to a new report.

Those ACOs would benefit from more guidance and support from the Centers for Medicare & Medicaid Services (CMS), private insurers and other sources as they take on greater financial risk and move farther away from traditional fee-for-service payments, according to a new report (PDF) from the Duke-Margolis Center for Health Policy.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

“ACOs, especially smaller ones and those in more resource-deprived settings, need additional support in building the organizational competencies (such as clinical care redesign and forecasting costs) to take on increased risk,” authors of the report, who conducted interviews with ACO leaders, concluded.

ACO leaders interviewed by researchers have concerns about meeting the new requirements of Medicare’s “Pathways to Success” program that shifts financial risk from CMS to ACOs more quickly, the report indicated. 

“By asking physician-led ACOs to take on more financial risk, CMS is trying to encourage better care at a lower cost,” said Robert Saunders, research director for payment and delivery reform at Duke-Margolis. “Transitioning to new payment models is always challenging, and CMS should do all it can to support smaller physician groups in joining effective ACOs at this pivotal time or risk their longer-term sustainability.”

Some of the challenges faced by small physician-led ACOS in taking on more risk include the structure of their ACO contracts—including the cost benchmark they are expected to improve on, their limited capital reserves and their need for advance investment and technical assistance, the report said.

The report noted that many small physician-led ACOs are partnering with third-party companies, what they called “ACO enablers,” such as Aledade, Caravan, Evolent and others, to access needed upfront capital and additional services to help them participate in risk-bearing models.

Others have dropped out of ACO programs at high rates in recent years, the report said.

CMS is pushing ACOs to more quickly transition to downside risk under its Medicare Shared Savings Program, or in new ACO-type programs, such as the Direct Contracting program or complementary programs, such as the Primary Care First program.

The report, which was prepared with funding from the Robert Wood Johnson Foundation, recommended three steps CMS can take to assist these ACOs:

  • Reduce regulatory burdens. For instance, ACO leaders interviewed by researchers said that regulations such as the Stark Law and Anti-Kickback Statutes limited their ability to coordinate and manage care effectively. CMS has proposed changes to both rules to provide greater flexibility for organizations in value-based payment arrangements
     
  • Provide more support for ACOs to develop technical capabilities. The report said CMS can identify and share successful strategies used by ACOs to improve the cost and quality of healthcare.
     
  • Simplify program rules. ACO leaders expressed difficulty keeping up with changing policies and priorities, the report said. Smaller organizations will be more likely to participate in new tracks or programs when the rules are certain and simpler to understand.

Small physician-led Accountable Care Organizations (ACOs) have shown success in reducing costs while improving quality. But they need more support to continue down that road, according to a new report.

Those ACOs would benefit from more guidance and support from the Centers for Medicare & Medicaid Services (CMS), private insurers and other sources as they take on greater financial risk and move farther away from traditional fee-for-service payments, according to a new report (PDF) from the Duke-Margolis Center for Health Policy.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

“ACOs, especially smaller ones and those in more resource-deprived settings, need additional support in building the organizational competencies (such as clinical care redesign and forecasting costs) to take on increased risk,” authors of the report, who conducted interviews with ACO leaders, concluded.

ACO leaders interviewed by researchers have concerns about meeting the new requirements of Medicare’s “Pathways to Success” program that shifts financial risk from CMS to ACOs more quickly, the report indicated. 

“By asking physician-led ACOs to take on more financial risk, CMS is trying to encourage better care at a lower cost,” said Robert Saunders, research director for payment and delivery reform at Duke-Margolis. “Transitioning to new payment models is always challenging, and CMS should do all it can to support smaller physician groups in joining effective ACOs at this pivotal time or risk their longer-term sustainability.”

Some of the challenges faced by small physician-led ACOS in taking on more risk include the structure of their ACO contracts—including the cost benchmark they are expected to improve on, their limited capital reserves and their need for advance investment and technical assistance, the report said.

The report noted that many small physician-led ACOs are partnering with third-party companies, what they called “ACO enablers,” such as Aledade, Caravan, Evolent and others, to access needed upfront capital and additional services to help them participate in risk-bearing models.

Others have dropped out of ACO programs at high rates in recent years, the report said.

CMS is pushing ACOs to more quickly transition to downside risk under its Medicare Shared Savings Program, or in new ACO-type programs, such as the Direct Contracting program or complementary programs, such as the Primary Care First program.

The report, which was prepared with funding from the Robert Wood Johnson Foundation, recommended three steps CMS can take to assist these ACOs:

  • Reduce regulatory burdens. For instance, ACO leaders interviewed by researchers said that regulations such as the Stark Law and Anti-Kickback Statutes limited their ability to coordinate and manage care effectively. CMS has proposed changes to both rules to provide greater flexibility for organizations in value-based payment arrangements
     
  • Provide more support for ACOs to develop technical capabilities. The report said CMS can identify and share successful strategies used by ACOs to improve the cost and quality of healthcare.
     
  • Simplify program rules. ACO leaders expressed difficulty keeping up with changing policies and priorities, the report said. Smaller organizations will be more likely to participate in new tracks or programs when the rules are certain and simpler to understand.

When it opened its first center in Chicago in 2013, Oak Street Health wanted to show that its model of providing value-based primary care to seniors could work.

It’s doing just that, as the network of primary care centers announced today that it will open clinics in two more states this year—Texas and Tennessee.

“Our mission is to rebuild healthcare as it should be,” Oak Street’s CEO Mike Pykosz told FierceHealthcare. It’s a job the company has done by bringing primary care to seniors in underserved areas, improving patients’ health and their healthcare experience.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

“We can generate phenomenal results. The challenge for us and our team is to do that in a lot of places, for a lot more patients and really transform healthcare,” said Pykosz, one of Oak Street’s founders.

Mike Pykosz
(Oak Street Health)

The health organization will now operate in nine states with more than 50 centers that serve about 70,000 Medicare patients.

It’s entry into two southern markets—it will open two locations in Memphis within the Frayser and Audubon Park neighborhoods this winter followed by a center in the Dallas-Fort Worth area this summer—caps a year of growth for the healthcare startup.

It also plans to expand in states where it already has clinics. It plans a fourth center in Cleveland, three new centers in Detroit and a second location in the Greensboro-High Point metro area of North Carolina—all expected to open in late spring.

In Rhode Island, a second center in South Providence celebrated its grand opening in a partnership with Blue Cross Blue Shield earlier this month.

It also has clinics in Illinois, Indiana and Pennsylvania, with plans to continue its geographic expansion in 2020.

That growth will significantly increase access to Oak Street Health’s innovative approach to primary care for older adults across the country, the company said.

Getting going

The first several years of operation at Oak Street were about proving its primary care model and approach would work, Pykosz said. “We had some pretty big ideas,” he said. That included opening up primary care centers in underserved areas, investing to keep patients healthy, creating a much more consumer-centric model and paying for those investments by taking full risk. By driving improved health outcomes, Oak Street believed it could become a national model for healthcare.

The next phase is to expand and bring that model to a lot more people. “We’re not moving the needle yet on healthcare,” he said about the problems of low quality and high cost that plague the healthcare system. “This is just the beginning.”

Oak Street Health measures its success in two key ways: by showing improved health outcomes of its patients and by improving the patient experience. “Are patients healthier?” Pykosz said.

Oak Street has seen patient hospitalizations reduced by 41%, compared to standard Medicare benchmark, and measured a 49% percent reduction in emergency room visits. Oak Street has an 89% Net Promoter Score used to guage the loyalty of its patients and their satisfaction with care.

Oak Street has funded its expansion by raising capital from a variety of different individual and institutional investors, he said. Securities and Exchange Commission filings show they’ve raised at least $200 million over six funding rounds. It’s investors include General Atlantic and Harbour Point Capital.

As the country tries to shift to value-based care, Oak Street has made national headlines as it offers a change from traditional fee-for-service healthcare.

“Our centers don’t look like doctor’s offices,” he said. They are not located in medical office buildings, but are in retail areas, all with a 1,000-square-foot community center in the front.

Patients who visit an Oak Street Health center will have a healthcare experience they may not have encountered before, the company says. Patients can expect extended time with their clinicians and individualized treatment plans. There’s community-centered support for social wellness, a 24/7 patient support line and access to transportation to and from the center for eligible patients. To create a one-stop shop for healthcare, Oak Health also offers supplementary services, such as behavioral health support and Medicare education classes.

Two-thirds of every dollar the government spends on Medicare goes toward paying for acute care episodes, Pykosz said. Only 3% of those dollars go to primary, preventive care or preventing bad things from happening to patients. “We feel like that is backward,” he said. “That is what we are trying to change.”

“We are at a place at Oak Street, where the model works. The quality of care and the patient experience are significantly better than what patients can find in other places. Not only does it work in our home market of Chicago, it’s worked in all the other major cities like Philadelphia, Detroit, Indianapolis,” he said.

The Trump administration wants to keep a hip and knee replacement bundled payment model going for another three years.

The Centers for Medicare & Medicaid Services (CMS) released a proposed rule Thursday that calls for a three-year extension to the Comprehensive Care for Joint Replacement Model, which is set to end after this year. The agency is also floating a major change to cover outpatient replacements, as the model currently only covers inpatient procedures.

The goal is to address changes to facilities that can now “allow for total knee and hip replacements to be treated in the outpatient setting,” CMS said in a fact sheet on Thursday.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

CMS is also proposing changes for how it will reconcile payments made under the model. Participating hospitals can get a bundled payment to cover an entire episode of care for a hip or knee replacement.

The episode begins when the patient is admitted and encompasses all care provided for 90 days following patient discharge. The goal of the model, which was created in 2016, was to improve care coordination between the initial admission and through recovery.

Currently, a hospital gets two chances to reconcile its bundled payments: at two and 14 months after the close of a performance year. But CMS is proposing to have one reconciliation period instead at six months after the close of each performance year.

The agency also wants to update how payments are calculated to better account for changes in Medicare’s payments.

The first two years of the model generated a modest reduction in spending per hip and knee replacement episode, according to a study in the New England Journal of Medicine.

CMS’ decision to propose an extension for the joint replacement model comes as other models await word of their fate. Chief among them is the Next Generation Accountable Care Organization program, which also sunsets after this year. 

The first deadline for the Trump administration’s new direct contracting value-based care payment model is right around the corner. But potential applicants are worried about key missing details.

For instance: How will they get paid?

Feb. 25 is the deadline to apply to be part of the implementation year for direct contracting. But the application period for the first performance year that starts in 2021 is three months away, and value-based care organizations are demanding the Centers for Medicare & Medicaid Services (CMS) fill in the holes in the program. During the implementation period, which runs through 2020, organizations will not have to take on any financial risk.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

Here are three major questions organizations have:

How much will we get paid?

Under direct contracting, an organization would get capitated payments from CMS. The organization would then contract with providers and dole out value-based payments. At the end of each performance year, CMS will compare actual spending by the organization against a benchmark and see whether the organization saved or lost money.  

But what that benchmark is remains a mystery.

CMS intends to put out an adjusted rate book used traditionally by Medicare Advantage (MA), which lists the rates for separate regions and dictates the capitated payment amounts for MA plans.

CMS intends to use a modified version of that rate book for the capitated payments under direct contracting.

“The rate book will tell you how much you get paid per person,” said Joshua Traylor, a director for the Health Care Transformation Task Force, which is composed of payers and providers in value-based payment arrangements.

Without the rate book, value-based care organizations can’t plug information into their own analyses and see how they would perform in the model.

“Let’s say you have a low-risk patient get $50 per patient per month, but high-risk patients $500 per person per month,” Taylor said. “You can go back to look at data and say how much high and low-risk people I have and that will see how many I can get per month.”

When will we get more information?

Value-based care provider groups are getting restless and want to know when more information will be released on the model. CMS told FierceHealthcare last month that it plans to release more information this spring. 

CMS also told interested organizations on a webinar that the rate book will be out by the end of the second quarter of this year, said Clare Pierce-Wrobel, senior director of the task force.

NAACOS said many accountable care organizations (ACOs) and provider groups will likely apply for both the Medicare Shared Savings Program and direct contracting and then make an “educated decision once they have the necessary information,” according to a letter the group sent to the Centers for Medicare & Medicaid Innovation, which is overseeing the model.

“Not providing more information upfront creates more administrative burden for providers and the agency,” the group added.

A value-based care provider group can put together the model and adjust it when more details become available. However, if the details come “too late then folks aren’t going to have time to get comfortable with the program,” said Greg Scrine, senior vice president of advisory solutions for consulting firm Lumeris.

Others questioned whether CMS would delay the implementation performance year.

Pierce-Wrobel noted that CMS pushed off the start date for the Bundled Payments for Care Improvement initiative, comprising four care models, to “allow for participants to change their participation arrangements. Considering how much is left unknown would CMS consider delaying implementation.”

Can CMS ease an administrative burden?

Direct contracting is composed of three tracks: a standard track for organizations that have experience with value-based care programs such as ACOs, a new entrant track for organizations that haven’t served Medicare fee-for-service patients and a high-need track for organizations caring for patients with complex needs.

Right now, an organization must be either in standard or high-need direct contracting and cannot blend the two.

“If you are a standard direct contracting entity and 5% of your population are high-need, and you want to get paid the high-need capitation rate for them then you need to create a separate tax ID and a separate entity and apply as high-need direct contracting entity for that 5%,” said Pierce-Wrobel.

That creates an administrative burden for organizations and can hinder efforts to coordinate care among patient populations, she added.

“The other issue is that it is not clear how CMS will identify that high-need patient,” Pierce-Wrobel said.