Bearing risk is a theme not to be ignored. Just as the old saying “the house always wins” gives the risk-adverse pause, providers and plans might hesitate to join the high-risk, high-reward next Generation ACO launching this year.
But if you have the right cards, it just might be worth placing a higher bet.
While the Next Generation ACO is predicted to entice just 20 ACOs this year, it is part of the movement away from traditional fee-for-service. For instance, by 2018, half of Medicare payments are expected to fall under non-traditional payment models with a mere 10% targeted to remain as traditional fee-for-service payments. So how does a provider group or plan know if the cards are good enough, and what forming a Next Generation ACO would mean for their members? According to industry experts, it starts by studying their hand closely for the right cards.
Past Successes with Population Health Management
All alternative reimbursement methods increase accountability for quality and cost of care. During a webinar titled Next Generation ACO Implications: Impact of the New CMS ACO Model, Vicky Parikh, executive director at Reliance Health, LLC, said these models necessitate strong population health management in a way it was not seen in traditional fee-for-service payment models.
Dr. Farzad Mostashari, founder of Aledade (a third-party resource for providers looking to form an ACO), added that one of the most gratifying aspects of his work has been to see providers engage in patient care in ways they could not before joining the ACO. He saw this happen especially for doctors in hospitals that lack the infrastructure necessary for community building.
“Physicians say, ‘We have never seen this before. In 20 or 30 years of practice, I never knew what everyone else was doing to my patients, how much things cost or where my patients were getting care.’ The ACO, for many doctors, is the first time in a long time they can come together and talk about their practices and patients.”
Major payers are placing bets on the model. For example, UnitedHealthcare committed to 250 new ACOs in 2015, providing IT infrastructure to the providers and medical groups it is engaging. Care coordination tops its list of priorities, according to a PAMF news release in April. According to the news release:
“UnitedHealthcare’s total payments to physicians and hospitals that are tied to value-based arrangements have nearly tripled in the last three years to $38 billion. By the end of 2018, UnitedHealthcare expects that figure to reach $65 billion.
UnitedHealthcare has more than 520 active accountable care programs today.”
The national health plan is pursuing it based on past successes that include reduced hospital admissions and readmissions, increased primary care visits, and reduced ER utilization. Even medication compliance was improved, according to UHC partner WESTMED in New York.
“In the first year of our (ACO) arrangement, our program improved nine of 10 health quality metrics, increased patient satisfaction and reduced health care costs. For example, there were significant improvements in patients taking their prescription medications properly and people with diabetes receiving more routine screenings to better control their blood sugar levels.”
Who is Ready for the Next Generation?
The Next Generation ACO was announced in March this year, spurring both debate and strategic thinking of healthcare stakeholders nationally.
This model is essentially a continuation of the previous ACO model, but, much like an investment portfolio can be more or less risky, the new generation model is more appropriate for the type of organization that can handle more risk. The same rules apply with new and old: strong IT infrastructure and effective care coordination improve the odds of success. To gauge the likelihood of reaping rewards instead of managing losses, successful experience with managing population health and bearing risk are likely to determine the financial sustainability of the ACO.
And this is why payers and providers need to examine their hand closely for the right cards.
Effective population health management relies on physician and member engagement, according to Parikh, who also quoted Patrick Conway, MD, Deputy Administrator for Innovation & Quality and Chief Medical Officer for CMS, as saying the next stage of ACO “enables greater engagement of beneficiaries, more predictable, prospective financial model, flexibility – to utilize additional tools to coordinate care for beneficiaries.”
Parikh added that sources of waste in the American health care system include $55 billion in missed prevention opportunities and another $210 billion in unnecessary services – both areas the alternative payment methods aim to improve on.
Therefore, to determine whether an ACO will succeed in the next generation model means evaluating whether you have the requisite care management platform to accept risk. Larger plans with experience in medical homes or population health management risk are the most likely to be early adopters based both on the criteria and on the likelihood of success bearing risk and reaping rewards.
The best way to beat the house is to become the house. Just like the “house” is the infrastructure in which a casino operates, ACOs that want the opportunity for high rewards and better health outcomes for their members will need to prioritize clinical, care, and IT infrastructure, while always maintaining strong physician and beneficiary engagement. The more infrastructure, the less risk, and the more rewards.
