What a difference a year makes…
At last year’s (first-ever) National Accountable Care Organization Congress, there was a palpable “buzz” about the previously obscure, wonky concept of “accountable care organizations” (ACOs) that had been elevated in importance by its adoption six months earlier by Congress in the Patient Protection and Affordable Care Act (ACA). Last year, the over 1,100 participants eagerly listened to the some of the chief architects and proponents (and least in published articles) of the concept of ACOs – Elliott Fischer, Mark McClellan, Steve Shortell, and Larry Casalino – make their case why ACOs would transform U.S. health care. For those that may not have been following the evolution of the ACO concept, it was a star lineup.
On the federal government side, Californian Peter Lee, representing the U.S. Department of Health and Human Services, was put in the awkward position of sitting on stage with little to say, since there were no proposed regulations or any other official guidelines about how ACOs were going to be implemented. The two most important things that Lee could and did say was that 1) under former Institute of Healthcare Improvement’s Don Berwick leadership at the Centers for Medicare & Medicaid Services, the “triple aim” was now federal government policy and 2) the one specific ACO authorized by Congress under the ACA, the Medicare Shared Savings Program ACO, would not be the only ACO model forthcoming from CMS. Lee told the participants to expect other ACO models from the new Center for Medicare and Medicaid Innovation (CMMI).
It wasn’t until the second day of last year’s conference that any skepticism about ACOs was expressed from the plenary stage. Harold Miller from the Center for Healthcare Quality and Payment Reform received applause for voicing some of the questions and concerns that many attendees were feeling. However, while participants left the conference with more questions than answers, there was a sense of being part of the beginning of something big, even if we weren’t sure what “it” was going to be.
Fast forward to a year later, this past week, and the second National ACO Congress.
Proposed regulations for the Medicare Shared Savings Program ACO (along with detailed policy guidances from four other federal agencies – the HHS Office of Inspector General, Department of Justice, Federal Trade Commission, and Internal Revenue Service) were issued in March. CMS received (and read through, and responded to) 1,300 public comments on the proposed regulations, and issued final regulations last week (just in time for the conference!). The four other federal agencies also finalized their guidances.
And weeks after publishing the proposed Medicare ACO regulations, CMS backed off from its proposal to “withhold” 25% of any shared savings to insure against potential losses by an ACO in future years by announcing an Advanced Payment Model, moving all the way from withholding payments to providing startup and operating capital upfront to ACOs. In the finalization of this program, the ACOs who qualify for advanced payments would not have to repay the advanced payment even if they were not able to achieve shared savings.
Meanwhile, in May, CMS announced an all-payer “Pioneer ACO” model from the CMMI, by just publishing the program rules, with no opportunity for public comment. CMMI is now finalizing agreements with up to 30 Pioneer ACOs.
And CMS also has quietly finalized new two-year shared savings agreements with the ten large physician groups that participated in the Physician Group Practice Demonstration that much of the ACO model is based on, calling these Transition ACOs.
The CMMI also has launched two training and technical assistance programs to prepare organizations to apply for these types of programs and engage in health care delivery redesign, quality improvement, and payment reform. An Accelerated Development Learning Program on ACOs was launched in June and more recently, an Innovation Advisors program has been started.
So at last week’s Second National ACO Congress, the tone was dramatically different. CMS was well-represented by Jonathan Blum and Mai Pham, the key architects of the Medicare ACO and Pioneer ACO programs, respectively. Both were surprisingly transparent and honest in their statements. Blum began by stating that the vision of an ACO is to put the patient and family at the center of care. He also noted that there would be multiple programs or “on-ramps” to achieve that vision through ACOs, stating that additional ACO models could be expected, including more models focused on Medicaid and Children’s Health Insurance Program beneficiaries. He also explained that CMS would invest resources in capital, training, and evaluation (“learning”) as ACOs were implemented. Blum concluded that CMS wanted “excitement and momentum” about ACOs.
Pham emphasized that, with the ACA, we only have this one unique opportunity to “get it right” in terms of savings based on quality, highlighting how important these “demonstrations” are. Like Blum, she noted that she expected that even within the Pioneer ACOs, there would be multiple models and designs, based on local contexts. However, she emphasized that ACOs were “not your mother’s HMOs”, drawing distinctions from the lock-in, prior authorization, and gatekeeper elements of managed care.
Despite the very significant changes made in the final regulations for the Medicare Shared Savings ACO Program, there were only passing references throughout the conference to the details of the final regulations. Most of the participants seemed to have read and digested analyses of the final regulations and just didn’t seem very interested in all the details.
And interesting, Fisher, McClellan, Shortell, and Casalino were not on this year’s program. The keynote addresses were from The Commonwealth Fund’s Karen Davis, whose Commission on a High Performance Health System (now chaired by the former director of the Office of National Coordinator for Health Information Technology David Blumenthal), has been actively supportive of ACOs, and Karen Ignagni from America’s Health Insurance Plans. Indeed, there seemed to much more of a balance of speakers from the health plan, hospital, and physician practice perspectives, all seemingly embracing, or at least resigned to accepting, the imminent reality that ACOs are going to part of U.S. health care delivery systems.
As Ignagni stated, we are not seeing just a paradigm shift but a cultural shift in health care, towards value rather than volume, and driven by aligned quality measures. Ignagni also stated the obvious: my cost containment is your revenue reduction. She concluded that true cost containment will come from reducing unit costs, not simply reducing utilization. HealthPartners Health Plan’s Patrick Courmeya stated the obvious: in an ACO environment, the value proposition for health plans is changing. Aetna’s Charles Kennedy described future business models for today’s health plans, including data and consulting services, admitting that a traditional health plan will only have “marginal value” in the future. Wellpoint’s Samuel Nussbaum highlighted that health plans have longitudinal data, research capacity, care managers, capital, and the ability to analyze and take financial risk, all capabilities of value to ACOs.
The conference also highlighted how the commercial market or private sector has taken up and already begun to implement ACOs, even while CMS finalizes federal government models. Two of the most visible efforts are a “learning collaborative” headed by Fisher from the Dartmouth Institute for Health Policy and Clinical Practice and McClellan from the Engleberg Center for Health Care Reform at the Brookings Institution, and another national collaborative being implemented by the Premier hospital alliance. Curiously, while there were some speakers and breakout sessions mentioning or featuring these two national efforts, none were highlighted at the conference.
Two of the most impressive of these models were showcased at plenary sessions at the conference: the Blue Cross Blue Shield of Massachusetts Alternative Quality Contract (will cover 650,000 lives in 2012) and the CALPERS ACO in Sacramento, California with the Blue Shield of California health plan, Hill Physicians Medical Group, and Catholic Healthcare West hospitals (covering 42,000 lives).
Some of the most surprising admissions from plenary speakers was that as health care systems, there will be less revenues in the future. Several speakers, including Blue Shield of California’s Juan Davila, noted that most of the “savings” to be expected from ACOs will come from reduced hospital days, and therefore reduced revenues for hospitals. UCLA’s Molly Coye stated that she was looking at operating with 30% less revenue. Any “shared savings” would never replace that lost revenue, but an ACO might mitigate the losses faced by a hospital with both “repatriation” of patients into the hospital as well as the shared savings. As Greater Newport Physician’s Alan Puzarne stated, the long-term strategy for hospitals in ACOs is to maintain or even increase that hospital’s market share. Hill Physicians’ Steve McDermott characterized this as the need for a “glide path” (vs. a crash landing?) for hospitals away from a fee-for-service payment system. Of course, one of the fears about ACOs is that it will consolidate and concentrate some privileged providers in a particular health care market.
From the physician perspective, Sharp Community Medical Group’s John Jenrette said, “ACOs are us” – medical groups have been doing the work of coordination, integration, and quality improvement even before there was a name for it. Yet Monarch HealthCare’s Bart Asner warned: physicians will have to join groups, get peer support, and use peer review to maintain quality.
Monarch HealthCare’s Jay Cohen concluded that it is not so much the details of any single ACO program or model that is important, but that health care is moving directionally toward greater integration, accountability, and payment models based on shared savings and quality-driven value. HealthPartners Health Plan’s Patrick Coumeya said he was agnostic about any specific ACO structure but that all would need the appropriate leadership, operational capabilities, and organizational culture. Futurist Ian Morrison said the future is not ACOs, but accountable care. Cohen also noted that, among all the ACO demonstrations and pilots, some will fail. Monarch HealthCare’s Bart Asner quipped, “I just hope we don’t have to start all over with a new acronym.”
The conference also had an emerging marketplace of various vendors and consultants offering to help organizations become ACOs. Indeed, the National Committee for Quality Assurance is about to release its accreditation standards for ACOs. Curiously, there was no speaker from NCQA on the agenda, it was not an exhibitor, and there was no mention of the accreditation standards in any of the plenary sessions.
In summary, this year’s ACO Congress was sober and pragmatic, a sharp contrast to the buzz from a year ago. Speakers seemed to no longer question “whether” ACOs were going to be a reality, but now were focused on “how” they were going to implemented and what impact they would have on U.S. health care in the years to come.