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March 7, 2016

Measuring progress: providers reveal doubts, hopes about ACOs

PHOTO | HBJ File Dr. James Cardon, chief clinical integration officer at Hartford Healthcare, says accountable care organizations will be a mainstay in the healthcare industry.
PHOTO | Pablo Robles After a cautious entry into the ACO model, St. Francis Healthcare Partners CEO Jess Kupec said he’s just about ready to take on higher contract risks with insurers.

Accountable care organizations (ACOs) are one of the most significant ongoing attempts in Connecticut to reverse or slow rising healthcare costs and improve care quality, but there's been little insight into how they're performing.

Until now.

A recent survey conducted by the Connecticut Health Policy Project in conjunction with the Hartford Business Journal provides some of the most in-depth analysis of Connecticut's ACO market, revealing there are at least several hundred thousand state residents enrolled in accountable care organizations.

Survey responses from nine ACOs that list Connecticut as part or all of their service territory found some healthcare executives have doubts about whether the ACO model will ultimately succeed. Most ACOs, however, reported modest cost savings and improved care quality in the last few years.

While Connecticut ACO providers are making up-front investments in software and other resources, they aren't taking financial risks in their contracts with Medicare and commercial insurers, the survey found. Hospitals and doctors are receiving financial bonuses for hitting certain cost and quality care benchmarks, but they aren't losing money if they miss those targets.

In-depth Survey

The 22-question survey, conducted from late 2015 to early 2016, received full responses from nine ACOs, which are all three years old or younger.

For competitive reasons, respondents were promised anonymity, but several agreed to speak on the record about their experiences. They include Hartford Healthcare, one of the state's largest hospital systems; St. Francis Hospital and Medical Center, which was recently acquired by Michigan healthcare operator Trinity Health; and, the Connecticut State Medical Society, which has grouped some of its independent physician members into a nationwide ACO.

Accountable care organizations were authorized under the 2010 Affordable Care Act and have taken on different forms and definitions, but they are essentially groups of doctors, hospitals and payers that join together to coordinate patients' care and share information.

ACOs are typically paid by the success of the treatment administered, not by the number of tests or procedures performed. Their ultimate goal is to shift the industry away from its costly fee-for-service model.

Some ACOs are private, formed by commercial health insurers and care providers, while others are run through government payers like Medicare, which has been a key driver for spreading the care model.

Connecticut is also trying to form an ACO for its Medicaid program that would include 700,000 patients.

Key takeaways

The survey respondents have at least several hundred thousand patients enrolled in private and government ACO programs.

Survey responses reveal some doubt over whether the ACO model will ultimately succeed in significantly lowering costs and improving healthcare outcomes.

All but one of the nine respondents, however, said they had either achieved modest savings so far or that it was too soon to tell. One ACO said savings exceeded expectations.

Five of the respondents said they think ACOs will be a part of the future healthcare landscape, while two said they weren't sure. Two others thought all patients would soon be enrolled in an ACO.

ACOs facing serious challenges

“I was especially struck by their honesty and insecurity about the future,” said Ellen Andrews, executive director of the Connecticut Health Policy Project, a nonprofit consumer advocacy group. “Connecticut's ACOs are facing serious challenges; we need to find a way to help them be successful.”

Andrews said she's concerned that if ACOs can't hit savings targets, they won't have the capital to invest in vital IT infrastructure — like interconnected electronic medical records — needed to ensure adequate coordination of patient care among doctors and hospitals. Respondents listed infrastructure and data coordination between both providers and insurers as top hurdles to ACO success.

Nationwide, ACOs have had mixed results. Medicare announced last year that in 2014, only 27 percent, or 97 of its 353 ACOs, performed well enough to receive shared-savings payments totaling more than $411 million.

While a majority of survey respondents said they had improved their quality metrics, nearly 80 percent said they don't intend to seek national accreditation, which would require them to meet a set of broadly accepted quality metrics and publicly report their performance.

Andrews said she found the lack of interest in accreditation concerning because it could provide less opportunity to ensure consumers will receive good value for their healthcare dollars. She said the state should set some ACO standards.

Future health insurers?

The survey also found nearly half of respondents were considering entering the health insurance business or pursuing health insurance financing. Andrews said that's troubling because it could put care providers and payers under the same umbrella, consolidating the decision-making process and potentially incentivizing the denial of necessary care for cost savings.

The good news, Andrews said, is that the most common goals ACOs reported were improving care coordination and care quality. Competitive concerns fell far down their list of priorities.

“We were pleased to see that the goals of ACOs align well with consumer goals,” she said.

Execs: ACO tenets here to stay

While the survey suggests ACOs alone won't solve rising healthcare costs, several executives interviewed insist that core accountable care strategies like physician collaboration and advanced use of patient data are here to stay.

“The key tenets of ACOs are going to be there forever,” said Jess Kupec, president and CEO of St. Francis Healthcare Partners. “It may not be the exact same model in the end, but we have to do what we're doing regardless.”

St. Francis launched its Medicare “shared-savings” ACO in 2013, which now has approximately 20,000 covered lives. Soon after, it began converting its commercial contracts with Cigna, Aetna, United Healthcare, Connecticare and Anthem — which cover 100,000 patients — to an ACO model, but only with upside risk.

The contracts include financial incentives for achieving good outcomes, like ensuring at-risk patients with high blood pressure and diabetes take their medications and receive proper screenings.

Private insurers paid St. Francis $1 million in incentive payments last year, Kupec said.

Medicare savings

On the Medicare side, St. Francis' ACO saved money in both of its first two years, but not enough to reach the threshold where Medicare would share a portion of those savings.

While St. Francis has not been willing to accept potential financial losses if its quality performance falls short, Kupec said it plans to begin taking on modest downside risk in its commercial plans starting in 2017.

Hartford Healthcare's Medicare ACO, with approximately 20,000 covered lives, saved nearly $6 million in 2014 in its second full year. But like St. Francis, it was just shy of Medicare's shared-savings threshold — by a mere $100,000 or so, according to Dr. James Cardon, Hartford Healthcare's chief clinical integration officer. Federal health officials told a frustrated Cardon that it was one of the smallest margins by which any ACO missed its target. Cardon said he hopes to earn financial rewards in 2015.

Like St. Francis, Hartford Healthcare has also transitioned its commercial contracts to value-based arrangements that incentivize quality care, but doesn't financially punish poor results.

Cardon is convinced the ACO model is here to stay.

“That train has left the station,” he said.

Cardon shares some of his fellow survey respondents' frustration around data and infrastructure. He said quality and cost data from both government and commercial payers lags for months. And Hartford Healthcare's technology doesn't fully link all of its providers, forcing some doctors to collect patient data manually.

Medical society sees protections for members in ACO

The Connecticut State Medical Society (CSMS) has enrolled several hundred of its 6,000 mostly small, independent physician practice members into a Medicare ACO, which launched last year covering roughly 12,000 patients.

CEO Matt Katz said the society wanted to offer its members a way to show they could succeed in the ACO model, without necessarily being forced to become part of a larger physician group or hospital.

“It's the transformation of the healthcare system,” Katz said. “Physicians don't want to be left by the wayside.”

Beyond that, he said doctors care about improving health outcomes and reducing costs.

CSMS' ACO is part of a national ACO called PACS, which is headquartered in Enfield and has approximately 100,000 covered lives.

PACS helps members comply with infrastructure and Medicare filing requirements.

Katz said there are no current plans to pursue commercial risk contracts. He wants to show members that the ACO model can save money, so more will be enticed to join, but CSMS won't know how it performed in the Medicare ACO program in 2015 until later this year.

“We need to crawl before we walk and walk before we run,” Katz said.

A Learning Model

What does he think of the future of ACOs?

“I think it's a learning model and it may not be the end-all-be-all final model, but it may be a way of getting us somewhere we need to go,” he said.


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