Life Science Compliance Update

June 13, 2016

Better Patient Care Doesn’t Necessarily Equal Patient Savings

In October 2012, the Centers for Medicare and Medicaid Services launched the Comprehensive Primary Care Initiative, in collaboration with thirty-nine private and public payers. Primary care practices that participated in the Initiative were required to make changes in care delivery that would build their capability in five functional areas: (1) access to and continuity of care; (2) planned care for preventive and chronic needs; (3) risk-stratified care management; (4) engagement of patients and their caregivers; and (5) coordination of care with patients' other care providers.

The Initiative supports the efforts of the participating practices by offering enhanced payment, data feedback, and learning support, as well as presenting an opportunity to evaluate a new multipayer model of payment and primary care delivery, in a large and diverse set of practices.

A group of doctors and researchers recently published a study in the New England Journal of Medicine that assessed the effects the Initiative had on Medicare expenditures, the use of services, selected measures of the quality of care, and patient experiences during the first two years of the Initiative.

During the first two years of the Initiative, practices received a mean of $131,000 per clinician in care-management fees and reported improvements in approaches to the delivery of primary care in areas such as management of the care of high-risk patients and enhanced access to care. This amount did vary according to the practice and region, depending on the number of participating payers, the number of patients attributed to practices by each participating payer, and each payer's payment amount. Interestingly, however, changes in average monthly Medicare expenditures per beneficiary did not significantly differ between initiative and comparison practices.

The effects on Medicare expenditures varied quite a bit across Initiative regions. Initiative practices had significant reductions in expenditures when fees were not included in two regions: New Jersey and Tulsa. Significant increases in net expenditures were found when fees were included in Cincinnati-Dayton.

The number of hospitalizations also did not change significantly for Initiative practices over the two year period. The only significant difference that the researchers found were a 3% reduction in primary care visits for Initiative practices compared to comparison practices and small changes in two of the six patient experience domains: discussion of decisions regarding medication with patients and the provision of support for patients taking care of their own health.

The researchers concluded that while practices that are participating in the Initiative have reported progress in transforming the delivery of primary care, these practices have not yet shown savings in expenditures for Medicare Parts A and B after accounting for care management fees, nor have they shown an appreciable improvement in the quality of care or patient experience.


The study did suggest that Initiative practices are transforming care delivery; however, they have not yet generated savings in Medicare Part A and B expenditures that are sufficient to cover care-management fees. The 3% reduction in primary care visits suggests the non-billable calls, emails, and interactions related to care management may have reduced, or even supplanted, the need for office visits.

The study also provided some possible reasons as to why the results were not more favorable. One such reason was that practices may need more time to fully implement changes in care delivery that translate to improved outcomes. It is also possible that practices will reduce expenditures enough to offset a lower fee; that CMS will reduce its average fee to $15 per beneficiary per month in the last two years of the Initiative, reducing not only the gross savings required to reach cost neutrality, but also the resources available to achieve those savings.

The study had several limitations, one of which was that practice participation in the Initiative is voluntary, and the analysis was limited to their attributed fee-for-service Medicare beneficiaries. The fact that patient experience was not measure prior to the start of the Initiative also makes it difficult, since there may have been preexisting differential trends between Initiative and comparison practices.

As CMS continues to pay for health care through alternative payment models that reward quality and value, the Initiative may help inform future policies guiding models for primary care delivery in the United States.

November 13, 2015

Accountable Care Organizations Prove They are Here to Stay

One of the key missions of the Affordable Care Act is to slow the rising cost of health care. The Obama administration believes ACOs represent one of the most promising reforms in the 2010 law. With this in mind, the administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. To help promote value of care over volume, Medicare encourages doctors, hospitals, and other providers to form accountable care organizations (ACOs) to coordinate the care of beneficiaries and provide efficient services. To incentivize these programs, an ACO that saves the government money and meets quality standards can be entitled to a share of the savings.

We have previously written about the challenges facing CMS and ACOs across the country. Recently, the GAO analyzed ACOs' spending benchmarks, amount saved and lost, and payment amounts for shared savings or losses. The GAO found that fewer than half of the ACOs in the Pioneer ACO program earned shared savings in 2012 and 2013, although overall the Pioneer ACO Model produced net shared savings in each year.

Are ACOs a success story?

To help answer this question, Kaiser Health News asked several ACO experts if ACOs are working. The answers illustrate the problems facing ACOs, such as the institutional behaviors learned from fee-for-service models. "The program started off slowly. Changing the behavior of doctors from fee-for-service to a value-based environment involves changing in some cases 30, 40 years of behavior and doesn't happen overnight. It's very, very hard work. The doctors who embrace it find it very challenging," wrote Richard Barasch, the Chairman and CEO of Universal American Corp.

Robert Murray, President of Global Health Payment was pessimistic, writing that ACO performance indicates they have not been successful. "A lot of people have characterized the results as lackluster at best, and I think things are even worse than that. Medicare's performance data ignores the fact that each of these ACOs made very substantial investments in infrastructure: new data systems, care management and care coordination systems that probably run anywhere between 1 and 2 percent of their target budget. If you apply that to the results of the ACOs, you would find that even a significant proportion of those meeting Medicare's goals would be underwater financially," he said.

Notably, Sean Cavanaugh, Deputy Administrator for CMS was more optimistic. He cited a number of measurements indicating success stories within ACOs, arguing that the initiatives "are off to a successful start because beneficiaries are receiving measurably better care and the trust funds are saving money."

Dartmouth-Hitchcock exiting Pioneer ACO program, calls model 'unsustainable'

To illustrate the challenges facing ACOs, one need not look further than recent news from the Dartmouth-Hitchcock Medical Center. The Center plans to leave the Pioneer Accountable Care Organization after losing more than $3 million over the past two years. However, the ACO does hope to join CMS's Next Generation ACO model in 2016.

The report notes that the hospital owed $3.6 million for Year 3 for spending above its benchmark, according to results released by CMS. Dartmouth-Hitchcock also owed $1.4 million from Year 2. After reconciling the figures with CMS, the hospital was expected to write a check to the government for an estimated $3.7 million. This is despite the fact that the hospital had what is considered good quality scores.

Beacon Health in Maine, while obtaining the second highest quality scores, owed $2.9 million, and Franciscan Alliance in Indiana owed $2.5 million, according to CMS.

CMS data: ACOs work

In late-August CMS released the quality and financial performance results for Medicare Accountable Care Organizations for 2014. CMS touted that Medicare ACOs continued to improve care while slowing growth in health care costs. Several key findings from the CMS report regarding the Pioneer ACO Model:

(1) In 2014 there were 20 ACOs participating in this Model.

(2) These ACOs were accountable for 622,265 beneficiaries, a two percent increase over 2013.

(3) Their total savings to the Medicare Trust fund amounted to $120 million.

(4) CMS claims 11 of the 20 ACOs earned the right to share $82 million in shared savings payments.

(5) CMS calculates that the total savings per ACO amounted to $6.0 million 2014, up from $4.2 million in 2013, and $2.7 million per ACO in 2012.

(6) CMS also reported that the mean quality score among Pioneer ACOs increased to 87.2%, reflecting improvements in 28 of the 33 quality measures. Improvement was reported in medication reconciliation, screening for clinical depression and use of electronic health records.

CMS reported positive results for MSSP ACOs:

(1) 333 ACOs participated in 2014, and 92 ACOs (27.6%) earned shared saving performance payments, totaling $341 million.

(2) 152 of the 333 ACOs did not meet or beat their cost benchmarks.

(3) The total savings to Medicare Trust Fund from the MSSP was $465 million.

(4) CMS reported that MSSP ACOs improved on 27 of the 33 quality measures, with particular improvement noted in patient ratings of clinician communication, patient ratings of their physicians, screening for tobacco use and cessation, and screening for high blood pressure.

(5) CMS also noted that ACOs who had more experience in the MSSP were more likely to earn a payment of shared savings.

What does the future look like for ACOs?

Despite these conflicting assessments of ACOs, it is clear they are here to stay. The Department of Health and Human Services' is betting several years of its policy programming on ACOs, recently announcing that it will tie half of fee-for-service payments to alternative payment models like ACOs by 2018. And despite problems with the Pioneer ACO, CMS announced an expansion of the program. CMS is also close to naming the first cohort of Medicare's Next Generation ACOs, according to Dr. Patrick Conway, acting principal deputy administrator and chief medical officer at CMS.

FiereceHealthcare recently reported on the recent history and rise of ACOs, citing Risa Lavizzo-Mourey, M.D., president and CEO of the Robert Wood Johnson Foundation. "In less than five years, ACOs have transformed from an academic idea to a tangible model that has been implemented across the U.S. By realigning financial structures and redirecting care delivery to be more patient-centered, ACOs have given providers more accountability in the care of their patients," Lavizzo-Mourey said. FiereceHealthcare notes that quality and cost improvements among ACOs under both Medicare and commercial payers will encourage growth in the ACO market.

New Jersey's ACOs illustrate the challenges facing future growth, particularly at the local and state level. Currently, the state is the first year of the three-year Medicaid ACO demonstration project. As reported, there is a sense of urgency to find sustainable funding for the ACOs.

"We recognize that Medicaid dollars or other government funds -- either directly from the state or through the managed-care companies -- must be made available for ACO activities," said Joan Randell, the COO of The Nicholson Foundation, which has helped fund the launch of the ACOs. She noted CMS has given states broad latitude to support ACOs. While her foundation will continue to support these organizations, without more outside funding the ACO model "is at risk of not thriving in the short term and not being sustainable in the long term."

Ultimately, CMS officials note most ACOs are still in their infancy, and believe that performance and savings will improve with experience. "In the long run we're shooting to achieve those goals," Sean Cavanaugh, CMS' deputy administrator, said in an interview.

June 08, 2015

Results from the First Two Years of the Pioneer Accountable Care Organization Model


On May 22, the Government Accountability Office (GAO) released a study evaluating the financial and quality outcomes for each accountable care organization (ACO) within the Pioneer Accountable Care Model for 2012 and 2013. The Pioneer ACO was created under the Affordable Care Act and is made up of health care providers and suppliers that voluntarily form individual ACOs to provide coordinated care to patients. The ultimate goal of this, and other ACOs, is to reduce spending and improve quality of care.

The Pioneer ACO model allows ACOs to earn additional Medicare payments if they generate savings but must pay CMS a penalty if spending is higher than expected. In this study GAO analyzed ACOs’ spending benchmarks, amount saved and lost, and payment amounts for shared savings or losses. The GAO found that fewer than half of the ACOs in the Pioneer ACO program earned shared savings in 2012 and 2013, although overall the Pioneer ACO Model produced net shared savings in each year.

The GAO report’s overview notes that 41% of the ACOs produced $139 million in total shared savings in 2012, and 48% percent produced $121 million in total shared savings in 2013. In 2012 and 2013 CMS paid ACOs $77 million and $68 million, respectively, for their shared savings. The Pioneer ACO Model produced net shared savings of $134 million in 2012 reflecting 2 percent of total expenditures for all 32 ACOs that participated in 2012. In 2013, it produced net shared savings of $99 million reflecting 1.4 percent of the total expenditures for the 23 ACOs that participated. The GAO also found that ACOs that participated in both years had significantly higher quality scores in 2013 than in 2012 for 67 percent of the quality measures.

ACOs with higher levels of prior spending likely had more capacity for achieving cost savings in the first two years of the model, for example, by reducing unnecessary services. As part of the GAO’s analysis, it compared the average expected expenditures (the spending benchmarks) for the Pioneer ACOs that achieved shared savings to the average expected expenditures for those ACOs that did not produce shared savings. In each year, GAO observed that the ACOs with shared savings had average expected expenditures that were about $1,100 higher, per beneficiary, compared to those ACOs that did not generate shared savings, absent other differences. For example, in 2013 the average expected expenditures for the 11 ACOs with shared savings ($12,426) was $1,160 higher, per beneficiary, than the average expected expenditures for the 12 ACOs without savings ($11,266).

The Department of Health and Human Services (HHS) provided technical support to assist the GAO in this study. HHS also offered general comments on the report. In its response, the agency stressed its commitment to ACOs like the Pioneer Model, calling it an “innovative initiative that is being used to test the impact of different payment arrangements in helping organizations who already have experience operating in ACO-like arrangements achieve the goals of providing better care to patients, and reducing Medicare costs.” HHS highlighted the fact that ACOs participating in the Pioneer Model for 2012 and 2013 had higher quality scores for a majority of the measures in the second year. Aside from trumpeting positive data, HHS concluded by stating the CMS will continue to test payment models that “incentivize providers to improve patient care and lower costs.”

With the recent MACRA SGR repeal legislation pushing physicians to choose between an unclear merit-based formula and alternative payment models like ACOs, it will be increasingly important to monitor developments in programs like the Pioneer Model. HHS continues to push post-Affordable Care Act projects, like their Health Care Payment Learning and Action Network, which strives to move healthcare from fee-for-service to quality and value-based care. We will continue to monitor these issues throughout the coming years.


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