Health Update

In This Issue:

  • Assessing the Medicare Shared Savings Program: Diverse Participants, Diverse Results
  • Hallmarks of the Accountability Model: Key Negotiating Points to Improve the Quality and Reduce the Costs of Healthcare
  • HIE Helps Integrate Behavioral and Physical Healthcare, but Hurdles Remain

Assessing the Medicare Shared Savings Program: Diverse Participants, Diverse Results

Authors: Christopher Cantrell, Senior Analyst, Manatt Health Solutions | Jonah Frohlich, Managing Director, Manatt Health Solutions

Background

Rising healthcare costs and declining reimbursements have placed immense pressure on providers and health systems to manage the health and costs of the populations they serve more effectively. These pressures coincided with the advent of the Medicare Shared Savings Program (MSSP) in the Affordable Care Act, which couples population health approaches with financial incentives to support the transition from volume to value.

The MSSP was met with a fair degree of enthusiasm and expectations (as well as some cynicism) when it launched in 2012. Some anticipated that the MSSP, along with the Pioneer ACO program, could save $1.5 billion nationwide over three years.

Manatt has supported more than a dozen MSSP applicants, ranging from independent practice associations (IPAs) to large health systems. Our experience has given us a unique perspective on the characteristics and development approaches of the ACOs participating in the program.

An Open and Transparent Program Design

The diversity of participating organizations reflects the MSSP’s open and transparent design, which is somewhat unique among federal programs. The MSSP established an annual open application period during which any healthcare organization that serves Medicare fee-for-service (FFS) beneficiaries and meets a basic set of requirements may apply. Those requirements are uniform regardless of the type or size of the applicant.

To be eligible, ACOs must serve at least 5,000 beneficiaries, report on 33 clinical quality measures, and meet cost benchmarks established by the Centers for Medicare and Medicaid Services (CMS). In exchange for meeting these and a host of other clinical, financial and organizational requirements, ACOs have the opportunity to realize shared savings if they outperform cost targets established by CMS and, in some cases, realize losses if they don’t.

Diverse Participating Organizations and Populations

The MSSP has generated significantly more interest than was first anticipated. More than 360 Medicare ACOs already have been established since the program’s launch. Among the MSSP’s participants are IPAs, academic medical centers (AMCs), regional hospitals, multistate delivery systems, and federations of all of the above. Each organization’s patient population reflects differing demographics, disease burdens, severity of illness and utilization patterns.

For example, one AMC was managing a population with more comorbidities and complex conditions than a community hospital located in a retirement community. As a result, the approaches that both institutions take to manage care should not necessarily be the same. The AMC needed more specialist and specialized care, while the community hospital focused more on primary care.

The ACOs that Manatt supported also showed significant differences in their clinical and information technology (IT) infrastructures, as well as their experience managing risk. One participating entity had no existing care coordination or care management infrastructure, requiring it to consider significant investments to support the ACO’s launch. Another already had a population health management system in place and National Committee for Quality Assurance (NCQA) certified patient-centered medical homes within a number of its primary care clinics, leaving the ACO better prepared for managing patient risk. Despite the differences between these two organizations, both applied for and were accepted into the MSSP. While the MSSP established a level playing field, it is decidedly uneven with respect to each organization’s capabilities and patient population profiles.

ACO Implementation Approaches Vary – A Lot

Given the wide variations among entities, it is impractical to create a single strategy for successful MSSP participation. Each organization must develop its own plan that takes into account both the specific characteristics of its patient population and its existing capabilities. Since an organization’s clinical and IT capabilities have implications for how effectively the ACO can manage care and achieve savings, it is critical that organizations engage in forecasting and assessments, as they develop their ACO implementation strategies:

  • Patient Population Characteristics. The CMS beneficiary attribution methodology assigns members to an ACO retrospectively by identifying where patients in the ACO’s geographic region receive the plurality of their primary care services. ACOs can use forecasting to anticipate the size and characteristics of the attributed beneficiary population, while also identifying hot spots and areas for potential savings.

    While beneficiary attribution is primarily driven by primary care services, Manatt’s forecasting experience suggests that it also may be driven by specialty care in certain settings. In one case, an AMC had twice as many attributed beneficiaries from specialists than a community hospital and 60 percent more than an IPA-based ACO. For some ACOs, higher specialty care utilization may require additional investments in care coordination for high-risk populations (e.g., specialist-based medical home models).

    Forecasting also may be used to predict with greater accuracy whether the ACO will meet the CMS minimum beneficiary requirement, which informs whether applicants should conduct further provider recruitment. Forecasting the expected attributed beneficiaries also provides insight into the ACO’s IT infrastructure needs to support more complex populations. For example, it can reveal whether the ACO needs more sophisticated clinical decision support and population health management tools.

  • Existing capabilities. Manatt’s experience in supporting MSSP applicants with gap assessments also uncovered significant differences in existing capabilities among different types of organizations. For instance, while some were more advanced than others, many federated provider groups, such as IPAs, did not have robust IT or care coordination infrastructures deployed across groups. Although IPA-based ACOs were typically developed through a physician-led governance model, they outsourced IT functions and relied on a “pod”-based care management model to coordinate care across practices. Since the IPAs lacked the kind of capital reserves available to hospital systems, they looked to national and regional payer partners to help support the ACOs’ implementation. These relationships do not preclude the ACOs from entering into contracts with other payers. In fact, there may be benefits to investors for the ACO to have multiple partners, if they can share in downstream savings.

    Larger institutions, such as AMCs and multistate delivery systems had more robust clinical and IT infrastructures and could centralize services to support their patient populations. However, these infrastructures often were fragmented across inpatient and ambulatory care settings. Manatt’s assessments revealed differing strategies and protocols across inpatient, ambulatory and post-acute care settings that need to be resolved. The MSSP pressed these ACOs to address fragmentation issues, reducing the likelihood of gaps in care as patients transition across settings.

According to the National Association of ACOs, the 114 MSSP ACOs that joined the program in 2012 have invested more than $400 million to build and operate their ACOs. However, as noted previously, the overall level of investment for each ACO varies based on its existing capabilities. Manatt’s business planning experience with MSSP applicants shows that ACO investments typically range from $1.3 million per year to $6 million per year, depending on an organization’s existing infrastructure and scale. These variations in costs underscore the need for accurate assessment and forecasting of needed resources.

Preliminary Program Results

Given that the existing capabilities, patient populations and ACO implementation approaches of MSSP participants varied so dramatically, it should come as no surprise that their performance also showed significant differences. In January 2014, CMS released preliminary performance results for the 114 MSSP ACOs that began operation in 2012.

Within this initial participant cohort, 27 of the 110 Track 1 participants, which are not liable for downside risk, generated shared savings. Of the four Track 2 participants, which are liable for downside risk if spending exceeds expectations, two generated shared savings and two generated shared losses. While only a small portion of the initial program participants generated shared savings during the first year, more than half of the 114 participating ACOs had lower than projected expenditures, generating $128 million in savings for the Medicare trust fund.

Following the release of the initial shared savings results, CMS released data in February on 5 of the 33 quality measures used to evaluate the clinical care that ACOs provide. The five released measures—which evaluate ACOs’ results with respect to patients with diabetes and coronary heart disease—provide additional insight into the performance of the initial participant cohort.

Similar to the shared savings results, the data indicate that performance varied across ACOs. For example, on the measure that assessed the percentage of diabetic ACO patients with documented daily aspirin use, one ACO achieved 81 percent while another achieved only 7 percent. ACO quality performance also varied dramatically across measures assessing blood pressure, tobacco use and hemoglobin control.

Looking Forward

The 2015 MSSP application cycle will begin in June and conclude in the fall, when CMS selects new program participants. While the 2015 cycle will likely not be affected, it is anticipated that CMS will release additional guidance for the MSSP program sometime this fall. Significant regulatory changes could potentially have an impact on how future ACOs are measured, as well as how they receive shared savings. Manatt will continue to monitor changes at the federal level that are of interest to current and prospective MSSP participants.

As current ACOs further develop care coordination and population health management capabilities, it is likely that some organizations will use the MSSP as a stepping stone toward assuming more risk for their beneficiary populations (i.e., Medicare Advantage and commercial HMOs). By waiving certain fraud and abuse requirements, the MSSP provides a pathway for healthcare organizations to be deemed clinically integrated by the Federal Trade Commission, adding a degree of protection from federal antitrust and antikickback rules.

While ACOs are still subject to state law, some are leveraging the MSSP waiver to engage in contracts with commercial payers. This approach allows ACOs to spread their clinical and IT infrastructure investments over commercial and public payer patient populations. As more organizations leverage this approach, it is likely that the spread of Medicare and commercial ACO arrangements will continue.

The preliminary results from the MSSP’s first year provide some insight into the varied performance of the initial MSSP ACOs. CMS intends to release final results later this year, which may shed further light on early experiences with the program. Given that ACOs in the initial cohort varied significantly in their existing capabilities and patient populations, it is noteworthy that some were able to outperform their cost projections and achieve shared savings. Time will tell whether other MSSP participants will be able to improve care while driving unnecessary costs out of the system. Their continued investment and participation in the program, however, suggest a longer-term commitment to adopting a care model that moves them away from traditional FFS medicine. That in itself may be the most significant achievement of the program to date.

Hallmarks of the Accountability Model: Key Negotiating Points to Improve the Quality and Reduce the Costs of Healthcare

Author: Anne O. Karl, Associate, Manatt, Phelps & Phillips, LLP

Editor’s Note: The United States is undergoing a transformative shift in how we pay for healthcare, moving from fee-for-service models to accountability-based models. In a recent article published in the March issue of Executive Insight, summarized below, Manatt Health defines the key terms used in contracts implementing accountability-based models—and reveals how they can impact the value proposition of these arrangements for both plans and providers. Click here to read the full article

Value-Based Contracting Models

Any model that compensates providers based on factors other than simply the volume of services provided can be categorized as value-based contracting. Contracting models employing bonuses/withholds or shared savings retain many of the features of a fee-for-service arrangement but with a value-based purchasing overlay. Providers receive most, if not all, of their standard fee-for-service payments for a given service. At the end of the year, the plan assesses whether a provider is eligible for bonuses, a repayment of the portion of fees withheld, or shared savings based on utilization, quality, or some combination.

In contrast, contracting models using global budgets represent a significant departure from fee-for-service arrangements. Providers may continue to receive a portion of their fee-for-service payments, but nearly all of their total compensation is based on patient utilization and quality scores.

Key Terms in Value-Based Contracts

Value-based contracts feature key terms that may dramatically impact the value proposition of the arrangement yet be unfamiliar to plans and providers, including:

1. Expenditure benchmarks

When negotiating the approach for calculating the expenditure benchmark, plans and providers must agree on:

  • Their approach to risk adjusting the benchmark to account for the acuity of the patient population attributed to the provider.

  • The frequency with which the benchmark will be adjusted in case of changes in the overall health of the patient population.

  • For multiyear contracts, the trend factor for the expenditure.

  • If and when the benchmark will be reset. (Providers prefer benchmarks based on spending levels prior to the value-based payment arrangement. Plans, in contrast, prefer that benchmarks be reset to reflect spending levels while the value-based contract is in place.)

2. Patient attribution

Patients can be attributed to providers on either a prospective or retrospective basis. Providers generally prefer that patients be attributed to them at the beginning of the year, so they can target coordination and outreach efforts. Conversely, plans prefer that patients be attributed at the end of the year, so providers are encouraged to improve quality and reduce costs.

Parties must also agree on how to attribute patients. For example, patients can be attributed based on a primary care provider selected by the patient or plan, or on where the individual received specified services.

3. Quality metrics

Quality metrics take on increased importance in value-based contracts, as payment is tied to performance. The parties must agree on the metrics and their associated performance targets, as well as on who will be responsible for data collection. Providers prefer metrics that assess activities that they perform, while plans prefer those tied to enrollees’ health outcomes.

Conclusion

Each contract negotiating process will differ. The key to success across the board, however, is ensuring that both parties understand fully the impact of various contracting terms on the arrangement’s overall value.

HIE Helps Integrate Behavioral and Physical Healthcare, but Hurdles Remain

Authors: Helen Pfister, Partner, Healthcare Industry, Manatt, Phelps & Phillips, LLP | Susan Ingargiola, Director, Manatt Health Solutions | Marlee Ickowicz, Senior Analyst, Manatt Health Solutions

Editor’s Note: Healthcare providers have long recognized that many patients have both behavioral and physical health needs—yet behavioral and physical healthcare services have traditionally been provided and paid for separately. The growing awareness of the prevalence and cost of comorbid behavioral and physical conditions—and the increased recognition that coordinated care can improve outcomes and achieve savings—has led to increasing acceptance of delivery models that integrate physical and behavioral healthcare. Electronic health information exchange (HIE) can facilitate integration—but challenges remain. In a new article published in the April 1 issue of iHealthBeat, summarized below, Manatt Health examines the benefits of and barriers to behavioral and physical care integration—and the strategies for overcoming the hurdles to electronic exchange of information between behavioral and physical healthcare providers. Click here to read the full article.  

Benefits of Integrating Behavioral and Physical Healthcare

According to a national comorbidity survey, nearly 70% of adults with mental illness have co-occurring medical conditions, while 29% of adults with physical health problems have comorbid mental illness. Comorbid behavioral and physical health conditions are costly. New York’s Medicaid program found that 82% of potentially preventable 30-day hospital readmissions were for patients with behavioral health conditions, costing the state $665 million. Almost 60% of those readmissions were due to physical health conditions. Scores of randomized controlled trials have found that collaborative care interventions—those using an interdisciplinary team to address mental health conditions in primary care settings—improve quality and outcomes for some of the most prevalent and costly behavioral health conditions, including depression and anxiety. With consensus growing around both the need for and benefits of integrating services, some states have embraced a statewide approach to supporting the integration of behavioral health services in primary care and community clinic settings. For example, the Integrated Behavioral Health Project in California has conducted numerous studies and funded more than 30 initiatives to identify and promote best practices, creating a road map for better implementation across the state.

Electronic HIE Can Facilitate Care Integration

Behavioral and physical healthcare providers often have separate administration, financing and regulatory structures. A prerequisite to coordination, however, is for behavioral and physical healthcare providers to exchange information about their shared patients’ care, including their treatment plans, medications and lab results. Electronic HIE can make this information available in one place, instantaneously.

The Barriers to the Electronic Exchange of Behavioral and Physical Health Data

State laws or regulations that impose special protections on behavioral health information or limit what healthcare providers can do with it are a barrier to the electronic exchange of behavioral health data. Most electronic systems do not have the capacity to tag and separate patient information that is subject to more stringent privacy standards than other patient data, creating an obstacle to sharing behavioral health information through HIE.

Providers, however, often interpret confidentiality laws as more restrictive than they actually are. Examples include:

  • Some providers believe HIPAA requires patient authorization to disclose information for treatment purposes, when no authorization is required.

  • Some providers have the misconception that HIPAA places tighter restrictions on behavioral health information than on physical health information, which, in general, it does not.

  • Some providers think that Part 2 regulations—those requiring patient consent to disclose certain drug and alcohol treatment information except under limited circumstances—restrict disclosure by general medical providers who deliver a mix of substance abuse and other medical services. In fact, the regulations apply only to federally assisted alcohol and drug abuse programs.

Strategies to Overcome Barriers

Stakeholders have developed several tools to surmount the barriers to the electronic exchange of behavioral and physical health information. For example, HHS recently released clarifying guidance to ensure providers understand that HIPAA does allow the use and disclosure of behavioral health information for treatment, payment and healthcare operations without the patient’s consent. The guidance also reiterates the rules, for both adults and minors, around communicating with family, friends, caregivers and law enforcement; considering the patient’s capacity to agree or object to sharing his or her information; and involving others in dealing with a patient’s failure to adhere to treatment.

In addition, the Substance Abuse and Mental Health Services Administration, the federal agency that enforces Part 2 regulations, recently released a “frequently asked questions” document that reassured Part 2 providers interested in HIE initiatives. For instance, the guidance states that a single consent form may be used to authorize a Part 2 provider to disclose records to multiple providers participating in HIE or other data sharing arrangements. States also are working to remove barriers, with some enacting legislation to replace their patchwork of privacy laws with a single set of requirements governing electronic information exchange. These and other strategies for overcoming barriers to information sharing between behavioral and physical healthcare providers (both electronically and through more traditional channels) were recently outlined in a Robert Wood Johnson Foundation-sponsored white paper. (Click here to download the paper.)

Conclusion

With many providers eligible for payment incentives for sharing information under the Medicare and Medicaid EHR Incentives Program and participation growing in health reform initiatives that reward providers for coordinating care, information sharing between behavioral and physical health providers is likely to increase. How quickly this expansion occurs will depend on how effectively providers and policymakers identify barriers and create strategies to overcome them.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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