Collaboration with Payers: Critical for Accountable Care Organizations

Table of Contents

1.     Preface

2.    Introduction

a.    Drivers of Change

b.    Accountable Care Organizations – The healthcare delivery reform initiative in PPACA

c.    Proposed Rules on Medicare Shared Saving Program

3.    ACO-Payer Collaboration

a.    Need for Collaboration

b.    Probable Areas of Collaboration

4.    Information Technology for ACOs

5.    ACO-Payer Collaborative HIT

6.    ACO-Payer Collaboration Challenges

7.    Conclusion

Preface

This study intends to recognize the importance of Payer Collaboration for ACOs to gain the competitive advantage. Payers have expertise in most of the functional areas that the aspiring ACOs are currently considering as road blocks. ACOs have the opportunity to achieve significant savings from the Shared Savings Program, provided they are able to meet the requirements as per the proposed rules published by HHS. ACO-Payer collaboration can solve several critical issues by leveraging Payer’s IT, Performance Management and Financial Risk Handing capabilities. This analysis details out the various Payer IT and Collaborative HIT capabilities that can enable the ACOs to achieve the dream of transforming the US healthcare system from a volume-based model to a value-based model.

Introduction

The Patient Protection and Affordable Care Act (PPACA) passed on March 23, 2010, directed important changes to address the chronic issues of US Healthcare System. Section 3022, the Medicare Shared Savings Program introduces a new approach called as the ‘Accountable Care Organizations’ which would be integrated provider care networks for lowering costs and increasing quality of healthcare through comprehensive coordination of care.

Drivers of Change:

Healthcare costs in US have been growing at an exponential rate. In 2009, CMS estimated it to be at 17.3 percent of the Gross Domestic Product and predicts that it can reach 19.3 percent of by 2019 if the issues are left unchecked.

Accountable Care Organizations – The healthcare delivery reform initiative in PPACA:

Accountable Care Organizations (ACOs) are expected to realize the dream of transforming the US healthcare system from a volume-based model to an integrated and value-based model. This would lead to greater emphasis on health and wellness rather than just paying for treating illnesses. ACOs are being viewed as an effective mechanism for driving greater provider integration as care givers will be encouraged to work together to collaborate across the continuum of care.

Proposed Rules on Medicare Shared Saving Program:

The US Department of Health and Human Services (HHS) published the proposed rules for Accountable Care Organizations on 31st March, 2011. The proposed rules will guide physicians, hospitals and other providers to define processes to coordinate care for Medicare patients through ACOs. ACOs would need to set up sophisticated reporting, financial and clinical systems to assist providers in achieving savings through better care coordination.

The proposed rules can be divided into the following sub-sections:

1.    Eligibility and Governance:

a.    ACOs are required to have a legal structure which permits (1) Shared Governance of ACOs (2) ACOs to receive and distribute the shared savings payments to all the participating providers.

b.    ACOs are not required to be a distinct legal entity. Hence the ACOs need not get themselves enrolled as a provider for Medicare programs but the participating providers must be enrolled.

c.    ACOs will need to exhibit financial integration by sharing risk across participating providers along with clinical integration through higher interoperability of systems used for administering care across the entire episode.

Higher the interaction, higher the cost savings and quality improvement.

2.    Assignment of Beneficiaries:

a.    Each ACO will be assigned a minimum of 5,000 beneficiaries which would be based on the history of utilization of primary care services provided by the physicians.

b.    Members would not be enrolled in an ACO which implies that they would not be locked into a single ACO and can seek services outside as usual.

3.    Quality and Reporting Requirements:

a.    As proposed by CMS, the quality measures can be divided into five important segments (Fig.1): (i) The patient/caregiver experience, (ii) Care coordination, (iii) Patient safety, (iv) Preventive health, and (v) High risk population.

b.    Current claims data and quality performance ratings would be used to identify the performance benchmark for the ACOs. CMS also proposes to reward the high-performing ACOs as per the improvements attained in the cost and quality.

4.    Risk sharing mechanism:

a.    ACOs can adopt any one of the two models, CMS has identified as per their willingness to share the risks. The two models are referred as one sided and two sided respectively.

b.    One-sided Payment Model: This model would allow ACOs to be risk-free from the losses conceded for the first two years of the agreement. For the third year however, ACOs would be eligible for shared savings as well the financial risk sustained.

c.    Two-sided Payment Model: This model would allow ACOs to share risk as soon as the agreement commences for the entire duration of three years. Hence, ACOs would be at risk for some part of the losses and would also be eligible for higher shared savings rate compared to the one-sided payment model.

5.    Monitoring:

a.    ACO's cannot circumvent the high-risk beneficiaries and compliance with quality standards. CMS has proposed usage of tools like on-site inspection, evaluations, audits etc to conduct monitoring for ACOs. CMS has also proposed a corrective plan for all the ACOs that engage in at-risk beneficiary avoidance activities.

ACO-Payer Collaboration

Key Challenges for ACOs- Need for Collaboration:
ACOs would be concerned about:

• Identifying the best suited risk sharing payment model
• Defining the mechanism of distribution of funds from payers to ACOs and within ACOs
• Improving population health and addressing the complete continuum of care
• Developing reporting, clinical data exchange and data aggregation capabilities

Research suggests ACOs would require a lot more time to attain expertise in these segments. Collaborating with payers looks like the most feasible approach for attaining the goal of care coordination using outcomes based reimbursement model with shared risk management. Leveraging Payer IT capabilities for improving flow of best-quality information can offer significant advantages.

In an ACO, Payers can play an important role along with the participating providers. While the Primary Care Physicians (PCPs) would be in charge of the entire episode of care, payer can help in providing information, connectivity, work flow and intelligence that can be leveraged by ACOs for improving medical outcomes.

Probable Areas for Payer-ACO Collaboration:

Payers have had an important, yet somewhat fundamental role: To select and manage risk, negotiate provider contracts, manage care and customer services as per need. Although payers have varied expertise, ACOs would look to identify how payer IT systems can be leveraged by them.

ACOs can utilize some of the following Payer expertise to gain significant

competitive advantage:

Commercial Payers may also be influenced to create incentives similar to the ACO model to maximize impact on provider behavior. They may also contemplate replicating the quality metrics used by CMS. Providers need to understand that post reforms; Payers are under tremendous financial stress to reduce cost. Hence collaborating with Payers could be a win-win situation.

Information Technology for ACOs

As already discussed, ACOs have the opportunity to leverage payer IT capabilities for seamless integration for a holistic coordination of care, through partnership with patients.

ACOs would require the following IT driven business capabilities to gain the competitive advantage:

• Performance Management Capabilities: ACOs would need detailed analysis about their current performance on a regular basis. Performance Management capabilities like scorecards, dashboards, and summary reports would be necessary for continuous improvement.
• Financial Capabilities: Efficient payment allocation and tracking system which can be integrated with the performance management system, for enabling payments based on quality of care rather than volume.
• Data Aggregation Capabilities: Accountable Care Organizations would be power-houses of data from Payers, Hospitals, Physicians and other ancillary providers to create holistic view of a population’s care experience.
• Clinical Data Exchange: Sharing of clinical information would be another important aspect for ensuring provider interaction and coordination of care. As Providers start participating in Health Information Exchanges, detailed patient specific data would be available to aid in diagnosis and treatment.
• Reporting Capabilities: Comprehensive and need based reporting system needs to be available to share the performance data with the other stakeholders.

ACO-Payer Collaborative HIT

ACO-Payer Collaborative efforts towards investing in developing IT capabilities can be a critical success factor in an ACO model. Some of the key features of ACOs where Collaborative HIT can significantly improve the quality of care are:

• The patient/caregiver experience: Payers can leverage their experience in improving patient experience assigned to ACOs through Patient Health Records, Social Media and Mobile applications. Use of Payer IT systems, for disseminating information that can enable members to take care of their own health will be a critical capability for ACOs. Patients’ ratings of providers can also be another efficient way of enabling greater patient empowerment similar to the way Payers rate the contracted providers based on their quality metrics.

Physician and provider groups may also achieve greater clarity on potential saving opportunities and budget management by comparing actual results to benchmarks using payer analytic capabilities on their own performance and benchmark data.

• Care coordination: Payers systems are highly interoperable as they constantly interact with disparate sources. They can easily be modified to facilitate HIE to HIE interaction which will enable providers to gather complete patient clinical history. Payers possess real time data transmission and analysis capabilities for credentialing, electronic claim submission and payment estimation etc. ACOs can leverage the real time data analysis and transmission capability to keep themselves updated on recent medical history of their patients to administer appropriate care.
• Payer telephone help lines can be used as an advice nurse telephone line to help individuals deal with manageable health problems by phone. Simple IT capabilities like Electronic reminders when patients fail to take an appointment after being referred to a specialist or when the physician forgets to visit the patient even after 30 days post-discharge, can also ensure proper care coordination.
• Patient safety: The members in ACOs will only be “assigned” and not locked-in. Hence patients will continue to have the freedom of visiting physicians and specialists outside. Participating providers can use the data of member treatment by other facilities and organizations, to ensure patient safety.
• Preventive health: Payer can support analytical capability to understand and derive important inputs from current health status indicators. Creation of online portals for individuals, having array of preventive programs and easily accessible medical information may help ACOs in preventing life style and chronic diseases.
• At-risk population: Identifying at-risk population and administering care to these individuals would be an important mechanism to achieve shared savings. Predictive modeling to identify costs involved as per the at-risk population can help the providers understand the financial implications. Creation of disease registries of patients with high cost chronic conditions like diabetes, hypertension, COPD etc and then refinement of the systems for keeping the physicians informed of their patient mix, can help participating providers better manage the population’s health.

ACO- Payer Collaboration Challenges

• Identifying the risk-sharing payment model: Shared risk and savings cannot be a “one-size fits all” payment model. There are many unknowns about the requisites for success of the payment models that will most appropriately align incentives while providing the ACOs with the resources to manage their patients successfully.
• Provider Integration: The Medicare Shared Savings program will incentivize the providers to come together. Payers are apprehensive that provider integration may reduce their ability to negotiate rates for provider services, which may also impact the collaboration process.

Conclusion

ACO-Payer collaboration can solve several critical issues related to Accountable Care Organizations. Payer’s IT, performance management and financial risk handing capabilities can be of great support to providers as they gain momentum towards achieving high quality standards and seamless clinical data exchange using Electronic medical records and Health Information Exchanges. Thus, a strategic and long term collaboration of payers and providers through mutual sharing of benefits can lead to higher savings, better quality and risk mitigation, as US healthcare gears up for the next generation reforms.

About the Authors

Varun Bahl works as a Business Consultant in the Healthcare payer IT field with more than 8 years of experience. His areas of interest include Health Reforms, Payer IT Process Optimization and Health Innovations. Varun has expertise in many payer business domains including Claims, Members, SRQ, PBM and Providers. Varun can be reached at bahlvarun@gmail.com

Vaibhav Srivastava works as a Business Analyst in the Healthcare domain consulting field with more than 3 years of experience. His areas of interest include Health Reforms, Healthcare Process Optimization, Innovations, Thought Leadership and Healthcare Strategic Consulting. Vaibhav can be reached at vaibhav.srivstava@gmail.com