By Charles Kennedy
September 17, 2014 at 4:45 am ET
Public and private sector innovations are driving us to the edge of what could be a major revolution for the U.S. health care system — addressing the deep-rooted problems around inefficiency, waste and quality. There is no shortage of challenges or skeptics, but those of us closest to the work believe that value-based care models, such as accountable care, are the perfect laboratory to drive change because they tackle one of the fundamental flaws in American health care – the payment system.
Guided by the Triple Aim outlined by the Institute for Healthcare Improvement (IHI), accountable care organizations (ACOs) are focused on improving the patient’s health care experience through greater care coordination and patient engagement; improving the health of populations; and reducing the per capita costs of health care by connecting payment with quality, patient outcomes and value.
In ACOs, the health system and its doctors are aligned structurally and financially to pursue the Triple Aim objectives in concert with one another. While focusing on the high cost of uncoordinated care, doctors are financially rewarded for improving the patient experience and health outcomes, and reducing unnecessary care. This, in essence, allows them to direct their resources to activities that can improve health while lowering costs. And the patient is the biggest winner of all.
Early results show signs of promise
Despite challenges, there are early signs that a balanced model — where payers and care providers are aligned around quality and outcomes — can work. On the Medicare side, for example, analysis by Leavitt Partners found that although not all Pioneer ACOs saved money their first year , the Pioneer program generated $147 million in total savings, with approximately $76 million in savings returned to ACOs. The Pioneer program is currently the most advanced payment model at the Centers for Medicare and Medicaid Services (CMS) — designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. On Sept. 16, CMS announced ACOs in the Pioneer ACO Model and Medicare Shared Shavings Program (Shared Savings Program) created over $372 million in total program savings for Medicare ACOs in year two for the Pioneer program and the first full year of the Shared Savings Program.
Commercial ACOs are beginning to show positive results as well. Based on the same report in May, Leavitt Partners counted 287 ACOs with commercial contracts. Out of the 12 commercial ACOs reporting financial results to date, 11 report having saved money. Very few of these have reported a dollar figure for savings, but costs were reported to have decreased by 2-12 percent.
Aetna’s accountable care collaboration with Banner Health Network resulted in a shared savings of $5 million on Aetna Whole Health fully-insured commercial membership in 2013 and a five percent decline in average medical cost on the members. But on the other side of the equation, quality improved. Consumers covered by the plan had higher cancer screening rates, better blood sugar management in diabetics, and fewer avoidable hospital admissions.
Evolve the programs to create lasting improvements
Building on early successes and lessons learned, the time is right to evolve both the government and commercial programs to create a sustainable model for the future. The Centers for Medicare and Medicaid Services (CMS) is expected to issue a proposed rule that will update the design of the Shared Savings Program. Change can’t happen soon enough.
Late last month we saw Sharp Healthcare in San Diego become the latest to exit the more advanced Pioneer ACO program because the financial structure didn’t reflect market-based fluctuations in the area wage index and other financial considerations.
Government-sponsored and commercial ACO programs need to support the level of risk, investment and workflow changes required by doctors and hospitals. Fundamentally changing the business model for health care delivery is not easy – nor is it cheap to make the investments in culture change, technology, and daily operations. Commercial ACO contracts have more flexibility in design and can adjust for geographic differences in patient mix, wages, and current performance on quality and efficiency metrics. With the right incentives and public policies, private sector participation on the commercial side can align to reengineer to a value-based care model, leading to long-term transformation of the health care system.
Support health IT standards and investment to unleash the data
Finally, health IT standards and policies need to drive interoperability of health information to improve care coordination and better support ACOs and other value-based payment models. Without easy exchange of health information across disparate systems, there will be little ability to truly impact care coordination, cost and quality. In a report prepared for the Agency for Healthcare Research and Quality, a group of scientists known as JASON encouraged the federal government earlier this year to advance a health IT infrastructure to connect legacy electronic health records (EHRs) to one another.
A survey by the eHealth Initiative and research group Premier Inc. showed that most ACOs have not progressed from simply collecting health data electronically to using electronic data for analysis and care coordination. They cite reasons such as costs and return on investment, a lack of interoperability between EHR systems, workflow challenges, a lack of provider engagement, and privacy and confidentiality concerns.
Health IT standards need to support doctors in driving long-term improvements in population health, assume risk and achieve the ROI necessary to support the investment. The move toward value-based payment models provides the business case to take advantage of interoperable health IT.
Significant progress is possible
Through coordinated and aligned policies and standards, federal programs and private sector collaboration, the sustainable change in health delivery, cost and outcomes is within reach. The Banner Health Network example is proof. Banner invested significantly to move its patient populations to value-based care models. It reengineered its model across 300,000 patients, and contracts with CMS and private payers to fund the investment. It has generated improvements in quality and lowered costs, earning $13 million in Pioneer payments in 2012 and $5 million in shared savings in 2013 from Aetna, not counting its work with other insurers.
Better patient care at a better price is possible. And with the right model in place, everyone benefits.
Charles Kennedy, M.D., is chief executive officer of Accountable Care Solutions from Aetna, responsible for leading Aetna’s accountable care collaborations with health care providers.
Editor’s Note: This column can also be found on Aetna’s new website here.