Congratulations to the 2018 Medicare ACO cohort on saving $739.4 Million while providing high quality care!
The Medicare ACO program covers close to a third of total Medicare Beneficiaries, and in 2018, it was comprised of 548 individual organizations. Out of the total ACO cohort, 66% saved Medicare money using benchmarking methods, and another 37% saved Medicare money but didn’t save enough to achieve shared savings. That means that 2018 has had the best performance to date, which also reinforces a point that has been made by NAACOS (National Association of ACOs), that organizations that stay in the program over the long haul perform incrementally better each year. What was even more notable, is the fact that ACOs that had taken on 2-sided risk (upside and downside) saved even more compared to ACOs with only 1-sided risk.
What does this really mean for ACOs? For CMS? For organizations considering taking part in value-based risk contracting? Participating in value-based contracting is a marathon, not a sprint. Organizations need to plan their financial and operational strategies with the ultimate understanding that the ROI may come 3, 5, or even 7 years later. For those organizations who think this is a quick way to increase revenue, they may want to think again, because the results, year after year, show that this isn’t the case. Even Seema Verma mentioned that CMS used this information when deriving the Pathways to Success Model, which is now a 5-year contract rather than a 3-year contract.
The next step in the business analysis will be to understand what some of those long-term strategies will be so as to better prepare for the future. While there may be quite a few, here are a few that we have identified based on our experience working with ACOs across the country:
- Assess your Provider Participants to make sure that they are open to change. Value-based contracting requires a mind-set shift from the fee-for-service model, whereby, the primary care provider takes ownership of the patient’s overall health outside of the E&M visit. This involves created new workflow and initiatives that focus on the well-being on the patient. If they want to practice value-based care and population health, then they will need to make their offices more accommodating to same-day appointments, grow their mid-level provider team to increase Annual Wellness Visits, and even expand office hours to 5 days a week with possible extended hours and weekends. Any practice that is looking for a quick way to retire, or get out of practicing, is not in it for the long haul and will need reconsideration.
- Ensure Shared Savings Distribution Strategy has a large bucket for infrastructure and may even benefit provider participants if they decide not to take the bonus immediately. Infrastructure and resources are key to ensuring the organization has a strong foundation for the long-term, which is why shared savings distributions can be crucial to help with funding. If you think of it as a business, typically the early smart play is to reinvest profits back into your company. This isn’t much different. The ACO may consider re-investing the resources to hire additional mid-level providers to improve population health programs or invest in more robust analytics software to help identify shared savings opportunities.
- Identify a Data Solution that will grow with you through capability, function, and ensure the solution does continuous performance improvement to ensure you are on the right track month over month, quarter over quarter, and year over year. Keep in mind that the future appears to be Medicare Advantage (MA). Kaiser notes that MA has grown by 8% each year for the past two years, and there’s a good chance that rate will begin to increase. Therefore, your desired solution should be able to handle Medicare, Medicare Advantage, and Commercial insurance so your providers can take care of their population and track progress over time without having to worry about which insurance the patient has. It’s important to also maintain security and governance. The data solution that you choose should be able to display data based on the user’s role.
- Begin Initiatives with large provider participants and incrementally push out the plans to the smaller practices and use provider champions where applicable. Larger provider participants will need to implement tried and true methodologies, such as Annual Wellness Visits, in order for the ACO to move the needle on cost and quality. Physician buy-in is critical—and the best way to get reluctant providers on board is through hearing the success of their peers (physician champions).
- Strategize Your Preferred Provider Network by identifying high value providers: those that provide high quality care at lower cost. Begin by identifying organizations that your patients are utilizing and then review quality and cost information. Reach out to the top performers, and set expectations; we call them Salient Expectations. Plan to review the data quarterly with your preferred providers to ensure they are meeting the expectations you set out. Remember, you’ll need a solution that helps you create easy-to-update scorecards. Does your solution have the ability to look at your practices and providers all the way down to the individual beneficiary level? Can you see if your beneficiaries are staying in your preferred provider network? If not, you’re losing out on the ability to control your network. Providers need to know who they’re seeing, if they’re seeing them often enough, and how well their patients are doing. That means facility utilization, quality metrics, and network management all have to be taken into account. If you can’t measure it, you can’t improve it. Thankfully, we can do all of the above.
While these strategies may just be a few, they are definitely a great place to start. The ACO program is showing success, which indicates its potential to become permanent. There will always be adjustments made to ensure programmatic success and alignment with quality, but one this is for sure, value-based care and financial risk are here to stay. We are very excited to see what is on the horizon and will continue to monitor strategies that bring about success to our clients and the rest of the participating Accountable Care Organizations.