Entries in DeMarco, William (13)


ACO Explosion

Bill Demarco, October 1, 2012

Medicare Shared Savings

Feasibility studies for three ACOs in North Carolina, a medical group in Arizona, a physician alliance in Illinois, a hospital system in Indiana and consultation with several Pioneer Plans has kept us very busy over the last several months. Most of these are physician owned medical groups, while several are IPAs with medical homes who want to collaborate with one another to form the primary care base of a Medicare Shared Savings ACO.

Over 490 applications for new ACOs are in process and due to CMS by September 6th. Add to this the several hundred earlier ACOs approved in April and June of this year and it becomes clear that the 600% growth rate in ACOs since November of last year when final rules were published brings excitement to the marketplace.

This easily represents 20% of Medicare beneficiaries who will be connected to Medicare through their ACO by January 1, 2013. When adding the Medicare Advantage beneficiaries that represent 27% of the Medicare population and growing, it is a factual statement to say that 50% of all Medicare beneficiaries will be receiving their benefits through Medicare contractors instead of Medicare directly. These contractors are all being held accountable by CMS to follow stringent guidelines including patient satisfaction.

This means Medicare has been permanently changed by focusing on shares savings for improving quality instead of merely paying claims. We anticipate ACO mergers and acquisitions will be the next step as investors and hospitals catch up to the opportunity to invest in the new chronic care business model.

We are excited for the plans with whom we have worked and their enthusiasm and innovation encourages us to expand our own resources and capabilities to serve this emerging transformation of the local delivery system.

Cautioning new applicants for next spring

We are talking to people about getting their Notices of Intent (NOI) submitted in the spring. This would make them eligible for submitting an application in fall of 2013 with a start date of January 1, 2014.

Applications that look simple are not acceptable by CMS with simple answers. Some of the key points we have heard from CMS include:

• Several workflow adjustments need to be made to make the patient process coordinated and all encompassing.

• Early charge reconciliations indicate the patient population notified by CMS may be different than the original ACO defined population discussed in early planning.

In addition, beneficiary engagement is a vital area of the application and connects with population management which is the backbone of successful care management. Tools and techniques vary by service area.

What’s an AHO?

What is the difference between a Medicare Shared Savings ACO and an Accountable Health Organization (AHO)? Is an AHO a private ACO?

Many people continue to be confused by private ACOs such as those sponsored by Cigna, Aetna and Blue Cross versus the Medicare Shared Savings opportunity to contract for Medicare lives in their area. While many of these private ACOs represent more of a bundled payment experiment paying global fees to doctors and hospitals tied to some sort of risk banding, the Medicare ACOs have a stronger focus on quality scores versus production of services and in so doing are able to raise the bar for both quality and cost. Private ACO sponsors are slowly making this transition but providers need to read closely what they are obligating themselves to in the future. Some are asking insurers for 2 side risk on day one and some are asking for one side risk only.



Thoughts on the Medicare Shared Savings Program Final Rule

By Bill DeMarco, October 31, 2011

The dynamics of the new final Medicare Shared Savings regulations are re-igniting interest by many who had passed this by because the proposed regulations were overwhelming.

Several associations including AHA, AMA and AGPA who were skeptics in reviewing the proposed regulations have come out publically and see some potential here. We see the upside opportunity being improved putting more on the physician plate to better plan for startup costs and see the reduction on the number of indicators to be reported making the medical management requirement a bit more realistic. Dropping EMR requirement has been a good decision by CMS as this was a burden for many physician networks.

Finally, the concern over attribution looks like it has been replaced with a more solid assignment process of patients so physicians know who they are accountable for. Several points that are missed in these comments are:

1) Value based purchasing and all that it has become is the over arching goral of this shared savings process and we see that for private or public payers that this is a good framework to start with.

2) This is truly a BIG opportunity for Primary care to band together and manage at a higher level both clinical care improvements and financial integration of their practices in a manner that makes care delivery scalable.

3  This ACO evolution gives health plans and physician something positive to discuss with the knowledge by most plans that if the providers should become dissatisfied they, the physicians, may start their own plan.


Impact and Implications of Comparative Effectiveness Research

by William DeMarco, November 2, 2010

MCOL asked me to respond to the following questions for their Thought Leaders publication: What will be the impact and implications of Comparative Effectiveness Research on U.S. health care delivery, in the short-term, and in the long-term? How dependent is CER, going forward, on federal policy and funding?

My abbreviated response is included in the current issue of Thought Leaders, but I wanted to provide a more complete response below.

Comparative effectiveness research is somewhat of a newcomer to healthcare.
Borne out of early practice variation studies at Dartmouth and other universities that reported surprising gaps in the delivery of care at the physician level, the CER takes this one step further to explain not just what the variance is but what the norm should be as a best practice.

These evidence based norms and practice guidelines are intended to give us a starting point to what we have been missing and that is ambulatory care comparators and a full disclosure of what are the best practices for a specific diagnosis for a specific population of patients with similar co morbidities and health status.

For decades we have seen hospital data on costs and length of stay being produced as DRGs and admissions data were available and understandable to many of us as a common unit of measurement and cost. Payers saw this as a large bottom line expense not realizing that the reason people were admitted was not because the hospital made that decision rather the doctors made the decision to admit based upon what they thought was a diagnosis that warranted such and action.

As we begin to look for root cause as to why the doctor thought this admission should occur we see again variation in practice style, training and capability come into play. The patient variation suddenly becomes key to understanding the physician logic and we start to see a move towards patient and population management which the CER process is trying to address.

Now we should have the ability with millions of records and billions of dollars invested in CER by HHS to discover just what is an appropriate admission for a specific diagnosis and begin to track this through impatient and outpatient treatment which is an imperative for a better understanding of how best to handle chronically ill populations as well as some of the less critically ill who need to be treated BEFORE they move to stage three or four cancer.

We have always asked about how lower back pain should be treated for the 70 year old versus the 50 year old, we have always wondered whether the mammogram should be done annually at 40 or 50 or is to tied to whether or not the patient has a predisposition and family history.

These are worth studying in terms of screening and are also worth building available database to see what works because much to the surprise of the public not all patients are treated the same because not all doctors are trained the same. Once can see a pattern of care in the medical notes and billing for a patient with hypertension yet 5 other doctors in the same group may treat this hypertension differently. Who is right and what is the best guideline to follow is.

In addition these guidelines change as we move from the discoveries and technologies of health care. CAT scans are useful but are they as useful for some illnesses as a MRI or would a simple x-ray do?

Most patients still ask for antibiotic for a cold yet truthful doctors will say it’s a virus and you have to ride it out... we can see how a national registry would enable our medical training and treatment expectations to come together over time to rid the system of wasteful tests and spending and assure both doctor and patient the results are predictable based upon good scientific population studies.

However we can also see the negative side of the argument.

In England and other countries we have seen the rise of the QUALY measurement that is used to determine wethere4 a patient really is a candidate for a specific procedure.

In several situations the QUALY dictates whether the man or women with stage 4 cancer gets treatment, whether the baby with an incurable disease is treated at all.

QUALY is the measurement of cost versus treatment for many countries and with CER we could see this occur here in the US as Harvard and other universities begin to but a VALUE on a human life.

The QUALY can be used to make some of the treatment decisions and also can place a number on ones forehead for underwriting just like a FICA score does for credit and loans.

Several states have banned using clinical effectiveness and similar means to be used to withhold issuing policies for GROUPS but as we see a move towards more individual policies with newly promised insurance exchanges and the like we see a potential for QUAYS being used to justify higher premiums or cancellation of insurance policies when the score does not justify expenditures of funds for saving or even extending a life represents a potential risk to an insurance and healthcare system that is already under funded.

One can see that in the hands of some insurers this methodology could be brutally unforgiving. In the hands of government one can see they like the idea of numbers and distancing themselves from patients just setting in motion a number and backing into a Medicare or Medicaid budget.

This Kevorkian factor represents all that most of us in health care and the health plan business are against but represents both am moral and ethical battles to fight to police one another and make sure we are not letting statistics dictate the value of a human life.
Rather we would like to see a more fruitful transition of using CER to build upon health and prevention. To determine what in a person’s lifestyle could be changed to avoid diabetes and heart problems, what could be done in an exercise routine to strengthen a back injury without needing formal rehab?

So what can health plans do? As the CER begins collecting data we see the opportunity for health plans to collaborate on a regional basis to also pool de-identified data to determine unique care patterns in their area that can be addressed or diagnosis that can be mentored to determine an outbreak of disease or unseal pattern in treatment protocols during different times of the year.

Lack of Iodine in the water in Detroit affecting thyroids, sinusitis conditions in Seattle affecting respiratory illnesses, allergies in droves in an urban population that uses antibacterial soap extensively could all tie to an unusual outcome unless treated,

Moreover these local models would have a national comparator baseline to look at but also contribute to local CER research that could help streamline care and diagnosis precision but most certainly would, be a way to obtain even further ROI on data collection process at the Health plan, ACO or similar integrated system.

This moves health plans data away from the typical claims warehouse into a life-science role that could also be shared with Pharma for testing and data sharing as well as scientific studies by local and regional medical schools to look at systemic variation in population health.

Health plans are already doing this in some cities such as ICSI in Minnesota and similar efforts are being headed by employers in Las Vegas and St Louis to try and come up with a value comparison of outcomes to be shared with all health plans in developing and monitoring their individual P4P and global payment reforms.

CER offers wonderful tools and more discussion of its application by the scientific community can help us really understand what works and what works best in short term and long term treatment.

If the research should go the other direction of assigning dollar amounts to QUALYS and reduction of services to those who need hope the most we will see a rapid de-funding of the program and a very loud outcry from the scientific and religious communities.

Health reform arguments have already surfaced this debate between the use of CER as a practice guideline builder versus a potential rationale to limit care. Health Plans have it in their power to build local and regional warehouses for clinical and scientific research always sharing such research with a national clearinghouse such as CER.


Primary Care Access During this Decade

by William J. DeMarco MA CMC, President, Pendelum Health Corporation, July 1, 2010

In the current issue of MCOL’s Thought Leaders newsletter, I was asked: How big of an issue will primary care access become during this decade- what are its implications- and what initiatives (such as medical homes, retail clinics, employer on site clinics, etc) if any, do you think will bring about improvement?" Here is what I replied:

What we continue to learn is that primary care doctors graduate with hopes of becoming the family practice doctor in a smaller town, something we desperately need, but the economics do not permit this new MD to move forward with their career. Because of the large loans and debts of medical school and subhuman conditions of an internship doctors really start out very poor and in debt. The actual earning of a salary does not occur for several years and the salaries for primary care are not rising as fast as specialist salaries. So many are forced to decide to sub-specialize in a more lucrative area where they can make the dollars they want as surgeons of super specialists and join a private practice as a respected member of the medical group.

This drives demand for primary care but until the salary cap blows off or the economics of medical school costs are altered we see the logical overpopulation of specialty practitioners while PCPs are treated as an aside by both hospital’s and physicians. When one calculates the revenue from referrals to specialist and hospitals that a single PCP makes the numbers can be astounding. True the specialists has a higher revenue per patient but the volume of PCP referrals to specialists and hospitals are far greater yet hospitals have been able to keep PCP compensation low and , in some markets, threaten PCPs that they must join the ranks of employed physician or be replaced.

In this vacuum we are seeing innovation. First by remaking primary care as a retail almost impulse buy the for the consumer retailers like Walgreen’s, Target, CVS Wal-Mart and K Mart and even some grocery store chains have brought Primary care to the patient. This is packaged as a Nurse practitioners and offered for common un-complicated illnesses which , for some, is less expensive and less intrusive than the Emergency room and certainly easier than waiting for 4 to 6 weeks for a PCP visit . While this transition occurred Nurse Practitioners and Physicians Assistant salaries shot up some 27% over their colleagues who were still stuck in public health or working as a medical assistant in a practice where physicians did not make full use of their talents.

As Dr Don Berwick ,Nominated CMS chief, has said the best way to manage costs in the delivery of care is to have the most efficient person downstream from the doctors do the work. So you have NPs PAs and RNs doing more of what they are trained to do thereby making the PCP more productive at less cost. In this regard the Employer owned medical practice is gathering steam as more and more employers see the value of designing benefits around the use of early detection and health promotion and less use of unnecessary specialty care unless the PCP has approved it as necessary. A well equipped PCP group practice with NPs and PAs seeing the right patients at the right level of service can be very successful in attracting volume because of its convenience and flexibility for follow-up.

The cost of such a medical group owned by an employer can quickly be paid back in terms of savings to emergency rooms, early detection of serious disease and better coordination of admissions and discharges to avoid readmissions and reduce length of stay for illness or injury. This kind of commitment by management also can create a positive attitude in the employees who feel their employer is not only offering them a way to pay for care through an indemnity insurance plan but also guaranteeing them a place to get it in the workplace. This guarantee is becoming more and more important as less primary care are available and few insurance companies will pay for ER rooms to replace PCP visits.

These various roles of Primary care emphasize team work and coordination of care. Some of the retail clinics are picking up on this as are the hospitals who once feared these competitors have encourage discussion and referrals to assure continuity and communication between patient and practitioners as well as practitioners to practitioners dialogue. Turning this delivery system on its head by having Primary care driven medicine is slowly at work at the federal level with ACOs and MA plans requiring PCP advocates be assigned or selected by each patient. This constant pressure of demand for PCP will, we believe, force hospitals and clinics to rethink their compensation strategies but also put the pressure back on policymakers to revisit funding for primary care spots in rural and urban settings by subsidizing broadly the medical school experience.  By encouraging more newly graduating Physicians, Physicians Assistants and Nurse Practitioners to advance their education with a promise of being that family practice doctor we all want and need


The Impact of Accountable Care Organizations During the Next Few Years

by William J DeMarco, April 27, 2010

I was asked to address the following question for the current issue of MCOL’s Thought Leaders newsletter: "How large of an impact will the emergence of Accountable Care Organizations have during the next few years, and what are some of the implications we might expect as a result?”  

I supplied a brief summary statement for Thought Leaders. Here are my expanded thoughts on this topic:

We believe that ACOs will have a tremendous impact on lowering costs and improving quality long term because these initiatives will be operated at the local level and therefore make quality improvement an ongoing process versus a short term discount approach to value improvement.

The concept of having local providers competing as integrated systems has long been a scholarly supported and business researched model that theoretically should work. The problem has always been in the reimbursement at the practice level. Money and care delivery have been separated from the care coordination making payment a barrier versus the bridge it should be to better patient management.

We have spent millions of dollars as health plans, medical groups, and hospitals to come up with reporting systems that are just now yielding some patterns of care that we know offer positive solutions in the area of chronic care and general prevention.  However, the savings from this more effective care outcome has always gone to the payers. The providers, patients, and most employers never really see these savings in the form of better benefits or lower premium costs so there has never been an incentive for physicians and hospitals to work together to better coordinate inpatient and outpatient care.

We think that the bundled payment opportunities will change this and, as Medicare continues to reduce or flatten its fee increases, bundled payments will become more attractive.

By having risked adjusted patient care guidelines tied to payments for hospital, physician and drug costs for each episode of care, well planned care management protocols will yield a margin IN ADDITION to billed charges to Medicare.  Therefore, there may be a way for many providers to actually see Medicare revenue start to come closer to commercial revenue.

Managed care companies handling commercial payers would also have an interest in seeing hospitals and physicians work together to improve everything from coding to clinical outcomes in order to secure a share of the savings created by their innovation and discipline. There is talk that delegated models of medical management as seen in Florida and California may offer an even more lucrative opportunity to participate by taking 85% of premiums through global or bundled payment structures. This would represent an outsourcing of medical management to hospitals and physicians who, we have always thought, should explore this as a business opportunity to leverage care AND management of care. Health plans and insurance companies would pay a nominal fee to have this management done, but that would only enhance the ability of the caregivers to hire navigators to assist people within and outside the care system so discharges are followed up and preventive services explored before admissions.

The ACO structure will truly be following the integrated care guidelines to improve care with an incentive versus just avoiding anti trust issues. Perhaps we will see different physician driven governance and locally based quality and utilization feedback to physicians and hospital staff whose compensation is dependent upon not just delivering more services but delivering more of the right services at the right levels within the delivery system. We reaffirm this point by saying if physician are incented to deliver top quality and share the savings but the hospital staff operates business as usual to load beds and get paid based upon gross revenue, we have created a monster in terms of two factions in the delivery system going in opposite directions. This happened under early bundled and capitation payments where doctors were starting to see serious gains in income while the hospital’s losses were mounting due to reduced lengths of stay.

Finally, the long term impact here will be collaboration between hospitals in an area where they were competing against one another in a small market. The larger delivery system and its primary care referral system offer great coverage of a larger Medicare and commercial population. This allows PCPs and specialty practices to grow and align better benchmarks and communication with other MSO services that share expense and allows a network of small practices to operate as a large multi-speciliaty group practice. This group without walls can achieve some of the economies of scale but would need to be linked by Health Information Exchange making patient records, ordering of tests, and recommending follow-up care more efficient than much of the paperwork and patient chasing by phone done now.

Assuming the demonstration projects give CMS some good feedback on key performance indicators and that many hospitals and physicians arrive at the conclusion that indeed there is an opportunity to perform better and be paid better under this ACO framework, we would say the government’s estimate of savings from ACO development is largely understated.  The costs curve will bend regionally which will create even more savings than projected for Medicare.

Even now states are talking about ACOs for Medicaid and some employer coalitions are attempting to encourage ACOs around centers of excellence to push providers to compete more on quality and less on discounts.  We have told these large, self funded employers that they need to stop being passive players in the health insurance arena and take an active interest in designing benefits that offer incentives to patients who see the ACO aligned doctors versus the non aligned doctors, who may be part of a discount network but have no real accountability when it comes to performance. Then the employer or health plan must also offer some sort of shared savings plan to continue to incent doctors and hospitals to improve quality and outcomes. This additional amount shared from savings costs employers and health plans nothing more than what they normally pay, but it opens the door to seeing waste removed from the system permanently and better coordination of services for the employee. This levels off premiums and reduces employee out of pocket costs.

We are excited about the ACO opportunity.  While there will be a large education process needed to implement these approaches in some markets, most agree this beats the alternative of price controls and further mandates on payers and providers.