Prescriptions for Excellence in Health Care a Collaboration Between Jefferson School of Population Health and Lilly Usa, Llc

PRESCRIPTIONS FOR EXCELLENCE IN HEALTH CARE A COLLABORATION BETWEEN JEFFERSON SCHOOL OF POPULATION HEALTH AND LILLY USA, LLC

ISSUE 23 | WINTER 2015 EDITORIAL TABLE OF CONTENTS ACOs Due for Their Annual Checkup David B. Nash, MD, MBA A Message from Lilly: Opportunities, Uncertainty Loom in 2015 for the Editor-in-Chief Health Exchange Marketplace Ryan Urgo, MPP...... 2 As 2013 drew to a close, Premier with more than 190,000 physicians Healthcare Alliance predicted and other health care professionals Biography of a New ACO Joel Port, FACHE...... 4 that participation in accountable participating.2 Although the care organizations (ACOs) would number of Medicare ACOs has Evolving Health Care Models and double in 2014 as a result of more grown more rapidly than the the Impact on Value and Quality providers developing core ACO number of non-Medicare ACOs, Bruce Perkins...... 6 capabilities.1 Premier’s forecast 46-52 million Americans (15%- Employers and Accountable Care was made on the basis of its 18% of the total population) are Organizations: A Good Marriage? survey of 115 senior executives patients in organizations with ACO Laurel Pickering, MPH...... 9 that revealed a growing trend in arrangements with at least 1 payer.2 high-risk population management, coupled with reductions in cost The next question is, are ACOs and increases in health care quality doing what they are designed to do and patient satisfaction. Of those (ie, improving quality and lowering who responded: costs)? Although it is far too early to draw conclusions, the Centers • More than 75% reported for Medicare & Medicaid Services Prescriptions for Excellence in Health that they were integrating (CMS) has begun to release Care is brought to Population Health clinical and claims data to financial and quality outcomes. Matters readers by Jefferson School better manage population Matthew Petersen and David of Population Health in partnership with Lilly USA, LLC to provide essential health respondents. Muhlestein provide a good synopsis information from the quality improve- in their article, ACO Results: What ment and patient safety arenas. • 50% reported using predictive We Know So Far. For example: analytics to forecast individual Editor-in-Chief patient and population needs. • The Pioneer ACO program David B. Nash, MD, MBA reported mixed results; of the Managing Editor • 46.3% reported using $147 million in total savings, Janice L. Clarke, RN, BBA integrated data to bring about a $76 million of which was Editorial Staff reduction in silos. returned to the program, only Deborah C. Meiris 12 of the 32 original ACOs Alexis Skoufalos, EdD So, as we barrel toward 2015, is the shared in the savings. All

This newsletter was jointly developed and subject to ACO movement gaining traction? Pioneer ACOs were successful editorial review by Jefferson School of Population By mid-2014, a leading health in reporting quality metrics Health and Lilly USA, LLC, and is supported through funding by Lilly USA, LLC. The content and viewpoints care data and research resource (related to patient experience, expressed are those of the individual authors, and identified 537 ACOs nationwide are not necessarily those of Lilly USA, LLC or the Jefferson School of Population Health. (up from 320 the previous year), CONTINUED PRESCRIPTIONS FOR EXCELLENCE IN HEALTH CARE

care coordination, patient I couldn’t agree more with solutions for enhancing quality safety, preventive health, Petersen and Muhlestein – these health outcomes at a lower cost. and at-risk populations) and early results have real value that With the aid of a clever analogy, demonstrated improvement goes beyond answering the “Employers and Accountable Care where comparable data question of how we’re doing. Organizations: A Good Marriage?” were available.3 They can be enormously useful sheds light on the pros and cons of in helping ACOs develop this interesting “relationship.” • The broader ranging, and winning strategies and avoid less stringent, Medicare potential pitfalls. As always, I welcome feedback Shared Savings ACO program from our readers at 2 released preliminary results on In this issue, we wrap up our [email protected]. 114 ACOs that were started in series on Creating a Framework 2012. Of the 54 that held costs for Accountable Care with REFERENCES below established budget articles from 3 different but 1. Leventhal R. Premier Report: ACO participation rates projected to double in 2014. Healthcare benchmarks, 29 received a complementary perspectives. The Informatics, December 18, 2013. http://info. portion of the $126 million in first article relates the “Biography of healthdirections.com/blog/bid/331272/Report- Hospital-ACO-Participation-Projected-to-Double- shared savings – in addition a New ACO,” an ongoing exercise in-2014. Accessed October 22, 2014. to generating $128 million in in transforming health care 2. Perna G. Report: number of ACOs ticks above total CMS trust fund savings. delivery and adjusting to payment 500. April 25, 2014. http://www.healthcare- informatics.com/news-item/report-number- Importantly, all but 5 of the reforms in a large urban/suburban acos-ticks-above-500/. Accessed ACOs successfully reported health system. “Evolving Health September 29, 2014. 3. Petersen M, Muhlestein D. ACO results: what the required set of 33 ACO Care Models and the Impact we know so far. Health Affairs Blog, May 30, quality metrics.3 on Value and Quality,” offers a 2014. http://healthaffairs.org/blog/2014/05/30/ aco-results-what-we-know-so-far/. Accessed glimpse into innovative payer September 29, 2014. initiatives; specifically, Humana’s

A MESSAGE FROM LILLY Opportunities, Uncertainty Loom in 2015 for the Health Exchange Marketplace Ryan Urgo, MPP

With open enrollment for the 2015 Health Exchange a 25% increase in the number of issuers offering Marketplace now under way, insurers are preparing Marketplace coverage for 2015 compared to 2014.2 for what they hope will be a promising start to Recently, HHS has tamped down expectations the new plan year. After turning the corner on a for total enrollment in 2015, predicting a range challenging launch in 2014, state-run and federally- somewhere between 9 and 10 million.3 However, facilitated exchanges have enrolled just under 7 staffing decisions made by many national plans million beneficiaries, meeting the estimate set by suggest a decidedly more bullish position. According the Congressional Budget Office in May 2013.1 to a recent survey by Reuters, most large national These enrollment numbers were reassuring to managed care organizations expect a minimum 20% plans, leading many national and regional insurers to increase in their 2015 Exchange membership, and expand their presence in 2015. many have doubled or tripled their support staff in advance of open enrollment in a display A Health and Human Services (HHS) report released of confidence.4 on September 23, 2014 stated that there will be

MH92294 | This newsletter was jointly developed and subject to editorial review by Jefferson School of Population Health and Lilly USA, LLC, and is supported through funding by Lilly USA, LLC. PRESCRIPTIONS FOR EXCELLENCE IN HEALTH CARE

In general, state-run and federally-facilitated Supreme Court rules to invalidate subsidies for Exchanges contain sufficiently balanced risk pools the millions of beneficiaries enrolled in coverage to avert extreme cases of adverse selection, wherein through a federally-facilitated exchange (37 states), a disproportionately sicker membership leads to it would significantly disrupt the Marketplace. premiums increases that would be unaffordable Barring a regulatory or legislative solution, premiums to many enrollees. Recent studies show that 2015 would become unaffordable for most enrollees, Exchange premiums increases will average 8% leading them to drop coverage and increasing the – growth that is considered manageable by the likelihood of what the insurance industry would historical standards of US health care inflation.5 term a marketplace “death spiral.” There is growing concern about this case among proponents of the Though all of this can be viewed positively by ACA because of the potentially devastating financial 3 consumers and proponents of the Affordable impact. In addition to the very real effects that would Care Act (ACA), the devil continues to lurk in the be felt by consumers, insurers, and other health care details. A New York Times analysis revealed that providers, the case poses a major threat to a key many insurers with the largest market share in 2014 component of the ACA itself. Until a final decision is intend to raise premiums much higher than the rendered, subsidies will continue to be available to “average.”6 Additionally, HHS will permit beneficiaries all beneficiaries – and at the moment it is business as to autoenroll in their current plans – a decision that usual – with 2015 open enrollment under way. could reduce complexity, but also make it more likely that consumers will forgo a search for a more Taken together, early signs suggest the Exchange cost-effective plan in 2015. Moreover, beneficiaries Marketplaces are poised for success in 2015, though who do not revisit healthcare.gov to update their uncertainty also looms large. Like much of health annual income will receive the same subsidy reform thus far, another chapter is yet to be written, awarded in 2014, increasing the likelihood that they and the repercussions will surely be felt by payers, could leave additional savings on the table. providers, and beneficiaries alike.

At the same time, the prospect of lower Ryan Urgo, MPP (Master of Public Affairs and reimbursement rates for hospitals and physicians Politics), is Director of Government Strategy for Lilly compared to what they typically receive for USA, LLC, the US affiliate of Eli Lilly and Company. traditional commercial coverage have compelled many providers to opt out of Exchange networks. REFERENCES Insurers tend to offer Exchange plans with narrow 1. Congressional Budget Office. CBO’s May 2013 Estimate of the Effects of the Affordable Care Act on Insurance Coverage. https://www.cbo.gov/sites/default/ provider networks and benefit designs that files/cbofiles/attachments/43900-2013-05-ACA.pdf. Accessed May 31, 2013. place substantial out-of-pocket cost burdens on 2. Gunja MZ, Gee ER. Health insurance issuer participation and new entrants in the consumers in the form of large deductibles and health insurance marketplace in 2015. September 23, 2014. http://aspe.hhs.gov/ health/reports/2014/NewEntrants/ib_NewEntrants.pdf. Accessed September 23, higher coinsurance for various benefits. Federal 2014. regulators continue to examine whether 3. Goldstein A. Obama administration predicts significantly lower health care Exchange plans are meeting prevailing enrollment. November 10, 2014. http://www.washingtonpost.com/blogs/ wonkblog/wp/2014/11/10/obama-administration-predicts-significantly-lower- “network adequacy” standards. health-care-enrollment/. Accessed November 12, 2014. 4. Humer C. Insurers have big plans for 2015 Obamacare enrollment. http://www.reuters.com/article/2014/10/30/us-usa-healthcare-insurers- Despite these concerns, nothing casts a larger idUSKBN0IJ26320141030. Accessed October 30, 2014. shadow over the future of the Exchange 5. Pearson CF. Avalere analysis: average exchange premiums rise modestly in 2015 Marketplaces than yet another pending Supreme and variation increases. http://avalere.com/expertise/managed-care/insights/ avalere-analysis-average-exchange-premiums-rise-modestly-in-2015-and-variat. Court decision (estimated release in June 2015). Accessed On November 7, 2014, the Court agreed to review July 1, 2014. a challenge to the legality of the subsidies offered 6. Sanger-Katz M, Cox A. With new health law, shopping around can be crucial. September 17, 2014. http://www.nytimes.com/2014/09/18/upshot/with-new- in federally-facilitated exchange states. If the health-law-shopping-around-can-be-crucial.html?_r=0&abt=0002&abg=0. Accessed September 17, 2014.

Biography of a New ACO Joel Port, FACHE

On March 23, 2010, the needs of its communities in the to a population-based payment President of the United States context of the new law. In 2010, model on a track consistent with, signed the Affordable Care Act JHS formed a limited liability but separate from, the MSSP.”2 (ACA), supporting the concept company called ACO-PA and, Because JHS was a relatively of access to health care for by 2011, an initial ACO business new ACO, the MSSP was more everyone.1 In addition to that plan had been developed and the appealing in that it had an “upside supporting premise, the Act journey to value-based care had only” option for the first 3 years, 4 provided significant funding for begun. A pay-for-performance whereas the Pioneer program health care innovations including program with a commercial had “downside risk.” Applying 2 Medicare Accountable Care payer was instituted; however, it to the MSSP program would Organization (ACO) programs - was another 2 years before JHS serve as a catalyst for our ACO Pioneer and the Medicare Shared and its members agreed to fully development, and help move Savings Programs (MSSP). Both implement an ACO strategy. JHS and its members from of these programs provided volume to value. novel incentives for health care In response to several market providers to assume risk, meet or factors, JHS and its members Although the MSSP application is exceed quality benchmarks, and revisited the ACO strategy detailed and extensive, it serves share in financial savings with the in early 2013. At that time, as an excellent assessment of an Centers for Medicare & Medicaid the dynamics of health care ACO’s readiness to take on any Services (CMS). Although the reform and other Medicare risk - upside only or downside. Pioneer program was created for reimbursement changes (eg, The CMS requirement of advanced managed care health penalties for readmissions) were attributing a minimum of 5000 networks located in relatively beginning to impact the member Medicare beneficiaries to an efficient markets, the MSSP was hospitals, and there was a new ACO demands a primary care designed to engage providers strategic focus on population network of significant size – a located in relatively inefficient health and value-based care. substantial hurdle for most ACOs. markets in managing risks Thus, the original business plan Fortunately, in a period of less among their patients. This article was updated and approved than 8 weeks, 225 primary care focuses on Jefferson Health in May 2013. Key among the physicians committed to ACO-PA, System’s (JHS) newly developed plan’s multiple components was with an attribution of more than ACO (accepted into the MSSP applying for the MSSP. When JHS 30,000 beneficiaries. Following as of January 1, 2014) and how invited other health systems and the July 2013 submission of we are pursuing this strategic hospitals to join this new ACO the MSSP application, ACO-PA opportunity for the benefit of and to embrace the new business was formally accepted into the participating physicians, member plan, Holy Redeemer Health program for a January 2014 health systems, and their patients. System joined with ACO-PA in its start date. Once the application 2014 MSSP application. was accepted by CMS, the real Created in 1995 with the merger work began. of the Thomas Jefferson The other Medicare program University Hospital and the - the Pioneer ACO Model - ACO-PA recognized that success Main Line Health System, JHS “is designed for health care under the MSSP would require is comprised of 8 hospitals with organizations and providers with patients and their physicians more than $3 billion in revenues. experience in coordinating care to be central; thus, patient After the passage of the ACA, for patients across care settings. data transparency would be JHS thoughtfully considered how It allows these provider groups paramount. Access to Medicare it would work with its member to move more rapidly from a claims files enabled us to offer health systems to meet the shared savings payment model the participating physicians

patient-specific data that provide the appropriate resources of DVACO, that journey is under previously were unavailable to to patients who require additional way, with a distinct focus and a them, and helped us understand clinical support. Working with clear investment strategy that how to better serve patients, participating hospitals and post- hold great promise for the long- especially those with significant acute care providers, we aim to term success of the organization. chronic diseases (eg, chronic reduce the likelihood of hospital heart failure, chronic obstructive readmissions within specified Joel Port, FACHE, is Chief pulmonary disease, coronary time frames. Operating Officer for Delaware artery disease). Valley ACO. He can be reached at: To assist ACO-PA in focusing [email protected]. To get a jump start in the first year its investments and care 5 of MSSP, we studied successful coordination efforts, a Quality/ REFERENCES ACOs. Rather than purchasing Care Coordination Committee 1. US Department of Health and Human Services. The Affordable Care Act, Section by Section. http:// a population health system, we was instituted and staffed with www.hhs.gov/healthcare/rights/law/. Accessed contracted with the UPMC Health physician leaders representing October 22, 2014. Plan (UPMC), an organization the participating practices. 2. Centers for Medicare & Medicaid Services. Pioneer ACO Model. http://innovation.cms.gov/initiatives/ with extensive experience in Three divisions were established Pioneer-ACO-Model. Accessed October 22, 2014. Medicare Advantage products representing the 3 principal and effective chronic care members of ACO-PA (Jefferson, coordination strategies that Main Line Health, and Holy could be transferred or adapted Redeemer associated physicians), to the MSSP. UPMC is able to and each division is overseen by provide aggregated and detailed a medical director. To support data reports (ie, risk stratification, medical management efforts, frequent emergency room and Quality Summits are held for inpatient utilizers, ambulatory participating physicians and office care-sensitive conditions, staff to review specific topics readmissions, physician and related to MSSP. In the coming hospital benchmarking, member year, resources will be offered to profiles) to our participating practices interested in advancing primary care physicians. to patient-centered medical home recognition. Another key area for MSSP is quality reporting. ACO-PA is Recently, ACO-PA changed its assisting practices to collect name to the Delaware Valley quality metrics for 2014 and will ACO (DVACO) to more closely report in January 2015 as one reflect the geographic location group. Because our physicians of participating physicians use multiple electronic medical and hospitals. With the recent records, and 8 different systems, addition of Doylestown Hospital, reporting quality metrics likely will DVACO increased its primary care take significant time and effort. physician base to more than 430 We are working with UPMC to physicians as we approach the collect and report these metrics. second year of MSSP.

With patient data in hand, care Moving a health system and coordination support can be community physicians from more focused and targeted. volume to value is a long journey ACO-PA has begun to make care with many successes and failures coordination investments to along the way. For the members

Evolving Health Care Models and the Impact on Value and Quality Bruce Perkins

From Australia to Sweden, chronic conditions and fewer MA plans, 1.4 million patients developed countries are financial resources, the data show were either in noncapitated, struggling to manage the cost that mortality rates are lower, “managed FFS" plans (ie, preferred of health care as spending recovery from acute conditions provider organizations) or health continues to consume greater is faster, and long-term health is care maintenance organizations 6 percentages of gross domestic better than in FFS models. Within (HMOs). Approximately 300,000 product and approaches Humana’s managed populations, patients were enrolled in an unsustainable levels, while the improved outcomes continue HMO plan that included global value attained for this large health as the organization leverages capitation (ie, risk sharing). In the care spend is being questioned. models that better align payer risk-sharing models, participating and physician incentives. primary care physicians were As a result, many organizations paid a contracted rate (adjusted are piloting alternative solutions As policy makers and medical for age, sex, illness, and regional to drive enhanced outcomes experts continue to seek new differences) for each member at lower costs. These solutions models for financing and regardless of the number or take many forms and differ from delivering quality care at affordable nature of services provided. traditional unmanaged fee-for- prices, they should take note of, service (FFS) medicine on several and perhaps seek to replicate, a Each of these groups was dimensions, including: real-world success story. compared against internationally accepted dimensions of health • More efficient, narrower Aligned, Coordinated care quality: (1) single-year networks of physicians. Care Produces Better mortality, (2) recovery from Patient Outcomes acute episodes of care requiring • Better coordinated and hospitalization, and (3) sustainability managed patient care In the past, there were widespread of health over time. Regressions delivered by providers. concerns - especially on the part were used to risk adjust the data • Redesigned financial of the general public - that health for 2 key factors that shape an incentives payments that care cost savings would come at individual’s health status (age and align with desired outcomes. the expense of quality of care. The number of comorbidities) to deal misperception that higher cost is with the nonidentical demographic Although it is widely accepted synonymous with better quality composition of our 3 samples. that these aligned, coordinated remains widespread. plans can provide care at Patients enrolled in more lower cost than traditional FFS Humana’s experience with a aligned, coordinated models medicine, the fact that patients substantial Medicare population had lower mortality rates and enrolled in these plans enjoy challenges that assumption. enjoyed better health with fewer better health outcomes merits Claims data were collected for complications than those in equal attention. At Humana, we 3 million patients; approximately traditional FFS models. Although have found that more aligned, 1.3 million of the patients in the large improvements in outcomes coordinated care models not only sample used providers on a occurred in managed and lower the cost of care but also traditional FFS basis (“unmanaged unmanaged FFS models, the risk- deliver far better outcomes than FFS”) while the remaining 1.7 sharing models demonstrated traditional FFS models. Although million patients were enrolled better outcomes than the patients in managed programs in private Medicare Advantage managed FFS models. Specifically, are typically older with more (MA) plans. Of those in private single-year mortality rates were

2.7% for managed FFS plans and Moreover, managed FFS and in non-MA models. Risk-shared 1.9% for risk-shared plans—less risk-sharing models had shorter plans also fared better in terms of than half of the 6.8% mortality rate average hospital stays and fewer readmission rates. Taken together, in unmanaged FFS. Moreover, this readmissions than patients enrolled this suggests that shorter stays are mortality gap widens with higher in non-MA models. The average associated with improvements risk patients, as shown in Table 1. length of stay in risk-shared models in the management of acute was 4.8 days, a full day shorter than episodes of care.

TableManagement 1. Management of sicker of sicker patients patients improves improves with shiftwith shift The benefits of more aligned, in modelsin models coordinated models are immediate and long lasting. In the 7 Impact on mortality greatest in higher risk patients Key takeaways first year patients opted to switch Aligned, coordinated care models to a managed FFS plan, mortality % 1-yr mortality can better manage outcomes in rates, average lengths of stay, Unmanaged FFS sicker patients • Significant relative reduction in and frequency of readmission 1-year mortality observed for 10 high risk patients in risk-shared dropped substantially, and have vs. unmanaged FFS continued to decrease with each • Significant reduction from unmanaged FFS to risk-share Managed FFS additional year of enrollment. for low-risk patients 5 Risk-shared Risk management trends also seen One of the greatest advantages across diseases • Data shown from all patients of aligned, coordinated models is However, same pattern noted 0 • the emphasis on healthier living Low Risk Avg Risk High Risk by disease in COPD, CAD, CKD, and diabetes Age 66 yrs 71 yrs 78 yrs and preventive care, especially

# comorb. 1 5 8 in managing chronic conditions. For example, patients with Source: CMS Carrier Claims and Enrollment 2011; Humana claims 2011 diabetes who are enrolled in Key aligned, coordinated MA plans FFS (Fee for Service) CAD (coronary artery disease) received more hemoglobin A1c COPD (chronic obstructive pulmonary disease) CKD (chronic kidney disease) tests and nephropathy screenings than patients in FFS plans. This Table 2. Integrated care delivery continuum. translates into startling outcomes; Integrated care delivery continuum for example, 3 amputations per Improved outcomes and lower costs seen within the risk continuum as well 10,000 patients in risk-shared plans compared to 111 per 10,000 No Provider Stars/ Path to Risk Full Risk Incentives Reward patients in FFS plans. Similar results have been observed in HEDIS scores 2.77 2.86 3.59 4.14 2014 BY other chronic conditions.

% of Cost to Original Medicare Within Humana’s MA plan 100 population, increased risk sharing 91 85 84 between providers and payers was 80 71 correlated across the spectrum 60 with improved health care quality, as measured by HEDIS (Healthcare 0 Effectiveness Data and Information 2013 Q1 % of individual 26% 28% 20% 26% Set), which tracks 75 broadly MA members accepted measures of high-quality health care. As indicated in Table 2,

Key MA (Medicare Advantage) Q (quarter) CONTINUED

Table 3. Payers continue to promote aligned models and providers from transactional Payers will aim to continue to push more aligned models agents to health “coaches” Leveraging incentives & management to promote more primary care and minimize acute spend and “quarterbacks.” Implement aligned, coordinated care models via ...resulting in a push for more primary, continued use of two key mechanisms... less acute care Health care is a huge and Build financial incentives to align physician efforts Increase in HbA1c testing to keep member healthy and stable Avg HbA1c tests per patient contentious issue and likely will • eg, pay for performance to risk-based Aligning 2.0 contracts / capitation become more so as additional Increase 1.36 provider 1.5 1.28 incentives Acquire primary care assets to ensure alignment primary elements of the Affordable Care and compliance with model care 1.0 0.75 • eg, PCPs, nurse practitioners (NPs), case 0.5 Act are rolled out. To prepare for managers (CMs) 0.0 these shifts in the health care 8 FFS Managed Risk Employ data analytics to predict health issues and FFS sharing landscape, policy makers and intervene proactively • Sharing education, systems, and data with Decrease in ALOs medical experts must continue to providers that enable improved outcomes Average length of stay (days) seek new models for the delivery Actively Deploy care management programs to monitor 10 managing and manage acute & chronic care of quality care at affordable care • eg, home visits for chronic care Minimize 6.3 5.8 eg, discharge management coordinator to 4.8 prices. The foregoing model is • acute care 5 help avoid readmission generalizable and one that Develop selective networks that involve efficient, 0 might be replicated. effective providers Unmanaged Managed Risk- FFS FFS shared

Bruce Perkins is President of the Source: CMS Carrier Claims 2011, Humana claims data 2011 Health and Well-Being Services Key Segment at Humana, Inc. HbA1c (glycosylated hemoglobin test) ALOs (average length of stay) FFS (fee for service) He can be reached at: [email protected].

this increase in health care quality members in the coming years also is correlated with a decrease because of cost pressures facing in costs at each step along the risk- those subscribers. sharing and incentives spectrum. With this in mind, Humana is Health Care Stakeholders focused on building capacity and Are Adapting Aligned and capabilities to further improve Coordinated Models outcomes through increased primary care and decreased Experience indicates that aligned, acute care. As shown in Table 3, coordinated models result this will be achieved by several in a “win-win” for patients by coordinated means: controlling costs and saving lives. As policy makers take note of • Building robust, patient- these results, Humana is investing aligned financial incentives more resources into managed with providers. care models, and other health plans are expected to follow suit. • Deploying care management Although these new models may programs to monitor acute not be adopted immediately, and chronic care. managed care plan membership likely will grow both in the • Using data analytics to public and private payer spaces. intervene proactively. In particular, Medicaid and commercial exchanges stand to In this way, the organization seeks gain many more managed care to transform the roles of payers

Employers and Accountable Care Organizations: A Good Marriage? Laurel Pickering, MPH

Employers foot the health is changing and, for employers, 3. The promise of better care bill for the nearly 60% there is both plenty to love outcomes. In ACOs, providers of Americans enrolled in about ACOs, and plenty not are paid based on outcomes employer-sponsored insurance, to love. rather than services. An ACO representing approximately 21% often takes on risk for the of the nation’s overall health What’s to Love? overall health of a defined 9 care spending. For decades, population, supported by employers have been the first 1. Providers are engaged in teams of physicians, hospitals to test new health care designs the overall health of their and other health care providers and delivery models, with the patients. Integration and and suppliers that work hope of achieving better health coordination among hospitals, together to coordinate and outcomes and reduced costs. physicians, other providers, improve care. and patients are critical Health reform popularized elements of an accountable 4. The promise of reduced costs. a model that was first care model. Traditionally, a ACOs reduce costs by implemented in public insurance physician only thinks about cutting down on waste and programs - the accountable care a patient once he or she inefficiencies, and by promoting organization (ACO). Although arrives in the office. ACO the idea of paying for value and the structure is relatively new, physicians proactively manage not volume. If providers know employers have focused the health of patients and they’ll share in savings achieved on accountability for quite consider their needs even by more efficient care, they’re some time. As payers for their when they aren’t in the office. more likely to consider cost employees’ health care, they Accountable care moves when making decisions. seek accountability, not only toward population health from the plans that provide it management – the “holy grail” Sounds Good. What’s Not but also from their employees for which employers have to Love? who receive it. To increase been searching. employees’ engagement in 1. Employers May Be Asked to their own health and related 2. Providers must care about cost. Pay More. Reminder to readers: expenditures, employers Historically, providers deliver self-insured employers take on support initiatives focused on care with little thought to all the risk of health care costs accountability at different levels; what their treatment plans will and pay for every employee for instance, demanding cost cost the insurer, employer, or (and often dependent) medical and quality transparency, offering patient. In a fee-for-service expense as it occurs. That’s a consumer-directed health plans, world, more is better. In real incentive for employers to and testing private health accountable care scenarios, care about the health of their insurance exchanges. providers often share in employees and the subsequent savings that result from more impact on health care costs Although the concept of efficient, appropriate care. – making ACOs an attractive accountability strikes a familiar So there’s an incentive for option. But in some instances, chord with employers, ACOs physicians to think about the the implementation of ACOs do not. Employers are not used cost of services they prescribe and other new delivery models to working with providers, or – including where they refer (eg, patient-centered medical considering how provider groups patients for these services. are structured and paid. But that CONTINUED

homes) require self-insured 4. Market Power and • Gather information on employers to pay more up Consolidation. In order to improved quality and front, at least initially. successfully coordinate care reduced costs. and integrate services, providers 2. Return on Investment (ROI) must be aligned and maintain Intel is one employer currently is Uncertain. Human resource patient health records on working directly with an ACO. In and benefits professionals are the same electronic system. New Mexico, for example, Intel stewards of company resources This has driven consolidation employees use the Presbyterian and must be accountable to the and merger and acquisition Health Services network, which leadership for how money is activity among hospitals and receives a bonus if quality goals 10 spent. They are often expected physician practices. Elimination are met and health care costs to explain the benefits of new of duplicative services and do not exceed a certain amount. programs to senior finance staff. personnel can result from If costs exceed the specified Important metrics include impact such consolidation, as can the amount, the network will pay a on clinical outcomes, cost, benefit of economies of scale. penalty. and utilization. Employers also But historically, such activity care about reductions in both has instead resulted in higher Rushing Toward the absenteeism and presenteeism, prices and revenues, as well Future and increases in productivity. as payment variations across Because measures like these are markets. Employers fear this In a post-reform world, employers not readily available, especially for trend will increase costs and must make important strategy ACOs, the ROI of new delivery cancel out the benefits of care decisions about health care models is unclear to employers. coordination, integration, and benefits. The excise tax, for As these new models accrue population health management example, puts pressure on data over time, it is reasonable to that ACOs promise to deliver. employers to deliver more assume that more information cost-effective benefits. Some will become available. Recent No Better Time than Now employers will rush away from evaluative results of the Pioneer for Employers to Engage providing benefits and take a ACOs showed small savings, and with ACOs hands-off approach by using indicated that further refinement private exchanges. Others will of the model is needed. Now is the time for employers rush toward actively participating to connect with ACOs and take in solutions like ACOs that 3. Narrower Networks. For an active role in shaping these promise more efficient health ACOs to be effective in products to fit their needs. care delivery and a healthier coordinating care and Important considerations include: employee population. managing population health, a finite group of providers is • Ensure alignment of the Do “only fools rush in”? Not in included in the organization. ACO’s goals and services with this case. There is increasing recognition the employer’s. that working with a smaller or Laurel Pickering, MPH, is “narrow” network of providers • Match actual employee President and Chief Executive can deliver cost savings and utilization of health care Officer, Northeast Business Group improved outcomes. But services with services the on Health. She can be reached at: employees want access to ACO provides. [email protected]. any provider they choose, and employers must effectively • Actively discuss shared communicate the advantages savings to make sure the of narrower networks to deliver employer saves too. on the promise of ACOs.

MH92294 | This newsletter was jointly developed and subject to editorial review by Jefferson School of Population Health and Lilly USA, LLC, and is supported through funding by Lilly USA, LLC.