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Value over volume: Health care changes on horizon

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Jim Leute
July 21, 2012

— One of Rock County’s two largest health care providers already has been selected to participate in a national program designed to provide Medicare recipients with better care at a lower cost.

The other—Mercy Health System—plans to apply to the Centers for Medicare and Medicaid Services to become an “accountable care organization” in the Medicare Shared Savings Program.

Officials from both said the basis of the voluntary program is a delivery model they’ve been advocating and using for years.

Accountable care organizations are groups of doctors, hospitals and other health care providers that work together to coordinate and provide high quality care to their Medicare patients. The goal is to ensure that patients get the right care at the right time without unnecessary duplication of services and medical errors.

When an ACO meets benchmarks for care quality and efficiency, it will share in the savings it generates for the Medicare program.

“I think the model provided by ACOs is the way of the future,” said Craig Samitt, president and chief executive officer of Dean Health System.

Earlier this month, Dean Clinic & St. Mary’s Hospital ACO was one of 89 systems from around the country selected to participate in the program as an ACO.

“It’s about delivering health care that is high quality, coordinated, more accessible and cost efficient,” Samitt said. “Dean and St. Mary’s has considered itself an ACO for some time. Medicare now will reward us for delivering the same type of care we have for years.”

Javon Bea, Mercy’s president and CEO, said that while his system has not yet applied for official designation as an ACO, it has been operating as one for decades.

Bea has been characterized in the industry as a pioneer in vertical integration. When he came to Janesville in 1989, he charted a course to turn a standalone hospital into a vertically integrated health care system that provides a wide range of services, including primary, specialty, urgent and emergency care; inpatient and outpatient hospitalization, home care and insurance products.

At their root, integrated health care systems are designed to contain costs while maintaining quality. They generally pursue economies of scale and eliminate redundancies through centralized control systems.

The intent is for the services to work together to provide patients with a coordinated and convenient continuum of care.

“It’s the way care should be delivered,” Bea said. “If I didn’t believe that, we wouldn’t have started doing it 20 years ago.

“We’re already doing what the ultimate goal of the ACO and Shared Savings Program is. We have one cost structure, one set of medical records, and if the goal of ACO is one-stop shopping, we’ve had it for years.”

All the pieces are in place, Bea said, but Mercy has delayed applying to become a nationally recognized ACO because it first focused on the launch of its government-approved Medicare Advantage insurance product.

Medicare-approved private companies run Advantage plans. Medicare pays the companies a fixed amount every month for the care, and the plans are considered more economical and stress-free for coverage that meets or exceeds the standards set by the original Medicare program.

MercyCare Health Plans is the only local company approved to sell Medicare Advantage plans.

“We decided to do Medicare Advantage first, which essentially sets us up as an ACO,” Bea said. “A big difference is that with Advantage, we’re taking the full risk. Under the Shared Savings Program, ACOs will still get their fees for services, even if they don’t get the incentives from Medicare.”

Samitt said patients of ACO systems should see care that’s better coordinated. Because that care will be measured against benchmarks, patients should also get better care at a lower cost.

“Under this care coordination model, patients will have an advocate and navigator who is their voice, whether they are in the hospital, at a nursing home for awhile or transitioning back to primary care,” he said. “The caregivers will be on top of that and follow the patient wherever he or she goes.”

Bea said the program would break down a delivery system that has traditionally relied on volume rather than value.

For example, he said, an array of doctors a patient might be seeing will be coordinated as a team. Instead of a patient trying to schedule individual appointments with Drs. A, B and C—and those doctors not necessarily being in touch with each other—the patient will work with his or her coordinator to schedule appointments, and the team of doctors will talk to one another in advance to help determine the best course of treatment.

“My prediction is that most organizations will over time move to this system that emphasizes value over volume,” Samitt said. “It will be an evolution.

“There are high quality systems that have chosen to not be part of the Shared Savings Program. I think it is in their best interests to do so because without it you won’t be recognized or rewarded as well, and in this economic climate every dollar does matter.”

What are ACOs?

The consultants are in place, and the books have been published.

While accountable care organizations represent a small part of the Patient Protection and Affordable Care Act, they’re becoming one of the most talked about provisions of the law.

“The industry is scurrying around like crazy right now,” said Javon Bea, president and chief executive officer of the Janesville-based Mercy Health System.

Q: What is an ACO?

A: Accountable care organizations are groups of doctors, hospitals, and other health care providers that work together to coordinate and provide high quality care to their Medicare patients.

The goal is to ensure that patients, especially the chronically ill, get the right care at the right time without a duplication of services and medical errors.

When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it generates for the Medicare program.

While Medicare offers several programs, most newly formed ACOs will provide Medicare fee-for-services in what’s called the Shared Savings Program.

Q: Where did it come from?

A: The term first surfaced in 2006 and became widespread enough that the voluntary concept was included in President Barack Obama’s Patient Protection and Affordable Care Act, which the Supreme Court recently upheld.

In April, the Centers for Medicare and Medicaid Services approved 27 ACOs for operation under the Shared Savings Program.

Another 150 applied to begin operating on July 1, but the government approved only 89, including Dean Clinic and St. Mary’s Hospital, which serve the Rock County market.

A third round of ACOs are expected to be operational in January, and the Janesville-based Mercy Health System said it would eventually apply to the program.

Q: What’s the goal?

A: Quite simply, it’s to deliver better, more coordinated care and save money for a strapped government program.

According to the Centers for Medicare and Medicaid Services, an ACO is “an organization of health care providers that agrees to be accountable for the quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program.”

ACOs have agreed to take responsibility for the quality of care they provide to people with Medicare in return for the opportunity to share in savings realized through high-quality, well-coordinated care.

The idea is to eliminate duplication of services, coordinate care and boost preventive efforts that decrease the need for other high-cost services.

“Better coordinated care is good for patients and it saves money,” Kathleen Sebelius, Secretary of the U.S. Department of Health and Human Services, said in a news release.

Sebelius’ department has estimated that ACOs could save Medicare up to $940 million in its first four years. While that’s less than 1 percent of Medicare’s expected spending in that period, the program has room for expansion.

Q: How would ACOs be paid?

A: In Medicare’s traditional fee-for-service payment system, doctors and hospitals generally are paid more when they give patients more tests and do more procedures, which drives up costs, said Jenny Gold of Kaiser Health News.

While ACOs still operate on a fee-for-service model, they would earn incentives by keeping costs down, as well as meeting a specific set of quality benchmarks.

To share in the savings, ACOs must meet a set of metrics. For 2012, Centers for Medicare and Medicaid Services established 33 measures relating to care coordination and patient safety, appropriate use of preventive health services, improved care for at-risk populations and patient and caregiver experience of care.

Gold said that if an ACO is unable to save money, it could be stuck with the costs of investments made to improve care and might have penalties for not meeting savings and performance benchmarks.

Q: If my doctor is in an ACO, can I still see whatever doctor I want?

A: Absolutely, according to the Centers for Medicare and Medicaid Services.

Q: Is an ACO a Health Maintenance Organization, managed care or insurance company?

A: Unlike HMOs, managed care or some insurance plans, an ACO can’t tell patients which health providers to see and can’t change Medicare benefits, according to the Centers for Medicare and Medicaid Services. If your doctor participates in a Medicare ACO, you always have the right to choose any doctor or hospital that accepts Medicare.



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