Accountable Care Organizations: Par for the Course

Betty Jo was one of my favorite patients as a medical student. This 71 year old widow, with an obsessive zest for golf, was also one of my best teachers. It took this affable elderly woman to demonstrate the United States health system’s fragmentation before I truly understood the magnitude of the problem. She was a motivated patient who was lost in the shuffle between doctor visits. Miscommunication was the norm between my preceptor and Betty Jo’s other providers. She had 20 medications scribbled on an old piece of yellow legal paper, but nobody knew what she was actually taking, not even Betty Jo. I was embarrassed by her care which resulted in poor outcomes, deteriorating health, and multiple hospitalizations.

Like Betty Jo, over half of Medicare beneficiaries have five or more chronic diseases¹. Chronic illnesses require new and innovative ways to deliver care. A 10 minute appointment slot that culminates with a blood draw and limited free samples of necessary life-saving medications represents a failure of our pre-ACA system. Running from one doctor’s appointment to the next, getting each of her diseases treated individually is proving ineffective. The quality of care is poor, costs are exponentially rising, treatment regimens are uncoordinated, medical tests are redundant, hospitalizations and emergency room visits are frequent, and the patients are unhealthy and unsatisfied with their care.

For Betty Jo and the other 47 million Medicare enrollees, Title III of the Affordable Care Act (ACA) hopes to provide an answer². Title III establishes a shared savings program with organizations, known as Accountable Care Organizations (ACO), which will take responsibility for all aspects of Medicare patients’ care, including quality and cost. ACOs will bring together groups of doctors, other providers, and hospitals under one network³. ACOs that agree to manage all the health needs of at least 5,000 beneficiaries for no less than three years will roll out this spring ⁴.

The most exciting aspect of an ACO is that it will create an environment conducive to clinical innovations. ACOs will liberate providers from the chains of fee-for-service, and pay them in ways that promotes creativity and innovation in care delivery. Practices will finally step outside antiquated delivery models and start utilizing group visits, team based care, longer patient visits, and technology to maximally enhance patients’ health. Specifically, in a world where non-communicable diseases are the most salient health problem, this new model of care will integrate all components of the care delivery chain, improving health outcomes, and keeping patients, like Betty Jo, out of the hospital and on the golf course.

ACOs show promise and are being touted by some as the solution that will revolutionize health care delivery across the U.S., but I see three challenges ACOs must overcome to achieve effects of that magnitude: (1) primary care physician (PCP) shortage, (2) inaccuracy and inexperience assessing quality, and (3) inability to reach rural and other underserved populations.

The PCP shortage creates a barrier for successful implementation of ACOs. At the center of the ACO model are PCPs who are essential for providing access into the network, and then coordinating and integrating care with others in the medical neighborhood. Specialist providers are good at treating illness once the patient is already sick, but the goal of an ACO is to keep patients healthy and to reduce both specialty care and hospitalizations⁴. PCPs are specifically trained to provide comprehensive care focused on keeping the patient healthy. When prevention, health maintenance, and routine care fall short, they are experts at connecting patients with appropriate specialty care when needed. ACOs will ask more of PCPs, but with too few providers available, it will limit the capacity of ACOs⁵.

The second major challenge moving forward will be to determine what quality indicators are important and how these metrics are measured. As payment and shared savings are tied into quality control, it will be critical to ensure that the metrics accurately reflect the care being provided. A recent report from the Inspector General discusses how quality measures from electronic databases are often too blunt and are unable to provide useful information on targeted outcomes⁶. Quality measures must be able to tease out the direct effects that providers have on patient outcomes, but the science of measuring this will take time to fully mature. Lastly, many practices have limited or no previous experience with monitoring quality data⁷. For these practices, operating under new quality and cost incentives will feel like making their way in the dark.

The last major impediment to successful implementation is that ACO models will be difficult to adopt in rural health clinics (RHCs) and Federal Qualified Health Centers (FQHCs). One out of five Medicare recipients lives in a rural area and in 12 states over 50% of the Medicare population is rural⁸. RHCs will not have sufficient startup capital or enough patients to justify bearing financial risk for their care. Even with the subsidies and tiered risk-bearing which was negotiated last October, it is feared that the financial incentives will not be enough unless the total potential savings is increased⁷. FQHCs serve 1.4 million Medicare beneficiaries and face a similar situation. It will require extra incentives for them to take responsibility for the outcomes of this inherently high risk population⁹.

Despite these challenges, ACOs show promise for delivering better health care to patients like Betty Jo. Betty Jo’s primary care provider will finally have the time and tools he needs to coordinate and integrate care effectively and ultimately keep her healthy and out of the hospital. This will encourage clinical innovations that are patient-centered, more efficient, and higher quality; all this will cost Betty Jo, as well as the overall health system, less¹⁰. Private insurers have already shown interest in negotiating ACO-like contracts, so non-Medicare patients will benefit as well¹¹. For Betty Jo, her future looks bright and her new biggest concern will the bogey she just got on the 18^th hole.

References:

1. Accountable Care Organizations: Improving Care Coordination for People with Medicare, Healthcare.gov; November 16, 2011

2. State Health Facts, “Total Number of Medicare Beneficiaries 2011,” Kaiser Family Foundation; February 2012

3. McDonough, J., Inside National Health Reform; University of California Press; New York 2011

4. Gold, J., “ACO is the hottest three letter word in health care,” Kaiser Health News; October 21, 2011

5. Centers for Medicare and Medicaid Services website; https://www.cms.gov/ACO/, accessed February 19, 2012

6. Levinson, D., “Adverse Events in Hospitals: Methods for Identifying Events,” Department of Health and Human Services; March 2010

7. Berwick, D., “Making Good on ACO’s Promise: The Final Rule for the Medicare’s Shared Savings Program,” The New England Journal of Medicine, 365:19; November 10, 2011

8. Kaiser Family Foundation, “Percent of Medicare Beneficiaries Residing in Rural Counties, by State, 2010,” February 2012

9. MedPac, “Federally Qualified Health Centers,” MedPac Report to Congress; June 2011

10. Merlis, M., “Accountable Care Organizations,” Health Affairs; July 27, 2010

11. Fisher, E., McClellan, M., and Safran, D., “Building the Path to Accountable Care,” New England Journal of Medicine; 365: 26, December 29, 2011

Access and the ACA: looming challenges

Expanded access to health care insurance: this promise of the Affordable Care Act (ACA) is historic as it creates a path to finally eliminate the ugly black mark on the United States as the only wealthy, developed nation without universal access to health insurance[i]. Within Title I of the law, details related to the expansion of private health insurance coverage and the regulation of the private health insurance market are laid out. In Title II, public programs including Medicaid and the Children’s Health Insurance Program are set to expand. Estimates from the Congressional Budget Office (CBO) project that 32 million uninsured Americans will gain coverage by 2019; half of them will obtain private coverage under Title I, while half will obtain coverage through the Medicaid Expansions of Title II[ii]. For a country with nearly 50 million of its people uninsured as of 2010[iii], this legislation takes a large leap forward in providing access to care.

Yet, health insurance is only one piece of the health access puzzle. While insurance reduces the economic barrier to accessing health care services, the barrier of health service availability still looms large on the horizon. Health insurance coverage is not enough to increase access to health care services, but must be coupled with an adequate supply of health care services to meet the demand of the insured. As demonstrated by the RAND Health Insurance Experiment, we can expect that as these 32 million Americans gain coverage, the demand for health care services will increase substantially, placing huge demands on our health care system[iv]. The question becomes: are we prepared to meet that demand?

Current debate around this question has focused on whether or not the physician work force, specifically, the primary care health provider work force, will be adequate to meet the new demand. Drawing on the example of Massachusetts where insurance was mandated in 2006, evidence has shown that health insurance without an adequate number and appropriate distribution of primary care physicians does not lead to health access. Since the mandate, Massachusetts has seen greater wait times for appointments with PCPs and fewer than 50% of PCPs accepting new patients[v]. This has led experts to project that with the advent on national health insurance expansion, the U.S. is on the brink of a primary care crisis. The Association of American Medical Colleges projects that the U.S. will face a shortage of approximately 21,000 PCPs by 2015[vi], while the American Academy of Family Physicians projects a shortage of 40,000 generalist physicians by 2020[vii]. While the actual number is likely to fall somewhere in between, the height of the numbers is worrisome.

Within the ACA, there are some provisions to address primary care physician workforce. These provisions include:
(1) $168 million to go towards training 500 new primary care physicians (PCP) through the creation of new residency spots by 2015,
(2) $5 million for states to create strategies to expand the primary care workforce by 10-25% over ten years to meet increased demand,
(3) $1.5 billion to strengthen the National Health Service Corps (NHSC) and to increase primary care physicians, nurse practitioners, and physician assistants by 12,000 total,
(4) Financial incentives to practice primary care in under-served areas, and financial incentives to care for Medicaid patients in 2013 and 2014.
(5) Provisions to expand the Physician Assistant (PA) and Nurse Practitioner (NP) workforce[viii].

Since health insurance without adequate health care supply does not result in greater access to care, better health outcomes, or reductions in cost, the expansion of the primary care physician workforce is vitally important to the overall success of the ACA. But will the above provisions meaningfully address this imminent problem?

The answer lies in the success of their implementation. The creation of new residency positions for primary care physicians will be helpful only if there are new physicians to fill the spots. In the last several years, family medicine and internal medicine have shown the highest unfilled residency position numbers by U.S. medical graduates. In the case of Family Medicine, 57.8% of all residency spots are filled by international medical graduates[viii]. In addition to continued reliance on international medical grads, the Federal Government is counting on the bolstered funding to the NHSC to incentivize U.S. medical students to choose primary careers in under-served areas by forgiving the loans of students who choose to enter this program. Yet, loan burden, even with debt burdens around $160,000 or higher, pales in comparison to the $3 million lifetime salary gap faced by students choosing a primary care career over a specialist career[ix]. Not to mention, years of research has supported that the choice of specialty career is influenced by multiple factors besides financial incentives, including student and institutional factors[x]. It is not at all clear that these financial incentives will be enough to induce student demand towards primary care careers.

The provisions to increase the number of practicing NP’s and PA’s will also face implementation challenges. To begin with, only one-third of PA’s currently practice within a primary care setting, limiting the effect of this legislation on the primary care shortage. While the majority of NP’s do practice in primary care settings, current estimates suggest that two NP’s are needed to cover the same workload as one PCP[xi]. Additionally, the function of NP’s is constrained by health plan and state restrictions on scope of practice. For the expansion of NP’s to contribute meaningfully to the primary care physician shortage, these constraints will need to be loosened[xii].

Finally, even if government projections are correct and the primary care workforce increases by 12,000 (a very generous estimate), this is not nearly enough to meet the projected 21,000-40,000 PCP shortage. Even more troublesome is that the impact of this shortage is likely to fall heaviest on the 16 million new Medicaid beneficiaries, due to low physician participation in Medicaid and infrequent physician practice presence in low-income communities[xiii].

The ACA is pivotal in the course of health care in the US. Yet, if the ACA is to successfully achieve the goal of expanded access, more must be done in order to bolster the primary care physician workforce. Insurance coverage without physician availability is not enough. While the above provisions are an important starting point for addressing this problem, additional new investments to strengthen the primary care workforce must become the top priority of those hoping to see the ACA succeed.

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[i] OECD (2011), Government at a Glance 2011, OECD Publishing, Paris.

[ii] McDonough, John. Inside National Health Reform. University of CA Press and the Milbank Fund, 2011

[iii] United States Census Bureau, Income, Poverty and Health Insurance Coverage in the United States: 2010. Retrieved fromhttp://www.census.gov/newsroom/releases/archives/income_wealth/cb11-157.html on February 19th, 2012.

[iv] Joseph P. Newhouse and the Insurance Experiment Group. Free for All? Lessons from the RAND Health Experiment. Cambridge, Mass.: Harvard University Press, 1993,

[v] Lowry, F. Massachusetts Universal Healthcare Coverage Reveals Serious Shortage of Primary Care Physicians. www.medscape.com October 8th, 2009.

[vi] Results of the 2010 Medical School Enrollment Survey. Center for Workforce Studies. AAMC, June 2011.

[vii] AAFP Projects PCP Shortage Could Reach 40,000 By 2020. News. Robert Wood Johnson Foundation, August 17, 2009. http://www.rwjf.org/humancapital/digest.jsp?id=21508

[viii] National Resident Matching Program. AAFP 2012. http://www.aafp.org/online/en/home/residents/match.html

[ix] Fact Sheet: Creating Jobs and Increasing the Number of Primary Care Providers. www.HealthrReform.Gov. U.S. Department of Health and Human Services. Feb 20 2012.

[x] Bryan T. Vaughn, Steven R. DeVrieze, Shelby D. Reed and Kevin A. Schulman. Can we close the income and wealth gap between specialists and primary care physicians? Health Affairs, 29 no.5 (2010): 933-940.

[xi] Senf JH, Campos-Outcalt D, Kutob R. Factors related to the choice of family medicine: A reassessment and literature review. J Am Board Fam Pract. 2003 Nov-Dec;16(6):502-12.

[xii] Improving Access to Adult Primary Care in Medicaid: Exploring the Potential Role of Nurse Practitioners and Physician Assistant. Kaiser Commission on Medicaid and the uninsured. The Henry J. Kaiser Family Foundation, March 2011.

[xiii] Fact Sheet: Creating Jobs and Increasing the Number of Primary Care Providers. www.HealthrReform.Gov. U.S. Department of Health and Human Services. Feb 20 2012.

PBS Documentary: U.S. Health System: The Good News

PBS's recent documentary on communities in the United States that are providing high quality health care at a lower cost is inspiring and worth checking out. They highlight several communities across the nation, including Grand Junction, CO, Group Health in Seattle, and physician practices in Everett, WA. Communities are doing great things, but in isolation. This documentary shows us that we are capable of providing high quality care, efficiently and cost effectively. Hopefully, medical communities across the nation will adopt practice patterns that are similarly responsive the health needs of the population.

Check out the documentary here.

BWC

Ezekiel Predicts the End of Insurance Companies by 2020

Ezekiel Emanuel boldly proclaims that insurance companies will be extinct by 2020 in last week's New York Times article. He believes that Accountable Care Organizations (ACO) will push them out of the market. It will be interesting to follow his prediction over the next 8 years to see if he is correct.

Emanuel explains that ACOs will eventually bear all the financial risk for patient care when they are implemented which will eliminate the need for insurance companies. ACOs, which will be composed of groups of doctors, other providers, and hospitals, will work together to provide the full range of patient care. Eventually, he sees patients paying a flat rate directly to ACOs, who, in turn, will provide all services needed. The advantage of the ACO model is that it incentivizes providers to keep the patient healthy and focus on prevention, rather than provide care only at the point of illness. Additionally, it will integrate care for the patient, creating better collaboration between different providers.

At the moment, 60% of insured citizens under age 65 in the U.S. are insured through their employer. In these cases, the financial risk falls on the employer, not the insurance company. This leaves the insurers there to help with processing claims and to provide negotiating power with hospitals and doctors. However, ACOs will charge a flat premium, which should reduce the amount of administrative work required to process and file insurance claims on a case by case basis. In situations where insurance companies take on financial risk for patients’ health – such as small businesses and individuals – they have enough market power to cherry pick healthy patients, charge high premiums, and deny patients’ claims. When ACOs start being implemented, insurance companies will be competing with ACOs for these patients. This will infuse better competition and should reduce the need for patients to hassle with insurance companies over coverage.

Emanuel also breaks down the difference between ACOs and HMOs in a very concise manner. First, ACOs and HMOs are similar such that patients are members of the organization and members pay a flat fee. In other words, payment is not done on a fee for service manner in either of these models of care. However, Emanuel emphasizes that ACOs will be local groups of providers, not large national corporations like many HMOs, so ACOs will be able to better respond to local patient needs. Also, ACOs will be financially incentivized to keep patients healthy rather than only getting paid to treat the sick. Lastly, he points to the advancements in electronic medical records as well as the science of care integration as improvements since the HMOs’ day.

Personally, I am not fully convinced that insurance companies will be extinct by 2020. It may be that I do not understand ACOs to the depth that Emanuel does. But, maybe in the end, ACOs will become large enough that they will just take over coverage responsibilities as well. Time will only tell.

BWC

Why Doesn't Pay-for-Performance Work?

Why doesn’t pay for performance work? It seems that by defining health outcomes and financially incentivizing physicians to meet those targets, we would see improved health. However, since the United Kingdom (UK) has implemented pay-for-performance incentives, the evidence that this change improves health status is negligible.

Researchers from the National Primary Care Research and Development Centre have been tracking health outcomes for asthma, diabetes, and coronary artery disease since implementing a pay-for-performance model in the UK. They found that health outcomes for asthma and diabetes improved, but only in the short run. In the long run, the rate of improvement leveled off. For heart disease, the results were even more disappointing as they did not even show improvement in the short run.

A study from the Department of Public Health Sciences, looking at intermediate outcomes of diabetes under pay-for-performance did not provide any better news. In fact, their results were not able to show a statistically significant difference in physicians’ ability to meet performance targets after rewarding physicians based off of performance.

The researchers also collected data from patients asking about perceptions of access to care, continuity of care, and the interpersonal aspects of care. The pay-for-performance method had no effect on any of these indicators either.

Performance based payment works in other fields, but for some reason it does not work in health care. This may point to the need to better define quality in health care, particularly in primary care. Maybe looking at HgA1c targets is fine on the individual level, but for population based diabetes control, this is not the answer? Perhaps, physicians are not incentivized by payment as much as economists would like us to believe? I am not sure what the problem is, but these results point us away from pay-for-performance as the silver bullet for improved quality in primary care.

BWC

References:

Stephen Campbell, et al, "Effects of Pay for Performance on the Quality of Primary Care in England," The New England Journal of Medicine 2009; 361: 368-78

Stephen Campbell, et al, "Quality of Primary Care in England with the Introduction of Pay for Performance," The New England Journal of Medicine 2007; 357: 181-190

Pooja Vaghela et al, "Population Intermediate Outcomes of Diabetes Under Pay-for-Performance Incentives in England from 2004-2008" Diabetes Care 2009; vol 32, no. 3

Public vs. Market

I am taking a class at Harvard School of Public Health this term called "Health Care Issues: Public vs. Market."  It is a cumbersome title, but defines the topic and scope of the course well.  Essentially it applies the debate between free markets and government intervention to the Affordable Care Act (ACA). Our first policy memo (which kind of blends into an essay in my case) was about our personal thoughts on the public vs. market debate.  Are there times when government intervention in health care is necessary and if so, when and how?  I offer up a few suggestions.

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MEMORANDUM
To: Speaker of the House
From: Jason Kroening-Roche
Re: Public vs. Market in Health Care Reform
Date: January 30, 2012

            We are at a significant turning point in the history of healthcare in this country.  With the passage of the Affordable Care Act (ACA)in 2010 and the upcoming elections in November 2012 the debate about marketsand government in health care is intense.  In this memo I will explain thebenefits of competitive markets and then explain why the health care market differs. I will finish with a discussion of the ACA and how it addresses theseissues.
            Competitive markets have been the foundation of an Americaneconomy that is the largest in the world.  Competition for profit spursinnovation, contains prices, and gives the consumer choice.  Innovationresults when companies consistently push the envelope with new technologies,products, and production processes in an effort to expand their market share andmaximize profits.  Competition alsoworks to keep prices for consumers low.  Companies search for new, moreeconomical methods of production and reduce inefficiencies in their businessmodels.  Southwest Airlines, for example, has repeatedly reduced operatingcosts by eliminating “frills” and shortening turnaround time between flights inorder to keep their prices competitive.  Lastly, markets give the consumerchoice.  In truly competitive markets, many businesses provide the same orslightly variable products from which the consumer can choose.
            Health care differs from perfect markets in several ways, however. First, many view health care as a human right and believe access tohealth care should not be based on employment status or ability to pay. Second, health care is an unpredictable need and often catastrophicallyexpensive.  An insurance market is a viable solution.  The twoclassic problems in the health insurance market, however, are moral hazard andadverse selection.  Moral hazard is the principle that after obtaininginsurance, patients will seek care they do not need, because it is free at the“point of sale.”  Adverse selectionis the principle that patients know more about their state of health thaninsurance companies and therefore will buy insurance only when they need it. This leads to the third pitfall of a competitive health care market.  Competitive markets assume perfectinformation.  The informationasymmetry in health care is undeniable and unavoidable, both between insurancecompanies and patients (adverse selection) and between patients and theirproviders.  Patients often do not know their medical needs and rely on theprovider (i.e. physician, hospital, etc) for advice, often in times ofemergency and stress.  These issuescannot be addressed in a competitive market for health care and thus requiregovernment intervention.
            The ACA contains solutions to many of these challenges that makesense.  First, the ACA provides access for an estimated 32 of the 50million people in the US for whom the current system was failing, increasing equityin a way the market cannot.  Previously, affordable health insurance was availableonly through Medicare, Medicaid, and employer-sponsored insurance, incentivizedthrough tax subsidies to companies who provide insurance for their employees.  Second, companies were not mandated toprovide insurance to employees, nor individuals to carry it.  This created equity and adverseselection issues, especially for the individual market.  The ACA now implements a mandate with subsidiesfor persons unable to afford to buy insurance on their own.  Third, the ACA places an emphasis onquality and transparency.  Regulatingquality measures gives consumers more information and power to make rationaldecisions about where they will seek care.  The insurance exchanges promote transparency whenindividuals are choosing a coverage plan. These are important interventions to improve information symmetry.

            Inconclusion, markets have been extremely successful in this country.  However, the health care market needsgovernment intervention to correct market failures and there are many models toachieve this.  Working within thecurrent system, however, the ACA does a good job ensuring greater access andequity, mitigating adverse selection, and protecting consumers from informationasymmetry.  I recommend it for yoursupport.