In my recent series of posts, I’ve been exploring various approaches to value-based care (VBC). Here I’ll delve into Accountable Care Organizations (ACOs) and their importance in the value-based landscape.
The ACO model represents what’s arguably the most progressive approach to delivering both care and value. It stands out in terms of its potential to significantly shift not just how care is provided, but how resources are allocated to assess and improve the well-being of a population. In effect, the emphasis is on “health” as opposed to “healthcare” in the traditional sense.
Accountable care as a means to achieve population health
While other VBC-oriented programs – such as bundled payments, readmissions reduction, and quality-based contracts – seek to optimize the established practices of the fee-for-service world, ACOs embody the “population health” movement, which reframes fundamental questions around accountability for ensuring health across entire populations.
Although the ACO concept has been implemented in a variety of forms over the years, it was formalized as part of the Affordable Care Act in 2012 to provide more effective care to the Medicare population. By participating in an ACO, healthcare providers, including health systems and physician organizations, had the opportunity to share in the savings when specified cost and quality goals were met. Optionally, they could also take on “downside” financial risk in exchange for a larger slice of the savings pie. The potential to achieve savings is largely predicated on the improved efficiencies that result from improved coordination of care within a network of providers working toward common goals. Each beneficiary in an ACO is assigned a primary care provider who serves as the “coordinator.”
Although achieving savings is challenging, experience does pay off. CMS data shows ACOs that participation in shared saving programs since 2012 generated $291 million in savings in 2017, with $87 million in net savings after accounting for bonus payments. In comparison, ACOs that started participating in MSSP in 2016 generated $46 million in savings, with CMS paying $80 million in bonuses—resulting in a net loss of $34 million. It’s clear that you do get better with practice!
And, the ACO movement has begun to take hold beyond the Medicare program as a way to implement population health across increasingly larger populations. Several states have instituted ACOs to manage their Medicaid populations. On an even more ambitious scale is the state of Vermont’s OneCare ACO.
Vermont’s ACO revolution
OneCare came into being in 2016 during Vermont’s journey to reform the state’s approach to healthcare. This included a failed attempt to implement a single payer system. Prior to OneCare, Vermont participated in the CMS (Center for Medicare & Medicaid Services) Multi-Payer Advanced Primary Care (MAPCP) demonstration along with programs in seven other states. Vermont’s approach showed a substantially larger reduction in health care expenditures than any of the other demonstrations. As a result, CMS agreed to treat Vermont as a laboratory for perfecting the ACO model.
Among OneCare’s stated goals is to unite physical, mental health, and social services sectors in serving patients with the most complex needs. Started by Vermont’s primary healthcare systems, the University of Vermont and Dartmouth-Hitchcock, it includes 10 of the state’s 14 hospitals, about half of the nursing homes, and the majority of primary and secondary care physician groups. One aspect that makes OneCare unique is its all-payer structure: Medicare, Medicaid, and Blue Cross Blue Shield of Vermont, which covers 90% of the state’s commercial market, agreed to a fixed per member per month financing model to fund the program, gradually increasing the number of beneficiaries covered in this manner over time.
On the provider side, hospitals assume the financial risk of managing care for their assigned beneficiary population. Monthly incentives are also paid to physician practices that have achieved NCQA patient centered medical home (PCMH) designation, as well as mental health providers and community health organizations, to assume responsibility for caring for beneficiaries, with additional incentives for achieving quality targets. By 2022, Vermont aims to have nearly 70% of its 624,000 residents attributed to an ACO.
One significant advantage OneCare has in its favor is the foundation that was created by Vermont’s Blueprint for Health initiative. The Blueprint is a community-based approach to providing healthcare that is funded at the state level. It provides a combination of independence to address issues at a local level plus communication and coordination among Vermont’s 14 health service areas.
Integral to making this possible is OneCare’s strategy to promote care coordination across the entire state. Blueprint-funded care coordination staff in the health services area plays a lead role in identifying beneficiaries most in need of care and connecting them with resources in the community that can provide for their specific needs. These needs range from elder care to women’s health to mental health and substance abuse services. Early evidence suggests this approach is leading to lower use of acute care services such as hospital emergency departments.
Data-driven decisions: Population style
With OneCare and the Blueprint, Vermont is striving to become a “Learning Health System”. And data and analytics is essential to learning: understanding what is working and where there are opportunities to improve. Three critical information resources provide the basis for meaningful analysis: an all-payer claims database, a clinical care registry that pools EHR information from primary care practices, and supplementary information added by care coordinators based on their own interactions with patients. One important use of this data set is to stratify the beneficiary population into four groups: healthy, early onset chronic disease, rising risk, and complex needs. The most intensive care is directed at the rising risk and complex needs populations, while primary care and proactive health risk assessment are employed to maintain the health of the other two groups.
An important revelation gleaned from the data is that Vermont’s investment in healthcare is beginning to pay off. Analysis of 2016 results, the most recent year for which data is available, indicate that a $25 million investment in medical homes and other care coordination averted $75 million in spending. That’s an impressive 3 to 1 return on investment.
One vexing challenge has been to harmonize the quality measures that help to ensure care quality across payers. No small task since each of the participating insurers, Medicare, Medicaid and Blue Cross Blue Shield Progress, have historically had their own approaches. In support of OneCare, all have agreed to work toward a unified set of 17 measures that emphasize Vermont’s goals of expanding access to primary care, reducing prevalence and morbidity of chronic disease, and reducing deaths from suicide and drug overdose.
So what can we take away from what Vermont has learned so far through its experience in promoting value-base care through OneCare and the Blueprint for Health? A few things are clear:
- Reducing healthcare spending while improving quality is really hard, but not impossible. For 2017, OneCare’s total costs of care were 1.5% above budget, meaning that it will owe money back to the state. The encouraging news in this is that the four hospitals that assumed downside risk did achieve savings, though these were offset by fee-for-service payments incurred for care outside of Vermont. In 2018, 10 hospitals moved into downside risk arrangements. Promising trends indeed.
- Care coordination works, and it leverages organizations and resources that are often already in place and focused on community health. A few of these aren’t typically associated with healthcare, but are critical, such as food pantries, homeless shelters, and suicide prevention hotlines. And it has financial advantages. For example, trends over the past five years indicate lower overall healthcare spending for beneficiaries participating in medical home programs compared with those who are not.
- Stakeholders can achieve out-sized goals when they are well aligned. As hard as it may be to imagine, Vermont’s success is the result of federal, state, and local government; commercial insurers; physicians, health system, and myriad community-based organizations working in close cooperation. That raises the question: if it’s possible in Vermont, why not elsewhere?
And of course, this brings us back to where we always start: the essential role of data and analytics. As Vermont’s experience demonstrates, information is one of the most critical resources for guiding population-wide health toward a successful and sustainable future.
- Using Data to Navigate the Value-Based Care Journey
- How to Build a Data Foundation that Supports Value-Based Care
- Navigating the Path to Value-Based Care
The Commonwealth Fund: Vermont’s Bold Experiment in Community-Driven Health Care Reform https://www.commonwealthfund.org/publications/case-study/2018/may/vermonts-bold-experiment-community-driven-health-care-reform
Vermont Blueprint for Health: 2017 Annual Report https://blueprintforhealth.vermont.gov/sites/bfh/files/Vermont-Blueprint-for-Health-Annual-Report-2017.pdf
Latest posts by George Dealy (see all)
- Accountable Care: The Next Frontier of Value-Based Care - December 4, 2018
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- Using Data to Navigate the Value-Based Care Journey - November 13, 2018