Health for life

ACOs at work.

According to this Bloomberg news release, some of Medicares Accountable Care Organizations (ACOs) are already achieving cost savings. Mt. Sinai and Coastal Carolina are reducing emergency room visits while Hackensack is reducing costs.

All three institutions are using two key ingredients:

1) information technology-based risk stratification to identify the persons at greatest risk and

 2) dedicated full-time nurses who perform telephonic and in-person outreach, coordinate care and provide patient coaching that, in turn, is tailored to that risk.

To the DMCB, the good news is that ACOs are using the two approaches that define modern-day disease and population health management. That industrys success will be Mt Sinais, Coastal Carolinas and Hackensacks success.

The bad news is that the news release only addresses half the question: did any savings exceed the institutions cost of the risk stratification and the nurse-FTEs? If the early answer is no, then avoided ER visits and reduced costs could turn out to be much like Governor Christies lap band: so far so good but its still risky and could ultimately be all for naught.

And on an unrelated note, this just-published New England Journal article makes note of "not made in America" health care innovations from overseas that could hold important lessons for the United States. In particular, the authors point out that Germanys DRG hospital payment system includes 30-days of post-discharge care and includes the physician payment. Readmissions within that 30 day window are, with a few exceptions, not covered and physician payment is possible because docs are often employees of the hospitals.

"Interesting!" says the DMCB, but is reminded that Germany is hardly a model for reducing inflationary cost trends.   It also specifically recalls hearing Germanys Minister of Health, Daniel Bahr, express impatience with his countrys DRG system just last week. He criticized it for not advancing enough quality in his keynote address at the HauptKongress in Berlin.

Want to better understand the perpetual anguish of a chronic illness?  Well, thanks to online streaming from the Harvard School of Public Health, readers can better appreciate the eerie similarities between hyperprogressive liberalism and incurable diseases like elevated blood sugars.  Both can go on for decades, are irreversible, cost a lot of money and are ultimately caused by inappropriate choices.  The Disease Management Care Blog is, of course, writing about this hour long video of former Massachusetts Governor and former Democratic Presidential candidate Michael Dukakis.

Sadly for health orm Obamaists, the supremely competent and confident Mr. Dukakis trashes the concept of accountable care organizations at about the minute 35 mark, dismissing it as a reincarnation of 1990s style HMOs and capitation.  And he doesnt stop there. The additional problem, he says, is that well waste ten years analyzing what he foresees will be a foregone conclusion: ACOs are destined to fail. 

Whats more, since health care markets are such a dismal option, he concludes the only choice thats left is price-setting "regulation."  Assume State Insurance Departments have power over hospitals, call everyone into a room, assume theyre decent people, appeal to their economic self interest and everyone will be happy.

Yet, once the DMCB got over Mr. Dukakis "legend in his own mind" persona, it believed the former Governor has a good point: if ACOs fail, well be left with two choices:

1) a governing class who is ready to step in with enlightened top-down governance or

2) a reintroduction of market forces that seeks bottom up competition and consumerism.

In the interest of fairness, if readers want to see a counter-argument in favor of markets, check out this one-sided nine minute Cato Institute video that teaches us weve havent really had a health care market for decades. 

Alternatively, if youre in the mood for neither of the above videos, perhaps your time would be better spent on viewing something that offers far more than either of the options above. 

You Go Bizzle!



Image from Wikipedia

In 2011, the Oregon legislature approved the creation of Medicaid "coordinated care organizations" (CCOs). Once the initiative was granted waiver status by CMS, the "Oregon Health Plan" was launched. Its regulated and funded by the "Oregon Health Authority," which also oversees the health insurance for Oregons public health employees. When it became clear that contracting for the states public employee business was tied to the CCO participation, most of the larger health systems in Oregon responded by signing up to be CCOs.

According to Eric Stecker writing in the Feb 13 the New England Journal of Medicine, "there is a distinct possibility it could fail."

Yikes.

The planning for CCOs was ultimately based on the assumption that its capitation-based payment methodology would achieve a 2% reduction in costs versus a 5.4% trend. That assumption, in turn, enabled Washington DCs waiver that included $1.9 billion in funding. Unfortunately, that money was tied to penalties if the savings are not achieved.

CCOs signed up with primary care medical homes, promises of clinical integration and a commitment to greater coordination of care. Yet, when Dr. Stecker reviews the Oregon health care landscape, he sees little proof that medical homes are achieving large savings, that the arms race of local competition has moderated or that the movement of patients across care settings is seamless and efficient. Whats more, local health providers within the CCOs are largely autonomous and fee-for-service remains the dominant payment methodology for these health systems other lucrative payers. The likelihood that theyre going to change their culture or their clinical work flows to serve the CCO segment of their business is remote.

Dr. Stecker correctly identifies the unproven assumptions that underlie the belief that physician-hospital organizations can cut out the middleman insurers and manage global risk contracts with the pixie dust of medical homes and care coordination.  While those ingredients are necessary, the Disease Management Care Blog agrees that the likelihood of CCOs ending the year with a 2% reduction in claims expense is a stretch. 

The DMCB will stay tuned.

Well talk diabetes in a sec Mrs Smith, but first, hows those darling kids?

Just being back from a whirlwind tour, the Disease Management Care Blog is happy to report that it became newly acquanted with some colleagues who are furiously at work building care management programs for newly minted integrated health systems and ACO wannabes.

They provided two big insights for the DMCB:

1) While the DMCB guesstimated that the typical ratio of care management nurses to enrollees amongthe mainstream care management service companies was in the range of 1:1500, at least two new programs are using a 1:750 ratio.  By the way, 1:800 is what was quoted in this peer reviewed article.  Thats a lot of nurses for an "accountable" population and a lot of budget for a CFO to approve. 

2) There is less of an emphasis on care manager "productivity,"  thanks to a recognition that nurse-client conversations outside hard nosed chronic illness management "engagement," "barrier identification" and "shared decision making" contribute to relationship building.  The DMCB thinks of this as "magic nursing dust" that adds to the likelihood of patient behavior change.  There are no hard data on the topic, but its important in other parts of the health care universe, so why not here?

"I wonder how I can lose less money?"

The ever resourceful HealthHombre Blog quotes an interesting academic review paper to make an important point: many of the widespread assumptions of smooth sailing for the 106 new ACOs still remain unproven.

The DMCB agrees with this important HealthHombre insight. In addition to the many "known unknowns" (including just how physician-hospital organizations will perform in managing insurance risk), there are also the "known known" year-to-year random fluctuations in claims expense.  And, as the DMCB noted, theres the "unknown unknown" "antifragile" threats to a highly protected sector of the economy that could bring the whole ACO-thing down, 2008-style.

And heres a case in point that backs up HealthHombre.  "Wellspan" is a highly regarded and well-run hospital system that is local to the DMCB. This recent news report is telling because Wellspans success and challenges probably apply to other emerging integrated institutions that have an appetite for risk contracting.

According to the press report, Wellspan garnered an excellent credit rating because...

"766 physicians — more than 75 percent of those in the hospitals market — are affiliated with WellSpan, which [was] counted as a key credit strength."

But the bad news is that the rating also....

.....noted that WellSpans physician group, which employs 411 of those doctors, generated losses of $19.6 million in 2011 and $21.4 million in 2012 (bolding DMCB).

The DMCB has heard similar statements from seasoned health system administrators both locally and nationally.  If "physician integration" is supposed to be the bedrock of ACOs, how is it that the docs are responsible for millions of dollars in losses?  What is the likelihood that these organizations will finish December 31, 2013 in the black?

If youre one of those disease management skeptics, you might enjoy the lingering anti-vendor schadenfreude of this bottom-up re-analysis of the MHS program that was just published in the New England Journal.  However, if you are a fan of the Feds programs for the Patient Centered Medical Home or Accountable Care Organizations, youll also want to pay close attention to a timely reminder about the perils of contracting with CMS.

The Disease Management Care Blog explains.

Recall MHS was a CMS program designed to test old fashioned disease management in fee-for-service Medicare.  A total of eight vendors launched their programs in separate geographic areas across the U.S. in the latter half of 2005.  Each area had about 30,000 beneficiaries with diabetes and heart failure who were randomized to disease management or usual care in a 2:1 ratio.  Participants were ill with an average of more than one recent hospitalization in the previous 12 months and more than $15,000 in baseline costs.  The programs consisted of remote call centers staffed by nurse-coaches who counselled patients on a regular basis.  Each of the vendors negotiated a monthly "at risk" administrative fee from CMS.  To retain the fee, the companies had to reduce costs in excess of the fee and simultaneously achieve a variety of quality and satisfaction targets vs. the usual care patients.  If they failed to save enough money, CMS clawed the money back.

The Journals reanalysis, involving more than 240,000 beneficiary-participants, didnt shed any new light on the original depressing report to Congress.  Among the eight vendors, the change in the per beneficiary per month (PBPM) cost ranged from $22 in savings to $38 in additional costs; most of the PBPM changes were in the single digits.  In contrast, the fees ranged between $74 to $159 per beneficiary per month.  Only three of the eight vendors had lower costs, none achieved statistical significance and none had savings that exceeded their fees. There were some improvements in quality, but they were spotty and quite modest.

Participation rates among eligible beneficiaries averaged 85%.  Mean telephone contacts per patient was .7 per month and ranged from .4 to 1 per month.  Patients were telephoned on average every 2.7 months; over a 30 month period, 59% were contacted at least 10 times and 23% were contacted fewer than 5 times. 

And what are the lessons?

The authors had five, all of which also apply to the medical home and ACOs.  The DMCB has two more.

1) Show me the money:  In retrospect, the research that led to MHS that suggested that disease management "worked" was imperfect.  By the way, the same can be said of the largely observational and underpowered research supporting medical homes and the total lack of any meaningful experience with ACOs.  Will these innovative care approaches share the same fate as MHS?  Based on what we know at this time, it cant be ruled out.

2) Needy patients:  Medicare beneficiaries with diabetes and heart failure are sick. The nurse-coaches were unprepared to meet all of their patients needs.  Medical homes and ACOs may end up being surprised also.

3) Analytics:  In the CMS "data dumps" to the vendors, it was difficult to find the patients who were the most vulnerable.  This good news is that modern predictive modeling analytics - despite its limitations - may enable medical homes and ACOs to target their care management at those patients with the greatest need and at the highest risk for increased costs.

4) Timely access to data: CMS data transfers to the vendors could be tardy, resulting in telephonic outreach to patients long after it could have done any good.  ACOs will need to worry about this in their dealings with CMS. 

5) The doctors: despite the vendors assurances, the disease management programs were not aligned with the beneficiaries doctors.  This is less likely to be a problem in medical homes and ACOs, but doesnt mean that they wont have to worry that their docs arent fully buying into the notion of teaming with non-physicians.

The DMCB offers two other lessons:

In retrospect, calling sick Medicare patients infrequently may have been one factor in MHS undoing.  The telephone will probably have a role to play for medical homes and ACOs, but the best mix of telephonic and face-to-face visits remains an open question.  At any rate, it seems that contacting patients at least every 30 days would be a good benchmark.

The DMCB remembers the confident "this is guaranteed to work!" hubris of yesterdays MHS architects and finds it eerily similar to the enthusiasm surrounding todays medical homes and ACOs. If the Medicare medical home and ACO programs dont work out, itll set these innovations back ten years or more.

Image from Wikipedia

In a prior posting, the Disease Management Care Blog noted that nurse-to-patient ratios in outpatient care coordination programs run between 1:750 to 1:1500. Based on 2010 Bureau of Labor Statistics data, the average annual salary of a registered nurse (RN) (in hospitals) is $68,610.  Fringe benefits for RNs add 46% for a total of $100,208.

Combine that ratio with the total compensation information and the per member per month (PMPM) cost for a care coordination nurse ranges from $5.57 to $11.13.
 
Obviously, a single RN does not care coordination make.  There are other overhead expenses, such as administration, documentation and supervision.  Assuming human resources account for the bulk of a program’s cost with an additional load of 25%, the total PMPM cost ranges goes from about $7 to $14, while 50% increases it to $8.35 to $16.70.

By my calculation, that puts monthly care coordination costs close to the CMS Innovation Center’s Comprehensive Primary Care Initiative (CPCi) within the “ballpark” of $15 to $20 per Medicare beneficiary per month (see page 3 here).
 
Based on these data:

1) CMS is being reasonable in offering a $20 monthly fee for care coordination.  It falls within industry benchmarks and supports a competitive compensation package for a typical RN.

2)  While CMS’ fee meets benchmarks, this is obviously meant to support a medical practice hiring additional personnel to take on the work of care coordination.  As a result, the fee may offer some additional margin depending on additional overhead.  Hopefully, the providers who participate in the initiative won’t assume that the $20 fee represents pure profit.  Expecting RNs currently on staff to manage care coordination on top of existing duties means that the existing duties or care coordination (and the RNs) will suffer.

3) As the Disease Management Care Blog pointed out in a prior post, this may also represent an argument for the “central” hiring and administration and the “peripheral” distribution of the care coordination nurses.  If administrative costs can be pooled and coordinated by a cluster of primary care sites, that could lower costs significantly.

4) Last but not least, this gives Accountable Care Organizations (ACOs) an important insight on one cost that they’ll need to take on if they are serious about care coordination.