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  1. Accountable Care Organizationsin the Rural Setting Renaissance Hotel Austin November 10, 2010 Thomas R. Miller, PhD, MBA

  2. Topics to be Covered • What is an ACO? • i.e., as of November 10, 2010 at 11:30 a.m. • ACO Requirements and Challenges • Stakeholder Perspectives • ACOs in the Rural Setting • Challenges • Potential Solutions • Final Thoughts and Q&A

  3. Multiple Entities are Exploring ACOs Goal: To engage stakeholders in piloting the ACO model and produce a successful and replicable model than can be implemented nationwide Health policy researchers Elliott S. Fisher, PhD, Stephen Shortell, PhD, and Lawrence Casalino, MD, MPH, PhD Massachusetts Health Care Quality & Cost Council

  4. What is an ACO?

  5. Déjà vu: The Health Security Act of 1993 An AHP* is an entity that delivers or arranges to deliver a continuum of services to a defined population. Accountability standards will be needed to measure accessibility of services, cost-containment, and quality. Primary care providers should be locally based and essential community providers should be included in the network. Local boards of health should participate in AHP planning and approve annual reports documenting performance in regards to access, cost containment, and quality assurance from a population perspective. *Accountable Health Plan Source: Rohrer, J. E. (1995). Regulation of accountable health plans in rural areas. Journal of Public Health Policy, 16(2), 198-211.

  6. What is an ACO? May Include a Variety of Players… …Under a Variety of Structures … with mandatory or voluntary provider participation … with passive or active patient enrollment

  7. ACOs and the Shared Savings Program • Medicare’s Shared Savings Program (SSP) will be open to ACOs that meting the following criteria. • Be accountable for quality, cost, and care of a population of Medicare beneficiaries (at least 5,000) • Participate for not less than three years. • Belong to a legal structure that can receive and distribute bundled shared savings payments. • Include sufficient primary care physicians. • Have leadership and management and clinical and administrative management systems in place. • Promote evidence-based medicine, report quality and costs measures, and coordinate care including the use of technological systems. Source: The Patient Protection and Affordable Care Act (PPACA; Public Law 111-148).

  8. ACOs and the SSP -continued • Criteria – continued • and… Demonstrate patient-centeredness. • Is this a patient-centered medical home (PCMH) “on steroids”? • Initiatives abound. Source: The Patient Protection and Affordable Care Act (PPACA; Public Law 111-148).

  9. Texas Patient-Centered Medical Home Demonstration Project Source: Retrieved October 30, 2010 from

  10. The Draft NCQA Criteria Guiding Principles Source: NCQA. Accountable Care Organizations (ACO) Draft 2011 Criteria, Overview. Retrieved October 30, 2010, from Confidential; obsolete after 11/19/2010. Strong foundation of primary care Report measures to improve quality and reduce cost Committed to improving quality, improving patient experience, and reducing per capita costs Work with stakeholders in community or region Create and support a sustainable workforce

  11. The Draft NCQA Criteria Source: NCQA. Accountable Care Organizations (ACO) Draft 2011 Criteria, Overview. Retrieved October 30, 2010, from Confidential; obsolete after 11/19/2010.

  12. Many Guides for ACO Development

  13. AHA Report: ACOs Won’t Be Easy Conclusions “Hospitals and health systems considering ACO participation should assess their capabilities in several key core competencies that will likely be necessary for successful ACO implementation, including IT infrastructure, resources for patient education, team-building capabilities, strong relationships with physicians and other providers, and the ability to monitor and report quality data. Providers should be prepared to make major investments in these areas where necessary (Shortell and Casalino, 2010). ACOs whose members already possess many of these characteristics are expected to be most successful at implementation in the short run (Deloitte, 2010). However, even providers who already possess key organizational, technical and clinical competencies may find that adjusting to an ACO will still require the sustained development and strengthening of those capacities in order to be successful (Devers and Berenson, 2010).” Source: AHA (June 2010). Accountable Care Organizations, AHA Research Synthesis Report.

  14. AHA Report: ACOs Won’t Be Easy Key Questions to Consider The following are key questions to consider in the development and implementation of ACOs. 1. What are the key competencies required of ACOs? 2. How will ACOs address physician barriers to integration? 3. What are the legal and regulatory barriers to effective ACO implementation? 4. How can ACOs maintain patient satisfaction and engagement? 5. How will quality benchmarks be established? 6. How will savings be shared among ACOs? Source: AHA (June 2010). Accountable Care Organizations, AHA Research Synthesis Report.

  15. Predictions Abound Despite Uncertainty Source: Health Care Advisory Board (2010). Playbook for Accountable Care, Road Map for the Transition to Total Cost Accountability. The Health Care Advisory Board: Washington, D.C.

  16. ACOs = Organizational Transformation Without “help,” the challenges for rural providers are even more substantial. Source: Health Care Advisory Board (2010). Playbook for Accountable Care, Road Map for the Transition to Total Cost Accountability. The Health Care Advisory Board: Washington, D.C.

  17. The Key Role of Phyisicians

  18. Uncertainty Abounds

  19. Perspectives: Hospitals See ACOs as End Game “The goal for each hospital is to develop, at last, a truly integrated delivery system capable of serving as an accountable care organization (ACO).”

  20. Perspectives: Letter to CMS Source: Letter to Donald M. Berwick, MD, Administrator of CMS, from Michael D. Maves, MD MBA Executive VP and CEO of AMA, Dated August 12, 2010. Retrieved October 30, 2010, from letter-cms-aca.pdf.

  21. Perspectives: Texas Medical Association

  22. What Do America’s Health Insurance Plans Think about ACOs? “Actually, kind of the holy grail at the end of all this would be where an ACO is large enough and competent enough so payers would basically say, ‘Here's the money. You take care of patients. You do it the best way that you know how. There's no utilization management. There's no prior authorization. There's no denying of fee-for-service claims. You just do it the best you can. And we'll be measuring quality and patient experience, to make sure you are not stinting on care.’ ” -- Lawrence Casalino, PhD In a letter to CMS from America's Health Insurance Plans (AHIP), the association expressed its concern that ACOs could potentially be developed with the sole purpose of amassing market power. It appears the group has some unlikely allies in smaller physician groups who could be left out of the ACO mix as well as consumer advocates who fear that powerful ACOs could limit choices and raise costs. Source: Elliott, J. (October 27, 2010). Could health plans derail ACOs? HealthLeaders Media. Retrieved October 30, 2010 from

  23. More than Patient-Centeredness • Patient-centeredness is necessary, but not sufficient; ACOs must be (healthy) person-centered as well. • Role of insurers in ACO development mostly silent and/or an afterthought – a potential mistake. “If providers think it is so easy to manage population health and population-based payments without a middleman, I challenge them to order their next cheeseburger directly from the cow.” -- Health plan executive

  24. Implications for the Rural Setting • The general discussion of ACOs, their requirements, and challenges sheds light on potential problematic areas for rural providers. • There are examples of rural-based ACOs and ACO-like organizations (e.g., PCMHs as a springboard for ACO development) • But there are challenges and opportunities unique to the rural setting.

  25. Vermont ACO Pilot • Manage full continuum of care settings and services, beginning with a patient-centered medical home. • Be financially integrated with both commercial and public payers. • Have IT platform that connects providers in the ACO and allows for proactive patient management. • Demand physician leadership, as well as commitment of hospital CEO. • Use process improvement capabilities to change clinical and administrative processes. Source: Hester, Lewis, & McKethan (2010). The Vermont accountable care organization pilot: A community health system to control total medical costs and improve population health. The Commonwealth Fund. Retrieved October 30, 2010 from Community-Health-System-to-Control.aspx.

  26. ACO Challenges in the Rural Setting • Limited population base • Implications for assuming population or insurance risk • Why not just risk-adjust? “You will never convince providers who are scored badly that you have adjusted enough.” • High cost of infrastructure, especially EMRs, patient education, patient navigators, and “insurance-like” functions • Culture: the pioneer/independent nature of hospitals and physicians 1Source: Texas Department of State Health Services, DSHS Center for Health Statistics. Retrieved October 30, 2010 from

  27. Lessons from Rural Managed Care • A primary measure or managed care’s “worth” in rural settings is its ability to coordinate care. • Is there a “natural” reluctance on the part of managed care organizations to enter or expand into rural areas? • Wysong et al. found socioeconomic and health system characteristics did a much better job of explaining differences in managed care availability and enrollment than did geographic location, population size, or density. Sources: Gamm, L.D. (2000). Coordination of care: Stage one in assessing rural managed care. Managed Care Quarterly, 8(1), 1-17. Wysong, Bliss, Osborne, Graham, & Pikuzinski (1999). Managed care in rural markets: Availability and enrollment. Journal of Health Care for the Poor and Underserved, 10(1), 72-84.

  28. Rural Medicare Advantage (MA) • Rural MA enrollment increased from 242 thousand to 1.45 million from December 2005 to June 2009; total MA enrollment increased from 5.1 million to 11.5 million. • Less than 15% of Medicare beneficiaries are enrolled in a MA plan in rural areas, compared to over 28% in urban areas. • Between December 2009 and June 2010 enrollment in PFFS plans fell by over 185,000 in rural areas and by over 550,000 in urban areas. In contrast, PPO enrollment grew by 175,000 and 560,000 persons in rural and urban areas, respectively. • Nine states have rural MA enrollment rates of 20% or greater: Hawaii, Minnesota, New York, Ohio, Oregon, Pennsylvania, Utah, Wisconsin, and West Virginia. Source: Kemper, McBride, & Mueller (August 2010). Rural Medicare Advantage: modest enrollment growth in 2010. Rural Policy Brief. RUPRI Center for Rural Health Policy Analysis.. Retrieved October 30, 2010, from

  29. Medicaid Managed Care • Primary care case management (PCCM) is the preferred managed care plan type in rural communities, while capitation dominates urban locations. Source: Silberman, Poley, James, & Slifkin (2002). Tracking Medicaid managed care in rural communities: A fifty-state follow-up. Health Affairs, 21(4), 255-263.

  30. Medicaid Managed Care - continued Source: Silberman, Poley, James, & Slifkin (2002). Tracking Medicaid managed care in rural communities: A fifty-state follow-up. Health Affairs, 21(4), 255-263.

  31. The Extended Medical Staff Can the “extended medical staff” serve as a means to improve quality and lower costs (i.e., an ACO) in areas where individuals receive most of their care from relatively coherent local delivery systems? Source: Fisher, Staiger, Bynum, & Gottlieb (2007). Creating accountable care organizations: The extended hospital medical staff. Health Affairs, 26(1), 44-57.

  32. “ACO” Steps Being Discussed • Practice “ACO” principles on self (hospital employees). • Partner with insurers around shared savings models (e.g., readmissions, proactive chronic disease management). • Sell ACO to employers. • Get ready for Medicare demonstration. Concerns over managing the transition: feet in two payment systems with “mixed messages.”

  33. Suggested ACO Action Steps

  34. Actions for Rural Providers • Develop a plan that includes the organization’s philosophy on ACO development and identifies strategic options. • Consideraffiliation potential. “They” are coming and they know you may not have: the financial capability for infrastructure requirements, the organizational capacity to change, and/or the population base to be manage population health effectively at an acceptable level of risk. • Do what you can/should: • Identify, collect, report, & monitor to improve quality and reduce costs • Develop community partnerships for public health interventions • Meet with physicians, local payers, and employers for focused discussions on ACO-related issues • Assess financial position and opportunities for improvement; designate ACO development funds Identify Assess Develop

  35. Accountable Care Organization ACO Final Thoughts • Let’s start here with the branding/semantics campaign. • How about “managed care” and “reimbursement”? • Don’t “Just do it!” Just do what is right. • For the person in the community who may use health care services. American Association of Retired Persons Avoid “group think” and lemming-like behavior. CenturaHealth | August 13, 2010.

  36. Questions and Thanks • Thank you! • Questions? • I am grateful to the following individuals: • Susanna Krentz, President of Krentz Consulting • Larry Gamm, Director, Center for Health Organization Transformation, Texas A&M Health Science Center • Leadership at Scott & White Healthcare, Scott & White Health Plan, and Lone Star Circle of Care • For follow-up comments or questions: • Tom Miller at