Image courtesy College-Guide, flickr creative commons

As North Carolina lawmakers consider requiring Medicaid providers to be part of accountable care organizations, they can look to some of the state’s Medicare providers who are finding success with accountable care.

By Rose Hoban

For patients who walk into one of the physician offices run by Triad HealthCare Network, not a lot seems different from other practices: You get weighed and your blood pressure checked. The nurse will ask about your most recent mammogram, your blood sugar; you might get some instruction about how to lose weight or stop smoking.

All of these activities are typical in doctors’ offices. But for patients at Triad, the difference is that no matter which of their clinics you walk into you’ll be asked the same questions, the record of your medications will always be the same and up-to-date, you’ll get encouragement and reminders from every provider you see to get that mammogram or be offered nicotine patches to help you stop smoking, and you’ll get help navigating a health care system that often can seem overwhelming in its complexity.

Moses Cone Hospital, Greensboro
Moses Cone Hospital, Greensboro

Greensboro-based Triad HealthCare Network is one of North Carolina’s first accountable care organizations, physician practices in which groups of providers come together and promise to be accountable for a set population of patients. Triad was one of four of North Carolina’s new Medicare accountable care organizations that scored in the top tier for quality improvement out of all of the U.S.’s 220 such accountable care organizations in the last fiscal year.

Triad did so well at saving money, that under the Medicare Shared Savings Program the organization will get a $10.5 million rebate from the federal Centers for Medicare and Medicaid Services, which pays for Medicare.

That’s a little less than half of what the organization saved federal coffers even as the group met higher quality benchmarks.

“You don’t just wave a magic wand and save almost $21 million,” said Bill Hensel, a physician and one of Triad’s administrators. He said it took time and effort – and money – to make those savings happen.

Changing paradigm

For generations, much of health care has been like a mom-and-pop industry. Individual practitioners had their own offices, patients went to see a generalist and then got referred to another doctor for any specialty care. Maybe the generalist and the specialist talked about the patient’s problem, maybe they didn’t. And that created problems with coordination of care, duplication of tests and services and ever-growing expense.

Doctors liked being their own bosses and have resisted change. But over the past two decades, many in health care have come to realize that the lapses in coordination and disorganization in care, all in a fee-for-service environment, created untenable growth in costs. Something had to change.

Back in the 1990s, health maintenance organizations tried to get at some of the things ACOs are trying to accomplish, but the emphasis with HMOs was on saving money. Hensel said the difference with the ACO model is that it has quality measurements baked into the payment system.

“Each [payer] wants to make sure you’re providing quality care and you’re not saving money just by doing cheap, lousy care,” he said.

ACOs have at least 33 quality metrics that measure how well patients are being cared for. Some are as basic as measuring what percentage of patients get their annual flu shots and mammograms. But others are more sophisticated, such as how many heart disease patients ended up in the hospital, how many diabetic patients lowered their blood sugar levels and what kinds of patient-satisfaction feedback is received.

ACO_box“That kind of [improvement] doesn’t happen by one doctor alone in his mom-and-pop shop saying, ‘I’ll do a better job,’” Hensel said.

The central question, he said, was, “How can we make [care] standardized so that it’s easy for patients to drop by and get things done by anyone in the practice?”

Hensel said Triad HealthCare Network has been able to improve on quality indicators in every area in which it created more standardized approaches to treatment. Everyone in the practice gets reminders of what each patient needs.

“We have patient outreach, like, ‘Hey, it’s time to get your mammogram, it’s time to get your colonoscopy or your flu shot,’ that kind of stuff,” he said. These questions help patients stay healthier and improve the quality of their care. But such interventions don’t necessarily save money for the practice.

Instead, Hensel said, some of the savings come out of targeting specific problems and practices that are expensive. He employed an oft-quoted statistic that about 5 percent of patients end up using about 50 percent of Medicare’s dollars.

So for these complicated patients, who often end up being sicker and costing more money, the practice uses case managers to troubleshoot issues.

“We have a woman who has diabetes and she did not have a refrigerator. She was in a wheelchair and didn’t have a ramp to get out of her house, so anytime she needed to go anyplace she called 911,” Hensel said. “We got our case managers involved, got her a refrigerator, built her a ramp and figured out a few other things like that, and the number of ER visits absolutely plummeted.”

And if the practice saves money on patients such as this woman, it gets to keep some of it.

“We are now entering more of the corporate practice of medicine,” said Hensel. “There are some bad things, some physicians squawk about the loss of individual autonomy, but there are some great things about that also.”

Challenges getting launched

But getting Triad to the point where it could save money wasn’t easy, said Steve Noerr, Triad’s executive director.

Triad, which is affiliated with Moses Cone Hospital, set up as an ACO in 2012 when the Centers for Medicare and Medicaid Services created the Shared Savings Program incentives for Medicare patients. Only about 350 of the doctors in Triad HealthCare Network are employees of Cone Health.

“Our Cone Health group of employed doctors has grown dramatically over the past few years, independent of the ACO,” Noerr said. But the growth of Cone Health’s network had been haphazard, with practices joining the hospital network without really having a plan for integrating their care with what others were doing.

Noerr said creating a “high-performing medical group” was getting all those doctors and practices aligned and connected. Part of that included developing information systems that would link the 800-plus doctors joining the ACO. That alone cost $7.5 million, money that CMS didn’t provide up front. The payment for that infrastructure will, theoretically, come from shared savings bonuses.

Kaiser Family Foundation data on Medicare benefits payments
Data: Kaiser Family Foundation, 2013

“The scary thing about it is it’s all based on ‘maybe’ money,” Hensel said. “It would have been a major blow to our finances if we had not created savings to share.”

According to Hensel, the average start-up costs for an ACO are $10 to $12 million. But not many ACOs did well enough to earn the shared savings bonuses, which means they’re still holding the bag for their start-up costs. He said that’s why some ACOs around the country are dropping out of the Shared Savings Program.

Triad was the only ACO in North Carolina to make money under the program. The group saved almost $21.5 million, of which they get to keep about half, after taking out 2 percent because of last year’s federal sequestration legislation.

Most of the $10.5 million Triad earned will go toward paying off their start-up costs.

“We’ve got operating costs; you don’t do this without infrastructure,” Hensel said. “And we’ve got to pay our doctors some sort of bonus because we’ve asked them to do a lot of different things to help us generate savings while raising quality.”

He said only a fraction of the $10.5 million will go to bonuses to doctors, which will end up being between $4,000 and $5,000 per primary care provider.

But Hensel said he’s especially proud of the fact that his group started from a foundation on which quality and cost measures were already good. Before the ACO launched, Triad’s per capita Medicare expenditures were 15 percent below the national average

“So we’re not [only] saving money against the national average, we’re saving money against our 15 percent below the national average,” he said.

That’s because care was better coordinated across different offices and the hospital and all of its departments, including the ER. Duplication of lab tests, imaging, specialist visits and readmissions to the hospital were reduced.

For decades, the national rate for Medicare patients being readmitted to the hospital within 30 days of discharge after an acute problem was about 25 percent.

“People squawked, these are sick folks, readmissions are inevitable, there’s nothing we can do about it, and the payers said fine, we’ll just quit paying for them. And overnight,” here Hensel snaps his fingers, “nationwide, they dropped to 17 percent.

“In our system, they’re someplace between 10 and 12 percent.”

One result of the better coordination is that inpatient admissions at Cone Hospital have declined.

Quality improvements convince doubters

Some providers have been reluctant to jump into the ACO model; specialists, in particular.

“Like a lot of sub-specialists, we were concerned that if you’re looking for savings and reduce high-cost procedures what you might do is rule against high-tech interventions,” said radiation oncologist Matt Manning, who is a partner at Piedmont Radiation Oncologists.

Manning and his group of seven other cancer doctors specialize in treatments that are expensive, such as cancer radiation combined with surgery.

“For example, we do stereotactic radio surgery on spine metastasis,” Manning said, referring to tumors that emerge on the spine, away from an initial cancer tumor. Often those tumors can’t be removed, but they can be treated to reduce pain and disability.

“First, we deliver a high dose of radiation on that part of the spine,” Manning explained. “It controls pain. In patients who present with the spinal cord already compressed by the tumor, we’ll combine it with surgical decompression.”

He said his group has decreased the number of post-operative clots by doing a sonographic study of a patient’s veins before the surgery. When they find a risk for clotting, they do an additional procedure to put a little screen in the patient’s vein to catch clots; it keeps them from causing a stroke.

“In a way, you’re adding something, but you’re mitigating a risk of bad things happening later in the treatment, which would be much more expensive,” Manning said. “It’s an ounce of prevention for a pound of cure.”

And that’s the idea behind much of what happens in ACOs, adding the prevention, which costs money, but preventing expensive interventions down the road. Manning said he likes that part of the ACO philosophy. He also likes the fact that Triad does a lot of follow up with patients, and that they reduce the amount of repeat testing, things like redundant CT scans.

But Manning and his partners didn’t want to jump into something that would disrupt their practice if it failed in two or three years.

But Noerr showed Manning that in Triad’s first year and a half of operation they were able to cut overall costs of care for patients by focusing on high-cost patients; preventing unnecessary emergency department visits; and using “navigators” who help patients get better, more consistent treatment.

“When we saw that and saw that the emphasis was based on identifying the high costs and applying clinical common sense, and they were able to improve the quality … from the standpoint of the cancer center, we felt like there were opportunities here to look at the costs of care and quality and make improvements,” Manning said.

He and his partners joined in the summer of 2014. Manning describes himself as a convert.

“We sort of believe in it now,” he said.

Challenges ahead

Hensel and Noerr said they’re worried about the next round of shared savings goals. Because Triad did so well, its next set of benchmarks will be more stringent, and harder to achieve.

“Many of the other ACOs around the country that actually generated savings to share were starting at the national average or above the national average” for expenditures, Hensel said.

Triad was one of a handful of ACOs with expenditures below the national average that managed to save even more money, he said.

“And now the new benchmark resets,” Hensel said. Triad’s benchmark will be based on the organization’s current rate of spending, not the national average. The organization will be expected to save even more each year.

“At some point, you’ve squeezed that lemon as hard as you can squeeze it,” he said.

Hensel predicted CMS will probably adjust the Shared Savings Program so as to not squeeze good practices such as Triad too hard. According to federal data, only 12 percent of Medicare payments nationally go into physician compensation; in 2013, that was about $70 billion. And about two-thirds of that physician pay goes to cover office overhead.

Hensel said there are probably only a couple more percentage points to shave from doctor’s slice of the pie.

Other potential challenges for ACOs come from state payers, namely North Carolina’s $14 billion Medicaid program.

Last spring, the N.C. Department of Health and Human Services proposed that the state’s Medicaid providers organize into ACOs. While the proposal had initial support, members of the state Senate have expressed continual misgivings about the ability of ACOs to meet the state’s budget goals.

One concern expressed by lawmakers is that by having physicians and hospitals involved in the creation and oversight of this method of providing Medicaid services, the providers will simply be looking out for their own financial interests.

At an October legislative subcommittee meeting on Medicaid reform, Sen. Ralph Hise (R-Spruce Pine) said that all the major players – hospitals, physicians and insurance companies – believe that the system that’s best for their industry is also best for the state.

“I don’t blame politicians for being suspicious of doctors; the feeling is mutual,” Hensel said. “And we’ve got to get beyond that if we really want to reform health care.”

Providers such as Hensel say they simply want to be at the table when the state finalizes its Medicaid plan because they have the clinical expertise and want to make sure quality issues are addressed, not just cost issues.

“Doctors know that health care has to change,” Manning said. “It can be done with physician input … or without. ACOs allow for physicians to step up and serve as leaders and determine how health care is transformed.”

Hensel, Noerr and Manning also said everyone – providers, patients, hospitals, insurance companies and government – needs to be in on any discussion of health care reform.

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