What Is It Like in California?
December 19, 2010
Posted by chcablogadmin in : ACO Update
It is like being the hood ornament on a storm chaser’s car about to catch a tornado based on our interview with Steven Peiser, Associate Vice President, Contracting, Children’s Hospital Los Angeles and Children’s Hospital Los Angeles Medical Group. So, what has Children’s Hospital of Los Angeles done and what is it doing now? Here is what he told us. Hold onto your seat as we take a “ride” with Steve.
According to Steve, many believe that the California health care delivery system is what the federal health care reform legislation will eventually lead to nationally. Health care in California can be conceptualized as an ‘ACO ecosystem.’ California has 285 physician organizations, both integrated medical groups and Independent Practice Associations (IPAs), which have many of the characteristics described in the current national policy debate. These include primary and specialty care physicians who care for defined populations of patients, provide or arrange for hospital services, and publicly report data on their clinical and financial performance. California’s provider organizations vary in their conformity with the parameters discussed in the national debate, but many go beyond the minimum set of ACO activities to include preventive care, chronic care management and complex case management, often supported by clinical information technology and financed through partial or global capitation payment.
In California, a range of relationships exists between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals has and will continue to offer important opportunities for performance improvements across the entire continuum of care. Capitation has been vital to encouraging coordinated care by California’s providers, as it has forced financial discipline, and allowed for investment in the infrastructure necessary to manage care across the continuum of providers. Fee-for-service (FFS) payments do not offer the same incentives for providers. As a method of payment, capitation can be effective at encouraging coordinated care, but payment methods should vary across ACOs depending on an organization’s ability to assume risk. California health care providers, outside of capitation arrangements, also experience increased case rate formation and bundled payments for hospital and professional services. Case rate or bundled payments are often found in contracts for transplant, cardiac and orthopedic services.
Health plans have played a key role in the historical development of California’s provider organizations. In the early days of medical group formation, plans often acted in concert and adopted similar capitation payment parameters, which lessened the administrative burden on groups, and allowed providers to focus on delivering high quality care to enrollees. Health plans must be ready and willing to foster ACO formation along similar lines, as a critical mass of payers will be pivotal to their success. California’s experience with pay-for-performance (P4P) also highlights the benefits to ACOs of health plans working together. California has the largest non-government P4P program in the country; it includes seven health plans paying performance bonuses to 221 physician organizations based on uniform measures and results aggregated across plans. The aggregation of data across plans enhances data reliability and validity, and has engendered increased provider trust in performance measurement, as well as collaboration between health plans and physician organizations.
Health care reform has opened opportunities for significant collaborative discussions between hospitals, medical groups and health plans. “We are talking with everyone and looking under every stone for potential partner opportunities,” Steve said. The Hospital has taken a multi-pronged approach. It also has chosen to attempt to work cooperatively, rather than compete, with provider/medical group partners and health plans. Steps taken to date include:
- Preliminary development of a Children’s Hospital health care network. The goal is to build an infrastructure to support health care reform initiatives and to further align hospital and physician incentives. The focus is on the building of a pediatric primary care base in partnership with existing groups and practices to offer the full continuum of care for comprehensive pediatric services within the community and regionally.
- Working with two high profile medical groups (which employ or contract with both primary care and specialty physicians) focused on development of an exclusive pediatric referral relationship for approximately 100,000 commercial pediatric lives throughout the LA market. This will move the medical center and its medical group from potentially being commodity based providers into a relationship that is built on partnership and alignment. It will also promote the development of alternative reimbursement mechanisms for hospital inpatient and outpatient services.
- Developing a capability and gaining experience with different payment methodologies such as capitation, bundled payment, case rate and others.
- Creation of community-based ambulatory care centers located more conveniently for the families and referring pediatricians.
- Expansion of the hospital and medical group laboratory outreach programs. Currently the hospital has three laboratory outreach centers in the community.
- Partnering with community hospitals to manage their pediatric programs under CHLA’s license. This is better known as the “hospital within a hospital” concept.
- Our affiliated medical group (CHLAMG) has recently entered into an at-risk arrangement with a Federally Qualified Health Center (FQHC) located on the hospital campus to manage 8,000 MediCal lives.
- An increase in the robustness of the Hospital’s analytic and information technology capabilities to better focus on outcomes, quality measurement and development of an outpatient electronic medical record (EMR).
- Strategic discussions with managed care companies about options for collaboration.
- Investigating the potential of developing new partnerships with other children’s hospitals in the region.
California has a special program for children with chronic illnesses called California Children’s Services (CCS). CCS pays for care on a fee-for-service basis. The Hospital submitted an application to CCS to take on some form of risk for this population. The Hospital submitted its application jointly with a medical group. In the application, the Hospital included plans to form an ACO, create a specialty health network, and operate primary care programs in conjunction with medical group partners. The state reportedly has been vague about what they have in mind, but they are expected to make their final recommendations in February 2011.
Strategically, the Hospital’s approach is to work with, and to talk with many potential partners. They perceive that time is of the essence and are moving as quickly as possible. That is why they are devoting lots of attention to and pursuing many activities even while preparing to also open a brand new patient care tower this coming July.
MediCal accounts for 75% of the Hospital’s business. While managed care is generally more advanced in California than most other places, interestingly, MediCal managed care accounts for only 6.3% of the Hospital’s revenue; commercial managed care accounts for 19%. But the Hospital anticipates these percentages will grow, and recent changes in activity prove that belief is probably correct. MediCal managed care admissions and patient days have increased a lot in recent months, probably due to the state’s efforts to increase the percent of MediCal beneficiaries enrolled in managed care programs.
Editor’s Note: And, of course, the federal Patient Protection and Affordable Care Act (PPACA) is likely to spur even more managed care or managed care-like activity not only in the Medicaid and Medicare markets, but in the commercial markets also. That is because changes in Medicare payment arrangements have usually been adopted by commercial payers as well.
You may also access the newsletter (ACO Update_12-20-10) as a document to print and share within your hospital.
1 comment so far | add a commentLessons Learned from California Accountable Care Organizations
December 19, 2010
Posted by chcablogadmin in : ACO Update
ACO-type organizations have existed in California for about thirty years. With 285 ACO or “ACO-like” physician organizations currently serving 15.7 million of California’s roughly 37 million people, there would seem to be lots of lessons to be learned from California’s experience. In “Accountable Care Organizations in California: Lessons for the National Debate on Delivery System Reform,” published by the Integrated Healthcare Association, six lessons seem most germane to CHCA’s membership.
- A variety of organizational structures are effective at delivering high quality, coordinated care; at least equally important are the organization’s capabilities, culture and infrastructure and the degree of goal alignment between the organization and individual physicians. There needs to be strong leadership, a clear purpose, shared goals, availability and use of data to help reach the goals (supported by a robust health information technology infrastructure), performance feedback and accountability for individual providers, participation in external quality improvement incentive programs, advanced care coordination capabilities, use of coordinated chronic care teams, provider acceptance and use of evidence-based guidelines, and strong market incentives to provide value.
- In California a range of relationships exist between physician organizations and hospitals. Alignment of incentives between physician organizations and hospitals are important keys to performance improvements across the entire care continuum. While many California ACOs do not include a hospital as a member, with hospitals being the highest-cost element of the delivery system, including them in the initiatives to control costs and increase value is essential.
- While capitation is one payment method that can be successful, payment methods should vary across ACOs depending on each organization’s ability to assume risk. The authors say it is unclear if shared savings programs (versus capitation), as proposed for Medicare, will be enough to incentivize providers to transition from volume to value, or to invest in the infrastructure needed to provide effective care management.
- Most California ACOs have focused on commercial, Medicare/Medicaid HMO plans for their patients. But mechanisms need to be found to encourage PPO and traditional Medicare and Medicaid patients to use ACOs as well. Benefit designs should reward patients for choosing higher value ACOs. The current California market does not incentivize purchasers or consumers to choose lower cost, more efficient providers. Laws and policies must allow for innovative provider payment arrangements regardless of insurance type.
- Balancing patient choice with the desire to decrease costs and effectively coordinate care is difficult. It is much tougher to coordinate care in unrestricted provider choice environments.
- Special attention must be given to establishing ACOs in areas with social and economic challenges. Lower performing organizations were clustered in sociodemographic and health system challenged areas. Low payment rates means less capital for structural and process improvements. Even in integrated medical groups, Medicaid patients tend to be grouped due to low payment rates and the difficulty of providing a single standard of care where payment rates are so different among the various payers. While the Patient Protection and Affordable Care Act (PPACA) will provide more coverage in these areas, there will be a need to pay special attention to the quality gaps (and presumably to provide incentives to obtain and utilize the resources needed to address them).
Seventy-eight percent of California ACOs serve fewer than 50,000 patients with some small medical groups and IPAs being successful with fewer than 5,000 patients. The largest ACOs benefit from economies of scale but can also suffer from diseconomies of scale (e.g., loss of culture and sense of ownership by individual doctors). The authors also express concern about market consolidation and clout enabling very large organizations without competition to charge higher prices and be more lackadaisical about cost containment. Smaller ACOs can succeed via use of outside management service organizations and benefit from larger scale in information technology, contract negotiation and other administrative functions, which is especially important because most regions lack the population density necessary to support multiple, large ACOs. ACO expansion via mergers and acquisitions and across regions has been difficult.
The authors describe a new pilot in the Sacramento region involving Hill Physicians Medical Group, the California Public Employees’ Retirement System (CalPERS), Blue Shield of California, and Catholic Healthcare West (a hospital system). These organizations have formed a virtual integrated model and agreed to keep CalPERS’ costs at or below what they were in the Sacramento area in 2009.
You may also access the newsletter (ACO Update_12-20-10) as a document to print and share within your hospital.
add a commentNCQA’s Proposed Accountable Care Organization Standards
December 19, 2010
Posted by chcablogadmin in : ACO Update
On October 19, the National Committee for Quality Assurance (NCQA) issued for public comment eighty pages of proposed ACO standards with a November 19, 2010 comment deadline. The Washington, D.C. –based, twenty-year-old NCQA accredits and certifies a variety of health care organizations. Its Healthcare Effectiveness Data and Information Set (HEDIS) is probably the most widely used healthcare performance measurement tool.
NCQA began the process in April by appointing a sixteen member ACO task force including representatives from Healthcare Partners, Kaiser Permanente, Geisinger Health Plan and others
NCQA recognizes and supports that how providers organize themselves as accountable care entities is likely to vary based on existing practice structures in a region, population needs, or local environmental factors. They also note that ACOs are likely to vary widely with respect to the components of care delivery included directly. In other words, some may include a full range of services, including primary care, sub-specialists, hospitals, home care agencies, insurance products, etc. Others may be more narrowly constructed but maintain active relationships and/or formal contracts with providers across the spectrum of care.
As a minimum, NCQA is proposing that the ACO include a group of physicians with a strong primary care base and a sufficient number of other specialists to support the care needs of a defined population. The ACO would have to align providers’ clinical and financial incentives, ensure that they are clinically integrated and work seamlessly to coordinate care. The ACO would need an administrative infrastructure to manage budgets, collect data, report performance, make payments related to performance, and organize providers around shared goals. They also would expect the ACO to have the potential to simplify the care process for patients, enhance quality and reduce costs. Those achieving certification would then have to undergo reviews every two or three years.
The proposed standards are built on five guiding principles:
- A strong primary care foundation – a core of Primary Care Physicians (PCPs) with medical home capabilities.
- Reporting of reliable measures to support quality improvement and waste/inefficiency elimination to reduce cost.
- Commitment to improving quality, the patient experience and reducing cost – this includes establishing shared goals for improvement across providers, continually monitoring and analyzing clinical quality, patient experience, and cost data and application of findings via benchmarking, best practices, and peer review.
- Cooperation with stakeholders in a community or region such as by linking providers in the ACO with other delivery system components (e.g., hospitals, social service agencies and county health departments), and help with managing the full continuum of the patients’ care (e.g., from preventive services to hospital-based and nursing home care).
- Creation and support of a sustainable work force, noting that likely increased PCP demand coupled with a shrinking PCP supply calls for creating a system that supports both providers and patients.
The proposed guidelines contain one reference to pediatric practices in “Element D: Guidelines for Important Conditions.” This element requires clinicians to systematically identify patients for whom they will proactively plan and manage care. Under this provision, the guidelines call for the physician practice to implement evidence-based guidelines through point of care reminders. One of the factors (number 3 of 4 listed) subject to identification is unhealthy behaviors such as substance abuse; obesity; smoking or other tobacco use; risky sexual behavior; overuse of illegal drugs, alcohol or prescription drugs. Mental health issues may include depression. The proposed guidelines characterize conditions such as well-child care, asthma, obesity, ADHD, eczema and allergic rhinitis as among those meeting Factor 3. Another factor (number 4 of the 4) is patients with complex medical or high risk medical conditions. Relevant conditions listed as potentially meeting Factor 4 with regard to pediatric practices include children and youths with special health care needs such as sickle cell disease.
For more insight, read the proposed standards in their entirety.
You may also access the newsletter (ACO Update_12-20-10) as a document to print and share within your hospital.
add a commentPhysician Groups Issue ACO Principles
December 19, 2010
Posted by chcablogadmin in : ACO Update
Four physician groups–the American Academy of Family Physicians, the American Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association–announced November 19 that they had developed and released “Joint Principles for Accountable Care Organizations (ACOs).” The groups represent 350,000 physicians. The 21 principles address ACO administrative structures and how payment should be facilitated. They strongly support that primary care should be the foundation for an ACO and that patient and/or family-centered medical homes should be the basic structures within the ACO. The four physician groups have sent the principles to the Centers for Medicaid and Medicare Services (CMS) for their consideration as CMS develops their rules for ACO certification.
You may also access the newsletter (ACO Update_12-20-10) as a document to print and share within your hospital.
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