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Mitchell Gittelman, DO, a family physician in Salisbury, Md., stresses the need for greater coordination of care. “But with greater leadership from the primary care physician also comes greater responsibility,” he says. Photo by Steve Ruark / AP Images for American Medical News

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment.

By Charles Fiegl — Posted July 29, 2013

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Physicians practicing in small rural clinics in Maryland soon will start viewing population data on chronically ill Medicare patients to identify strengths and deficiencies in the recommended care the doctors are providing them — whether it be ensuring regular hemoglobin A1c checks for diabetics, increasing pneumonia vaccination rates or providing more falls-risk screens for the elderly.

The decision to undertake this quality improvement idea did not originate from a federal mandate from Washington or a regulation drafted at the Centers for Medicare & Medicaid Services headquarters in Baltimore. The idea came from small groups of physicians practicing in rural parts of the state. And similar types of localized health policy concepts are being crafted in places such as Owensboro, Ky., Sacramento, Calif., and other locations where doctors are leading advance payment accountable care organizations, a pilot initiative under the Medicare program.

Physicians and other health professionals have come together to create 35 advance pay ACOs, through which participants receive money up-front from CMS to implement quality improvements that have the potential to lower overall costs to the programs. Many of the groups, such as one formed by 35 physicians and midlevel health care professionals in the lower Eastern Shore region of Maryland, have doctors at the helm. These leaders make decisions for the ACOs based on the needs of the local community, such as investing in health information technology and hiring care coordinators.

“It's physician-led with regards to how we physicians can best improve the care of our patients,” said Mitchell Gittelman, DO, a family physician in Salisbury, Md., speaking about his lower Eastern Shore ACO.

For years, participating Medicare physicians would receive pay for only the services that were covered by fee schedules written by Medicare administrative officials. Although the new ACO shared savings model still relies on fee for service, it also invests in care coordination activities that are absent from the fee schedule.

The goal of the program is to improve quality and ultimately save Medicare money. Any future savings generated by participating ACOs, determined by projecting the differences between current cost trends and actual spending, would be used to repay the up-front federal investment. Any savings beyond the amount of those advance payments would be shared with the physicians.

The American Medical Association and other organized medicine groups had urged CMS to include an advance pay option so smaller physician groups could participate in shared savings models.

“The AMA recommended the advance payment initiative to CMS, and we are very pleased that this program has proven successful for many physician-led accountable care organizations,” said AMA President Ardis Dee Hoven, MD. “The up-front financial assistance offered through the advance payment initiative helps physicians with the cost of starting an ACO, enabling them to make changes to their practice to improve the way care is delivered to their patients.”

Return on investment a challenge

Participating ACOs receive three types of advance payments: a $250,000 lump sum; a one-time payment equal to $36 for every beneficiary assigned to the ACO during the first month; and an ongoing monthly payment of $8 per patient. An ACO with 13,000 patients that launched in April 2012 would receive $3.5 million over 27 months, according to CMS. An ACO with 5,000 assigned beneficiaries that started in July 2012 would receive nearly $1.4 million over a two-year period.

Under the arrangement, physicians continue billing Medicare for office visits and other services covered by the federal payer. The advance ACO payments go toward previously agreed-upon infrastructure improvements and care plans that include services not normally covered, such as consultations with others to manage chronic diseases or Medicare data mining that can identify patients at risk of accruing large hospital bills.

Such enhanced services are expected to lower overall costs for Medicare, and the savings would pay back the original investment along the lines of a no-interest loan. But unlike under a bank loan, if an advance pay ACO does not produce the desired repayment through program savings, the amount of the initial investment is written off.

Many health policy observers are skeptical of the various ACO models, which now involve 10% of the Medicare beneficiary base. Conservative health policy analyst James Capretta, a senior fellow at the Ethics & Public Policy Center in Washington, said the primary flaw in Medicare ACOs is that CMS is trying to create a coordinated, integrated care model without achieving active buy-in from beneficiaries. Medicare assigns beneficiaries to the ACOs based on their primary care physicians, and patient agreements to participate are not needed, he said.

“I'm a budget guy, and we have not yet seen an ACO with large savings,” said Capretta, a former White House Office of Management and Budget official. “Giving money to groups up-front would make me very suspicious.”

The payments very well might do some good by improving patient care, Capretta added. But the additional spending would be considered an add-on to what Medicare pays that probably won't produce savings.

The advance pay ACO also has disadvantages for participating doctors, said Harold Miller, executive director of the Center for Healthcare Quality and Payment Reform in Pittsburgh. In theory, physician practices still could lose money because they will not be paid directly for certain activities designed to improve quality, such as telephone outreach by nurse care managers.

There's also uncertainty about whether the program will continue, Miller said. Advance payment ACOs are an experiment by the CMS Center for Medicare and Medicaid Innovation. If it is proven to lower costs and improve quality, CMS has the option to implement the program nationwide, but that's no guarantee, he said.

Advance pay ACOs in practice

Despite the challenges facing the model, one advantage physicians see as being offered by the ACOs is greater autonomy.

Maryland has three advance payment ACOs operating in the state, each of which oversees care for 6,000 to 10,000 Medicare beneficiaries assigned to about 20 to 35 physicians. A second ACO on the Eastern Shore has 19 participating physicians from 11 practices.

Nephrologist Adam Weinstein, MD, practices in Easton, Md., and serves as that group's medical director and its only specialist. He said the ACO collectively is working to identify patients who are chronically ill and at high risk. Physicians want to know when, for example, their Medicare patients are admitted to hospitals by ensuring good communications with care managers. The group will monitor practices' performance and determine how well they are managing population health.

Dr. Weinstein acknowledges his ACO is not yet operating at that goal. MedChi, the Maryland State Medical Society, which has been instrumental in facilitating the formation of the ACOs and providing critical organizational support, is creating a data warehouse as a repository for claims and other patient data, he said. An interface engine will allow certain quality reporting and analytics, but an outside company also will help with risk stratification and heavy data processing.

“It is moving slower than some might like, but it's certainly happening,” Dr. Weinstein said.

Under the ACO concept, physicians and hospitals are being asked to do more by improving quality and patient outcomes and accept less money in the long run. That's because the goal of the shared savings experiment is to cut costs by lowering utilization of traditional Medicare services. Still, the new approach has been a proverbial breath of fresh air for the doctors involved, Dr. Weinstein said.

“I've been impressed with how little focus there is on dollar values, but focus on services and opportunities we can offer to provide better patient care,” he said.

The biggest health problems seen by Dr. Weinstein and his colleagues in the local health population, spread out among farmland and small towns, are not unique to the Eastern Shore of Maryland. Heart failure, cardiovascular disease and diabetes care lead to the greatest costs to the system everywhere.

The average payment per Medicare patient in 2010 was $4,015. Physicians and health care researchers have continued to quantify the increased costs associated with the number of chronic conditions present in the beneficiary population. For instance, a patient with four chronic diseases cost the program an average of $9,200 in 2010. Spending on patients with eight chronic conditions more than doubled that amount.

“There is a big gap between the sick patients coming to the office and the sick patients going to the hospital,” Dr. Gittelman said. “The continuum of care between the doctor taking care of the patient in the office and the doctor taking care of the patient in the hospital needs to be bridged.”

Communication is a central theme

Kenneth Buczynski, MD, started Wellspring Family Medicine in Oakland, Md., in 2004. He always had envisioned running a small, rural family practice, which since has grown to two locations, with three other physicians. Wellspring physicians offer care for every phase of a patient's life and tend to be on call day and night, he said.

His clinics joined with other primary care practices and a medical group to form the advance pay ACO in western Maryland, whose participants now care for a significant portion of adults living in two counties. The ACO will manage chronic conditions using a strategy that includes education and outreach on care coordination among physicians, monitoring medicine adherence, and setting patient reminders for appointments and alerts for the practice when patients have not been seen for an extended period of time. Patients missing appointments will receive calls from a clinical assistant to discuss what may be preventing them from getting help, he said.

For Dr. Buczynski, the opportunity to join the advance pay ACO was too good to pass up. His practice views the model as a stepping stone toward better care and much more. “I think the ACO will allow us to become a medical home and redefine our workflow,” he said.

“We're taking a more active role in seeking out what's happening to our patients when they leave our care,” Dr. Buczynski said. One example is the patient who needs cardiology care in nearby Cumberland, Md., or Morgantown, W. Va. Practice staff will follow up on the appointment to determine the outcome and to plan ongoing chronic disease management — ensuring the patient is getting the services and medicines he or she needs. The practice now is more focused on communication with specialists and on providing better patient transitions.

Eventually, Dr. Buczynski would like to see the ACO initiative aligned with other payers, so best practices can be applied beyond Medicare patients. Otherwise, there would be no additional revenue source to pay for the time needed to improve care for an entire patient population.

“If not for the startup money, none of us would have the margin to do something like this,” he said.

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ADDITIONAL INFORMATION

The 35 advance pay ACOs

Only 35 accountable care organizations — quality improvement networks of physicians and other health professionals — have been selected by Medicare officials to take part in its advance payment pilot program. The application process was open only to small groups of physicians with less than $50 million in total annual revenue. If the proposed ACO included a facility, such as a critical access or low-volume rural hospital, revenue could not exceed $80 million.

April 2012

  • Coastal Carolina Quality Care Inc. (New Bern, N.C.)
  • Jackson Purchase Medical Associates PSC (Paducah, Ky.)
  • North Country ACO (Littleton, N.H.)
  • Primary Partners LLC (Clermont, Fla.)
  • RGV ACO Health Providers LLC (Donna, Texas)

July 2012

  • Accountable Care Partners ACO LLC (Jacksonville, Fla.)
  • Coastal Medical Inc. (Providence, R.I.)
  • Cumberland Center for Healthcare Innovation LLC (Nashville, Tenn.)
  • Golden Life Healthcare LLC (Sacramento, Calf.)
  • Harbor Medical Associates PC (South Weymouth, Mass.)
  • Maryland Accountable Care Organization of Eastern Shore LLC (Easton, Md.)
  • Maryland Accountable Care Organization of Western Maryland (National Harbor, Md.)
  • Medical Mall Services of Mississippi (Jackson, Miss.)
  • MPS ACO Physicians LLC (Middletown, Conn.)
  • Physicians ACO LLC (Houston)
  • PriMed LLC (Shelton, Conn.)
  • Quality Independent Physicians LLC (Louisville, Ky.)
  • Reliance Healthcare Management Solutions (Tampa, Fla.)
  • St. Thomas Medical Group PLLC (Nashville, Tenn.)
  • Texoma ACO LLC (Wichita Falls, Texas)

January 2013

  • ACO Health Partners (Jacksonville, Fla.)
  • American Health Alliance (Ocala, Fla.)
  • American Health Network of Ohio Care Organization LLC (Indianapolis)
  • Bay Area Florida Physicians Trust (Winter Park, Fla.)
  • Fort Smith Physicians Alliance ACO (Fort Smith, Ark.)
  • KCMPA-ACO LLC (Kansas City, Mo.)
  • Lower Shore ACO LLC (National Harbor, Md.)
  • National ACO (Beverly Hills, Calif.)
  • Nature Coast ACO LLC (Beverly Hills, Fla.)
  • NOMS ACO LLC (Sandusky, Ohio)
  • Owensboro ACO (Owensboro, Ky.)
  • Physicians Collaborative Trust ACO LLC (Maitland, Fla.)
  • Primary Partners ACIP LLC (Clermont, Fla.)
  • Rio Grande Valley Health Alliance (McAllen, Texas)
  • SERPA-ACO LLC (Crete, Neb.)

Source: Advance Payment Accountable Care Organization (ACO) Model, Centers for Medicare & Medicaid Services, updated Jan. 10 (link)

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How ACO members are judged

Accountable care organizations must demonstrate that they meet certain quality standards before their members can share in any savings they generate through the Medicare program. Officials base this assessment on 33 measures within four domains:

Domain # of measures/composites
Patient and caregiver experience 7 measures
Care coordination and patient safety 6 measures
Preventive health 8 measures
At-risk population:
   Diabetes 1 measure;
1 composite consisting of 5 measures
   Hypertension 1 measure
   Ischemic vascular disease 2 measures
   Heart failure 1 measure
   Coronary artery disease 1 composite consisting of 2 measures

Source: “Accountable Care Organization 2013 Program Analysis,” Centers for Medicare & Medicaid Services, Dec. 21, 2012 (link)

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External links

Advance Payment Accountable Care Organization (ACO) ACO Model, CMS Center for Medicare and Medicaid Innovation, updated Jan. 10 (link)

"Accountable Care Organization 2013 Program Analysis", Centers for Medicare & Medicaid Services, Dec. 21, 2012 (link)

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