payers & providers midwest edition – issue of may 24, 2011

8/6/2019 Payers & Providers Midwest Edition Issue of May 24, 2011

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The withering complexities of creating anaccountable care organization under the ruleproposed by Medicare are prompting leadersof major Midwestern healthcare providers to

reconsider just how ardently they wish topursue the idea.

For many providers, theshared savings offered bythe federal government arelooking more theoretical thanreal.

The rewards may be a tadmiserly, said Oliver Henkel,chief government relationsofcer at the Cleveland Clinic.We think the rule is veryprescriptive. The process willmake applying for

qualication veryburdensome, particularly forsmaller health systems. Thatsdaunting, and will causesystems to say, Im not going tobother.

The rule is toocomplicated and laborious,in the view ofCharles E. Kelly,M.D., senior vice president ofthe Henry Ford Physicians Network in Detroit.If they had put the bundled payment programout there before the shared savings, it wouldhave made more sense. That would have

whetted the appetite for people to stick theirtoes in the water, to see if they want to swim.

Their assessments were echoed in ahandful of interviews with Midwestern

institutions. Many of the best prepared, mosthighly integrated providerorganizations are hedging theirbets.

We dont know yet, saidCraig Samitt, CEO ofDeanHealth in Madison, Wis., whichalready thinks of itself as anACO. We are analyzing it. Mysense is that people areparalyzed.

Neither the Cleveland Clinicnor Henry Ford was prepared tosay whether it would le an

application under the sharedsavings model. Both systems arepreparing detailed commentletters suggesting substantialchanges, and will wait to seehow the nal rule comes out.

While many executives laudthe concept of the accountablecare organization in theory, andsome have already taken major

steps in that direction, they say executionunder the CMS rule would be difcult.

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In Brief

Joplin HospitalDamaged by Tornado

St. Johns Regional Medical Center inJoplin, Mo., was largely destroyed by atornado that tore through the city on

Sunday.The hospitals windows were blownout and parts of its facade were tornoff, leaving its steel superstructureexposed in several places. The roofwas also taken off. A ruined helicopterlay on its side, its rotors broken off, ina parking lot.

The staff had a few minuteswarning to move patients into hallwaysbefore the storm hit the nine-storybuilding. According to news reports,the hospital started a full evacuationafter it was hit by the storm. We arenot sure of the safety of the building,said Cora Scott, spokesperson for St.Johns Health System in Springeld,

Mo.About 100 patients from the Joplinhospital were taken to St. Johnshospitals in Springeld, about 50 milesaway, and others were taken toFreeman Health System in Joplin andto other facilities.

Nearby structures were completelyleveled by the storm, which killed 89people as of Monday mornings tally.Dentist Matt Sheffer said his ofceacross from the hospital was totallygone. The building that his ofce wasin was not imsy, he told theAssociated Press. It was 30 years oldand two layers of brick. It was verysturdy and well built.

Wind from the storm carried debrisas far as 60 miles. People reportednding medical records and X-rays onthe ground in the next county.

Illinois CON PanelDenies Closure of

Oak Forest Hospital

The Illinois Health Facilities andServices Review Board once again

Continued on Page 3

NEWS

ACO Regulations (Continued from Page One)

That doesnt mean the ACO concept isntvalid, Samitt added. I frankly believe theACO destination is inevitable, he said.

Where everybody is getting caught up is,which tack were going to take. Were inMadison, Wisconsin, and we need to get toSan Diego. How do you get there? Everybodywill pick a different route. But we cant allsay, Were going to stay in Madison.

Nevertheless, a number of largeorganizations contacted for this articledeclined to talk about their views on the ACOtransition.

* SSM Health Care in St. Louis begged off,saying everyones schedules are crazythrough the next two weeks or so.

* Spectrum Health, parent system of

Butterworth and Blodgett hospitals in GrandRapids, Mich., said its primary people whowould decide if we wish to comment wereout of state.

* Allina Hospitals and Clinics inMinnesota said they were still studying theregulations and have not made any naldecisions yet.

* Indiana University Health didntrespond to a request for an interview.

* St. Lukes Health System in Kansas City,Mo., was not ready to discuss this in themedia right now, said a spokesperson.

*Across the state line, the University of

Kansas Hospital executive team came to theconclusion that we are still in the evaluationphase and dont have any thoughts one wayor the other yet, said a spokesperson.

Several organizations that wouldnt speakto Payers & Providers have made their viewspublic through other media. The Mayo Clinic,in Rochester, Minn., told the Washington Postthat it was committed to the ACO model. ButRobert E. Nesse, CEO of the Mayo system,said he didnt know whether his organizationwould be able to make all the decisionsnecessary to qualify to start the program intime. We will engage and transform our

practice, he said. It is just a question of howwe do it and who we do it with. Aurora Health Care in Milwaukee wasthe most explicit in its rejection of theproposed CMS rules. In an interview withHealthLeaders Media, CEO Nick Turkal,M.D., declared atly that his health systemwould not participate in the HHS shared-savings experiment unless fundamentalchanges were made.

We had been very excited about theconcept of ACO, Turkal said. But the pilotas designed by CMS doesnt match with what

we expected and I dont think it matches withwhat a lot of providers expected across thecountry.

Advocate Health Care, which has beendeveloping a commercial ACO with BlueCross Blue Shield of Illinois for 15 years,already has specic targets for reducingreadmissions, emergency room visits, andlength of stay. Right now were paid for eachservice being rendered, said system ChiefOperating Ofcer William P. Santulli inFebruary. Tomorrow were going to be paidfor keeping patients healthy. Were prettybullish on whats out there on the horizon.

But Advocate, the largest hospital system inthe Chicago area, is bearish on the CMSshared savings idea. We were disappointed i

the proposed rule, said Meghan K. Clune,vice president for government and communityrelations. We are working on our commentletter and remain hopeful that CMS will makesignicant changes to the nal rule.

On May 17, CMS released rules for anothemodel of ACO, the Pioneer model, intended toprovide a faster path for mature ACOs thathave already begun coordinating care forpatients. Its designed to work with privatepayers. CMS is asking organizations interestedin the Pioneer model to submit a letter ofintent by June 18. Meanwhile, CMS willreceive comment on the shared savings mode

until June 6.In addition, CMS announced an advance

payments initiative, to provide upfrontrewards to organizations to help them meetthe nancial requirements of building theACO. CMS would prepay a portion of theanticipated savings. Dean Health is taking a hard look at thePioneer model, Samitt said. It will rewardorganizations like Dean that have been morelike an ACO for longer, that can take on agreater degree of risk, and accept a programmore in alignment with commercial payers.

The Marsheld Clinic in Wisconsin

participated in the CMS physician grouppractice demonstration project, which endedMarch 31, 2010. Marsheld earned sharedsavings of $40 million in four years, more thanany other of the 10 groups.

We are seriously evaluating our optionswith regard to continuing with the physiciansmodel, said Theodore Praxel, M.D., medicaldirector of Marshelds Institute for Quality,Innovation, and Patient Safety. The cliniccouldnt participate in the shared savingsmodel if it goes forward with the physiciangroup model, he said.


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NEWS

In Brief

stymied the plans ofCook Countyleaders by denying them permission toclose Oak Forest Hospital.

Cook County Board PresidentToni Preckwinkle had proposedshutting down the underutilizedpublic hospital and consolidatingservices at Stroger Hospital, which

has excess capacity, for a savingsof around $40 million. The county,which encompasses Chicago andits suburbs, planned to turn thefacility into an outpatient clinicand hasnt budgeted anyoperational funds for emergency orinpatient care past June 1. OakForest has 213 beds, of which only31 inpatient beds were occupied inearly May.

The state certicate of need panelrejected the countys proposal by a4-1 vote. The one no vote wassufcient to derail the countys plans.

The panel has nine seats, of whichthree are vacant because Gov. Pat

Quinn has not appointed newmembers. One of the six incumbentsdidnt show up for the meeting. Thepanels rules require a majority ofvevotes to take action. Because it didntattain that threshold, the measurefailed.

Public employee unions andhealthcare workers had opposed theclosure, and celebrated their victoryby shouting, Vote Preckwinkle out!

Six MinnesotaPhysicians Disciplined

for Poor Conduct

The Minnesota Board of MedicalPractice disciplined six physicians forimproper conduct, including abotched surgery, overprescribingpainkillers, and not following up on apatients diagnostic test for cancer.

The disciplined doctors are SheftelCohen, M.D., 73; James Eelkema,M.D., 58; David Gilbertson, M.D., 71;Todd Leonard, M.D., 42; RobertoPagarigan, M.D., 79; and John Sander,M.D., 79.

Starting Sept. 1, health insurance companieswill be required to explain large premiumincreases publicly and publish that informationon their own web sites as well as the federalgovernments Affordable Care Act web site,according to rules issued last week by theDepartment of Health and Human Services.

Rate increases of 10% or more for smallgroup and individual policies are affected.

Insurance companies continue to raise rates,often without justication and explanation,said Kathleen Sebelius, secretary of Health andHuman Services. Under the Patient Protectionand Affordable Care Act, the department is

working with states to review, revise, or rejectunreasonable rate hikes.

The federal government does not haveauthority to overturn insurers rate increases.That role falls to the insurance commissionersof the individual states, if their legislature hasgranted them that power.

HHS has given the states $44 million ingrants to help them ll this enhanced role. Instates that decline to do so, HHS will lead thereviews itself.

The recent quarterly earnings statements ofmajor for-prot national insurance companiesshowed surging prots as Americans held off

getting needed medical care for economicreasons, while insurers reaped the benets ofrecent premium boosts.

Often these increases come without anyexplanation or justication, Sebelius said.

Kansas Insurance Commissioner SandyPraeger welcomed the new authority.

We already require companies to le theirrates with us. Unless I can demonstrate that therate is excessive or discriminatory, it iseventually approved after a 30-day period, shesaid.

The new requirements will add moretransparency about the rates when led, by

putting them on the departments web site.

I think thats good. Its important forconsumers to understand why rates are goinup, she said. This will bring about thenecessary discipline to keep ratesappropriate.

Praeger, a Republican, was electedinsurance commissioner in 2002, after servimany years in the Kansas Senate, including stint as chair of the health committee.

States that have the ability to look at ratedont lose any of our authority, she said.States that dont have rate authority, likeIllinois, will have to get it, through legislatio

The Illinois insurance director, Michael

McRaith, said in March that insurers in hisstate have pushed their prices higher, to thepoint of accumulating more than $28 billionin surplus capital as of 2010.

We are seeing in this transition period to2014, that insurers are increasingly aggressivwith their underwriting, meaning they areincreasingly aggressive in denying coveragelimiting coverage, or denying or limiting anyone claim, he said in an interview withPayers & Providers. They are using the absence of rateregulation to price out existing policyholderAll that is designed to lead to the

accumulation of capital, so that by 2014,when insurers have to cover everyone, theybe starting from a point of extreme nancialstrength.

For some small-group employers, premiuincreases were being reported in the 30% to40% range, he added.

McRaith, a Democrat, will be leaving hisofce at the end of May to join the Obamaadministration as the rst head of the federaofce of insurance, a position created by thenancial industry reform law.

Praeger said her department has workedwith Kansas insurance companies to modera

rate increases.

Insurance Regulators Get New PowerHHS Rules Allow States to Question High Rate Boosts
https://www.managedcarestore.com/pandp/p&pblueprintebook.htm


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Payers & Providers Page

Reaction to the proposed Medicare accountablecare organization shared savings program hasbeen overwhelmingly negative, with manybelieving that the risk is not worth the reward.The Center for Medicare and MedicaidServices has already proposed, through itsInnovation Center, enticements for ACOpioneers and a program for advance paymentsto help fund ACO start-ups.

Regardless of what happens with MedicareACOs it is clear that the journey has begun. Thekey for any organization is identifying the rightvalue-based payment strategy for their particular

situation, which may or may not be developingan ACO. Lets reset the focus to a few coreprinciples: Physician Relationships:Developing formal, collaborative relationshipswith physicians is essential for delivering value-based care from a marketpreservation and growthperspective. To realize anypotential cost savings from anACO requires physicianalignment on evidence-basedcare protocols, physician-ledquality, and self-monitoring. Also, without

formal integration with physicians througheither employment, nancial, or clinicalintegration, the hospitals primary-care base is atrisk of being picked off by a competitor.

Performance Quality Tracking: ACOs musthave a culture of physician accountability,visibility around results, and continuous clinicalquality enhancement. While arguments can bemade that todays quality metrics are not theright metrics (that there is too much focus onprocess rather than outcome measures, that thedata are wrong, or that a particular physicianspatients are more complex), the reality is thatphysician quality tracking and performance

monitoring are here to stay.Many providers also nd themselvesunprepared to meet the IT requirements forexchanging and aggregating clinical data. Ahealth information exchange, central datarepository, physician portal, disease registries,clinical decision support systems, andpredictive modeling are all necessary tobecome an ACO. These capabilities often take ayear or longer to build or buy. Outpatient Capabilities: To be successful inan ACO model, organizations must be able tomanage the total cost of care for patients. Few

organizations today have the experience andresources to identify high-risk patients and enthat they get the follow-up care needed to prefailures, which for an ACO would be apreventable hospital admission or readmissionand emergency department visit. To be effectivan ACO, organizations will need outpatient cmodels to care for the sickest patients andproactive processes to manage patients withchronic disease. It takes time to build thesecompetencies, and organizations tend tounderestimate the resource and culturalrequirements necessary to do so.

Other Payer Opportunities:CMS is just one payer, and for many, starting wa hospitals self-insured employees anddependents, and then expanding to commercpayers and large employers may be a morepractical and prudent approach. Some payers

and large employers are mowilling than others to suppohospitals and physicians inpursuing value-based care.Some are eager to discuss nmodels that have the potento lower costs, such as on-s

clinics, medical homes, or an ACO, and may

provide capital to support the development.The rst to create an ACO in a market mayreap a rst-mover advantage, but it also comewith added costs and potentially more headacFor most providers, the immediate future shoufocus on physician alignment strategies anddeveloping the competencies and infrastructube successful. The path to becoming an ACO be a two- to three-yearjourney for many. In tnear term, focused efforts for primary care (emedical home and clinical integration) andspecialty services (e.g., co-managementarrangements or bundled payments) may bemore appropriate strategies.

OPINION

Let Core Principles Be Your GuideThe ACO Thicket Can Confuse Even Savvy Player

By Michael J. Randall

and Gregory P. Shufelt

Michael J. Randall and Gregory P. Shufe

are consultantans with The Camden Gro

in Chicago.

Op-ed submissions of up to 600 words are

welcomed. Please e-mail proposals to

[email protected],

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payers & providers midwest edition – issue of may 24, 2011

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