CMS chief vows to 'turn the page on Medicaid' and grant states more leeway; pushes work requirements for 'able-bodied' adults; raps Obama Administration's 'soft bigotry of low expectations.'
Centers for Medicare & Medicaid Services Administrator Seema Verma on Tuesday lashed out at the "Washington knows best, one-size-fits all Medicaid policy" and said the Trump administration will push for more state control of their programs.
In her first major speech on Medicaid, delivered at a plenary session at the National Association of Medicaid Directors Fall Conference in Arlington, VA, Verma said the administration's "vision for the future of Medicaid is to reset the federal-state relationship, and restore the partnership, while at the same time modernizing the program to deliver better outcomes for the people we serve."
That flexibility for states is expected to include allowing work requirements for "able-bodied" Medicaid enrollees that were brought onto the program under the Affordable Care Act, a topic that Verma touched upon several times in her speech.
"The thought that a program designed for our most vulnerable citizens should be used as a vehicle to serve working age, able-bodied adults does not make sense," she said, "but the prior administration fought state led reforms that would've allowed the Medicaid program to evolve to meet the needs of these new individuals, and they did this, even when increased coverage was at stake."
"Believing that community engagement requirements do not support or promote the objectives of Medicaid is a tragic example of the soft bigotry of low expectations consistently espoused by the prior administration. Those days are over," she said. "Let me be clear to everyone in this room, we will approve proposals that promote community engagement activities."
Verma referred to "able-bodied" or "non-disabled" adults, individuals and enrollees seven times in her speech, while making the case for work requirements. Her speech included no specifics on what percentage of Medicaid enrollees were considered "able-bodied."
Critics have called claims that healthy adults are bilking the program a red herring, and studies have shown that the numbers of "able-bodied" adults who are on Medicaid are relatively low, and can be explained by other factors, such as leaving the workforce to act as a caregiver.
Verma said Medicaid spending grew from $33 billion in 1985 to $558 billion in 2016, and consumes 29% of total state spending, which she said is unsustainable. To rein in spending growth, she said CMS would restore flexibility, accountability and integrity.
That flexibility would center around 1115 demonstrations, state plan amendments, and 1915 waiver processes, and CMS will allow states to:
Request approval for certain 1115 demonstrations for up to 10 years;
More easily pursue "fast track" federal review, which makes it easier for states to continue their successful demonstration programs;
Spend time administering innovative demonstrations by reducing certain 1115 reporting requirements;
Expedite state plan amendments and 1915 waiver efforts through a streamlined process and by participating in a new "within 15-day" initial review call with CMS officials.
"We are making innovation easier. If we approve an idea in one state, and another state wants to do the same thing, we will expedite those approvals," Verma said. "However, we won't approve every idea, the law will be our guideposts, and we will also ensure that proposals will not result in additional costs for taxpayers."
As for improving accountability, Verma said CMS is in the process of developing Medicaid and Children's Health Insurance Program scorecards to track and publishing state and federal Medicaid outcomes.
"The Scorecard will allow us to demonstrate your progress to the nation and allow others the opportunity to learn from your successes," Verma said. "This Scorecard isn’t just for States, but for CMS as well, because good partners hold each other accountable."
Dakotas-based health system buys minority stake, looks to tap into groundbreaking type 1 diabetes research, stem cell therapies.
A German subsidiary of Sanford Health has acquired a minority position in ISAR Klinik II AG, which includes Isar Klinikum, a hospital in Munich.
It’s the first investment in an international hospital by Sioux Falls, SD-based Sanford Health. Financial terms were not disclosed.
Kelby Krabbenhoft, president and CEO of Sanford Health, will serve on ISAR Klinik II AG’s board of directors.
“This is another significant step in our goal to advance health care around the world,” Krabbenhoft said in a media release. “ISAR’s ground-breaking procedures and medical technology are well-known, and we are eager to strengthen our relationship with the hospital and its leaders to bring that knowledge and care to our patients.”
The founder of ISAR Klinikum, Eckhard Alt, MD, oversees The Sanford Project, an initiative of Sanford Research that is searching for a type 1 diabetes cure.
“Advancements in medicine and patient care come when knowledge is shared,” Alt said. “As we look to the future and our stronger relationship with Sanford Health, we are excited to further unite our work and spread it to more parts of the world.”
Since 2015, Sanford Health has arranged for U.S. patients to travel to ISAR Klinikum to gain access to stem cell therapies allowed in Germany. Sanford has also sent 11 physicians to the hospital to better understand the application and impact of these therapies. The physicians’ experience has contributed to Sanford Health’s FDA-approved rotator cuff clinical trial in the United States.
Sanford Health’s operations include 44 hospitals and nearly 300 clinics in nine states and four countries.
The financially troubled 378-bed Topeka hospital will be renamed The University of Kansas Health System St. Francis Campus. The new for-profit/not-for-profit joint venture pledges $50 million in investments, local control.
The University of Kansas Health System and Ardent Health Services have completed the joint venture purchase of St. Francis Health in Topeka, and its 15 medical clinics.
Ardent will own a 75% stake in the health system and manage day-to-day operations. The University of Kansas Health System will provide clinical and financial resources.
Ardent CEO and President David T. Vandewater spoke with HealthLeaders Media about the St. Francis acquisition, which is Ardent’s first property in Kansas, and its first joint venture with UKHS. The following is a lightly edited transcript.
HLM: How long have you been working with the University of Kansas Health System?
Vandewater: It started some time ago with a predecessor company, LHP Hospital Group in Texas, which we acquired in March. They had established a relationship with the University of Kansas Health System to try to buy some hospitals in the Kansas City market some time ago. That did not work out for them but they developed a relationship. When we acquired LHP we used the relationship they had with our Chief Development Officer Dan Moen and that put us in a position to create this partnership.
HLM: What attracted you to this joint venture with UKHS?
Vandewater: We had looked at Topeka in September 2016 and decided it was something we would like to own, but because we didn’t own anything else in the state we felt it was important to have a partner in the process. No. 1, we liked the hospital. No. 2, we needed to find a partner.
At the time, UK was working on something else and they didn’t feel they had the capacity to do that. We got another call from the folks at SCL Health, and the governor’s office. The folks at UK health system felt they had the capacity to do it and having us as a partner made it easier for them to participate. Everything just worked out. It’s more a case of timing than anything else.
HLM: What attracted you to St. Francis Health?
Vandewater: No. 1 we liked the facility and the asset. It’s an attractive hospital. It has a substantial service line and capabilities within the organization. It is a sophisticated facility. We felt that between Ardent and UK we could bring some additional sophistication; both through the medical staff capabilities that would be provided, as well as understanding how to operate hospitals in communities such as Topeka.
HLM: How is the joint venture structured?
Vandewater: The University of Kansas has a 50/50 split in governance. Their ownership is 25% and they named the chairman of the board, and that is Bob Page, who is the CEO for the University of Kansas Health System.
HLM: You’ve pledged $50 million in investments. When and where will those investments be made?
Vandewater: It will be over three years. It will be inclusive of the capital improvements needed to expand service lines. We’ve been a guest in St. Francis for the past five months doing due diligence. We haven’t really had the opportunity to operate it. We will continue to have discussions with the medical staff, with the employees, and we will figure out the best way to distribute the $50 million. In addition to that, physician recruitment and service line expansion will be where we will devote the capital.
HLM: Why do you think your offer was chosen by SCL Health, rather than other bidders?
Vandewater: The model that we put together with having the University of Kansas Health System as part of it, that was a key ingredient with regards to their decision about the future. Interestingly, UKHS is a remarkable story. If you go back to 1997 they went through a similar experience to what St. Francis is going through now and they came out on the other end of that and made incredible recovery. Everyone understands the significance of UKHS to the health of the state.
Vandewater: This is more the norm than the exception. We’re seeing it everywhere. If we came to the conclusion that we could not operate in states that were having challenges with regards to being able to take care of patients and pay for it from the state budget, we wouldn’t be able to go anywhere.
HLM: How will you work around the state’s refusal to expand Medicaid?
Vandewater: We will take care of the patients who come through our doors. But, our goal is to use the brand of UKHS to attract patients beyond Medicare and Medicaid. We believe the more sophisticated services we bring in, the more sophisticated physicians who are participating with us through the UK physician group will provide us with an opportunity to get more market share to use our facility.
HLM: Your press release describes St. Francis as “near closure.” What will you do differently to make it prosper?
Vandewater: First of all, we will put a lot more local leadership so they can run it from Topeka. We believe local leadership will do a number of things with regard to insuring that we keep our ears to the ground with regard to what the people of Topeka need. Again, the board that we put together is going to be more sensitive to the Topeka marketplace than the previous owner. There are some opportunities where we can demonstrate through the skill sets we’ve developed over the years with regards to how we operate facilities.
HLM: Have you named your C Suite yet?
Vandewater: We have a CFO and our CNO and our CMO, but we do not have a CEO yet.
HLM: Will your CEO be from UK or Ardent?
Vandewater: Probably not. We have people who we are talking to that we have had longstanding relationships with who we anticipate would be eager to join us.
HLM: How will care delivery change for patients in Topeka under this new ownership?
Vandewater: Going forward, I don’t think initially they are going to see a lot of difference. Our goal is to improve the quality of the services within the organizations and for our employees and associates to be very service oriented. If we do that, everything else is going to take care of itself.
Medicare ACOs generated $843 million in savings in 2016 and demonstrated strong quality scores. ACO advocates believe those numbers could improve if CMS provides some flexibility on financial benchmarks and risk.
With four years of returns in the books, Medicare’s accountable care initiative has demonstrated savings for the federal government and improved care quality for beneficiaries, advocates say.
However, the Centers for Medicare & Medicaid Services’ reluctance to tweak financial benchmarks, or adjust risk scores upward for aging beneficiaries holds ACOs to a different standard than other Medicare programs, according to the National Association of Accountable Care Organizations.
“With risk adjustment, unlike the approach CMS takes for other initiatives, including Medicare Advantage, risk scores for beneficiaries who are assigned to the ACO over a number of years are never allowed to increase. They can only go down,” says Allison Brennan, NAACOs vice president of policy.
“That holds ACOs to a much higher standard and is unfairly penalizing them for beneficiary risk scores for an aging population that often has multiple chronic conditions,” Brennan says. “It is unrealistic to expect those risk scores to never increase, and that affects the abilities of ACOs to meet their financial benchmarks.”
In addition, Brennan says ACOs are often the victims of their own success. Their efforts to reduce costs and improve care mean they set the bar higher for themselves every year, which makes identifying new savings all the more difficult.
“As ACOs continue with the program they feel more prepared to tackle additional issues which will allow them to have continued success,” she says. “However, we need to see changes with financial benchmarks for the long-term because if they keep getting progressively harder and harder there won’t be opportunities for ACOs to out-perform their previous performance.”
Despite those hurdles, ACOs in the Medicare Shared Savings Program, the Next Generation Model, the Pioneer ACO program and the Comprehensive End Stage Renal Disease Care Model are collectively delivering on the savings, Brennan says.
CMS’ new Performance Year 2016 report on ACOs that found that the average generated savings per beneficiary per year has increased from $84.61 in combined 2012/2013 to $133.53 in 2016. Medicare ACO initiatives generated $836 million in gross savings and $71.4 million in net savings for the federal government.
In addition:
73% of Innovation Center ACOs earned shared savings totaling nearly $146 million. Specifically, Pioneer ACOs earned $37 million, Next Generation ACOs $58 million and CEC ACOs $51 million.
31% of MSSP ACOs earned shared savings with payments totaling $700 million.
25% of MSSP ACOs generated savings for Medicare but did not meet the threshold needed to share those savings.
Only 18% of MSSP two-sided risk ACOs were responsible for repaying losses.
41% of physician-only MSSP ACOs earned shared savings compared to 23% of ACOs with hospitals.\
On quality metrics:
Average MSSP performance improved 15% across the 25 measures used consecutively across program years.
The MSSP ACOs subject to pay-for-performance measures earned an average quality score of 95% and 98 ACOs who were subject to pay-for-reporting earned a quality score of 100%.
Innovation Center ACOs all demonstrated very high quality, Pioneer ACOs had an average quality score of 93% and Next Generation and CEC model ACOs all had 100% in their initial pay-for-reporting years.
Brennan says “there is no one-size-fits-all approach for ACO success, but that generally speaking, ACOs that focus on improved care coordination and providing beneficiaries with the right care in the right setting tend to be more successful.”
“According to CMS’ internal analysis MSSP ACOs generating shared savings had a significant decline in inpatient and hospital expenditures and utilization and decreased home health, skilled nursing and imaging expenditures,” she says. “That’s what they were seeing in the 2016 results. It’s nice that they pointed out those takeaways in their presentation.”
Experience is proving invaluable, too. CMS data show that 42% of MSSP ACO early adopters (2012) earned shared savings in 2016, compared with 18% of MSSP ACOs that started ACOs in 2016.
“We view the future for ACOs in a positive light but we need to make sure that CMS and the administration continue to improve policies to enable ACO success,” Brennan says. “This is a long-term game. Population health and accountable care initiatives don’t always yield instant results. But, these are investments that ACOs are making that are showing benefits in the long-term.”
S&P blames the decreased enrollment on multiple factors, including reduced outreach at the federal level, a reduced broker presence in the individual market, shorter enrollment periods, and higher non-subsidized premiums.
Affordable Care Act exchanges are projected to sign up between 10.6 million to 11.4 million people during the upcoming fifth enrollment period, according to S&P Global Ratings.
"This is about 7%-13% lower than the 12.2 million that signed up during the 2017 open enrollment season," said S&P credit analyst Deep Banerjee. "We expect that most individuals who maintained ACA insurance for full-year 2017 will re-enroll (for 2018), though fewer new enrollees will enter the marketplace."
People who bought insurance on an exchange last year and paid their premiums for full-year 2017 are highly likely to re-enroll for 2018. In addition, more than 80% of this population likely receive an advanced premium tax credit, which will offset the impact of the 2018 premium increases, S&P said.
"As for new enrollees, we are forecasting fewer people signing up in 2018 than during previous open enrollments," Banerjee said.
The S&P forecast blamed the enrollment drop on multiple factors, including reduced active outreach at the federal level, a reduced broker presence in the individual market, shorter enrollment periods, and higher nonsubsidized premiums.
During the first three years of the exchange, about a quarter of the people who signed up later dropped their coverage during the year. For 2018, S&P is forecasting a similar trend. Effectuated enrollment will be between 8.3 million and nine million as of year-end 2018, which is flat to 8% lower than S&P's estimate for 2017 effectuated enrollment of nine million.
As for the exchange population beyond 2018, S&P expects enrollment again to jump at the beginning of the year and then gradually decline as the year proceeds. But the amount of decline throughout the year will decrease as the market settles in at a sustainable size.
Moody’s analysis shows that plenty of liquidity and flexibility from a debt covenant perspective give Tenet time to make operating improvements or change its strategic direction.
Despite high leverage, disgruntled shareholders, and mounting uncertainty, Tenet Healthcare Corp. has the time and flexibility to adjust before refinancing is required in 2020, an analysis from Moody’s Investors Service says.
“We had expected Tenet to de-lever primarily through organic growth and the deployment of capital to acquire EBITDA-generating ambulatory surgery centers. But recent developments create considerable uncertainty around the company's strategy,” Moody’s said.
Those recent developments include the Oct. 23 accelerated departure of long-serving CEO Trevor Fetter who had planned to retire early next year. He leaves with a severance package worth nearly $23 million.
Dallas-based Tenet is the nation’s third-largest for-profit hospital company, based on the number of hospitals it operates. It is also one of the most highly leveraged, and its margins are significantly lower than other investor-owned, publicly traded hospital companies, Moody’s says.
The company has outstanding debts of $17.2 billion, and a debt/EBITDA ratio of 7.0X. Moody’s gives the company a B2 credit rating with a negative outlook.
Fetter’s abrupt departure and a board of trustees shake up come amid growing shareholder unrest, led by Glenview Capital, an activist investor that owns 18% of Tenet’s stock.
Tenet has also announced a series of hospital divestitures by year’s end.
Moody’s says Tenet is well-positioned in the near term with favorable debt terms and good liquidity providing flexibility.
“The company has no significant near-term maturities and good liquidity with minimal covenant restrictions,” Moody’s says. “The next large maturity that would require refinancing is in October 2020. As a result, Tenet has significant flexibility and time to make operating improvements or change its strategic direction.”
While still grappling with a challenging hospital environment, Tenet’s earnings are expected to improve with the company’s investment in ambulatory services businesses.
With the changes in leadership at Tenet, Moody’s says “all options are on the table,” including the sale of its ambulatory services centers, and its Conifer revenue-cycle management subsidiary. If Tenet sells Conifer or ASCs, the company is not obligated to use those proceeds to pay down its debts, although Moody's says that would be a “significant credit negative.”
However, if Tenet sells ASCs to reduce debt, Moody’s says the company would also “lose scale and diversity and risk considerable operating disruption because these businesses are closely aligned with its hospitals.”
While the number of acquisitions dropped in the third quarter, there were some sizeable deals, led by the merger of UPMC and PinnacleHealth. Private equity firms acquired six physician practices in the quarter.
Hospital and physician practice mergers and acquisitions slowed in the third quarter of 2017, according to HealthCareMandA.com.
“Despite the lower number of hospital deals in this quarter, some sizable health systems merged or were acquired,” stated Lisa Phillips, editor of the Health Care M&A Report.
“PinnacleHealth (1,267 beds) and UPMC merged, and NantWorks LLC acquired BlueMountain Capital’s majority stake in Integrity Healthcare (1,650 beds). We expect to see a few more of these large mergers in the fourth quarter,” Phillips said.
According to HealthCareMandA.com:
The number of hospital acquisitions slipped to 15 in the third quarter, down 32% from the 22 publicly announced acquisitions in the second quarter of 2017, and down 21% from the 19 announced deals in the year-ago third quarter. None of the transactions disclosed a purchase price in the third quarter of 2017.
The largest group of acquirers were not-for-profit hospitals and health systems, with eight acquisitions announced by seven buyers. St. Luke’s University Health Network, a not-for-profit system in Pennsylvania, announced two acquisitions, as did publicly traded HCA Healthcare.
Among the sellers, two financially troubled publicly traded hospital companies divested four hospitals through four announced deals. Community Health Systems sold two hospitals in the third quarter, and its 2016 spinoff, Quorum Health, also sold two. HCA acquired the two Community Health Systems hospitals, one in Texas and one in Florida.
Physician medical group M&As also dipped slightly in the third quarter of 2017 to 28 transactions, a 10% drop from the second quarter.
“This third quarter’s deal volume may seem disappointing, but it is more in line with transaction volumes we’ve seen in the third and fourth quarters of 2016,” Phillips said.
The 28 transactions were a decline of 15% from the third quarter of 2016. The first quarter of 2017 represented the highest level of physician medical group M&A activity in several years, with 59 deals.
Even with the decline in deal volume, spending increased 91% compared with the previous quarter, to $1.45 billion.
Four companies announced two acquisitions apiece in the quarter: CRH Medical Corporation, Envision Healthcare Corporation, MEDNAX and Riverchase Dermatology and Cosmetic Surgery.
Eight of the acquired medical groups had 20 or more physicians, compared with three in the second quarter.
Hospital companies or health systems announced three physician medical group acquisitions in the third quarter, while private equity firms announced six, not including transactions announced by physician medical groups backed by private equity firms.
Data show that the rate of mental health/substance abuse-related ED visits increased 44% from 2006 to 2014, with a 414% increase in suicidal ideation visits. Alcohol-related disorders were the most frequent mental health/substance abuse-related ED visits.
The number of emergency department visits covered by Medicaid increased by 66% while the number covered by Medicare rose by 29% from 2006-2014, according to a statistical brief from the Agency for Healthcare Research and Quality.
In that same span, ED visits covered by private insurance decreased by 10%, AHRQ said.
In addition, the AHRQ data found that:
There were 137.8 million emergency department visits in 2014, with a rate of 432 per 1,000 population.
The number of ED visits increased 14.8% from 2006 to 2014, during which time the U.S. population grew 6.9%.
The rate of ED visits for medical conditions increased 11.7% from 2006 to 2014. Diagnoses involving abdominal pain were the most frequent medical diagnoses for ED visits in 2014 (6 million visits).
The rate of injury-related ED visits decreased 12.9% from 2006 to 2014. Among injury-related ED visits, sprains and strains were the most frequent first-listed diagnoses in 2014 (5.8 million visits).
The rate of mental health/substance abuse-related ED visits increased 44% from 2006 to 2014, with suicidal ideation growing the most (414% increase in number of visits). Among mental health/substance abuse-related ED visits, alcohol-related disorders were the most frequent diagnoses in 2014 (1.5 million visits).
Cleveland Clinic ACO saved more than $42 million across 71,113 beneficiaries in 2016 as a participating provider in the Medicare Shared Savings Program. Most of the savings came from reducing big bucket expenditures around inpatient stays, readmissions, and post-discharge care.
Cleveland Clinic’s accountable care organization has seen two years of solid savings under the Medicare Shared Savings Program. This year, the provider generated savings of $42.2 million, of which the clinic will receive nearly $20 million, a 20% increase over 2015, according to the Centers for Medicare & Medicaid Services.
James Gutierrez, MD, president and medical director of the Cleveland Clinic ACO, spoke with HealthLeaders Media about the success of the shared-savings program. The following is a lightly edited transcript.
HLM: How many physicians and patients are involved with Cleveland Clinic’s ACO?
Gutierrez: All of our employed staff physicians in both northeast Ohio and Florida are members of the ACO. We are talking upwards of 1,500-1,700 physicians. It keeps growing. In addition, we have about 300 primary care physicians employed by Cleveland Clinic in northeast Ohio, and probably 50 in Florida, and another 50 independent private practice primary care physicians in northeast Ohio who are members of our clinically integrated network called Quality Alliance.
Patient-wise, in 2017 we have about 85,000 patients. In 2016 we had just a little over 69,000.
HLM: Were you surprised that you’d generated $42 million in savings in 2016?
Gutierrez: We were surprised in 2015 because that was our first year of participation and we didn’t have a baseline in terms of familiarity. We were just gaining familiarity with the CMS claims data set that we received as part of the program but didn’t have any sense of where we would wind up until we got the final reconciliation.
Based on what we learned in 2015, our actuarial and analysis staff developed some modeling to predict how we would do at the end of 2016. They did a pretty good job of getting us in the ballpark. The $19.9 million for our share of the savings was in line with the range that we expected to see. It made us feel good that our predictive model was pretty good in understanding what we get from CMS and being able to monitor that through the year.
HLM: What is your projected savings for 2017?
Gutierrez: We are going back and forth with CMS now about the calculation of the benchmark. It looks like we will be roughly in the same range (as 2016), but we are waiting until the end of this month to get an updated benchmark from CMS to get a better idea of how our performance will compare with that benchmark. So, stay tuned.
HLM: Where do you find the savings?
Gutierrez: You break down the big buckets of Medicare spend. In 2016, we saw about an 18% reduction in the inpatient spend for our attributed population and about a 32% reduction in skilled nursing spend for that population. Those were really the key drivers, along with smaller improvements in high-end imaging utilization and emergency department utilization. But, it was mostly the inpatient and skilled nursing. We also saw a 9% reduction in 30-day readmissions, which certainly contributed to the bottom line.
HLM: Could these savings have been generated in a fee-for-service environment?
Gutierrez: We started to really focus on value and reducing utilization, where that was possible, back in 2013. Everybody saw what was coming with accountable care and value. So, we started to focus as a system on trying to improve access, develop care coordination for our highest utilizing patients to keep them out of the hospital and the ED, and we developed a more robust programs to reduce readmissions for people who were admitted.
We started to build that foundation several years before we started with the shared savings in 2015. We got into it at the right time because we had put things in place to start to cut out the spend where there was room to be found, and the shared savings program came into play when there was an opportunity to harness that.
HLM: Is this level of savings sustainable?
Gutierrez: Obviously, it’s going to get harder and harder as we continue to benchmark against ourselves and we keep cutting the fat out of the system.
However, our part of the country, northeast Ohio and the Midwest in general, is a less-advanced market than the coasts or other parts of the country. Our level of per-beneficiary, per-year spend is still relatively high so there is still opportunity there. But, in 2015 and 2016 we were picking that low-hanging fruit. It’s going to be more of a challenge for sure. We realize that.
HLM: What is it about the ACO model that allowed you to find savings?
Gutierrez: We’ve done a couple of things in recent years that helped us. No. 1, although we don’t own skilled nursing facilities at Cleveland Clinic, we have our own nurse practitioners and physicians caring for many of our patients at our highest-volume SNFs. This group has been out there for more than five years and they have been on the front lines improving quality and reducing unnecessary and managing length-of-stay in the SNFs. We reaped some benefits from our Medicare Advantage plans earlier in this decade and now we are seeing it in the ACO as well.
The second thing is we were very active in the bundled payment initiative, specifically for total joints. We rolled out total joint bundles across our system in 2015 and part of the success there is about being more comfortable bringing people home after a joint replacement rather than having them pretty much mandatory stay in a SNF.
Not only did that help us with total joint replacements, it teaches people in the hospitals, discharge planners, physical therapists, and most importantly physicians, that we need to have a comfort level with sending people home. The patients prefer it. There are less complications and infections. If you pick your patients well they do quite well in that setting. There is a halo effect that extended to other medical and surgical patients who left our hospital and avoided SNFs altogether.
HLM: Is leadership’s role different in an ACO?
Gutierrez: We really needed our leadership going back to the early part of this decade clearly and regularly saying that we need to move toward value. This is the train coming down the tracks. We need to get on or run over.
In terms of operationalizing it, that took place in the trenches. Every hospital ward, every community hospital had efforts going on around readmission reduction, primary care across all of our practices. We got engaged in care coordination and trying to get the message of value out to the front lines.
We had terrific quality results in 2016 for the ACO. We had a robust and engaged quality group that were frontline people in our practices figuring ways to close care gaps, get better diabetes and hypertension control, improve preventive care, improve screening for depression, etc. I was those small tactical wins that got us to the results we’ve got.
HLM: Is your replicable elsewhere? If so what needs to be in place?
Gutierrez: We followed a fairly standard roadmap for succeeding in terms of attacking the big buckets of spend; reducing readmissions, ED visits and SNF stays. The thing that put us in a great position to be successful was that the bulk of the physicians and patients were Cleveland Clinic attributed. As a medical staff model group practice with a single employment structure and single leadership, it made it much easier to align. We are still a big battleship to turn, but at the same time we all work for the same entity, so that made it easier to get that message across and work together to get these results.
A lot of ACOs, where you have a clinically integrated network of physicians who are more independent and you have several hospitals, it is much harder to get everyone to work in lock step. You can get there and some people have had tremendous results, but it’s harder to get that engagement when everyone is more independent.
HLM: Anything else?
Gutierrez: We made significant investments in population health analytics and health IT. When you are managing a population of 85,000 beneficiaries and you have this huge claims data set and a huge clinical data set that is coming out of our EHR, which is Epic, having the analytics to crunch that big data helped us identify who our highest-risk patients are who we need to care coordinate aggressively, who are our potentially high-risk patients who we can reach out to proactively and address care gaps and get them under control. That helped us in 2015 and 2016. As time goes on our folks are getting better using that analysis to help us.
With a quality score of 96.3%, the accountable care organization demonstrated that it could deliver high-quality care and improve the value of the healthcare dollar.
Cleveland Clinic’s Accountable Care Organization saved more than $42.2 million across 71,113 beneficiaries in 2016.
That’s according to a Centers for Medicare and Medicaid Services report for ACOs participating in the Medicare Shared Savings Program.
“The ACO helps to unify our enterprise by bringing together primary care, specialty care and independent participating physicians,” said James Gutierrez, MD, president and medical director of Cleveland Clinic ACO.
“The care model is further enabled to manage our patient populations across the whole continuum of care,” Gutierrez said. “This validates the work we have done in recent years to provide outstanding quality of care while being better stewards of healthcare resources.”
The Cleveland Clinic ACO:
Generated $42.2 million savings in 2016, which represents a 24.5% increase from 2015.
Will receive $19.9 million back in shared savings, a 19.8% increase over 2015.
Increased the number of shared beneficiaries by more than 6,500 and the health system’s quality score was 96.3%.
In 2016, there were 433 Medicare Shared Savings Program ACOs across the United States.
