OCTOBER 9, 2012

Welcome to the Accountable Care Update eNewsletter
Editor: Philip L. Ronning
This issue is sponsored by the ACO Congress

For ACOs, IT Startup Costs Top $1 Million
According to a Black Book survey of 300 developing and established ACOs, an ACO's IT startup cost begins at over $1 million for a small ACO and can exceed $4 million for a large ACO. The survey found that 28% of respondents have their health insurance exchange (HEI) and interoperability strategies in place and 39% intend to have technology purchasing decisions in place by the third quarter of 2013. (Information Week Healthcare, September 27, 2012)

NCQA Offers ACO Accreditation Review
Sarah Thomas, vice president of public policy and communications for the National Committee for Quality Assurance (NCQA), a private non-profit healthcare measurement group in Washington, D.C., says "[N]ot all organizations have what it takes to be able to deliver on the promise of the Triple AIM, which is better quality, better experience and at a lower cost." The NCQA has designed an accreditation program allowing payers and patients to know which ACOs have met national standards. These standards are built around the following seven core competencies.

  1. ACO Structure and Operations
  2. Access to Needed Providers
  3. Patient-Centered Primary Care
  4. Care Management
  5. Care Coordination and Transitions
  6. Patient Rights and Responsibilities
  7. Performance Reporting and Quality Improvement

Thomas goes on to say that soon "the public will know the names of several organizations that have passed our tough review." As many as 100 ACOs are expected to seek accreditation by the end of 2013. (HealthLeaders Media, September 24, 2012)

Sutter Health Pursues Launch of Own HMO
Sutter Health, a nonprofit health system based in Sacramento, CA, submitted on September 14, 2012 an application to the California Department of Managed Health Care for a Knox-Keene license to launch its own HMO. Plans call for the HMO to be operational in 2014. William DeMarco has started a discussion on the Accountable Care News LinkedIn site (Click here to join the discussion) entitled "Providers are getting the message, it's just as much work to launch a GOOD ACO as it is to launch a GOOD HMO. (North Bay Business Journal, September 24, 2012)

10 Recently Formed ACOs
Ten ACOs have been formed since July according to Becker's Hospital Review:
  1. Montefiore Medical Center Signs ACO Agreement with Empire BlueCross BlueShield
  2. Dominican Hospital, Physicians Medical Group and Blue Shield to Launch ACO in California
  3. Key Physicians, BlueCross to Launch ACO in North Carolina
  4. Methodist Le Bonheur, BlueCross to Launch ACO in Tennessee
  5. Aurora Health Care, Anthem Blue Cross Ink New Health Plan
  6. Optimus, Healthcare Partners, Horizon Blue Cross of New Jersey Link for New ACO
  7. Dignity health, Vanguard Pursue Medicare ACO in Arizona
  8. Park Nicollet in Minnesota Forms ACO with Non-Profit Insurer Medical
  9. Penobscot Health Center Joins Eastern Maine ACO
  10. Aurora Health Care, Aetna Form ACO
Information about each site can be found by clicking the name of the ACO. (Becker's Hospital Review, September 27, 2012)

ACOs Not as Popular as Government Hoped
Sally Pipes, president and CEO of the public policy think tank Pacific Research Institute, writes in a Forbes op-ed piece, "Hospitals and doctors are revolting because ACOs saddle them with significant financial risks and substantial new administrative burdens. Patients won't like them because they'll put government bureaucrats--not their doctors--in charge of their care." The Commonwealth Fund reports that 75% of hospitals are not considering ACO participation. (Fierce Healthcare, September 20, 2012)

Healthcare Economist: Time Studies Could Make ACO Implementation Tick
Collecting the right clinical data and analyzing it to find new efficiencies for cutting costs are the two key areas on which CIOs must focus to successfully implement an ACO, says Adam Powell, an economist and health informatics professor at Northeastern University. Powell's theory is based upon time studies and their importance in determining precise costs. If a hospital can accurately determine task times, it can adjust workflow for capitated payments. (SearchHealthIT, September 27, 2012)

Survey: Pessimistic Physicians Down on ACOs, EMRs
The Physicians Foundation, a Boston-based nonprofit organization that seeks to advance the work of practicing physicians and help facilitate the delivery of healthcare to patients, found in a recent survey of more than 13,000 physicians that 62% of those physicians believe ACOs are either unlikely to increase quality and decrease costs or that the improvements will not be worth the effort. Further, while 70% of the respondents have implemented EHRs, 47.4% of them have significant concerns over patient privacy. This report includes other interesting findings. (Healthcare Informatics, September 24, 2012)

How a Flaw in the ACO Model Leaves Patients Out
This blog by Michael F. Arrigo, managing partner of No World Border consultancy, finds the ACO model ignores fundamental economic principles which cause him to ask three questions: 1) Will rational consumers seek ACO networks? 2) Is there sufficient liquidity, velocity cash flow in payer provider ACO networks? and 3) Are accelerating payments reducing out of pocket costs for members? (GovernmentHealthIT, September 24, 2012)

The Rapidly Evolving ACO World
Cancer care costs are accelerating at a rate twice that of healthcare inflation, and a patient with cancer can incur up to 26 times the costs of a non-cancer patient. Yet a survey last year conducted by the Cancer Center Business Summit found that oncology was not an attractive candidate for "early win" cost savings in the shared savings model. However, commercial health insurers have an active interest in exploring non-traditional methodologies for payment re-design for oncology services. This article addresses a 2011 survey which seeks to identify progress that is being made in finding a role for oncology within the ACO construct. The hypothesis is that by incorporating oncologists who are functioning under the principles of an oncology medical home model, the costs of cancer care for the ACO's patient population may be reduced by 10% to 15%.

The Cancer Center Business Summit survey for 2012 identifying trends, patterns and innovations developing with regard to addressing this potential newfound cost reduction opportunity in the cancer spend will be presented at the 2012 Cancer Center Business Summit, October 11-12, 2012 in Fort Worth, Texas. (Oncology Business Review at oncbiz.com, September, 2012)

Sign of Change: Doctors Offering Price Guarantee to Insurers
Milwaukee-based Aurora Health Care's ACO is offering small and mid-sized businesses a "price guarantee." Aurora commits that prices will not rise beyond a certain amount for three years provided the employer signs a three year contract with either Aetna or Anthem. Aurora says it has used its ACO to treat its own employees and saw costs drop 2.4% in 2010 while most large employers experienced increases of 10% or more. (Forbes, August 21, 2012)

Cigna Collaborative Accountable Care Initiatives

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Lessons Learned from Applying to the Medicare Shared Savings Program

S. Lawrence Kocot, JD, MPA, LLM
Engelberg Center for Health Care Reform, Washington, DC

John Friend, JD
Tucson Medical Center, Tucson, AZ

Mark Hamelburg, JD
SNR Denton, Washington, DC

Thomas Kloos, MD
Optimus Healthcare Partners, Summit, NJ