Minor League Champs

Last September, the Bowling Green Hot Rods, a minor league affiliate of the Tampa Bay Rays, beat the Peoria Chiefs 7-2 to win their first ever Midwest League Championship.

I bring you this critical, though seven-month old, item because one of the themes we are tracking this year is the migration to value-based reimbursement.  Yes, a segue is coming. 

Today, we have a little news from the minor leagues of value-based care.  See the connection?

We’re checking back in on the Accountable Care Organizations (ACOs) participating in the Medicare Shared Savings Program (MSSP). Remember when these ACOs, working in the MSSP model, were going to save us boatloads of money and fix healthcare?  Now, it seems like Single A ball.

If you’ve been reading here long, you know that the ACO/MSSP idea is a favorite punching bag for us.  For all the smoke and heat and light and energy and spending that has been put into this, CMS would have saved more money by simply asking their staff use the other side of the Sticky Notes before reaching for another.  ‘Rounding error’ is a fitting summary for the program’s ‘savings’ to date.

But we look a little deeper today.  It turns out that physician group ACOs record a net positive savings to Medicare, while hospital-integrated ACOs don’t save enough to even cover their bonuses.

Neither saves a ton, but the evidence is clear for physician ACOs.  Those that entered the program in 2012, the first year, saved $474 per Medicare beneficiary in 2015, the last year for which the data is available.  Their hospital counterparts from the same year saved only $169, less than the bonuses they received.

Bowling Green beats Peoria.

Looking at the ACOs that have been in the program longer is the right idea because they’ve had time to bake-in their strategies.  And sure enough, both hospital and physician ACOs get better over time.  But, the doc-driven ACOs start with a better savings and get better faster in subsequent years.

In 2015, the physician group ACOs saved CMS, after bonuses, $256 million dollars.  The hospital-based ACOs were net negative to the cost of the program.

It was a bit humorous to read one analysis, explaining that doc-owned ACOs outperform because they more aggressively cut spending from other providers outside their practice, but the hospital ACOs should be excused because they own all of those downstream providers and can’t be expected to reduce services to their own business units.

So, it is not real savings unless you reduce spending in your own part of the value chain, but if you own all parts of the value chain, you can’t be expected to reduce spending??

You see why we think this model is flawed?

Your Free Trial is Expiring

Relax, I am not going start charging you for this blog.  I get to pretend some of you are occasionally interested in my musings and I am not about to test that assumption by asking you for a credit card number.  Some delusions are worth maintaining.

But the free trial period is almost up for a key part of the Obamacare reform and apparently there are a lot of subscribers not sure they want to pay up. 

The ACO world is about to take a hit.

Recall that there are three tracks for ACOs, creatively named Track 1, Track 2, and Track 3 (nice to know we did not spend too much taxpayer money on the branding consultant).  Potential financial rewards for ACOs go up as you move up, but also come with downside financial risks.

Well, surprise, surprise, but 82% of the ACOs opted for Track 1, the limited upside/no downside option.  Sheep are predictable.

However, the law also has a provision that says if you started in Track 1 in 2012 or 2013, which most of these ACOs did, you have to move up to a model with downside risk by year three.  That is next year.

Now we start to find out just how committed folks are to ‘value-based care.’ 

When everyone thought it meant ‘we’ll give you a participation trophy for trying, and hey, it looks really good in a press release to say you want to be paid for value,’ everyone raised their hand.

But now that we are learning it actually comes from the root word meaning ‘put some dang skin in the game,’ it looks like the commitment might be fading. A recent survey of  Track 1 participating ACOs found that 71% plan to leave the business instead of stepping up to downside risks. 

Sorry kids, counting the number of free downloads on your app does not make you a millionaire.  Tell me how many actually paid to play.

The bailing ACOs have legitimate reasons for backing out.  I have no beef with them giving it a run and then deciding the upside opportunity is not worth the downside risks.  Businesses make that call every day.

And I really appreciate CMS Administrator Seema Verma’s amazingly clear thinking posture on this.  She said:

’The presence of these upside-only tracks may be encouraging consolidation in the marketplace, reducing competition and choice for our beneficiaries. While we understand that systems need time to adjust, our system cannot afford to continue with models that are not producing results.’

Yes, that statement came from a government employee.

So it seems both sides are making rational arguments.  And in doing so, both expose if not the core underlying fallacy of the ACO silver bullet, then at least its limited impact. 

When people have to put their money where their mouth is, we tend to get some honest truth telling.

Now can we start moving on to find better answers?

The Inconvenient Good News

Years ago, there was a lawsuit against some championship wrestling promoter.  I don’t remember the details and it is not even worth a little time on Google to reconstruct the facts, but the essence of the story was that the way out of the legal mess was for the defendants to admit that it was not a sport at all, that is was all rigged.  Not competition, but choreographed theater. 

This memory came to mind as I was attempting to process a recent study in the most recent issue of Health Affairs.  How do you feel when you get good news, but that news essentially undermines your fundamental premise?

Here’s the deal…

This study (the write-up was mind-numbingly dense – more on that later) was trying to figure out what drives the cost savings of Accountable Care Organizations (ACOs) that participate in the Medicare Shared Savings Program (MSSP).

The authors start with the premise that ACOs save a lot of money (that the savings barely cover the bonuses paid out didn’t seem to matter), but note that the mechanism by which those savings have been achieved is not yet clear.  Thus, the need for this study.

Being true devotees, the researchers assumed the data would support the high holy mantra of the entire ACO concept – that the identification and better management of complex patients would be the key to dramatic reductions in cost while simultaneously improving quality. 

We all know the script…find those with chronic diseases, improve intermediate clinical outcomes like blood pressure, get players across the delivery system talking to each other, follow best practice treatment plans, and wa-la, expensive acute care that comes from treating the complications of chronic disease will be prevented.

Call it ‘care coordination;’ call it ‘population health management.’ It all depends on what software or consulting you are selling, but you can also call it ‘wrong.’

It turns out the study did find a reduction in cost, but it was (disappointingly) not rooted in the high risk patients like the ACO theory would suggest.  Instead, most of the cost reductions achieved by the ACOs came from low-risk patients. 

How good that be?  A good old fashion restriction of services.  You get less time in the skilled-nursing facility, you don’t get that MRI, you need to go the urgent care instead of the ER.

Wow, this is not the tingly vision of population health management.  This is just evil ‘utilization management,’ a fancy way of saying, ‘No.’  So all of this ACO brain damage, this silver bullet that will solve this mess, is just a sophisticated way to restrict services?  That is an inconvenient truth.

I mentioned the study write-up was hard to read.  That was mostly because the authors were standing on their heads trying to come to grips with the fact that their findings were so at odds with their deeply held beliefs about this singular path to healthcare nirvana. 

How about some straight-up science that is only trying to show us what actually works?

Not Quite Batting Champs

Since the turn of the century, it takes a batting average of about .345-.350 to win the batting title.  Some years are higher and some are lower, but get to the end of the season in the mid-300s and you’re in the race.

Baseball is not the only place where you can have a failure rate approaching 70% and still be deemed successful.  The ACO world uses a similar standard.

CMS recently released the 2015 results for 404 Medicare ACOs and the model is hitting .309.  Not bad if you are hitting in the six-hole and can turn a double play at second base, but we’re not yet turning backflips for these third year results for a key centerpiece of the Affordable Care Act.

Of the 404 Medicare ACOs, 12 are original Pioneer ACOs and 392 are Shared Savings Program ACOs.  Six Pioneers received bonus payments, but only 119 of the MSSP ACOs did.  Quick math gets us that .309 batting average.

For you non-baseball fans, that means about 31% of the ACOs qualified for a bonus. 

Of course, CMS trumpeted the results and the progress.  In fairness, that is up a smidge from the 28% of a year ago and 26% in year one, so we’re moving in the right direction.  And all together, the ACOs saved about $466 million. 

$466 million is a nice number, not quite 2x the Los Angeles Dodger annual payroll and not quite one-tenth of one percent of the Medicare budget.  Yes, that is a bit of a slam.

Oh, since we are doing the baseball comparison and tossing stats around like baseball people do, there was one more stat in the news from CMS.  Since 2015 ended, three more Pioneer ACOs dropped out of the program.  Now we are down to nine of the original 32.  That is .281.