Progress in Healthcare Reform - Part 3:HIE & ACO

My last two posts addressed progress in healthcare reform from the standpoint of meaningful use & PCMH. In part, I tried to critique some of the recent criticisms of these programs, but in truth, I agree with some of that criticism & laid out why. This is the last post in this series (but certainly not the last post on progress in healthcare reform), & its focus is HIEs & ACOs. The issues with HIEs were covered in a late January (2014) Black Book survey[1] reported in Government Health IT found that 95% of payers, 83% of hospitals & 75% of providers thought that publicly funded HIEs had flawed business models & provided no meaningful connectivity. Let’s look at each of these separately.

Public HIEs’ business (sustainability) models are dominated by the $546M in funding provided by the HITECH Act. As this funding ends (actually, it has ended), public HIEs have had to try to develop other means of sustaining their operations. Among these have been charging (large) fees to stakeholders, but HIE stakeholders are in very different positions relative to paying for services. Most provider organizations are not in the position of being able to pay large amounts for HIE capabilities. Many do not have the financial resources to do so, & those that do, like the big payer/provider organizations, do not want to pay for capabilities that have not been shown to be essential (yet?).

A second potential means of providing sustainability is the development & offering of new capabilities: IT & data management, data warehousing, analytics & nontechnical capabilities such as financial management services. Charging constituents for these services could provide financial stability, but first those services have to be developed to a point where an organization (that may already be doing much of this) will pay for them. This is not as easy as it seems.

The real bottom line, in my opinion, though, is that HIEs have yet to provide a service that is necessary. The original use cases that consisted of a patient serendipitously needing emergency or trauma care far from their primary healthcare provider just does not happen often enough to sustain a half billion dollar investment & less ambitious use cases are not compelling for providing needed care. If HIEs were to develop a model that provided information for care in situations that actually exist in the real world, there would not be a sustainability problem. I work quite a bit with Federally Qualified Health Centers (but the same example is mostly true of ambulatory care in general), & many people who get their ambulatory care at FQHCs get trauma-based (& a good deal of other care) care at hospital EDs. This is especially in urban environments. A person getting their care at one of the Ryan Community Health Network sites in Manhattan, NY could potentially get non-ambulatory care at any one of hundreds of hospital sites. They might have to choose from 10-25 hospital sites in walking distance. What happens when they walk into one of those sites? Chances are that the years of medical records from their health center, or even just their medication history, will not be available to the ED providers. This is a sustainability model right here, & it doesn’t have only to be in NYC.

Of course, the other issue with HIE is that they actually have to work – that is, they have to be able to share critical clinical & administrative data among constituents. This is only incompletely realized in most cases & will have to substantially improve before any sustainability model can succeed. The proof of this is the amount of vendor churn in HIE. I wrote about this as early as 2011[2], & my current observation is that the situation has not changed for the better with many HIEs looking to change their vendor. Much of this is connected to EHR churn as a 2013 survey[3] found that one in six medical practices were looking to change their EHR vendor in 2013 & one of the primary reasons was HIE support.

What can be done to improve this situation?

• First, vendors must provide the connectivity & interoperability for data sharing that users require in order to have the basic functions of an HIE work. Sustainability is a moot issue if the HIE is not providing adequate function.
• If HIEs are to provide additional services (beyond the connectivity & interoperability capabilities referenced just above), then they must provide those services that users want & need, & they must do this in a way that makes these services easy to understand & to use. Examples might include: 1) data warehousing including ETL & normalization so that the data is usable, 2) analytics related the warehousing including “canned” analyses for a “top 10” list of questions/issues, 3) support for accountable care, 4) outsourced IT management etc.
• Capabilities for more “local” data sharing aligned with healthcare usage of the patient population being served.

This brings us to ACOs. Section 3220 of the Affordable Care Act established the Medicare Shared Savings Program & CMS published a final rule on this program in November 2011[4]. ACOs are healthcare organizations that commit to share savings & risks for at least 5,000 Medicare fee-for-service patients. Simply put, the cost of care for these patients is compared to CMS benchmarks & if the organization’s cost is at least 2% less than the benchmark, they qualify to “share” in the savings through higher reimbursements. There is also a shared risk model which organizations opt into where if the savings are below benchmark level (i.e. no savings), the organization may be required to pay CMS back part of it’s reimbursement. The details are, well… substantially more detailed, but you can read the 190 page regulation yourself if you are interested.

So how is this program doing? If we look at the first year of the ACO Pioneer program we can see pluses & minuses. CMS selected 32 advanced healthcare organizations for the Pioneer Program. Of these, nine (28%) dropped out in the first year for various reasons. 13 organizations (41%) were paid bonuses for showing savings. CMS’ estimate for savings totaled $87.6M that is .015% of Medicare expenditure for 2013. Participants’ issues with the program, including those that dropped out, centered around administrative complexity & the relatively small amount of reimbursement compared to the effort of producing savings. If CMS’ expectation is that some form of this program will eventually replace fee-for-service payments, they have a very long way to go.

Why, then, are so many HIEs focused on morphing into ACOs? The answer seems pretty straightforward – sustainability. ACOs offer one of the few models for a healthcare organization that pays money for a level of care & cost savings that the organization would want to achieve in any case. The real question is: “Is this a good idea?” The answer would be yes if it were easy to provide “accountable care” to 5000+ Medicare patients in such a way so that their outcomes were improved & cost savings could be measured against a CMS benchmark. This does not seem to be the case, though. If some of the best healthcare organizations in the country are having trouble providing improved care with the required “shared savings”, then it will be difficult for less well-resourced organizations to do so.  An example would be Texas Health Resources (consisting of 13 hospitals, managing 41,000 Medicare beneficiaries in their ACO), a 2013 HIMSS Davies Award winner for EHR adoption. THR dropped out of the Pioneer Program as they failed to achieve shared savings & would have owed CMS $6M-$9M by the end of 2013[5]. As always, my question is what can be done to improve the situation, although I have to admit we are in very early days with ACOs & I have not worked much on this… however that never stopped me from making suggestions[6]:     

• Every aspect of the program has to be simplified. This includes how savings & benchmarks are calculated, eligibility requirements, administrative requirements, reporting,… every aspect.
• Some program details have to be rethought:
• The amount of reimbursement (shared savings returned) needs to be concomitant with the effort to create those savings. The best data we have on how this might work is from the Physician Group Practice demonstration[7] run by CMS from 2005-2010. If a new ACO made the same investment that the PGP demonstration groups did in their first year ($1.7M), they would need to make a 20% profit to break even over their first three year ACO contract. This seems unlikely.
• Patients in the ACO need to be able to be identified. It is very difficult to measure things like hospital readmissions (& many other quality measurements) if all you have are statistical characterizations. If ACOs are going to be about improvements in population health, then that’s what they should be measured on.
• CMS must do better in coordinating sharing of claims & other data so that participating organizations have the data they need to monitor quality & costs.
• A realistic care model must be part of the ACO model. We know from looking at HIEs that most patients get their care both within the HIE & outside of its participants. The same is true of ACOs, & so the shared savings must take this into account. ACOs cannot be held accountable for patient-driven costs that the organization is not involved in, but they are currently held responsible for overall quality of care & all costs. Conversely all relevant costs need to be taken into account if cost is going to actually be reduced. I don’t know what the answer to this one is, but it needs to be worked on.
• Part of the problem with the shared cost model is that savings are in part calculated on growth rates from a national sample. CMS’ own data[8] show that most ACOs have costs in line with their region & local areas, & that these may differ greatly from the national averages. Costs need to be evaluated based on local conditions, especially where those are different from national averages. 

So,… a lot of issues with HIEs & ACOs. Are these organizational & clinical models the future of healthcare delivery? CMS seems to want to evolve the ACO model into an eventual replacement for their Medicare fee-for-service model. Anything that realistically moves us away from fee-for-service models, & also improves outcomes while reducing costs is an essential & welcome change to the system. Are HIEs a step along this path? For all of the investment in HIEs, greater than $0.5B to date, I do think that they are a temporary step. HIEs need to continue to find sustainability models. I do not think that their governance model lends itself to profitable service provision (not what they were designed for) & the sharing of healthcare data over large distances also does not seem to be a sustainable model. One question to ask about HIE sustainability is: “Were these organizations meant to be self-sustaining businesses?” Obviously, their evolution to ACOs is one way to deal with the major issue facing them, but that then begs the question of whether the majority (or even a small number) of the approximately 250-280 HIEs in the country can successfully make this change, & if they do, can they succeed as an ACO? I think the answer is no unless CMS works with healthcare organizations, payers & all constituents to evolve the ACO model to be simpler, both to qualify for shared savings & to improve the incentives to do so.

Coming up:

•         Many people, myself included, have said that healthcare is really not a market. What does this mean in terms of our current reform effort? & what are its implications for the future healthcare system?
•     Other core industries have done substantial re-engineering work that made them much more effective. Has this work been done in healthcare? What would doing it look like?
•     To be supplanted by relevant & interesting topics as they come up… 

That should be enough for a while…

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[1] http://www.prweb.com/releases/2014/01/prweb11503131.htm

[2] http://www.hiewatch.com/perspective/change-good

[3]http://www.questdiagnostics.com/dms/Documents/hit_quality_solutions/qs_vendor_enewsletter_oct2013.pdf

[4] 42 CFR Part 425 Medicare Shared Savings Program: Accountable Care Organizations. Federal Register 76(212).

[5] THR has said the two biggest impediments to achieving shared savings were lack of CMS to provide timely claims data (to monitor quality & cost) & lack of ability to coordinate care for managed patients seeking care outside of the ACO. Other organizations had these same problems. http://www.modernhealthcare.com/article/20130720/MAGAZINE/307209949/1138. Accessed 3 April 2014.

[6] At the Digital Equipment Corporation, we used to say that the (unofficial) Consulting Engineers’ motto was “Often wrong, never uncertain!”

[7] Health Affairs. Health Policy Brief. Next Steps for ACOs. Health Affairs Blog. January 31 2012.

[8] http://innovation.cms.gov/Files/reports/PioneerACOEvalReport1.pdf