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ACOs, Quality Healthcare with Quantified Savings, featuring Dr. Scott Sarran

April 20, 2012

By Bruce Jaspen

Though an overwhelming number of physicians across the country are unsure about whether to form—let alone participate in—an accountable care organization for Medicare patients, Chicago physicians Lee Sacks, MD, and Scott Sarran, MD, are more than a year into a private sector effort designed to achieve the same thing.

Dr. Sacks, the top doctor at the Chicago area's largest provider of medical care, and Dr. Sarran, the senior physician at the state's largest insurance company, are leading Advocate Health Care and Blue Cross and Blue Shield of Illinois into what they think will be a national model in shared savings between provider and insurer.

ACOs work toward a common goal of pushing less expensive and higher quality medical care by reducing or eliminating unnecessary medical services by more effectively managing the care. An ACO is designed to have physicians and hospitals take responsibility for managing the care of a patient. The reward for a successful outcome is the provider being awarded with extra reimbursement from money saved by the improved quality.

"We need to bend the cost curve," said Dr. Sarran, vice president and chief medical officer at Blue Cross and Blue Shield of Illinois, which provides health benefits for more than seven million people in Illinois. "Current cost trends are unsustainable."

The private sector effort between Advocate and Illinois Blue Cross was launched in January 2011 with more than 400,000 patients. Advocate expects to build on its experience this year when it applies this spring to form an ACO under the Medicare Shared Savings Program, which is a voluntary program formed under the landmark Affordable Care Act signed into law two years ago by President Obama.

"The current fee-for-service system creates a lot of bizarre incentives," said Dr. Sacks, vice president and chief medical officer at Advocate Health Care, which operates a dozen hospitals in Illinois and has more than 250 sites of care. "Hospitals get paid for keeping people in the hospital as opposed to keeping people healthy."

Though ACOs can vary widely in the private sector, the Medicare model involves doctors having to achieve about 30 quality measures.

The Advocate-Blue Cross model also has quality and outcome measures. Advocate will work to reduce the length of patient hospital stays and for the need to readmit patients who have already received treatment but later have been found to have had a complication or infection that warranted a return to the hospital within 30 days.

To achieve their goals, Advocate last summer hired nearly 60 outpatient "care managers," who are largely nurses, with some social workers, who help physicians by monitoring their patients and making sure they adhere to their treatment plans.

"For a patient with chronic disease like congestive heart failure, you need to make sure the patient or their significant other really understands the condition," Dr. Sacks said. "A doctor spends five minutes with a patient and (the patient) forgets what they need to do even before they leave the office."

The care manager first meets with the patient in the doctor's office and then follows up with a phone call or even a home visit as the patient's first point person for everything from a medication refill to home care instructions or someone who can "fast-track" an appointment in an Advocate doctor's office, Dr. Sacks said.

The case manager nurses are there to assist physicians in areas like follow-up, ensuring patients return when necessary or are following the doctor's orders or taking their medications.

"Care managers also do the intangibles like connecting them to a community agency or church support group," Dr. Sacks said.

By more aggressively managing the medical care and adding staff to make that happen, Advocate is hoping to reduce the need for patients to get sicker and end up in the hospital where medical care tends to be more costly, Illinois Blue Cross' Dr. Sarran, the insurance company's vice president and chief medical officer, said physicians and hospitals in the ACO will be paid for outcomes rather than being paid for procedures and visits to the doctor's office.

Some of the things Illinois Blue Cross measures include patients' satisfaction and quality measures such as whether patients are getting breast cancer screenings and whether Advocate hospitals and health facilities are reducing their infection rates.

Advocate has also initiated pilot projects to reduce re-admissions. If successful, Advocate will figure the savings and quality improvement in "future ACO agreements with other payers," Advocate said.

Doctors do not get an upfront payment to help fund their ACO with Advocate. Rather, a bonus waits if they achieve certain outcomes.

"There is no upfront payment," Dr. Sarran said. "If there are savings by Advocate providers against a control group and if Advocate hits a set of quality, safety and service measures built around continuous improvement, they are then eligible to share in the savings. They have to create the savings and hit the quality, service and safety measures."

In January 2012, the Centers for Medicare and Medicaid Services began accepting applications from providers to begin forming ACOs. Advocate said it expects to have an application in this year.

"We applaud CMS for offering flexible and creative options to help Advocate and other provider organizations better serve our patients and communities," Dr. Sacks said. "We are excited about the opportunity to partner with CMS to form an ACO. It's just a matter of determining the best model for Advocate given our size and other business considerations."

Physicians across the country are concerned about the potential high expense of forming an ACO that will contract with Medicare.

And there is reason to think that way.

Advocate spent about $10 million in 2011 on care managers, data systems and infrastructure. Unlike smaller doctor practices, and as the state's largest medical care provider with more than $3 billion in cash on its balance sheet, Advocate has the access to capital to more easily invest in an ACO, according to the September Moody's Investors Services report.

"A doctor practice on a smaller scale is going to struggle," Dr. Sacks said.

But a small doctor practice of 10 or more physicians could get it done by either working through an independent practice association that has more resources or by investing in management resources and technology.

"You could do it on a smaller scale, but you have to be in an organized system of care," Dr. Sacks said.

The Medicare shared savings program will have "significant start-up costs," said Anders Gilberg, senior vice president of government affairs for the Medical Group Management Association, which represents more than 20,000 physician practices. "Challenges remain with this program."

But after doctor groups complained last year and high profile practices such as the Mayo Clinic and Intermountain Health Care balked through their trade group, the American Medical Group Association, that they were unlikely to participate in the Medicare ACO effort, the Obama administration issued new rules through the Centers for Medicare and Medicaid Services to ease physician concerns.

CMS said participating doctors will get access to $170 million in the first year of savings to the Medicare program. Doctors will be able to use that money toward building their ACOs. CMS also reduced by half, the number of quality measures doctors will have to comply with but a CMS spokesman said it will still be "more than 30" quality benchmarks.

CMS' move late last year made ACOs more palatable to doctors.

"Coupled with massive startup costs and the initial rule's many burdensome requirements, such as reporting on 65 quality measures, physicians simply would not be able to make CMS' planned ACO program work," said Dr. Peter Carmel, the president of the American Medical Association, wrote in November on his blog, "On the Road," after CMS issued its new rules on ACOs.

The AMA and Dr. Carmel now believe doctors will at least consider participating in ACOs.

CMS also expects about two million seniors enrolled in the Medicare program to have doctors who will be participating in ACOs that have a contract with CMS.

But even if physicians don't participate voluntarily in the ACOs contracting with Medicare or an effort like the Advocate-Illinois Blue Cross program, analysts don't see today's current system that pays for each treatment or procedure as an option in the future.

"Clearly, the government and insurers have decided that physicians will not be paid for services rendered," physician blogger Dr. Kevin Pho, who writes on his site KevinMD said in a post last year. "Physicians will be paid based on patient outcomes and will share in any losses insurers sustain due to poor patient outcomes. There are going to be quality indicators and physicians with high quality scores will be paid more than those with low scores."

Doctors with lower scores might find themselves outside of networks like those being pursued by Illinois Blue Cross. But Illinois Blue Cross is also working on other arrangements with smaller medical care providers to "align incentives," Dr. Sarran said. "By doing so, we allow providers to share in the upside."

Although not all arrangements with providers will be through ACOs, Illinois Blue Cross has negotiated with 75 medical group entities from large groups to independent practice associations through its HMO plans, HMO Illinois and Blue Advantage.

Insurance companies are under more pressure to spend money on quality medical care rather than quantity.

Another part of the Affordable Care Act requires insurance companies to spend at least 80% of their premium dollars on medical care in health plans they will be selling on state-regulated exchanges.

The health law calls for such exchanges to be operational by 2014 when more than 30 million Americans who don't have medical care coverage will be eligible for subsidies to buy private insurance.

Doctors will be held more accountable no matter how health care reform takes shape, Dr. Sacks said.

"If a doctor has patients going into the ER for asthma, there perhaps needs to be more education to that doctor about asthma," Dr. Sacks said. "Care is more cost-effective and efficient when done with the same physician team."


Bruce Japsen is an independent Chicago health care journalist. He was health care reporter at the Chicago Tribune for 13 years and is a regular television analyst for WTTW's Chicago Tonight, CBS' WBBM radio and WLS-News and Talk. He teaches health care writing at Loyola University Chicago and has taught in the University of Chicago's Graham School of General Studies medical editing and publishing certificate program. He can be reached at brucejapsen@gmail.com.

Source: Chicago Medical Society 

Chicago Magazine, Medicine Issue, April 2012

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