The Engelberg Center for Health Care Reform at Brookings | The Dartmouth Institute

June 6–8, 2012

Third Annual National ACO Summit

Follow us on Twitter at @ACO_LN

and use #ACOsummit.  

ACCOUNTABLE CARE ORGANIZATION SUMMIT

WASHINGTON, D.C.6/7/2012

FRANCIS J. CROSSON, M.D.

THE KAISER PERMANENTE INSTITUTE FOR HEALTH POLICY

Building a Culture Of Accountability

America’s Largest Nonprofit Health Care Organization

Fully integrated health care delivery system8.6 million members15,000+ physicians166,000 employees8 regions serving 9 states and DC35 hospitals and medical centers441 medical offices450,000 surgeries85,000 deliveries$45 billion annual revenue (2011)

Kaiser Foundation Health Plan

Kaiser Foundation Hospitals

Permanente Medical Groups

Health Plan Members

Medical Service Agreement

Hospital Service Agreement

Group / Individual Contracts

Operating Budgets Capitation to the Group

REVENUE

EXPENSE----------------------------------------------------------------------------------------------------

--------

Kaiser Permanente

4

POPULATION

Kaiser Permanente Experience— Prerequisites for Success

Effective integrationA common vision and sense of purposeTrusted governancePhysician leadership (and followership)An effective management structureAligned financial incentives

Types of Integration

Clinical – shared responsibility for quality and outcomes (e.g. hospital acquired infections)

Financial – shared responsibility for costs (e.g. bundled payments; managed purchasing of O.R. supplies)

Functional – shared capabilities (e.g. a common electronic medical record system)

Structural – shared governance and management (intra-entity or contract based)

A Common Vision and Sense of Purpose

It should be more than a financial interestIt should connect to quality of care and other social and professional values It should contain a sense of common destiny and belief in shared responsibility for performance

7

Trusted Governance

Principled – grounded in the missionParticipatory – physicians directly influence who will lead and the policies of the organization Perceived as equitable – fair distribution of resources, rewards and recognition; due process

Physician Leadership9

Leadership matters – very little happens without it

Engaging others in carrying out the purpose of an organization – moving from “what is” to “what could be”

Leadership requires followers, and is

“… the art of achieving much more than the science of management says is possible..” Colin Powell

What will be required of physician leaders..10

Aptitude helps, but skills (which can be built) and knowledge (readily acquired) much more important..

Capacity for system thinking, and enterprise-wide perspective

Communication (verbal and written) – ability to mobilize colleagues behind a vision of future success, without minimizing the difficulty of the journey

What will be required of physician leaders?11

Leadership attributes: stamina (physical and emotional endurance); courage; humility; emotional intelligence; intellectual rigor; optimism; fairness

Leadership capabilities: think long term, think strategically; exert influence without authority; translate complex ideas into clear stories; understand their role as symbol

What will be required of physician leaders?12

Management expertise: “acquire it or hire it”, e.g. finance (just enough to ask the right questions); bargaining and negotiation; conflict resolution; interdisciplinary team building; performance management..

Advocacy skills: not the same as leadership, but has a place in the leaders’ tool box

Commitment to develop others – leadership development produces great followers

Management Structure

Multi-level – organization; facility; departmentMatrixed – administrative policies vs. clinical policiesSupported at all levels by accurate and timely performance information (data and analysis)

Aligned Incentives

Mission – shared visionQuality – the patient comes firstReputation – common sense of prideSustainability – future as important as nowCareer and professional enhancement – a place to build a lifeFinancial – organizational/individual/patient

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CMWF Delivery System Reform Model

Capitation

Fee-for- Service

Solo Practice Integrated Delivery System

PA

YM

EN

T M

OD

EL

DELIVERY MODEL

Group vs. Physician Payment

Group Capitation Group Fee-for-Service

S

a

l

a

r

y

F‐F‐S

• Permanente• Group Health• Fallon

• Scott and White Clinic• Mayo Clinic

• Atrius/Harvard Vanguard• Health Care Partners

• Austin Regional Clinic• Billings Clinic

ACA Shared Savings Model

California “Delegated Model”Full Risk 

Capitation

Corridor 

Capitation

FFS +/‐

“Bonus”

FFS + 

“Bonus”

FFS Only

Bundled Payment

Medicare Group Practice Demo

PCMH

Primary 

Care

Specialty 

Care

Admin. 

RK (B)

Referral 

Costs

Non 

Referral 

Costs

Hospital 

Costs

Prescr. 

Rx (D)

A Schematic of ACO Risk Assumption

“Breadth”

of Risk

“Dep

th”of Risk

Permanente Medical Groups

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Summary

Building a successful accountable care organization requires building a “culture of accountability”. Such a culture is based upon more than financial incentives, no matter how striking or sophisticated.

Track 1: Accountable Care Payment Strategies

Panel 1: Creating a Pathway to Population Based Payments

Jay Crosson, MD, Senior Fellow, Kaiser Permanente Institute for Health PolicyBruce H. Hamory, MD, Executive Vice President, Managing Partner, 

Geisinger Consulting Services for Geisinger Health System

Gerry Meklaus, MHSA, Senior Managing Director & Practice Leader, 

Physician Enterprise, FTI Consulting, Inc.

Warren Skea, PhD, Director, Health Enterprise Growth Practice, 

PricewaterhouseCoopers

Robert Kocher, MD, Partner, Venrock; Visiting Fellow, Engelberg Center for 

Health Care Reform, The Brookings Institution (Moderator)

c.2012 Alice G. Gosfield and Associates PC

Getting Payment Strategies to Work: The Critical Physician Nexus

Alice G. Gosfield, Esq.3rd National ACO SummitJune 7, 2012

Alice G. Gosfield, J.D.Alice G. Gosfield and Associates, PC

2309 Delancey PlacePhiladelphia, PA 19103

(215) 735-2384Agosfield@gosfield.com

www.gosfield.com www.uft-a.com

An accountable health care organization is one which has explicitly focused on its clinical culture as supportive of appropriate quality for which such an organization is willing to be evaluated, compared and held responsible.

Gosfield, “Quality and Clinical Culture: The Critical Role of Physicians in Accountable Health Care Organizations,” (1998)

And today will have payment consequences from it’s activities

Non-FFS/DRG Payment FormsCase Rates: defined episodes of careBundled Payments: essentially undefined

Implies episode based payment because different provider services are ‘bundled’New CMMI opportunities are open-ended and flexible

Global capitation: actuarial riskPayor GainsharingACOs

New Forms of Payment

Medical Home and Advanced Medical Home

Care coordination, infrastructure, NCQA“If only….”

Geisinger ProvenCareSurgical, hospital focused, system-based

……This isn’t enough ….

Provider Payment Reform for Outcomes, Margins, Evidence, Transparency, Hassle- reduction, Excellence, Understandability and Sustainability

Background: www.hci3.org

501 (c)3Independent boardRWJF grant through March 2011Four pilot sites:

HealthPartners in MSP; Crozer-Keystone in PA; PriorityHealth in Grand Rapids,MI; ECOH in Rockford, IL

Other implementations: NY, CO, Providence in OR, NJ, FL, NC

Basic Concepts

Amount of payment is derived from assessment of projected resources to deliver care in a good CPG across ALL providers treating the patient for that condition

Negotiated base payment takes into account severity and complexity of patient’s condition

MoreEvidence informed case rate (ECR) encompasses all providers treating a patient for that condition and is allocated among them in accordance with that portion of the CPG they negotiate to deliver

Comprehensive scorecard measures process, outcomes, patient experience of care, measured at level of contracting provider (e.g., group, IDS, individual)

We don’t care what you are. It works for all

70% of the score turns on what you do; 30% on what everyone else does

Clinical collaboration to succeed

Typical v. PAC

Medical$595 Million

•Pharmacy•$732 Million

•Pharmacy•$407 Million

Medical $108 Million

Medical$488 Million

Pharmacy$325 Million

DiabetesRelevant Services

$1.32 billion

• Claims that do not have a “PAC” code

• All diabetes-related inpatient stays

• All professional services during stays

• All claims with “PAC” diagnosis codes

• All claims with “PAC” procedure codes

• Drugs used to treat PACs

Potentially Avoidable

Complications:$813 million

Typical claims and services:

$515 million

PAC Allowance after Re-basingFactors Avg

Cost Number Total Cost

Total DM cases $6,076 218,541 $1,327,855,11 6

Claims for typical patients $3,002 171,631 $515,236,262Claims for patients with PACs $6,685 121,576 $812,735,560Added Burden for PACs $6,685 $812,735,560Evidence-informed Adjustment (Adjustment for Underuse) 90% $957 154,462 $147,879,761

Allowable Cost of PACs 50% $332,427,899Flat Fee Portion (spread 25% costs of compl over all cases) 25% $380 $83,106,975

Proportional Rate (75% of compl costs as a rate over base costs) 75% 38%

Factors Patient 1

Patient 2 Patient 3

Cost of Care of Typical DM Case (severity adjustment models) $311 $2,453 $8,375Cost of Care of Typical DM Case (after rebasing on CPGs*) $1,317 $3,459 $9,381

Allowance for PACs $881 $1,695 $3,945Flat Fee Allowance (25% of compl costs spread over all) $380 $380 $380 $380Proportional Allowance 38% $500 $1,315 $3,565Margin 10% $132 $346 $938Margin Plus Allowance for PACs $1,012 $2,041 $4,883Net Percent Allowance for Margin plus PACs 77% 59% 52%Total ECR per Patient (severity-adjusted + margin + Allowance for PACs) $2,329 $5,500 $14,264

Inpatient for AMI

Hip Replacement Summary

HACs vs. PACs (Hip Replacement)

Care defects consume billions of dollars every year

The results of an analysis for a large national employer showed that 10% of overall costs of care, across all employees and dependents, could be saved if defects were reduced to zero.

Cost of care defects as % total cost of care for each condition/procedure

How can PROMETHEUS Payment data be used today?

Identifying PACs in a claims database can provide actionable information for hospitals and their physiciansHospitals are employers and don’t deliver care any differently to their own covered populations than to the patients who come to them independentlyThe ECRs say who should be paid for what avoiding the PHO food fights in ACOsThis can help primaries surviveIt is a bundled payment, episode grouper, clinically integrated model

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But what happens below the payment from the payor?

Governance issuesSupermajority issues: e.g. 75% of each class of ownership/representation

To change compensation/allocation metricsAdding providers Adding classes of providersTerminating a provider Resolving an appealTerminating the agreement

Contractual issuesDistributing upside and allocating downside riskAppeals and Dispute resolutionFinancial consequences to providers

Why Is Physician Engagement around Quality and Value So Important ?

Physician centrality Plenary legal authorityPortal to the system

Their involvement can enhance results, improve the culture, and foster truly effective inter-disciplinary collaboration;but their disengagement or malevolent engagement can thwart other efforts

E.g., Cedars Sinai CPOE

What Makes Physicians Different?

Responsibility for individualsAccountability for life and deathLegal captain of the shipCollegiality and “groupiness”Evidence based, scientific decision-makingOutcomes and quality improvement feedback (the dynamism of medicine)Due process as the scientific method

Why physician engagement?Health systems will not succeed without the enthusiastic engagement of their physiciansAcquisition/employment has nothing to do with potential successIt is about physician values

GEMS report for Cmwlth Fundhttp://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2010/Apr/1389_Minott_group_employed_model_hlt_reform_ib_v2.pdf

True Clinical Integration“Physicians working together systematically, with or without other organizations and professionals, to improve their collective ability to deliver high quality, safe, and valued care to their patients and communities.”

Gosfield and Reinertsen, 2010 http://www.gosfield.com/PDF/ACI-fnl-11-29.pdf

http://www.uft-a.com/CISAT.pdf

OPERATIONS

: Standardization: Guidelines and Protocols

Not Really in the Game

Making an Effort Committed and Capable

We are either a multi- specialty group practice, or we are hospital-employed physicians

Each doctor does his own thing. Any standing order sets etc. are for each individual doctor.

We formally adopted some practice-wide protocols but only a few enthusiasts actually use them.

We have standardized whatever is standardizable. We are all measured on and expected to follow the protocols that we’ve adopted.

We are the hospital medical staff, trying to be more clinically integrated with each other, and with the hospital, e.g. becoming an ACO

We don’t evaluate physicians for their economic performance, nor do we require standardization for privileging or participation.

A few clinics and practices have adopted guidelines and some standing order sets, but they are not an expectation of all physicians on the medical staff.

Standardization is an expectation of all physicians, is taken into account in credentialing and privileging and those who cannot conform or actively resist have their privileges and/or ACO contracts terminated.

© 2011 Alice G. Gosfield, JD and James L. Reinertsen, MD

Principles of Engagement

Involve physicians from the earliest moment.Identify the real leaders, early adopters.Choose messengers and messages carefully.Make the involvement of the physicians visible.Build and then rebuild trust: do what you say, say what you do, consistently over time.Use open, frequent and candid communication.

“Cooperation can get started by even a small cluster of individuals who are prepared to reciprocate cooperation, even in a world where no one else will cooperate. There are two key requisites… reciprocity and the shadow of the future.”

---Robert Axelrod

ResourcesGosfield, "Clinical Integration Self Assessment Tool v.2.1 (Network/IPA Version), Jan 2012 http://www.gosfield.com/PDF/CISAT_IPA_V.2.1.pdfGosfield and Reinertsen,“Achieving Clinical Integration With Highly Engaged Physicians” (Nov 2010), 31pp http://www.gosfield.com/PDF/ACI-fnl-11-29.pdfGosfield, “Making PROMETHEUS Payment® Rates Real: Ya’Gotta’ Start Somewhere ” (June 2008) 15pp http://www.gosfield.com/PDF/MakingItReal-Final.pdfGosfield, Quality and Clinical Culture: The Critical Role of Physicians in Accountable Health Care Organizations American Medical Association, Chicago, Illinois, 1998,47 pp http://www.ama-assn.org/ama1/pub/upload/mm/21/quality_culture.pdf

Track 1: Accountable Care Payment Strategies

Panel 2: Payment Strategies to Reduce CostsAlice G. Gosfield, JD, Principal, Alice Gosfield

Associates

Wayne Jenkins, MD, MPH, President, Orlando Health Physician Partners, 

Senior Vice President, Orlando Health

Lewis Sandy, MD, MBA, Senior Vice President, Clinical Advancement, 

UnitedHealth Group Incorporated

Greger

J. Vigen, MBA, FSA, Independent Health Actuary

Kavita

Patel, MD, MSHS, Fellow, Engelberg

Center for Health Care Reform, 

The Brookings Institution (Moderator)

The Engelberg Center for Health Care Reform at Brookings | The Dartmouth Institute

June 6–8, 2012

Third Annual National ACO Summit

Follow us on Twitter at @ACO_LN

and use #ACOsummit.