Investing in ACO Capabilities

Healthcare providers find that up-front investments are necessary to achieve success in accountable care contracting.

This article first appeared in the May 2017 issue of HealthLeaders magazine.

For organizations that have not participated in programs like the Medicare Shared Savings Program, the longer they wait and do not build up experience, the harder it gets to be successful in the more advanced risk-based programs,” says Elizabeth Johnson, MD, MS, president and CEO of MaineHealth Accountable Care Organization.

The Portland, Maine–based ACO joined the MSSP upside-risk-only Track 1 in July 2012. MaineHealth ACO was among the Top 10 shared-savings earners in calendar year 2013 —the first performance year of MSSP— serving 48,273 Medicare beneficiaries and receiving shared-savings payments totaling $9.4 million. The ACO features several hospitals including Maine Medical Center in Portland, rural health clinics, federally qualified health centers, and primary care and specialty care physician practices.

Newton, Massachusetts–based nonprofit Atrius Health has achieved shared-savings success in Medicare’s two-sided risk-model Pioneer ACO because the organization invested in ACO-related capabilities over many years. This limited the size of up-front investments, says Emily Brower, MBA, vice president of population health at Atrius Health, which has 30 medical practice sites, more than 50 specialties, and 875 physicians.

“A majority of our revenue is in full-risk, global-budget, outcomes-based contracts. So we had an existing structure on the commercial side to take in claims data and activate care management resources for our patients. We were also doing full risk in our Medicare Advantage partnership, so we had a lot of foundation that we could build on. We did add some capacity in our data warehouse and data analytics team, just because operating an ACO is like adding another big payer,” says Brower.

In Pioneer ACO’s 2015 performance year, Atrius earned $4.4 million in shared savings. In the 2014 performance year, Atrius earned $2.8 million in shared savings.

Unlike MaineHealth ACO, which Johnson describes as “an ACO that has everybody under the tent,” Atrius’ strategy for participating in the Pioneer ACO is focused on physician practices. Last year, more than 1,000 physicians in the Greater Boston area participated in Atrius’ Pioneer ACO.

Essential up-front investments

There are several essential administrative and clinical capabilities required to operate a successful Medicare ACO model, says Cassidy Tsay, MD, MBA, vice president of business development at Sacramento, California–based CAPG, a nonprofit association that represents physicians practicing capitated, coordinated care.

Over the past five years, the Centers for Medicare & Medicaid Services has launched a handful of ACO models. MSSP is the most popular model, with 433 healthcare provider organizations participating in the program last year.

“On the administrative side, someone has to take on the role of submitting information to CMS. You have to have some kind of data-collecting infrastructure, either through an existing EMR system or through a separate system,” she says.

Establishing the ability to collect and analyze data often is the biggest up-front investment for healthcare providers launching governmental and commercial ACOs, according to Tsay.

“You need to know who your patients are, what quality measures these patients are going to be measured upon, and where the patients go for care,” she says. “You also have to have a way to track the physicians in your organization and how you are going to reward them for their performance. The IT infrastructure is the main component that usually has to be built, or purchased, or added on.”

On the clinical side, evaluation of existing clinical personnel and ACO-related staffing needs is vital to success, she says.

“It depends on what you have already. If you are part of a health system, sometimes the system will repurpose some of its staff to do the care continuum and care management work. If you have a de novo physician organization and you are trying to build from within, that is definitely more difficult,” says Tsay. “For care coordination, you may need to hire an RN; you may even need to hire social workers, who are crucial in some parts of the country where there are many social determinants that affect patient care and patient access.”

CMS has offered limited financial support to help healthcare organizations make up-front investments in ACO capabilities, Tsay says, noting the ACO Investment Model (AIM) launched last year has been one of the most significant sources of direct federal financial support.

For most healthcare providers, the best approach to financing up-front investments in ACO capabilities is leveraging internal resources to limit the size of cash outlays or loans, says Tsay.

Paul McBride, MSPH, CEO at Hartford, Connecticut–based Aetna Accountable Care Solutions, says there are “three key areas we see that create a successful ACO relationship and where ACOs should focus resources” in commercial accountable care contracting:

1. Membership growth, such as collaborating on marketing, broker activities, and member retention
2. Clinically integrated network support, such as physician practice support and education initiative support
3. Population health clinical services such as complex case management, patient-centered medical homes, and pharmacy management

Aetna Accountable Care Solutions is a business unit of Aetna Inc., which had established more than 1,800 value-based arrangements with healthcare provider organizations across the country as of December 2016, including more than 280 ACO contracts.

At Atrius, devoting more resources to postacute care settings was the most significant up-front investment required to succeed in Pioneer ACO, Brower says.

“Once we had our ACO claims data, we bumped it up against our Medicare Advantage data for the population for which we had been held accountable previously, for over a decade. That is how we identified the gaps and started building new capabilities. The biggest variation that we saw in medical expense was in postacute care.

“We expanded the number of skilled nursing facilities where we employed doctors, nurse practitioners, and case managers,” Brower says. “We started building a number of new ways of working with our home health agency partner to better manage our ACO patients who were getting home healthcare.”

Technology has been a key element of that heightened cooperation. “We are leveraging our home health partner’s experience in home telemonitoring to help prevent acute exacerbation of chronic illnesses.”

One essential area of up-front investment was more about expending staff energy than spending money, she says.

“With the Medicare population, so much of the care and the intensity of care—and therefore the cost of care—is outside of your walls. So, while we did do a lot of work inside our primary care facilities to make sure we were delivering good geriatric care, we also went out into the community and built strong partnerships with hospitals, skilled nursing facilities, and our home health providers to make sure the care across the care continuum was delivering the quality, outcomes, and cost levels we were looking for.”

At Atrius, gauging the return on investment from up-front investments linked to participating in Pioneer ACO is more complex than tallying shared-savings payments.

“It’s a couple million bucks, when you put it all together,” Brower says of the up-front monetary investments that Atrius made to launch its Pioneer ACO. “Atrius took on the cost of expanding our medical management, care management, and population health infrastructure as part of our clinical and management operations planning and budgeting process.”

“I built a small team to manage the work—to pull together the clinical leaders and the data analytics leaders and the resources in our Epic team—to be able to design and implement the changes. Then we had the additional care managers—the RNs, the social workers, and doctors and nurse practitioners who take care of patients in skilled nursing facilities. We also have a new home-based primary care program to take care of our frailest patients, who could not necessarily get the care that they needed inside the practices.”

Shared-savings payments alone would not have been financially justifiable for Atrius to participate in Pioneer ACO, she says.

“The shared-savings payments have also been a couple of a million dollars. If all that we were banking on was our ACO revenue, then the ACO would not have made a lot of sense. What we got was improvement in our entire Medicare population. We were able to be successful in the Pioneer ACO model, and we were able to see improvements in Medicare Advantage. So when you put it all together, we definitely have had a positive return on investment.”

Improved Medicare patient outcomes have been observed in several areas, Brower says. “Key utilization metrics—including avoidable hospital admissions, postacute episode expense, and patients recovering sooner and at home—have improved for the Medicare population broadly, as they improved for our ACO-aligned population.”

A different set of challenges

MaineHealth ACO has faced a different set of accountable care investment challenges, says Chief Operating Officer Jen Moore, MBA.

“We had been doing value-based risk contracting for about 20 years and had the core components for success. We had a clinical registry that all the primary care physicians were using; we had nurse care managers that were deployed for our primary care practices; and we had a data infrastructure. What we didn’t have—and [this] was one of our early investments—was effective communications and population health management to present the data to physicians. We hired a communications specialist to help us get the word out. We knew engaging physicians would be essential to achieving success in MSSP.”

Caring for seniors poses hurdles to successfully operating a Medicare ACO, she says.

“A year or so into the MSSP, it became clear that we needed to modify some of the programs that we had in place. Although we had a robust infrastructure, we realized that managing the Medicare population was different than the commercial populations that we had been managing.

“Particularly on the care management side, it required a multispecialty team approach rather than the straightforward nurse care–manager approach that we were doing for chronic illness care,” says Moore. “So we transitioned from a chronic illness focus to more of a complex illness care focus. We broadened the care team to include social workers, health guides, and tapping into community resources. … Care transitions became an additional focus, too.”

That modification process required significant monetary investment and ongoing staffing costs.

“For several years, we were financially supported by CMS to build our team out to improve the care transition providers. That program has since ‘sunsetted,’ so we had to figure out how to preserve this important aspect of care delivery. We did not want to lose these FTEs [full-time equivalent employees] that were so critical to our success. We absorbed the FTEs that we had brought on for the care transitions project. That investment alone was about $700,000,” Moore says.

Nearly 10 FTEs were on the line when the CMS funding dried up. MaineHealth ACO absorbed five FTEs in the organization’s operating budget and filled the rest of the positions through attrition, she says.

Direct ROI can be elusive

Realizing direct ROI from investments in accountable care capabilities has been difficult for MaineHealth ACO.

“The reality is that in terms of pure numbers, the ROI is difficult to establish. It was challenging to come up with the $700,000, but we did. We invested those resources in places where there was high need and complex patients where the downstream financial effects will be felt, but we are not going to see those effects immediately. That is a challenge,” Johnson says.

The financial challenges MaineHealth ACO has faced as an MSSP participant could have been insurmountable if the organization had not established a solid accountable care foundation before joining the program.

“Other ACOs that formed solely in response to MSSP had a whole lot of building to do,” Johnson says. “Our initial build was not enormous because we were able to build off our existing 20-year-old physician-hospital organization.”