Posts Tagged ‘shared savings’

2016 ACO Results: Majority of Next Generation and Pioneer ACOs Earn Shared Savings

October 20th, 2017 by Patricia Donovan

Six of eight Pioneer ACOs and eleven of eighteen Next Generation ACOs earned shared savings in separate initiatives in 2016, according to newly released quality and financial data from the Centers for Medicare and Medicaid Services (CMS).

In 2016 Performance Year Five of the Pioneer ACO program, one of several new accountable care organization (ACO) payment and service delivery models introduced by CMS to serve a range of provider organizations, only Monarch HealthCare and Partners HealthCare were not among shared savings earners.

Banner Health Network emerged as the top 2016 Pioneer ACO performer, earning nearly $11 million in shared savings based on care provided to its more than 42,000 beneficiaries.

In order to receive savings or owe losses in a given year, Pioneer ACO expenditures must be outside a minimum corridor set by the ACO’s minimum savings rate (MSR) and minimum loss rate (MLR).

The Pioneer ACO model is designed for healthcare organizations and providers already experienced in coordinating care for patients across care settings. It allowed these provider groups to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with but separate from the Medicare Shared Savings Program (MSSP).

The Pioneer ACO Model began with 32 ACOs in 2012 and concluded December 31, 2016 with eight ACOs participating.

Meanwhile, at the conclusion of 2016 Performance Year One of the Next Generation ACO model, Baroma, Triad and Iowa Health topped the list of ACO earners in this program, with each organization accumulating more than $10 million shared savings.

Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program, CMS’s Next Generation ACO Model sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.

According to a CMS fact sheet, 18 ACOs participated in the Next Generation ACO Model for the 2016 performance year, and 28 ACOs are joining the Model for 2017, bringing the total number of Next Generation ACOs to 45. The Next Generation ACO Model will consist of three initial performance years and two optional one-year extensions.

CMS’s ACO models are one of seven Innovation categories designed to incentivize healthcare providers to become accountable for a patient population and to invest in infrastructure and redesigned care processes that provide for coordinated care, high quality and efficient service delivery.

11 Value-Based Healthcare Reimbursement Trends to Know

November 24th, 2015 by Patricia Donovan

value-based reimbursement

One-fifth of healthcare companies experience annual savings of $100,000 to $500,000 from value-based payment models, finds a new Healthcare Intelligence Network Savings survey.

A survey by the Healthcare Intelligence Network on the growing trend of fee-for-value payments has documented healthy adoption rates, measured savings and steady gains in the area of preventive services related to fee-for-value formulas.

Seventy-one percent of survey respondents employ a value-based reimbursement or alternative payment model, according to the October 2015 survey. The study also determined that of those respondents not yet exploring a fee-for-value approach, 26 percent plan to do so in the coming year.

In assessing value-based payment formulas, 56 percent of respondents favor a pay-for-performance model, with 71 percent employing these models in contracts for commercial populations.

Despite healthy adoption of alternative payment approaches, one quarter of respondents say the infrastructure required to sustain value-based payment models is the reimbursement trend’s most significant hurdle—greater even than the challenge of data integration or patient engagement, the survey determined.

In evaluating healthcare providers for value-based rewards, respondents most often review markers tied to quality (82 percent), hospital readmissions (56 percent) and patient satisfaction (56 percent) to determine payment, the survey found. The use of physician report cards to track provider performance was reported by 63 percent of respondents.

The shift toward fee-for-value has had the greatest impact on the area of prevention, respondents said, with 69 percent attributing a rise in preventive care to value-based reimbursement models.

Other survey findings included the following:

  • Twenty-one percent of respondents reported savings from value-based payment models as ranging from $100,000 to $500,000 annually.
  • Value-based payment contracts most often were executed for populations having more than 100,000 beneficiaries.
  • Fifty-six percent said the market lacks sufficient technological support for value-based payment models.

Download an executive summary of results from the Value-Based Reimbursement survey.

Post-Acute Care Improvement: 9 Trends to Know

August 25th, 2015 by Patricia Donovan

post-acute care trends

Healthcare favors a unified cross-setting PAC payment system, according to 2015 PAC metrics from the Healthcare Intelligence Network.

Across the continuum of post-acute care (PAC) providers—defined as skilled nursing facilities (SNFs), home health agencies (HHAs), inpatient rehabilitation facilities (IRFs), and long-term care hospitals (LTCHs)—skilled nursing is the sector most in need of reform, say 40 percent of healthcare organizations who responded to a 2015 survey on Post-Acute Care Trends.

Also in need of revamping are PAC payment models, the Healthcare Intelligence Network survey determined. While 53 percent have already incorporated PAC services into value-based reimbursement methodologies such as an accountable care organization (ACO) or shared savings arrangement, 60 percent of respondents would like to see Medicare adopt a unified cross-setting PAC payment system that would follow the patient across care sites.

Already participating in Models 2 and 3 of CMS’s ongoing Bundled Payments for Care Improvement (BPCI) initiative, PAC providers are also gearing up for closer scrutiny of skilled nursing facility (SNF) readmission rates by Medicare beginning in 2018. The federal payor has been monitoring 30-day hospital readmission rates since 2012, gradually expanding the list of applicable readmissions measures and scaling readmission reimbursement.

The top tactics to improve quality, enhance care coordination and reduce spend associated with post-acute care include care transition management, development of PAC partnerships and integration of all PAC services, say respondents.

Here are five more metrics from HIN’s 2015 Post-Acute Care Trends survey:

  • A case manager helms PAC improvement initiatives for 38 percent of respondents.
  • Patient transitions between care sites is the top PAC challenge, say 25 percent of respondents.
  • Half of responding organizations say heart failure and shock are the most challenging health conditions to manage in PAC settings.
  • Eighty-five percent of respondents said care coordination improved as a result of these efforts, while 36 percent observed a decline in hospital readmissions from PAC facilities.
  • The INTERACT™ (Interventions to Reduce Acute-Care Transfers) program and tools, designed to reduce the frequency of PAC transfers to acute hospitals, are frequently cited by respondents as critical to PAC coordination. The INTERACT tool was initially developed by Joseph G. Ouslander, MD and Mary Perloe, MS, GNP, at the Georgia Medical Care Foundation.

The post-acute care arena is rich with opportunity for improvement, agreed many respondents.

“PAC is the blockbuster drug the U.S. healthcare system has been waiting for,” concluded one survey respondent, noting that post-acute care provides big financial levers for provider organizations to align clinically, financially and operationally. “Forward-thinking providers are organizing to amass large pools of manageable risk and recalibrating to optimize care delivery and share meaningfully in the medical expense reduction associated with better more effective and patient centric care. This is a win all the way around.”

Download an executive summary of 2015 PAC survey results.

Which Value-Based Reimbursement Model Will Ultimately Align Physicians?

February 24th, 2014 by Patricia Donovan

Move over, ACO: a new payment model in town “has an excellent chance of coalescing value around a single model,” according to Greg Mertz, MBA, FACMPE, managing director of Physician Strategies Group, LLC.

It’s not yet law, but the federal Better Care, Lower Cost Act introduced last month circumvents the ACO’s attribution model, which Mertz describes as “loosey-goosey,” and targets the sickest and highest cost patients, who are also eligible for financial incentives if they play by the act’s health management rules. In Mertz’s eyes, the ACO has a limited life span.

Touching briefly on the proposed legislation, Mertz all but left the accountable care organization off his list of six value-based physician compensation models explored during Physician Alignment: Which Model Is Right for You? workshop sponsored by the Healthcare Intelligence Network — except as a footnote under Population Management, a model Mertz described as still evolving.

And while three-quarters of healthcare leaders agree that quality is driving the need for alignment around a preferred reimbursement model, the simple presence of physicians in a hospital does not translate to alignment.

Instead, the financial catnip of incentives will draw physicians to collaborative efforts, he said. Mertz moved workshop participants along a “collaborative continuum” of alignment from an environment of “mutual toleration”—the state of many two- to four-doctor practices today where planning can be challenging—to Population Management, a model he termed “the least defined, most questionable of the value models right now.”

In all, Mertz explored the following six models:

  • Process Improvement
  • Physician-Hospital Organization (PHO)
  • Shared Savings
  • Case Pricing/Bundled Payments
  • Co-Management
  • Population Management

Engaging physicians in process improvement efforts is a first step toward much larger things, Mertz noted. “If you can’t get doctors to collaborate over something like standard orders, surgical trays or discharge orders, you’re going to be hard-pressed to move up the continuum toward any other kind of value models.”

Shared savings, a term nearly synonymous with kickbacks until a few years ago, now aligns with the government’s goal of reducing costs, Mertz noted, although it can be complex to implement. High cost service lines like orthopedics are good contenders, he added.

Case pricing and bundled payment models have great potential, while population management requires large numbers of physicians and patients. Many questions still surround population management, including the idea model to employ (Medicare’s ACO or a commercial payor’s), the best quality metrics to measure, and the likely short- and long-term benefits.

To guide workshop participants, Mertz presented examples of a small rural hospital, a competitive community hospital, and a large health system, outlining the challenges, likely realities and possible reimbursement models for each.

Regardless of an organization’s size, to foster alignment, healthcare companies should focus on education, engagement and fostering good citizenship among physicians, Mertz said, defining this last concept as being an active participant in organizational efforts.

“Help [physicians] develop the skills and ability to interact with their peers. Just because they have an MD or a DO after their name, doesn’t mean they know how to do that.”

Those efforts will pay dividends, he notes—including the kind that could eventually end up in physicians’ pockets.

Click here for an extended interview with Greg Mertz on the future of accountable care organizations.

Guest Post: Accountable Care as a Panacea

April 22nd, 2013 by Ally C. Evans


ACOs are testing ways to disrupt the high-cost culture of healthcare.

In the final post of a three-part series on “Accountable Care: The Power of Partnerships,” guest blogger Ally C. Evans, healthcare consultant with Freed Associates, makes the case for ACOs as a solution.

Because ACOs are in a state of evolutionary fluidity, it is too early to know if they will cure our fragmented delivery system woes, but they certainly have potential. We know this because although the term ‘ACO’ is relatively new, the concept itself is not. The likes of Kaiser Permanente, the Mayo Clinic and the Cleveland Clinic have operated under the principles of integration, population health management and accountability for a long time. In fact, they are so good at it that they’re really more like Super ACOs. They have developed highly sophisticated, centralized practices, IT systems and care networks that connect patients to the right services at the right time to optimize outcomes, the patient experience and service utilization. As a result, they have emerged as some of the top healthcare brands in the country and provide best-practice examples to inform ACO strategy and tactical implementation.

The major benefits of ACOs are clear. Healthcare spending reductions will be driven by attempts to disrupt the high-cost culture associated with volume-based payment. Healthcare quality enhancements will leverage both preventive and reactive tactics to drive performance relative to quality benchmarks. Specifically, enhanced service integration and care coordination will ensure effective management of chronic conditions in low-cost primary care settings, minimizing demand for high-cost acute and ancillary services. If shared savings appropriately offset the revenue loss providers may experience due to efficient service utilization, more patients will receive the appropriate standard of care at a lower price. Although this concept doesn’t seem like rocket science, given the history and complexity in healthcare it’s nothing short of groundbreaking.

Of course, ACOs aren’t necessarily the right choice for every provider. There are inherent risks that will keep the ACO debate whirling around board rooms for some time, not the least of which are the risks associated with change burn-out, inequitable care (i.e. patients within an ACO get a higher standard of care than non-ACO patients), misalignment with organization strategy, revenue reduction, financial penalties tied to low performance, and up-front infrastructure investment. CMS is addressing the latter concern with their Advanced Payment ACO, which provides a proportion of projected shared savings up front for start-up costs.

A small but rapidly growing proportion of healthcare organizations have taken the ACO plunge, with a reported 221 operating across 45 states as of May 2012. These ACO early adopters have varying structures, with more than half being sponsored by hospital systems and just over one-third sponsored by physician groups.1 Specific to the Medicare ACO programs, 116 ACOs had joined the Shared Savings Program as of July 2012 with another cohort joining in January, 2013. An additional 32 ACOs are participating in the CMS Pioneer ACO Program, designed for more experienced and integrated organizations, and 20 are participating in the Advanced Payment ACO. The greater majority of CMS ACOs are physician-led.

If ACOs are successful on a large scale in this country, they will fundamentally alter our health system, underscoring the notion that high-quality care and responsible spending are the right thing to do. As a patient-centered approach, these programs have cost benefits that will eventually filter back to employers and patients, with reductions in health-insurance premiums and subsequent reductions in cost-driven avoidance of care and medication non-compliance.

Are ACOs the answer we’ve been waiting for, or another flavor of the month program waiting to fail? Based on the ethical, economic, and clinical potential, we think it is a significant step in the right direction.


  1. Muhletein, D., et al. Growth and disperson of accountable care organizations: June 2012 update. Leavitt Partners, June 2012. Available online.

Read Part 1: Why Accountable Care Organizations?

Read Part 2: Accountable Care Reflects Paradigm Shift from Volume to Value.

Ally C. Evans is an industrial engineer specializing in process and system improvement in healthcare. Most recently, Ally has driven various initiatives in the Accountable Care arena, focusing on the design and implementation of ACO strategy and tactical interventions. She is a consultant with Freed Associates, a California-based healthcare consulting firm. Their work is to provide sustainable solutions that enable healthcare organization to improve patient care services reduce costs and increase operational efficiency.

HIN Disclaimer: The opinions, representations and statements made within this guest article are those of the author and not of the Healthcare Intelligence Network as a whole. Any copyright remains with the author and any liability with regard to infringement of intellectual property rights remain with them. The company accepts no liability for any errors, omissions or representations.

The PHO in 2013: More Flexibility, Less Risk Than Eighties Model

January 31st, 2013 by Patricia Donovan

Unlike the hospital-dominated physician-hospital organization (PHO) prominent 30 years ago, today’s PHOs are largely physician-centric, notes Travis Ansel, manager of strategic services for the Healthcare Strategy Group. And make no mistake: in the new fee-for-value healthcare universe, payors and employers understand that physicians are the one that control process and control cost, he asserts.

“Hospitals and physicians have a great incentive right now to figure out how they should be working together going forward, and how they need to align legally and what model to use in order to engage those populations,” Ansel notes. Providers unable to provide efficient quality care that’s going to help hospitals survive under value-driven reimbursement will face losses in market share and reimbursement, he continues.

Ansel and Greg Mertz, director of Healthcare Strategy Group, recently explored the key contractual elements to consider when creating a PHO during a webinar on Physician Hospital Organizations: Developing a Collaborative Structure for Shared Savings Agreements.

Today’s PHOs are jointly governed by physicians and hospitals, they explain, with the common goals of quality and cost management and the sharing of savings from any joint contracts or arrangements — elements that weren’t necessarily part of the eighties’ PHO equation.

Compared to other emerging shared savings arrangements — the Medicare Shared Savings Program, commercial accountable care organizations (ACOs) and public and private bundled payments — PHOs offer more flexibility, notes Mertz. For example, a PHO has the option of expanding into an ACO in the future, as well as target multiple populations, something that can be more challenging in an ACO due to its reporting requirements. “Today’s PHO is scalable. It can start with a single client and grow to ACO.”

But flexibility doesn’t preclude serious considerations around forming a PHO, he continues, including its legal structure, number and type of participating physicians, size of the patient population, compensation plans, data support, and most importantly, evidence-based protocols against which to measure PHO performance. And while cost reduction is paramount, patient satisfaction levels are getting equal attention.

“The big difference between today’s programs and the gatekeeper HMO’s back in the eighties is that nobody worried about whether the patient was happy with the HMO,” says Mertz. “Now within public programs, there’s a formal process of monitoring and reporting on patient satisfaction.”

What will the typical PHO look like? Owner physicians and hospitals, plus contracted providers such as imaging, pharmacy and other ancillary services. The PHO team will also rely heavily on nurse case managers, nurse navigators to really interact with the patients as they help to coordinate their care. “It’s cheaper to intervene now than in the emergency room,” Mertz notes.

It is also important to have an accurate picture of the patient population. “Diabetes, pulmonary, cardiac, and depression are the top cost drivers, but dual eligibles (Medicare-Medicaid patients) and patients with behavioral issues are chronically non-compliant and are the biggest cost consumers. It’s important to identify those people up front and develop a patient registry-managed plan for those patients.”

Of course, key to any shared savings model is quantifying the cost of services and then savings gleaned from the PHO’s clinical protocols and quality efforts — then distributing the savings equitably.

The challenge for fledgling PHOs will be changing provider behaviors. “Participants have to believe that the PHO is better than the alternative,” says Mertz. “Creating a culture of collaboration is key; success hinges on provider engagement.”

And not just the physicians that are part of the PHO. “The PHO is really a vehicle to involve all physicians, including community doctors,” concludes Ansel. “Community physicians that aren’t a part of employed networks are just as important and have just as much insight as to how the industry succeeds under this new reality.”

Listen to an expanded interview with Travis Ansel and Greg Mertz about today’s physician-hospital organizations.

Q&A: How Clinical Integration Creates Framework for Value-Based Payment Contract

August 8th, 2012 by Jessica Fornarotto

Advocate Physician Partners is proud of its infrastructure of success in shared savings, built on a foundation of clinical integration.

“To describe how valuable our clinical integration program is at Advocate Physician Partners, two areas need to be highlighted,” says Dr. Carrie Nelson, medical director for special projects with Advocate Physician Partners (APP).

Dr. Carrie Nelson, Medical Director for Special Projects

Prior to her presentation on Bending the Cost Curve with a Commercial Value-Based Payment Contract: A Case Study from Advocate Physician Partners, Dr. Nelson discussed in depth APP’s clinical integration program that helped to set the framework for their value-based payment contract with Blue Cross Blue Shield of Illinois (BCBSIL). This payor-provider agreement has reduced inpatient admissions and ER visits, and has bent the cost curve after its first year of implementation. APP’s clinical integration program is described in detail in
Case Study in Clinical Integration: The Advocate Physician Partners Experience.

HIN: How has APP’s clinical integration of more than 4,000 physicians and 10 hospitals over the last few years helped to lay the groundwork for your value-based payment contract?

(Dr. Carrie Nelson): We feel very fortunate that we have a strong clinical integration program in place. It has created a strong foundation for the work that we’re doing with shared savings. There are two major areas that demonstrate how valuable that foundation has been to us.

First, it is a culture of delivering that value that we have established here over the last eight years or so since we’ve been deeply involved in this clinical integration program. That has been a tremendous spirit to build upon with movement toward shared savings and value-based contracting. Physicians in our network have a strong understanding of the importance of delivering that value and achieving quality metrics and not just a fee-for-service volume-based approach to care.

The second would be the framework that it has laid for us in how we can continue to incentivize the physicians to achieve the goals associated with shared savings. We have been able to build a number of our key priorities into the clinical integration program, such as decreasing ER utilization, length of stay, and admissions for ambulatory care-sensitive conditions. Many of those things have rolled into our clinical integration program and have helped physicians to be energized to help achieve these shared goals.

We feel very fortunate that we had this program in place in many cases before it was truly rewarded. It has also provided this cultural basis and framework for building upon the successes that we’ve already seen. The last thing to remember is this: all that needs to be accomplished in shared savings can be overwhelming. Clinical integration and the measurements that we’ve been involved in for many years are some of those things.

It’s nice to be able to focus on some alternative areas to show our infrastructure of success in shared savings, instead of having to focus explicitly on just the measures that are brought along.