Affordable Care Act Creates MSSP and ACOs
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1 ACO Update Matt Brow VP, Public Policy & Reimbursement Strategy McKesson Specialty Health November 28, 2012 Affordable Care Act Creates MSSP and ACOs Section 3022 of the ACA added a new section 1899 to the Social Security Act that requires the Secretary to establish the Medicare Shared Savings Program The program is intended to encourage physicians and other providers of Medicare-covered services and supplies (e.g., hospitals and others involved in patient care), to create a new type of health care entity, an ACO, that agrees to be held accountable for improving the health and experience of care for individuals and improving the health of populations, while reducing the rate of growth in health care spending. The final rule, the notice of the Advance Payment ACO Model, and the final waivers in connection with the Shared Savings Program were published in the Nov. 2, 2011 Federal Register
2 The MSSP and Pioneer ACOs MSSP is a permanent program to encourage the development of ACOs, which must agree to: Be accountable for at least for 5,000 Medicare FFS beneficiaries who will be free to choose providers for a 3 year period. Options to take risk or not only pursue upside potential (with lower bonus %). Pioneer ACO program developed by CMMI to test how well ACOs and other costcontainment programs integrate and coordinate care, improve quality, and reduce healthcare costs. Accepts risk for at least 15,000 MFFS beneficiaries (5,000 in rural areas) for a period of 3 years or less. ACOs are paid on a FFS for first two performance periods and if savings are achieved and program requirements are met will transition to population-based payments in future. Pioneer includes more risk, but provides greater rewards 3 3 Medicare Shared Savings Program Final Rule 4 2
3 Patient Assignment Focus on PCPs Primary care physicians will lead the formation of ACOs and specialist physicians may participate Patient assignment first based on primary care services by primary care providers which are defined as physicians who have the primary specialty designation of internal medicine, general practice, family practice, or geriatric medicine If no primary care providers provided primary care services, then patients attributed to the ACO of the specialist who provided the most primary care services Assignment of Beneficiaries to ACOs CMS may be advertising the assignment as preliminary prospective but in reality it s still retrospective assignment 5 Patient Assignment Focus on PCPs Patient Assignment Implications for Specialists Some specialist-managed patients don t count toward targets or performance Specialist-managed patients may be inappropriately attributed to an ACO through a relatively meaningless interaction with a primary care physician 6 3
4 Final Rule - Benchmarks All Medicare Part A and Part B spending Benchmark set using three years of historical spending for beneficiaries managed by physicians in the ACO, weighted more heavily on the most recent year and adjusted forward with a small inflationary index. CMS would remove any per-capita spending above the 99th percentile, or approximately $100,000 Benchmarks would not be reset until the end of the threeyear ACO performance period. 7 Benchmarks Implications for Specialists Comparison of current costs to historical costs will not work for many specialists New technology and generics are significant and mandate concurrent controls/benchmarks versus historical For example, recent study estimates cancer drug spend will increase by >10% annually over the coming years Outlier carve-out Excludes a significant portion of cancer patients Average chemotherapy patient cost = $111,000 (Milliman) Outlier exclusion is >= $100,000 Three year lock-in If the ACO wins in years 1-3, then what? Lower targets? 8 4
5 Experiences with the PGP Demo 9 Will the PCP-Centric Model Work? NEJM Study Suggests Not The ACO Model A Three-Year Financial Loss? Trent T. Haywood, M.D., J.D., and Keith C. Kosel, Ph.D., M.B.A., M.H.S.A Required Operating Margin Needed for an ACO to Recover the Start-Up Investment Physician Group Practice (PGP) demo experience 8 of 10 participants did not receive any performance payments in year 1 6 of 10 received no payments in year 2 5 of 10 received no payments in year 3 Participants invested $1.7 million on average, in the first year alone None recovered their investments 10 5
6 Implications for Oncology PCP/hospital-centric model looks difficult to achieve Specialists don t know primary care, other specialty savings strategies or how to assess their success until too late Specialist savings strategies require investment No way to recoup investments if ACO umbrella is unsuccessful in generating savings/receiving performance payments 11 Key Take-Aways 12 6
7 Key Take-Aways for Oncologists CMS has targeted the MSSP to drive cost-effectiveness in larger, low-cost patient populations Specialties such as oncology that treat smaller, high-cost populations have been sidelined ACOs Final Rule Remains primary care focused Will assign patients with a prospective approach, identifying patients before the performance period Patients in 99 th percentile of annual Medicare costs excluded None of the 33 quality measures are oncology focused Key Take-Aways for Oncologists ACOs are still in the early stages of definition Specialists are likely to have additional value-based options with Medicare before all is done Value-based reimbursement generally The ability to deliver and document high quality, cost effective care is vital whether one joins an ACO or not Success requires scale, investment, changes in practice patterns, and aligning reimbursement with quality 14 7
8 Study Published by Journal of Oncology Practice, Colon Pathways JOP-AJMC 2011 On-pathway treatment was 30% ($50-60,000) less expensive with equal or better outcomes 16 8
9 Specialists Role in an ACO Specialist-managed patients may not be attributed or may be inappropriately attributed Many specialist-managed patients are relatively costly, may be excluded as outliers Little incentive for specialists to want to participate in an ACO or for an ACO to want specialists to participate 17 Discussion 18 For internal use only/proprietary and confidential. 9
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