You can’t get there from here

Readers of this column may recall that we have been following the fate of a small 14 primary care physician–owned accountable care organization bordering the Rio Grande River in Texas, the Rio Grande Valley Health Alliance. These physicians in 12 practices started with no infrastructure, no common electronic health records, or capital, and nonetheless took the plunge to become a Medicare Shared Savings Program accountable care organization beginning Jan. 1, 2013. It is time for an update on them.

Admittedly, I have been dragging my feet about an update, not because the results were poor, but because they were so great. With barely the minimum 5,000 beneficiaries, they saved more than $6 million in their first year. They are in the no-downside-risk plan, and thus got 50% of those savings. They have had time in 2014 to crunch the data even more to identify the 10% of patients driving more than 50% of costs and begin implementing complex high-risk patient management. For these reasons, I wager that they will do even better in 2014 through increased efficiencies.

How about quality? In the first year in the Medicare Shared Savings Program (MSSP), an ACO need only show the ability to report; they are not graded on their quality performance. But the Rio Grande Valley Health Alliance kept track internally, and the ACO regularly appears to be hitting the 90th percentile on the bulk of the 33 quality metrics. Their model tracked the elements for success outlined in previous columns.

So, why have I been I hesitant to report this?

Well, so many of you readers have called or written me to say that, while this type of physician-driven community or rural ACO with a primary care core makes sense, there is no way that you can get the money to organize and build the infrastructure necessary to succeed like RGVHA has. You would have to create a legal entity and apply to a program such as the MSSP, create infrastructure, track savings over a calendar year, then wait 6 or 8 months to get the results and the shared savings payment.

In sum, it’s a great idea. You are in the best position to drive high-value health improvement. You are located where the historic lack of access and medical infrastructure has resulted in high avoidable costs.

But the cruel irony is that, thanks to the fee-for-service system, those in the best position to drive value – primary care physicians – are in the worst position to front the necessary capital costs.

RGVHA was able to go forward because they were eligible for the now-gone Advance Payment Model program that advanced them the necessary operational costs. Their exciting success would ring hollow as a message to you if you couldn’t get this type of developmental financial support. Deferred shared savings and improved quality for your Medicare patients is a great concept – but this is a proverbial “you can’t get there from here” dilemma.

The CMS ACO investment model

The Centers for Medicare and Medicaid Services also saw this disconnect. So, CMS announced a new upfront infrastructure support program specifically to promote new small nonhospital* or managed care ACOs, rural ACOs, ACOs where there is low ACO penetration, and existing ACOs wanting to move toward taking financial risk. This prepaid shared savings builds on the Advance Payment Model program.

ACOs that plan to apply for the program in the next cycle and start in 2016 must have a preliminary prospective beneficiary assignment of 10,000 or less. CMS will give preference to new ACOs in rural or low-penetration areas, or in areas with exceptional need, or to ACOs with compelling proposals on how they would invest their funds and the CMS funds.

Each dollar given by CMS is a prepayment against the ACO’s shared savings distribution. If there are not enough shared savings, there is no further repayment obligation unless the ACO leaves the program before the 3-year program period.

Applications will be accepted during the summer of 2015, which is roughly the same time as the MSSP application period.

In my mind, this is the single best investment in improving health delivery and reining in runaway health care costs that CMS could have made. It will empower those in the best position to generate the highest quality at the lowest cost: readers like you.

This could be a game changer for primary care and rural care. But it won’t happen without physician leaders like those at RGVHA. The summer of 2015 seems a long way off, but the time to begin preparing your fully financed ACO is now!

* Exceptions to the nonhospital condition exist for critical access hospitals or inpatient prospective payment hospitals with 100 or fewer beds.

Mr. Bobbitt is a senior partner and head of the Health Law Group at the Smith Anderson law firm in Raleigh, N.C. He has many years’ experience assisting physicians form integrated delivery systems. He has spoken and written nationally to primary care physicians on the strategies and practicalities of forming or joining ACOs. This article is meant to be educational and does not constitute legal advice. For additional information, readers may contact the author at [email protected] or 919-821-6612.

Readers of this column may recall that we have been following the fate of a small 14 primary care physician–owned accountable care organization bordering the Rio Grande River in Texas, the Rio Grande Valley Health Alliance. These physicians in 12 practices started with no infrastructure, no common electronic health records, or capital, and nonetheless took the plunge to become a Medicare Shared Savings Program accountable care organization beginning Jan. 1, 2013. It is time for an update on them.

Admittedly, I have been dragging my feet about an update, not because the results were poor, but because they were so great. With barely the minimum 5,000 beneficiaries, they saved more than $6 million in their first year. They are in the no-downside-risk plan, and thus got 50% of those savings. They have had time in 2014 to crunch the data even more to identify the 10% of patients driving more than 50% of costs and begin implementing complex high-risk patient management. For these reasons, I wager that they will do even better in 2014 through increased efficiencies.

How about quality? In the first year in the Medicare Shared Savings Program (MSSP), an ACO need only show the ability to report; they are not graded on their quality performance. But the Rio Grande Valley Health Alliance kept track internally, and the ACO regularly appears to be hitting the 90th percentile on the bulk of the 33 quality metrics. Their model tracked the elements for success outlined in previous columns.

So, why have I been I hesitant to report this?

Well, so many of you readers have called or written me to say that, while this type of physician-driven community or rural ACO with a primary care core makes sense, there is no way that you can get the money to organize and build the infrastructure necessary to succeed like RGVHA has. You would have to create a legal entity and apply to a program such as the MSSP, create infrastructure, track savings over a calendar year, then wait 6 or 8 months to get the results and the shared savings payment.

In sum, it’s a great idea. You are in the best position to drive high-value health improvement. You are located where the historic lack of access and medical infrastructure has resulted in high avoidable costs.

But the cruel irony is that, thanks to the fee-for-service system, those in the best position to drive value – primary care physicians – are in the worst position to front the necessary capital costs.

RGVHA was able to go forward because they were eligible for the now-gone Advance Payment Model program that advanced them the necessary operational costs. Their exciting success would ring hollow as a message to you if you couldn’t get this type of developmental financial support. Deferred shared savings and improved quality for your Medicare patients is a great concept – but this is a proverbial “you can’t get there from here” dilemma.

The CMS ACO investment model

The Centers for Medicare and Medicaid Services also saw this disconnect. So, CMS announced a new upfront infrastructure support program specifically to promote new small nonhospital* or managed care ACOs, rural ACOs, ACOs where there is low ACO penetration, and existing ACOs wanting to move toward taking financial risk. This prepaid shared savings builds on the Advance Payment Model program.

ACOs that plan to apply for the program in the next cycle and start in 2016 must have a preliminary prospective beneficiary assignment of 10,000 or less. CMS will give preference to new ACOs in rural or low-penetration areas, or in areas with exceptional need, or to ACOs with compelling proposals on how they would invest their funds and the CMS funds.

Each dollar given by CMS is a prepayment against the ACO’s shared savings distribution. If there are not enough shared savings, there is no further repayment obligation unless the ACO leaves the program before the 3-year program period.

Applications will be accepted during the summer of 2015, which is roughly the same time as the MSSP application period.

In my mind, this is the single best investment in improving health delivery and reining in runaway health care costs that CMS could have made. It will empower those in the best position to generate the highest quality at the lowest cost: readers like you.

This could be a game changer for primary care and rural care. But it won’t happen without physician leaders like those at RGVHA. The summer of 2015 seems a long way off, but the time to begin preparing your fully financed ACO is now!

* Exceptions to the nonhospital condition exist for critical access hospitals or inpatient prospective payment hospitals with 100 or fewer beds.

Mr. Bobbitt is a senior partner and head of the Health Law Group at the Smith Anderson law firm in Raleigh, N.C. He has many years’ experience assisting physicians form integrated delivery systems. He has spoken and written nationally to primary care physicians on the strategies and practicalities of forming or joining ACOs. This article is meant to be educational and does not constitute legal advice. For additional information, readers may contact the author at [email protected] or 919-821-6612.

Readers of this column may recall that we have been following the fate of a small 14 primary care physician–owned accountable care organization bordering the Rio Grande River in Texas, the Rio Grande Valley Health Alliance. These physicians in 12 practices started with no infrastructure, no common electronic health records, or capital, and nonetheless took the plunge to become a Medicare Shared Savings Program accountable care organization beginning Jan. 1, 2013. It is time for an update on them.

Admittedly, I have been dragging my feet about an update, not because the results were poor, but because they were so great. With barely the minimum 5,000 beneficiaries, they saved more than $6 million in their first year. They are in the no-downside-risk plan, and thus got 50% of those savings. They have had time in 2014 to crunch the data even more to identify the 10% of patients driving more than 50% of costs and begin implementing complex high-risk patient management. For these reasons, I wager that they will do even better in 2014 through increased efficiencies.

How about quality? In the first year in the Medicare Shared Savings Program (MSSP), an ACO need only show the ability to report; they are not graded on their quality performance. But the Rio Grande Valley Health Alliance kept track internally, and the ACO regularly appears to be hitting the 90th percentile on the bulk of the 33 quality metrics. Their model tracked the elements for success outlined in previous columns.

So, why have I been I hesitant to report this?

Well, so many of you readers have called or written me to say that, while this type of physician-driven community or rural ACO with a primary care core makes sense, there is no way that you can get the money to organize and build the infrastructure necessary to succeed like RGVHA has. You would have to create a legal entity and apply to a program such as the MSSP, create infrastructure, track savings over a calendar year, then wait 6 or 8 months to get the results and the shared savings payment.

In sum, it’s a great idea. You are in the best position to drive high-value health improvement. You are located where the historic lack of access and medical infrastructure has resulted in high avoidable costs.

But the cruel irony is that, thanks to the fee-for-service system, those in the best position to drive value – primary care physicians – are in the worst position to front the necessary capital costs.

RGVHA was able to go forward because they were eligible for the now-gone Advance Payment Model program that advanced them the necessary operational costs. Their exciting success would ring hollow as a message to you if you couldn’t get this type of developmental financial support. Deferred shared savings and improved quality for your Medicare patients is a great concept – but this is a proverbial “you can’t get there from here” dilemma.

The CMS ACO investment model

The Centers for Medicare and Medicaid Services also saw this disconnect. So, CMS announced a new upfront infrastructure support program specifically to promote new small nonhospital* or managed care ACOs, rural ACOs, ACOs where there is low ACO penetration, and existing ACOs wanting to move toward taking financial risk. This prepaid shared savings builds on the Advance Payment Model program.

ACOs that plan to apply for the program in the next cycle and start in 2016 must have a preliminary prospective beneficiary assignment of 10,000 or less. CMS will give preference to new ACOs in rural or low-penetration areas, or in areas with exceptional need, or to ACOs with compelling proposals on how they would invest their funds and the CMS funds.

Each dollar given by CMS is a prepayment against the ACO’s shared savings distribution. If there are not enough shared savings, there is no further repayment obligation unless the ACO leaves the program before the 3-year program period.

Applications will be accepted during the summer of 2015, which is roughly the same time as the MSSP application period.

In my mind, this is the single best investment in improving health delivery and reining in runaway health care costs that CMS could have made. It will empower those in the best position to generate the highest quality at the lowest cost: readers like you.

This could be a game changer for primary care and rural care. But it won’t happen without physician leaders like those at RGVHA. The summer of 2015 seems a long way off, but the time to begin preparing your fully financed ACO is now!

* Exceptions to the nonhospital condition exist for critical access hospitals or inpatient prospective payment hospitals with 100 or fewer beds.

Mr. Bobbitt is a senior partner and head of the Health Law Group at the Smith Anderson law firm in Raleigh, N.C. He has many years’ experience assisting physicians form integrated delivery systems. He has spoken and written nationally to primary care physicians on the strategies and practicalities of forming or joining ACOs. This article is meant to be educational and does not constitute legal advice. For additional information, readers may contact the author at [email protected] or 919-821-6612.