Many hospitals, which are only beginning to make the transition to the realities of accountable care, are finding that some lessons are difficult to learn.

Case in point: Hospitals "love" applications from software vendor Sentrian that enable them to monitor chronically ill patients at home, contends Martin Kohn, MD, the company's chief medical scientist. They help them limit patient readmissions-and hospitals are on the hook for care costs when Medicare patients are readmitted within 30 days of discharge.

But come day 31, it's sometimes a different story. After the 30-day time limit has passed, Kohn says, some hospitals stop using the application for some patients and readmit them as inpatients.

That's fee-based thinking. But the industry is rapidly moving to accountable care with value-based reimbursement. Under that scenario, any unnecessary care will hurt, not help, providers.

The long-term goal of accountable care is better health, better care and lower costs, according to Ruth Levin, a managing partner at Managed Care Revenue Consulting Group. But to achieve this "triple aim," Levin said at the recent HIMSS15 conference in Chicago, providers must change their behavior.

Under accountable care, providers take on most or all of the risk for treating patients, by accepting a set payment for the care of a population of patients. As a result, incentives shift-no longer do providers make more money by giving more services; in fact, the new incentive is to not spend unnecessarily and to increase efficiency.

To succeed in this new environment, a suite of specific IT capabilities is essential. At the minimum, an organization needs a robust electronic health records system certified under 2014 meaningful use criteria, data exchange capability, case management software, a data warehouse pulling information from the EHR and multiple ancillary systems, and analytics capabilities, says Steve Matteson, a vice president at Simpler healthcare consulting.

Risky business

But while IT systems are important in tracking and analyzing care, as well as its costs, they are not a panacea that guarantees financial success under accountable care. That won't happen without new and committed process improvement initiatives, Matteson asserts. "There is no way you will survive, regardless of technology, if you haven't developed people with the mindset that we've got to get better."

The risks are high, as providers' early experiences with ACOs show. Medicare's Pioneer ACO program started with 32 organizations in 2012, but now only 19 are still in the Pioneer program-the others dropped out for various reasons, primarily financial.

Those still in the program aren't necessarily making money, either. For example, Atrius Health, a large multi-specialty group practice serving 675,000 patients across eastern Massachusetts, has eight ACO contracts with public and private insurers. It makes a profit with the commercial payers, "but we absolutely do lose money on Medicaid, and Medicare is break even; sometimes we make money, and sometimes we lose money," says Bud Stacy, Atrius' chief financial officer.

Improving operations to make a profit in an ACO environment will require paying more attention to avoidable expense. For example, it will mean cutting costs by reducing readmissions; only a few years ago, readmissions meant additional revenue.

Healthcare organizations also will need to do a better job understanding the health needs of each patient in the ACO, what his or her expenses are, who else is coming in to the ACO and who is leaving to seek treatment out of the network. Patients are free to leave an ACO if they are not satisfied with the care they receive. When they do, it not only signals troubles within the organization, but winds up costing money.

For example, if an ACO's Medicare member decides to have surgery performed outside of the ACO-at, say, twice what it would cost inside the ACO-Medicare will reimburse the facility that performs the surgery, and then will charge the variance back to the ACO, says Gene Lindsey, MD, an advisory council member for Simpler healthcare consulting and retired CEO of Atrius Health.

Clinicians and staff must become more aware of care management and associated costs. For example, they need to pay more attention to which specialists they are referring patients, because specialist consultations are considerably more expensive than patient visits to generalists. And when an organization is on the hook for expenses, they also must take into account costs for services and supplies, Levin says.

Opportunities to cut costs are everywhere, Levin says. Easy ways for hospitals to start include cutting length of stays, supply costs and intensive care stays. For instance, some physicians who send patients to a hospital ICU routinely keep them there for three days, even though best practice for their condition and acuity level might be a one-day ICU stay. Physician practices can cut costs by becoming more discriminating shoppers for medications and devices such as implants, and achieving less out-of-network utilization.

Scheduling discharge consultations with patients earlier in the day can speed the discharge process and lower costs. So can discharging patients on weekends, an emerging trend for reducing the length of hospital stays, Levin noted. Decreasing the time between a physician request for a specialist to consult with a patient and the actual consultation also can cut costs, because a patient's condition can worsen while waiting for the appointment. Physicians can request timely consultations from specialists, who now will work hard to provide them because they don't want to lose referrals, she said.

Keeping patients healthier

To succeed in accountable care, organizations must keep their most vulnerable patients healthier, Stacy says. Doing that effectively means adding some new costs to an organization, which must hire new personnel, such as hospitalists, social services professionals and case managers.

However, providers increasingly will scrutinize care given to vulnerable patients to determine medical necessity. For instance, an internist at Atrius Health learned that a female patient with multiple conditions had made 38 office visits in a year. The patient was asked which visits she felt had been helpful, and she answered that she didn't need to see all the specialists she'd been seeing. Consequently, the internist started handling the bulk of her care, at less overall cost.

Incidents like that have compelled the organization to monitor specialists more closely, says Marci Sindell, chief external affairs officer at Atrius. "Specialists routinely say, 'See me in three months,' and we have to decide if that is medically necessary," she adds.

Atrius Health worked with Epic to create a Web portal that allows hospital-based and affiliated physicians to have one-click, read-only access to a patient's EHR. That improves the quality of care but also can cut costs for participants in an ACO. For example, a physician at a hospital can learn that a patient had an MRI done last week at Atrius, so he or she doesn't have to order another MRI. Or a physician could notice that a patient's medications won't work long-term and move the patient to a more appropriate regimen. Using analytics to assess case costs across locations and doctors also saves money by eliminating variations.

Paying more to save more

Making a profit with accountable care means making it easier for patients to access providers by giving them a one-stop shopping experience, says Robert Fortini, RN, chief clinical officer at Bon Secours Virginia Medical Group.

The practice of 650 providers offers same-day appointments, extended hours, centralized scheduling and referrals, and a patient portal that is part of a suite of population health management software from Phytel, which was recently acquired by IBM. Bon Secours has 57,000 beneficiaries in its Good Help Medicare ACO, which is a shared savings program.

Knowing that medical homes and ACOs were on the horizon, Bon Secours built an infrastructure to support population health management; that project has been under way for several years, and it includes embedded nurse case managers and dieticians within facilities, an advanced EHR and data analytics.

At Bon Secours, readmission rates have gone down while giving the organization a new revenue stream. Newer billable codes under Medicare support transitional and chronic care management, keeping patients out of the hospital while assisting them as they move to alternate care sites, such as their homes, or nursing or rehabilitation facilities. Under these new codes, providers can bill for RN case manager services for managing chronically ill patients.

"That's a very clean revenue stream that many aren't taking advantage of," Fortini says. He estimates the organization gained $250,000 for these services in 2014, and this year expects to gain $500,000 in transitional care payments and $250,000 for chronic care support.

Regardless of the progress being made, Bon Secours still hasn't realized savings from its two-year-old Medicare shared savings program, but Fortini is optimistic that will change in 2015.

Other revenue issues

The rise of patient financial responsibilities is fundamentally changing how providers think of the revenue cycle, says Jim Riley, a general manager at claims clearinghouse and revenue cycle management vendor Emdeon. "You have to start treating the patient as a payer now."

That means providers must take new looks at clinical and financial data to identify nuances of a patient's financial situation and how the insurer and patient will cover a procedure before a physician sees the patient, Riley says.

Providers will have to give patients a "working diagnosis code" to ensure appropriate tests and treatments are conducted to meet quality metrics, which will affect revenue. They will have to offer "actionable intelligence" to physicians before patient encounters to ensure quality metrics are presented and reported, he adds.

And it isn't just providers and patients who are being affected, said William Allen, MD, executive medical director at FTI Consulting during a presentation at HIMSS15. Allen has helped providers create 35 "integrated clinical networks" to support physician practices, generally acquired by a hospital, that agree to follow certain protocols to improve the quality and efficiency of care.

However, it takes a robust information infrastructure to practice accountable care, and providers shouldn't shoulder the entire financial load. Allen suggests telling payers that if the providers demonstrate better care and lower costs, "we're going to be looking at you to help pay for the infrastructure."

PHM VET SHARES LESSONS LEARNED

A provider's level of success in working with an accountable care organization depends on the experience of those within the provider organization: It must assess how much, and how well, the executive team worked at managing risk, if it has invested in the appropriate technologies, and if it has positioned the physician community to manage the change, says Jonathan Niloff, MD, chief medical officer at software vendor McKesson.

Niloff knows the trials of population health management; before working at McKesson, as president of Provider Service Network, he managed 500,000 lives "and knows how to screw up," he says.

In rolling out its accountable care programs, Niloff says, the Centers for Medicare & Medicaid Services has made its own mistakes by failing to recognize that parts of the Pioneer ACO and Shared Savings programs were not structured to enable participating providers to succeed in managing risk. As a result, the providers initially did not know in advance who their patients were and how to guide them toward appropriate care.

However, he adds, next-generation rules from CMS in late 2014 started to solve those problems, particularly by offering up-front payments that significantly ease participants' capital concerns as they gear up for accountable care.

Niloff notes some competencies providers need to succeed with value-based contracts:

* They must be able to manage quality metrics in specific populations.

* They must have technology (analytics) to understand the key drivers of cost and utilization.

* They must be able to understand practice pattern variations, manage ambulatory care and medications, and the need to develop strategies and technology to support patient engagement, along with a strategy to acquire, aggregate and normalize data to track progress, problems and trends.

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