ACO Archives - Recon Strategy

An opinionated take on NEJM highlights for September 2018

Marc Herant October 2, 2018

Primary care organizations are better ACOs when it comes to achieving savings Initial results from the Medicare Shared Savings Program ACO have been disappointing pointing to small to negligible net effects on net spending, but a clever analysis digging into the details shows that there is a silver lining. The key insight is to distinguish between ACOs that are health systems and those that are physician practice groups: health systems show no net savings (after bonus incentive payments) while physician group ACOs do. In the physician group ACOs, the savings

NEJM Highlights for July 2016: Bayesians vs. frequentists, PCPs vs. specialists, SGLT-2 vs. GFR

Marc Herant August 2, 2016

Adaptive clinical trials slowly coming of age In an adaptive clinical trial, the protocol of the trial is allowed to change in a pre-specified manner during the study based on on-going study events. In this issue of the NEJM, two research papers, one perspective, and one editorial are devoted to the I-SPY 2 trials which dynamically changed randomization procedures for neo-adjuvant (pre-surgery) chemotherapy for stage II and III breast cancer and allowed accelerated identification of subgroups that benefit from a novel tyrosine kinase inhibitor (neratinib – Puma Biotechnology) and a

NEJM Highlights for June 2016: Improving care delivery is just plain #%^*! hard

Marc Herant July 5, 2016

Disappointing interim results from two ACA experiments Two papers reporting results from ACA experiments – the Comprehensive Primary Care (CPC) Initiative in which primary practices were incentivized with fairly generous payments to strengthen care management activities such as management of chronic conditions, or coordination of care – and the ACO initiatives (2012 cohort) described elsewhere in many reviews. Both papers provide a view on the early impact of these initiatives (2 years out) on costs and outcomes by using well controlled no-intervention comparison groups. The upshot is that so far,

So what if PCPs in ACO practices are not paid differently?

Diana Poon August 3, 2015

In a recent study, Ryan, Shortell, et al analyzed the composition of PCP compensation (broken down into salary, productivity and quality/other components) across practices with ACO contracts vs. those with more traditional business models. This note will: provide a quick summary of results offer an alternative interpretation of the data describe two methodological points regarding the data set The major finding As of 2012/2013, there are no major systematic differences in how PCPS are paid in ACO practices vs. others. Whether in an ACO or not, PCPs were paid on

NEJM Highlights May 2015: a read on ACO performance, progress in cystic fibrosis treatment, yes developing new drugs is expensive, rethinking industry-medicine relationships, CVS Caremark and smoking cessation

Marc Herant May 29, 2015

Early results of the ACO experiment: directionally right, but impact is still small In this study, the authors compare metrics for Medicare beneficiaries assigned to the 32 ACOs part of the Pioneer program vs. matched beneficiaries who were not in an ACO. With respect to costs, they find that compared to contemporaneous trends observed in non-ACO members, the ACO beneficiaries yearly spending was approximately $100 below trend (a 1% savings). In a hint of a reversal of a secular trend in health care, office spending visit expenditure increased more in

A sizeable step forward but miles still to go: CMS’ Next Generation ACO model

Tory Wolff March 28, 2015

CMS has issued a “Request for Applications” describing its Next Generation (NG) ACO. The model makes progress on three issues that have generated plenty of analytical handwringing from MedPAC and the broader ACO community. It also signals a strategy to set ACOs up to compete more directly with Medicare Advantage (MA). (1) Enhancing predictability The Medicare Shared Savings Program (MSSP) and Pioneer ACO models had different approaches to solving the same business parameters. With NG, CMS has generally picked the ones which enhance simplicity and predictability (see table). For example,

Cosgrove moves south: competitive implications of the formation of the Midwest Health Collaborative

Tory Wolff January 27, 2015

A few days ago, Cleveland Clinic announced the formation of the Midwest Health Collaborative (“the Collaborative”), a new company jointly managed by six Ohio delivery systems across the state. The company’s goals are to share best practices, collaborate to reduce costs (e.g., procurement synergies) and “explore the business case” for developing a state-wide provider network. Notably, the deal was announced just eighteen months after Cleveland Clinic’s key competitor in Ohio, Mercy Health (formerly Catholic Health Partners), announced its own state-wide alliance, Health Innovations Ohio; this new deal also links three

The “weaponization” of ACO narrow networks: Strategic destabilizers which compel their own replication?

Tory Wolff October 1, 2014

In theory, narrow networks built around a single provider or a network of aligned providers (“provider-orchestrated narrow networks” or “ACO networks”) can pose a much higher stakes threat to non-participating providers than ones assembled solely by payers (i.e., where the payer picks who is in based on cost and rates): They are more likely to achieve broad utilization reduction because participating providers can align on principles, build shared capabilities and coordinate management of specific patients consistently. As a result, discounts can play a smaller role in creating a compelling value

Boeing’s model for creating product-based competition among providers

Tory Wolff September 4, 2014

Summary Boeing is creating a benefit design model which sets up providers to compete for their book of lives via provider-branded narrow networks By offering a choice among competing narrow and full network products, the model may make narrow networks more palatable for employees Narrow networks can produce a volume windfall for providers (e.g., share gain, leakage reduction) and profits from better care management and a risk deal Providers “pay” for the narrow network opportunity by being lower cost (often via incremental discounts) in hopes that these gains outweigh cannibalization

Can drug companies make drugs, AND money?

Nikhil Bhojwani June 3, 2014

In this morning’s New York Times (June 3,2014), Andrew Ross Sorkin asks,“DO drug companies make drugs, OR money”? That’s a fair question in the context of what I’ll call a “fee-for-product” reimbursement regime. Another way to look at this question is, “CAN drug companies make drugs, AND money”? Value has not been an easy sell As the U.S. healthcare services system moves from fee-for-service to a value-based system, the biotech and pharmaceutical (biopharma) industry should have an opportunity to capture more of the value it creates. But with drug costs only ~10%

Aetna not conceding the private exchange space to the benefits consultants

Tory Wolff May 16, 2014

Summary Aetna is stitching its inventory of ACO deals into a national ACO network and will offer them on its proprietary private exchange (PHIX) Linking ACOs and PHIXs is smart because PHIX’s defined contribution feature creates a strong consumer reward for picking a tighter network product Promising a national network of ACOs is bold: ACO deals depend on willing providers and opportunity in local care patterns; in many geographies, the delivery system isn’t ready or interested. If Aetna can create a national network, it should be attractive to major employers

Strategic “crowd-out” via narrow networks: an emerging case study in Wisconsin

Tory Wolff September 16, 2013

Last week, I argued that, if payers want to secure competitive advantage from improved provider care, they would need tighter, more exclusive alignments with these providers to “crowd out” the free riders (the “free riders” in this case are the other payers who have members being treated by the same providers and who can therefore share in any improvements). Two deals last week suggest a case study of the concept may be developing in southeastern Wisconsin: On September 9, Anthem announced that it will be teaming up with highly ranked

ACO proliferation and provider “all-payer” care models inexorably lead to tighter network strategies

Tory Wolff September 1, 2013

A new study in JAMA (by McWilliams et al.) looks at the Medicare expenditures of patients seeing providers enrolled in the BCBS of Massachusetts version of the ACO (Alternative Quality Contract or “AQC”). The AQC model covers only commercial lives and all of the relevant providers had FFS reimbursement from Medicare during the time of the study (several later became ACO Pioneers). The study tests whether providers rewarded to be more efficient for one pool of patients (BCBCMA commercial HMO lives) will take the same approach to care with other

Ambidextrous strategy: PART 2 – Scenario Implications

Nikhil Bhojwani July 17, 2013

In our last post we introduced two potential scenarios. “Provider bastions” in which buyers of health care services select upfront the network that they will trust to deliver their care in a coordinated manner. “Value-based deconstruction” in which buyers of healthcare choose the site-of-service for every interaction with the delivery system based on incentives built on micro level information about value – outcomes and cost. Obviously there are factors unique to firms that will have a tremendous impact on optimal strategic choices for them. All we do here is raise

Ambidextrous strategy: PART 1 – Payer and provider strategy for two very different worlds

Nikhil Bhojwani July 17, 2013

It seems like every day there’s some news outlining strategic actions that various players are taking or other developments with respect to health reform. Here’s a sample of recent news: Employer adopts a tightly limited provider network Customers sign on to private exchange Hospital chain grows through acquisition Insurers boycott state exchange Health systems drop out of ACOs Payer collaborates with provider systems to target Medicaid population All of these represent choices or “bets” that firms are making based on a view of a healthcare world facing clear trends. More

When do you know ACOs are here to stay?

Tory Wolff April 11, 2013

Answer: When they form an industry association! Back in February, a group came together to form a national association for ACOs (NAACOS) to, according to the announcement press release, promote the growth of the model, industry standards, best practice sharing and vendor engagement. What was missing from the press release was fixed on the web site which adds as goal #2: “Participate with Federal Agencies in the development and implementation of public policy”. In other words: lobbying. And, of course, as the model evolves from Medicare to commercial and Medicaid populations, state level policy will also need

Risk-taking providers in private exchanges: Medica’s “My Plan” private exchange

Tory Wolff December 4, 2012

At a TEDMED conference a couple years ago, I had to write some sample “ask me” questions on the bottom of my ID badge as conversation starters. One of them was “Ask me why PHIX+ACO=:-)” Given the presentations on 3D tissue printers and technologies to help blind people just about see again, I was not surprised to have few takers. However, recent news from Minnesota suggests that others see the potential in combining risk-taking providers with exchanges. Medica – one of the early leaders in private exchanges with Bloom Health

Getting the troubled Highmark-West Penn relationship back on track: an outside-in speculation

Tory Wolff December 1, 2012

Summary Highmark and the West Penn Allegheny Health System (WPAHS) are not aligned on their vertical strategy to counter UPMC in the Pittsburgh market WPAHS can only absorb a portion of Highmark’s care demand now being met by UPMC. So its upside on the success of Highmark’s vertical strategy is capped Highmark would prefer a deal with UPMC if it get reasonable rates: the status quo looks better than the uncertainties of a vertical model build A large share of UPMC’s business still comes from Highmark which makes UPMC vulnerable.

Clear Health Alliance: Debut of the for-profit HIV/AIDS special needs plan

James Matheson July 16, 2012

Summary HIV Special Needs Plans (SNPs) offer extra layers of services specialized for the HIV/AIDS patient and can generate attractive savings particularly in reduced in-patient costs A new partnership in Miami-Dade is creating a for-profit model in what has historically been a space pursued by mission-oriented non-profits Recent Florida legislation mandating HIV positive Medicaid members join an HMO specialized in HIV/AIDS sharply expands the potential market for SNPs and was likely critical for the for-profit venture In contact to the condition-specific provider ACO, SNPs are likely better suited for addressing

Rescuing the condition-focused ACO from CMS

James Matheson July 12, 2012

Summary The case for an oncology ACO can be compelling but CMS rules for ACOs within fee-for-service (FFS) make value difficult to demonstrate A new physician-hospital-payer partnership in Florida will test whether the oncology ACO model can succeed outside the CMS rules The payer partner has a limited Medicare position and the hospital partner is reputed to be high priced. Despite these potential issues, there are good reasons to think the partners are well aligned on a growth agenda for the model If the model itself proves out, however, it

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Recon takes an analytical look behind select developments in healthcare