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In early May, the U.S. Department of Health and Human Services (HHS) announced that the Pioneer accountable care organization (ACO) model had met the criteria for expansion. HHS Secretary Sylvia Mathews Burwell noted the “Pioneer ACO model has demonstrated that patients can get high-quality and coordinated care at the right time, and we can generate savings for Medicare and the healthcare system at large.”
Supported by a program evaluation conducted by L&M Policy Research, Burwell touted the $384 million in Medicare savings achieved during 2012-13. The actuary for the Centers for Medicare & Medicaid Services (CMS) provided the formal certification for expansion, stating, “Expansion of the Pioneer Model would reduce net [CMS] program spending.”
Given that CMS reports as recently as September 2014 had shown that Pioneer ACOs had reduced net Medicare spending by only $61 million in 2012-13, what accounts for the large increase in savings claimed by Burwell? As seen in the exhibit below, the two estimates reflect different measures of program savings.
The $384 million figure is based on an econometric estimate of gross Medicare savings compared with the cost of caring for all Medicare beneficiaries in the markets where the Pioneers operate. But this estimate does not reflect shared savings payments made by CMS to the successful ACOs, or shared loss payments by ACOs to CMS. When these amounts are included, the net program savings is actually $249 million—still a positive result, but 35 percent lower than claimed.
Pioneer ACO Performance, 2012-13
For 2012, the March 2015 report estimates total savings of $279.7 million. But after reducing these savings by the amount of shared savings paid to and shared losses collected from the ACOs, net CMS savings become $205 million—an amount dramatically higher than the $17 million estimated from the spending benchmark comparisons in the September 2014 report.
For 2013, the two reports show very similar results for both gross and net savings. It is not clear why the 2012 estimates are so different, but a closer look will likely show that the initial benchmarking methods used were more stringent than warranted by the potential market savings available (as reflected in the L&M Policy Research study).
The L&M Policy Research
report issued in March provides detailed information on the performance of each Pioneer ACO during 2012-13. Of the 32 original Pioneers, 10 achieved gross savings in both years, nine achieved savings in one year, and 12 failed to achieve savings in either year.
Combining all Pioneer ACOs, Medicare spending in the program increased at an average annual rate of 2.6 percent during the period. However, when shared savings payments to and from the ACOs are included, the annual rate of increase rises to 3.0 percent, Meanwhile, spending in the comparison group increased at a rate of 3.4 percent.
In summary, the Pioneer ACO program fared only 0.4 percentage points better than the comparison group in terms of spending. The exhibit below shows the estimated monthly Medicare spending per beneficiary for both groups, including the effect of the shared savings payments.
Pioneer ACO Performance, 2012-13
The economic theory underlying the ACO program assumes that sponsors will respond to the incentive of sharing in cost savings by identifying care management processes that improve quality of care and reduce spending. Although these incentives clearly had an impact, the effect was uneven across the Pioneer ACOs. As shown in the exhibit below, 10 Pioneer ACOs generated a total of $268 million in net Medicare savings over the entire 2012-13 period, according to the L&M Policy Research analysis and CMS estimates of shared savings and shared loss payments.a
These ACOs benefitted from $50 million in shared savings payments as a performance incentive. Steward Health Care System, Beth Israel Deaconess, and Michigan Pioneer were the primary beneficiaries of these payments, receiving over 80 percent of the total dispensed. The seven other Pioneer ACOs that generated savings received no or very modest payment because their spending did not come in significantly below their spending benchmarks. Because these payments were planned to offset operating costs, these sponsors funded ACO operations largely from their own capital.b (With several ACOs having deferred their reconciliation during 2013, final 2013 shared savings payments and losses may differ from the CMS estimates here.)
Top-Performing Pioneer ACOs, 2012-13
By way of contrast, a smaller group of Pioneer ACOs generated modest if any savings for Medicare, according to the L&M Policy Research analysis. As shown in the exhibit below, the five Pioneers with the greatest net losses cost the program $110 million during the period.b
Despite the losses, these ACOs received relatively generous shared savings payments. (These payments simply added to the Medicare claims losses during the period.) Although these ACOs may have benefitted from weaknesses in the initial benchmarking methodology in 2012, three ACOs—Montefiore, Monarch, and Banner—received substantial shared savings payments each year. This issue raises many questions, especially regarding whether the benchmark methodologies used to set spending targets for Pioneer ACOs were overly generous in some cases and more punitive in others.
Less Successful Pioneer ACOs, 2012-13
The Pioneer ACO savings claimed by HHS overstate the net savings to Medicare by the amount of shared savings payments ($145 million) minus ACO payments of shared losses ($10 million). Thus, net Medicare program savings are estimated to be $135 million less than the figure cited by HHS, or $249 million.
Without the prospect of shared savings payments, the Pioneer ACO program would not have attracted the interest of these sponsors. The purpose of the demonstration was to explore what factors contribute to achieving Medicare program savings. Clearly, incentives work. However, when the shared savings and losses are accounted for, the Pioneer ACOs as a group saved Medicare an annual average of only 0.4 percentage points relative to the comparable group of traditional fee-for-service beneficiaries in their markets.
Among individual Pioneer ACOs, the demonstration program exhibited a wide range of performance in controlling costs. The 10 top-performing Pioneer ACOs produced net program savings of $268 million, more than offsetting the poorer performance of the 22 others. The top performers received $50 million in shared savings payments, whereas the other 22 received $85 million (net of shared losses paid back to CMS).
For CMS, expansion of the newly certified Pioneer ACO program will require greater attention to the relationship between the spending benchmarks used to determine shared savings and losses and the broader impact on Medicare.
John Valiante, MBA, is president, Valiante Healthcare Management Solutions, Scottsdale, Ariz., and a member of HFMA’s Arizona Chapter.
a. These L&M Policy Research savings estimates were statistically significant at the p
b. These L&M Policy Research estimates were not statistically significant at the p
<0.05 level, but represented the mid-point of the estimated range.
Publication Date: Thursday, July 30, 2015
In this Business Profile, Bruce Haupt, president and CEO of ClearBalance, discusses how a patient loan program can increase patient collections, reduce bad debt, and speed cash flow.
Patient financial engagement is more challenging than ever – and more critical. With patient responsibility as a percentage of revenue on the rise, providers have seen their billing-related costs and accounts receivable levels increase. If increasing collection yield and reducing costs are a priority for your organization, the metrics outlined in this presentation will provide the framework you need to understand what’s working and what’s not, in order to guide your overall patient financial engagement initiatives and optimize results.
In this Business Profile, Jerry Bruno, principal with Deloitte Consulting LLP, discusses the importance of choosing revenue cycle solutions that help an organization meet the challenges of a quickly evolving healthcare environment.
No two patients are the same. Each has a very personal healthcare experience, and each has distinct financial needs and preferences that have an impact on how, when and if they chose to pay their healthcare bill. It’s no longer effective to apply static billing techniques to solve the complex challenge of collecting balances from patients. The need to tailor financial conversations and payment options to individual needs and preferences is critical. This presentation provides 10 recommendations that will not only help you improve payment performance through a more tailored approach, but take control of rising collection costs.
In this business profile, Lane Jackson, a partner in the Grant Thornton LLP Health Care Advisory Services practice, with extensive experience in overseeing system implementations and revenue cycle reorganizations, discusses best practices for elevating revenue cycle performance during an EMR implementation. Grant Thornton LLP is a sponsor of the Large System Controllers Council Affinity Group.
This white paper, written by Apex Vice President of Solutions and Services, Carrie Romandine, discusses the importance of patient segmentation and messaging specifically related to the patient revenue cycle. Applying strategic messaging that is tailored to each patient type will not only better educate consumers on payment options specific to their billing needs, but it will maximize the amount collected before sending to collections. Further, targeted messaging should be applied across all points of patient interaction (i.e. point of service, customer service, patient statements) and analyzed regularly for maximized results.
In this business profile, Amy Gross, senior vice president of Key Government Finance, discusses the benefits of private placement transactions to support large-scale financing projects.
This white paper, written by Apex President Patrick Maurer, discusses methods to increase patient adoption of online payments. Providers are now seeking ways to incrementally collect more payments due from patients as well as speeding up the rate of collections. This white paper shows why patient-centric approaches to online payment portals are important complements to traditional provider-centric approaches.
In this business profile, Doug Polasky, executive vice president at Xtend Healthcare, explains the importance of having sound workflow processes in a consolidated business office to ensure optimal performance and reduce costs.
Increased electronic engagement between healthcare providers and patients provides significant opportunities for improving revenue cycle metrics and encouraging patients to access EHRs. This article, written by Apex Founder and CEO Brian Kueppers, explores a number of strategies to create synergy between patient billing, online payment portals and electronic health record (EHR) software to realize a high ROI in speed to payment, patient satisfaction and portal adoption for meaningful use.
In this business profile, sponsored by SSI, Jay Colfer, vice president of sales and marketing, shares how patient access solutions are reversing the trend toward increased bad debt resulting from the rise in high-deductible consumer health plans.
Faced with a rising tide of bad debt, a large Southeastern healthcare system was seeing a sharp decline in net patient revenues. The need to improve collections was dire. By integrating critical tools and processes, the health system was able to increase online payments and improve its financial position. Taking a holistic approach increased overall collection yield by 10% while costs came down because the number of statements sent to patients fell by 10%, which equated to a $1.3M annualized improvement in patient cash over a six-month period. This case study explains how.
In this business profile of Deloitte Consulting, Matthew Hitch and David Betts explore the potential benefits of elevating the customer experience and outline strategies to change service delivery.
With the ICD10 deadline quickly approaching and daily responsibilities not slowing down, final preparations for October 1 require strategic prioritization and laser focus.
TriMedx helps health systems control costs and uncover savings opportunities by optimizing the clinical engineering function.
Read how Gwinnett Medical Center provides clear connections to financial information, offers multiple payment options for patients, and gives onsite staff the ability to collect payments at multiple points throughout the care process.
Read how Orlando Health was able to perform deeper dives into claims data to help the health system see claim rejections more quickly–even on the front end–and reduce A/R days.
To maintain fiscal fitness and boost patient satisfaction and loyalty, healthcare providers need visibility into when and how much they will be paid–by whom–and the ability to better navigate obstacles to payment. They need payment clarity. This whitepaper illuminates this concept that is winning fans at forward-thinking hospitals.
Financial services staff are always looking for ways to improve the verification, billing and collections processes, and Munson Healthcare is no different. Read about how they streamlined the billing process to produce cleaner bills on the front end and helped financial services staff collect more than $1 million in additional upfront annual revenue in one year.
Effective revenue cycle management can be a challenge for any hospital, but for smaller providers it is even tougher. Read how Wallace Thomson identified unreimbursed procedures, streamlined claims management, and improved its ability to determine charity eligibility.
Before launching an energy-efficiency initiative, it’s important to build a solid business case and understand the funding options and potential incentives that are available. Healthcare leaders should consider taking the steps outlined in the whitepaper to ease the process of gaining approval, piloting, implementing, and supporting sustainability projects. You will find that investing in sustainability and energy efficiency helps hospitals add cash to their bottom line. Discover how hospitals and health systems have various options for funding energy-efficient and renewable-energy initiatives, depending on their current financial structure and strategy.
Health care is a dynamic mergers and acquisitions market with numerous hospitals and health systems contemplating or pursuing formal arrangements with other entities. These relationships often pose a strategic benefit, such as enhancing competencies across the continuum, facilitating economies of scale, or giving the participants a competitive advantage in a crowded market. Underpinning any profitable acquisition is a robust capital planning strategy that ensures an organization reserves sufficient funds and efficiently onboards partners that advance the enterprise mission and values.
The success of healthcare mergers, acquisitions, and other affiliations is predicated in part on available capital, and the need for and sources of funding are considerations present throughout the partnering process, from choosing a partner to evaluating an arrangement’s capital needs to selecting an integration model to finding the right money source to finance the deal. This whitepaper offers several strategies that health system leaders have used to assess and manage capital needs for their growing networks.
Announcements from several commercial payers and the Centers for Medicare and Medicaid Services (CMS) early in 2015 around increased efforts to form value-based contracts with providers seemed to point to an impending rise in risk-based contracting. Rather than wait for disruption from the outside in, health care providers are now making inroads on collaborating with payers on various risk-based contracting models to increase the value of health care from within.
Yuma Regional Medical Center (YRMC) is a not-for-profit hospital serving a population of roughly 200,000 in Yuma and the surrounding communities.
Before becoming a ZirMed client, Yuma was attempting to manually monitor hundreds of thousands of charges which led to significant charge capture leakage. Learn how Yuma & ZirMed worked together to address underlying collections issues at the front end, thus increasing Yuma’s overall bottom line.
Kindred Hospital Rehabilitation Services works with partners to audit the market and the facility’s role in that market to identify opportunities for improvement. This approach leads to successes; Kindred’s clinical rehab and management expertise complements our partners’ strengths. Every facility and challenge is unique, and requires a full objective analysis.
As the critical link between patient care and reimbursement, health information enables more complete and accurate revenue capture. This 5-Minute White Paper Briefing shares how to achieve cost-effective revenue integrity by your optimizing HIM systems.
Speedier cash flow starts with better CDI and coding. This 5-Minute White Paper Briefing explains how providers can improve vital measures of technical and business performance to accelerate cash flow.
Qualified coders are getting harder to come by, and even the most seasoned professional can struggle with the complexity of ICD-10. This 5-Minute White Paper Briefing explains how partnerships can help improve coding and other key RCM operations potentially at a cost savings.
The point of managing your revenue cycle isn’t just to improve revenue and cash flow. It’s to do those things effectively by consistently following best practices— while spending as little time, money, and energy on them as possible.
How Lucile Packard Children’s Hospital Stanford increased payments received within 45 days by 20% and reduced paper submission claims by 70% by using ZirMed solutions.
The reasons claims are denied are so varied that managing denials can feel like chasing a thousand different tails. This situation is not surprising given that a hypothetical denial rate of just 5 percent translates to tens of thousands of denied claims per year for large hospitals—where real‐world denial rates often range from 12 to 22 percent. Read about how predictive modeling can detect meaningful correlations across claims denials data.
Emergency Mobile Health Care (EMHC) was founded to be and remains an exclusively locally owned and operated emergency medical service organization; today EMHC serves a population of more than a million people in and around Memphis, answering 75,000 calls each year.
Since the Physician Quality Reporting Initiative (PQRI) introduction, CMS has paid more than $100 million in bonus payments to participants. However, these bonuses ended in 2015; providers who successfully meet the reporting requirements in 2016 will avoid the 2% negative payment adjustment in 2018, so now is the time to act! Included in this whitepaper are implications of increasing patient responsibility, collections best practices, and collections and internal control solutions.
Getting paid what your physician deserves—that’s the goal of every biller. Yet even for the best billers, achieving that success can be elusive when denials stand in the way of success, presenting challenges at every turn. Denials aren’t going away, but you can learn techniques to manage and even prevent them.Join practice management expert Elizabeth W. Woodcock, MBA, FACMPE, CPC, to: Discover methods to translate denial data into business intelligence to improve your bottom line, determine staff productivity benchmarks for billers, and recognize common mistakes in denial management.
Physician practices must improve organizational efficiency to compete in this era of reduced reimbursement and escalating administrative costs.
Many healthcare organizations are pursuing next-generation health information systems solutions. Learn more about Navigant's work with University of Michigan Health System.
The proper implementation of healthcare information technology systems is crucial to an organization’s financial health.
HFMA's print, email, online, and mobile opportunities provide you maximum reach and impact. We will work with you to build a plan that meets your needs. Contact a sales rep.
HFMA offers online, email, and print opportunities to help you recruit the most talented healthcare finance professionals. Place your classified ads today.
Drive down costs while improving quality in a reform environment.
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