LTC Population Health is here! Sea Change arrived at AMDA 2017April 27th, 2017 by
The world of long-term care medicine changed, quietly, on the afternoon of March 18, 2017. That was the day the first functioning LTC ACO was described in public.
The event was the practice management pre-meeting at AMDA 2017, and the presenter was the Genesis HealthCare ACO. Genesis, the country’s largest nursing facility chain, with over 500 buildings, is also the second largest Long-Term and Post-Acute Care (LTPAC) Medical Group in the country. This month’s blog post dissects the logic behind Genesis’ decision to start an ACO, and the opportunity it presents to revitalize the entire industry.
First, a digression into the status of CMS sponsored Population Health Innovations in LTC.
Since the inception of the Affordable Care Act (ACA), the CMS has focused its attention on cost containment in Post-Acute Care; these efforts manifested themselves in the IMPACT Act, and Bundled Payments for Care Improvement (BPCI and CJR). The ACA inspired a single effort that could directly improve care, while also reducing costs, for the LTC population residing in our nation’s Nursing Homes – The Initiative to Reduce Avoidable Hospitalizations Among Nursing Home Residents. My old LTPAC Medical Group, Extended Care Physicians (NC/SC), was involved with the first pilot of that Initiative under a CMS demonstration contract starting back in 2010. Both that pilot, and the subsequent individual initiatives, were overly complex, diffused responsibility, and yielded limited incentives for delivering true Population Health to LTC residents.
- Phase 2 of the Initiative does contain a stellar enhancement – if both practitioners and facilities are properly enrolled in the demonstration projects, each is eligible for new payments if they collaborate to avoid hospitalizing NF Residents with certain diagnoses. Practitioners have always had pathways to added payments if a resident has an acute change in condition – but facilities were expected to increase care with no change in (Medicaid) reimbursement, and no Medicare participation. The new feature of the demonstration is that the facility may receive 5-7 days of new Medicare Part B payment (@ approximately $218/diem). This payment is in addition to the facility’s daily payment from Medicaid (or other non-Medicare payers).
While this new Part B benefit is limited to a highly-restricted group of potential locations, it is a major innovation – establishing an “immediate” reward at the LTC facility level for increasing the level of care when a resident could (otherwise) be hospitalized.
Why would anyone start an ACO for nursing residents? It’s easy to rattle off a list of reasons why others felt it was a bad idea:
- ACOs are designed for ambulatory populations, LTC residents are institutionalized.
- ACO’s must be physician led, and accept risk for the medical care of a population. LTC institutions are largely responsible for the care of their residence, and Medicaid is the primary payer. Nursing Homes’ operational incentives aren’t naturally aligned with an ACO model of care.
- ACOs presume a multiyear relationship between a primary care practitioner and the individual.
- The average LTC resident has less than 2 years’ life expectancy.
- Individuals in their last years of life consume a disproportionate amount of all healthcare expenditures. A population comprised of LTC residents is virtually guaranteed to be ranked in the top 10% of most costly individuals.
- The ACO risk adjustment methodology, employed by CMS, presumes a large heterogeneous population with an average risk equal to 1.0. This risk adjustment methodology is invalid for a homogeneous population comprised of older individuals, who are predominantly dual-eligible, suffer from moderate to severe cognitive impairment, and are burdened with multiple chronic illnesses.
- Successful ACO’s are required to demonstrate their effectiveness through quality measures. Those quality measures presuppose individuals are capable of independent decision-making, focused on wellness, and will benefit from individual disease management strategies. None of those assumptions are typically consistent with the LTC populations goals of care.
- Some Pioneer ACOs enrolled LTPAC Medical Groups, believing the concentration of beneficiaries with high risk scores would benefit the ACO. Pioneer ACOs with large LTPAC beneficiary numbers suffered financially, and attributed their problems to the LTPAC Medical Group. Other ACOs have disenrolled LTPAC groups because they were capturing beneficiaries with annual expenditures above the risk adjusted cost targets.
This list of negatives could be extended with little effort. Despite these significant structural deficiencies, a LTC specific ACO, like the one in operation at Genesis, is still a terrific idea. Let’s list some of the positives:
- 90% plus of LTPAC facility residents are covered by Medicare A + B, or C plans.
- The nation has 1.6 million nursing facility beds, approximately 900,000 are occupied by LTC residents with Medicare benefits.
- Multiple studies demonstrate LTC residents are at, or near the 95th percentile for annual Medicare expenditures.
- Individuals with extremely high expenditures represent population members with the greatest cost savings opportunities.
- More than 1/3rd of all LTC residents’ hospitalizations are avoidable, per CMS sponsored studies.
- Creating an ACO based on established LTPAC Medical Groups may be advantageous – particularly under 2017 rules where beneficiaries treated in the SNF (POS 31) are not eligible for ACO attribution.
- The practitioner resident relationship in LTC settings is primary care, and encounters qualify for ACO attribution.
- By their nature, LTC facilities are controlled environments. This significantly increases the likelihood hospitalization reduction strategies can be identified, implemented, and assessed.
- There is near universal agreement that a Treat-in-Place model is the preferred care strategy in LTC facilities, whenever possible. If an ACO can align the incentives for the Facility to employ an aggressive Treat-in-Place strategy, all parties benefit.
- The Medicare Payment Advisory Commission (MedPAC) documented that in 2015 the Nursing Home Industry had a <2%> operating margin on all its non-Medicare SNF Care. This grew from a <1.5%> loss in 2014. MedPAC is recommending Medicare Part A SNF payments be frozen for FY 2018, and systematically reduced in the future. An LTC ACO provides a clear path for ‘gain sharing’ if the Nursing Facility’s residents consume fewer resources. Last, but not least, the Genesis ACO is in Track 1 – so practitioners are still subject to the Medicare MIPS Fee-for-Service fee schedule. If the ACO ‘self-nominates’ for the CMS designation of ACO Track 1+ for 2018, qualifying participants in the ACO will have the opportunity to earn the 5% Advanced APM incentive payment.
- How does a LTC ACO differ from an I-SNP (Medicare Advantage Institutional Special Needs Program – e.g. Optum’s Care Plus)? The care goals of a LTC ACO and an I-SNP are closely aligned, but differ in implementation. I-SNPs are a specific version of a Medicare Advantage Plan – intended for Dual Eligible Beneficiaries who are LTC Nursing Facility residents. They are paid concurrently on a PMPM (per member per month) basis by CMS, and are responsible for directly paying for all an enrollee’s Medicare covered care. Because these are true insurance plans, they require significant capitalization, and a rigorous compliance infrastructure. In addition to regulatory complexity, the greatest challenge an I-SNP faces is individually enrolling each beneficiary; after nearly 2 decades of development they had reached a 2015 national enrollment of ~48,000 beneficiaries. Active enrollment has its advantages – beneficiaries, or their representatives, elect to join the I-SNP. That election creates the opportunity to align expectations and goals of care.
ACOs, while more complex than Medical Groups, are considerably less regulated than a Medicare Advantage Plan. In the ACO model, beneficiaries aren’t enrolled, they are attributed through the act of providing Primary Care. This simplicity is counterbalanced by a lower lack of control. The I-SNP model allows the Plan (Insurance Co.) to define its Provider Network, and negotiate payment contracts. ACOs are far more limited in their span of control – they must rely on their practitioners and Providers to actively engage beneficiaries and families in voluntarily supporting a Treat-in-Place paradigm. What is safe to say – if a Medical Group, or Facility perform well under an I-SNP model, they are probably going to find it easy to adapt to an ACO structure. Because I-SNPs and ACOs operate under two different Medicare benefits, it may be possible to work in both models simultaneously.
Back in 2012, I was fortunate enough to be one of the 75 ‘Advisors’ selected to conduct projects at the CMMI (the Center for Medicare and Medicaid Innovation). The Advisors’ Program was a tutorial in population health as envisioned in the ACA. That was a completely disorienting experience, listening to the CMS leadership expound on population health, while knowing there was no plan to address the population that was/is the epicenter of the government’s health care cost crisis. The ACA was great Public Health policy with its focus on health and wellness for children, and adults making low-quality health decisions. But, if you want to show measurable change in Medicare expenditures, focus on the population where the most potential savings exists.
The Genesis ACO leadership estimated the 900,000 LTC residents consume approximately $40 Billion of Medicare’s resources. Field level research we conducted, and published in 2013, showed that the average Medicare expenditures for Beneficiaries attributed to a sample of LTPAC Medical Groups was about $41,000; after ‘risk adjustment’, that cost was still $20,000 – nearly 200% of the expected $10,337 average national Medicare annual cost. This data came from 2012 QRUR reports for large LTPAC Medical Groups – and uses attribution and cost adjustment models which paralleled those of ACOs for 2012. The 200% difference in Risk Adjusted spending vs. the Benchmark, illustrates the structural problems when an ACO-type analytical model is applied to the LTC Population.
A subsequent study we conducted on 2013 QRUR data illustrated the dramatic cost differences between LTC residents experiencing a hospitalization ($56K) vs. those with none ($9K).
As imperfect as the ACO program is for LTC populations, it is the only generally available Practitioner driven program which can support a shared reward system for LTC facilities and practitioners. The CMMI’s Initiative to Reduce Avoidable Hospitalizations Among Nursing Home Residents, is highly restricted in scope, and requires an infrastructure that is currently not part of any existing benefit program (e.g. Medicare A, B, C, or Medicaid).
It’s apparent, from the presentation conducted by the Genesis ACO leadership team, that their model for an LTC facility based program is working. The high cost history which ‘damned’ LTPAC Medical Groups to a <2%> VBP penalty for CY 2017, doesn’t negatively affect groups enrolled in an ACO; they are benchmarked against their own populations’ expenditure history. This ‘same group, same population’ benchmarking works in favor of a LTC focused ACO; any measurable improvement in hospitalization rates will yield significant reductions in expenditures. It’s also safe to assume that most ACOs will apply for CMS designation as an Advanced APM for 2018; achieving that status yields a 5% increase in the Medicare Part B fee schedule for participating Medical Groups.
Aligning the interests of LTC facilities which focus on Medicaid payment policies, with an ACO medical group that is aligned with Medicare expenditures is tricky. Facilities will need education to appreciate how this new paradigm works; it’s not intuitive.
The Genesis organization does have the unique advantage of sharing finances with the nursing facilities ownership structure, and employing the ACO’s practitioners who work in the same facilities. This structure simplifies the otherwise vexing contracting issues an independently controlled ACO could face. Regardless, if the ACO offers financial incentives which align facilities and practitioners, there can be measurable cost savings.
The Genesis Organization’s decision to launch a nursing facility based ACO was bold. The entire industry, the CMS, and patient advocates should all be collaborating to make this venture a success. There are clear opportunities to improve the design of the ACO model when it applies to the population of individuals eligible for LTPAC care, regardless of location. Future posts and journal articles will discuss those strategies, and the supporting rationale.