Health Reform WK-EDGE OIG reviews ACO efforts to reduce Medicare spending and improve care
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Wednesday, August 7, 2019

OIG reviews ACO efforts to reduce Medicare spending and improve care

By Robert B. Barnett Jr., J.D.

Accountable care organizations offer an alternative payment model that is part of the transition from fee-for-service care.

With Medicare spending expected to more than double between 2017 and 2028, accountable care organizations (ACOs) offer some promising strategies for both reducing Medicare spending and improving the quality of care, according to a new HHS Office of Inspector General (OIG) study. The Medicare Shared Savings Program (MSSP), which includes ACOs, is one of the largest alternative payment models in the proposed transition from the traditional fee-for-service model to value-based care. Among the strategies that OIG identified are those for increasing physician cost awareness, managing beneficiaries with costly care needs to improve health outcomes, improving home healthcare quality, and using technology to improve information sharing (OIG Report, OEI-02-15-00451, July 19, 2019).

Background. Reports indicated that Medicare spending is expected to grow from $708 billion in 2017 to $1.5 trillion in 2028. CMS, therefore, has sought ways to reduce spending by moving from a fee-for-service payment model to a value-based payment model that rewards providers for the quality and value of their services. One alternative payment model is the Medicare Shared Savings Program. In that program, healthcare providers voluntarily form ACOs and enter into multi-year Medicare contracts. Successful ACOs are eligible to receive a portion of the savings they provide to Medicare. The OIG initiated this study, which was a follow-up to its 2017 study, to learn best practices from ACOs. The 2017 study found that ACOs had a net reduction in Medicare spending from 2013 to 2015 of nearly $1 billion. This 2019 study focuses more on identifying the strategies that ACOs have adopted to address conditions that raise healthcare costs and harm patient care.

Working with physicians. The ACOs reported to OIG that physicians are often unaware of the cost of services and, as a result, may order expensive services or make specialist referrals without considering the costs. In a separate problem, administrative tasks also can be onerous, significantly reducing the time physicians spend with beneficiaries. ACO strategies include (1) providing physicians with cost data, (2) providing physicians with quality measures and care gaps, and (3) providing administrative and clinical support.

Managing costly cases. Beneficiaries with complex or costly care needs are responsible for a disproportionate share of Medicare spending. The cases include chronic conditions, such as diabetes, lung disease, and congestive heart failure. ACOs strategies include using care coordinators to manage beneficiaries’ health and providing care outside of the physician’s office. The ACO-provided care coordinators closely monitor the identified beneficiaries to help them transition between care settings, which can include making sure they have the correct medication and equipment when they leave the hospital. The coordinators also schedule appointments and help develop care plans. As for providing care outside of the physician’s office, the ACOs provide support that includes home visits, telephone calls with beneficiaries between visits, and monitoring devices.

Home healthcare quality. Skilled nursing and home healthcare constituted 13 percent of all Medicare spending in 2016. These professionals, however, are not typically part of an ACO. Furthermore, the 3-day rule (must be in the hospital for three days before qualifying for skilled nursing benefits) can hamper the ACO’s ability to coordinate care. ACO strategies include (1) designating SNFs and HHAs as preferred providers, (2) embedding staff in SNFs to monitor beneficiaries, (3) overseeing care transition handoffs, and (4) using the SNF 3-day waiver rule whenever possible.

Information sharing. ACOs told the OIG that they often cannot access beneficiaries’ medical information when the beneficiary changes providers, even when the change is within the ACO. ACO strategies include using a single EHR system, or developing an alternative system, to communicate with providers and using state and regional data systems. Both strategies have reported some success and some continuing frustration.

Recommendations. As a result of its review of the ACO strategies, OIG made the following recommendations to CMS: (1) review recent program changes to ensure that ACOs can continue to be successful in their transition to a value-based care payment model, (2) share the findings in this report and others on best practices with all ACOs, (3) adopt outcome-based measures and align them across all programs, (4) share information about use of the SNF 3-day rule waiver, (5) share information about strategies that address social determinants of health and behavioral health data, and (6) prioritize ACO referrals of potential fraud, waste, and abuse.

CMS response. In essence CMS concurred with all the recommendations.

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