Clinically Integrated Networks and ACOs : Past, Present, and Future

This report is based on a 2018 webinar given by Amy Flaster, MD, MBA, Vice President, Population Health Management and Care Management at Health Catalyst, and Jonas Varnum, Population Health Management Consultant at Health Catalyst, entitled, “ACOs and CINs–Where Did They Start, How Have They Evolved, and Where Are They Going Next?”

The current growth rate of healthcare is unsustainable. In fact, it’s the largest driver of federal debt in the United States, with Medicaid placing tremendous pressure on state budgets. Companies that self-insure employee groups are also struggling to balance their budgets as the cost of healthcare grows rapidly.

The Evolution of the ACO and Clinically Integrated Networks

ACOs and clinically integrated networks (CINs) are two types of organizations working to, among other things, address the problem of rising costs. As ACOs and CINs continue to evolve, organizations moving into value-based care (VBC) face an ever-changing landscape. This article looks at the evolution of the ACO and CIN models, what new tools ACOs employ today to promote success, and lessons learned from organizations that have succeeded in alternative payment models. It also explores what healthcare experts believe the future of alternative payment models will look like and competencies to develop to meet those changing demands. Although this article focuses on ACOs and CINs, these are just two of many innovative payment reform and contract models used today.

In response to growing healthcare expenses and political pressure to reduce costs, healthcare organizations are on a decades-long payment reform journey. A pivotal point in this process took place in 1932, when the Committee on the Cost of Medical Care released a landmark medical study. The report recommended the “integrated practice of medicine rather than autonomous individual sets of practices.” The question of how to achieve this integration has confounded the medical community since that time.

Fast forward to the 1970s, the passage of the Federal HMO Act in 1973 encouraged the growth of prepaid medical groups, health maintenance organizations (HMOs), and independent physician associations (IPAs), all of which are the predecessors to today’s ACO structures. At the time, these organizations were constructed as an alternative to existing fee for service medical care, bringing together a range of medical services in a single organization. HMOs would provide these services “as needed to subscribers in return for a fixed monthly or annual payment periodically determined and paid in advance.” These models can stand as early ACOs and the first examples of value-based payments.

The 1990s brought about the managed care era, sometimes dubbed “the managed care revolution of the 1990s.” During this time, insurance companies contracted with providers for capitated payments. At the time, managed care provided little quality assurance or protection in terms of insurance risk, which resulted in public backlash from both patients and providers. Around this same time, the first CINs were born, prompting the Department of Justice (DOJ) and the Federal Trade Commission (FTC) to create standards and provide guidance around clinical integration.

In 2007, Elliott Fisher published the article “Creating Accountable Care Organizations: The Extended Hospital Medical Staff” in Health Affairs, introducing the term accountable care organizations/ACOs, which made its way into the Affordable Care Act. That same year, the IHI developed the Triple Aim framework, placing focus on improving the patient experience, improving the health of populations, and reducing healthcare costs. The Triple Aim, and the subsequent Quadruple Aim, are part of this history, not because they are landmark legislative acts in the development of VBC, but because they have provided a moral compass for healthcare reform. In today’s current landscape, there are over 1,000 ACOs covering 30 million lives. That’s one in 10 Americans. And the journey to VBC continues to evolve.

ACOs and CINs: 101

CMS defines an ACO as “a legal entity recognized and authorized under applicable federal or state laws, comprised of eligible groups of providers that work together to manage and coordinate care for a payer specific population.” While that is the legal CMS definition, there isn’t one standard industry definition of an ACO. ACOs are voluntary or legal entities comprised of groups of doctors and hospitals that share responsibility for both quality and cost for a population. Unlike the traditional fee-for-service reimbursement model, an ACO directly ties payments to outcomes of care and the providers’ abilities to deliver care in an efficient manner.

There are a number of clinical and administrative commonalities across ACOs, including Medicare ACOs, commercial ACOs, and Medicaid ACOs. Clinically, ACOs share a number of features:

• Standardize clinical protocols that aim to reduce clinical variation.
• Meet quality targets.
• Coordinate care amongst providers.
• Organize and optimize a broad spectrum of care management.
• Ensure appropriate site of care efforts.
• Develop patient engagement strategy.

ACOs also share the following administrative features:

• Create and monitor governance and partnership operations.
• Identify solutions for core clinical, analytic, IT, and resource functions.
• Monitor quality and payment targets.
• Negotiate and manage contracts.
• Establish procedures to distribute financial payments to participants.

ACO Contracts

Although ACOs share these clinical and administrative features, contracts can differ considerably based on the type of ACO (i.e., Medicare, commercial, or Medicaid). While it can be difficult to make generalizations because of this, one common theme among all ACOs is the shared contract goal to reduce a population-specific total cost of care. Though contracts can vary greatly in the specifics, common components include the following:

• Minimum/maximum savings rate.
• Quality score.
• Attribution—retrospective vs. prospective.
• Performance period and ramp up schedule.
• Data access.
• Contract review provisions.

ACOs should ask the following question when reviewing or negotiating a contract:

• Benchmarks: What benchmark is used? Is it a regional cost trend? Is it based on the historical costs of attributed patients? Does it account for gain deficiencies in the market?
• Minimum/maximum savings rate: What is the minimum and maximum savings rate? How do these vary over time? Are they steady, or do they ramp up?
• Quality measurement: How is quality measured in the contract? How negotiable is that? And what is the quality reporting program in the contract?
• Attribution: How is attribution managed? (There are reasonable arguments in favor of both prospective and retrospective methods, but this an important feature to consider.)
• Performance period: What is the performance period of the contract? Does it give the organization enough time to allow for some stability in strategy?
• Data: How much data is accessible to the organization in the ACO contract? How is access provided?
• Contract review provisions: What is the contract review process like? What events trigger a positive review?

Although both ACOs and CINs are collaborative entities with similar goals, are are significant differences in the way they are structured. While an ACO is a contract-based term with payment tied to outcomes, a CIN is the organizing body that can support multiple contracts. Another way to view a CIN is the platform upon which providers can form an ACO.

The FTC defines a CIN as a “structured collaboration between physicians and hospitals to develop clinical initiatives designed to improve the quality and efficiency of healthcare services.” Clinically integrated systems are recognized by the FTC and allow joint managed care contracting in order to accelerate improvements in healthcare delivery. The designation of a CIN allows groups the following benefits:

• Grants the group the ability to negotiate better rates with payers and provides protection against anti-trust laws.
• Has systems in place to enable their participants to share information about their patient populations.
• Allows participating physicians and practices to collectively track a shared patient population in order to optimize quality and cost reductions goals.

Supplemental to these core qualities are four key principles of every CIN:

1. Provider responsibilities: active participation, engagement, and time committed to enhancing clinical quality (care pathways) and reducing costs.
2. Provider accountability: CIN standards of participation create recourse if providers are noncompliant in quality and cost reduction policies defined by the CIN.
3. Clinical quality standardization: The organization must demonstrate that the CIN improves quality and efficiency over time.
4. Resource use: The organization must make efforts to meet quality standardization and cost efficiencies. including infrastructure investment (IT), efficient network participants (monitored through IT), and clinical improvement tactics (care management and care pathways).

In addition to these four main components, CINs allow for greater coordination across four main areas of the integrated network: financial and operational administration, legal structure and governance, information technology, and performance improvement (Figure 1).

The Evolution of ACOs and CINs

ACOs are growing, with over 1,000 ACOs covering more than 32 million lives. Historically, commercial ACOs have primarily driven this growth, but that number flattened in 2019 while Medicare ACOs and, to a lesser extent, Medicaid ACOs, continue to rise steadily (Figure 2).

In addition to the recent rise in Medicare ACOs, there has been significant growth in Medicare ACO models that involve more risk. In Figure 3, the illustration on the left side shows the least risk bearing of the Medicare Shared Savings Program (MSSP) ACO tracks, moving toward Next Generation ACOs–the most sophisticated and highest risk bearing of the ACO models.

The bar graph to the right shows enrollment per track by year, illustrating significant adoption with more than 10 million beneficiaries enrolled in MSSP and a steady increase of enrollment in Next Generation ACOs. Interestingly, 21 organizations opted into downside (or two-sided) risk CMS ACOs in 2018, without prior CMS ACO experience, indicating that organizations aren’t necessarily starting with the lowest risk model. These MSSP tracks provide increasing levels of potential bonuses for organizations that keep spending below targets and include repayment penalties for higher than expected spending.

Looking to the Future of ACOs

Looking at these numbers, it’s clear that ACOs are moving toward more risk for greater financial rewards. But, what’s the next for ACOs? CMS Administrator Seema Verma said, at an American Hospital Association Annual Membership Meeting in May 2018, “We are working for competition and better value by moving away from a fee-for-service approach, to a system that is value based and that rewards value over volume. We also want to think about models that create a true competitive market where providers compete for patients on the basis of price and quality, and moves the government out of the business of setting prices. … We will also make sure that our beneficiaries have incentives to seek value when they obtain care.”

Similarly, Adam Boehler, Director for the Center for Medicare and Medicaid Innovation (CMMI), has taken a hard line approach to ACOs, saying, “If you’re not cutting it, get out of the way, because there are others that will come that will cut it.” These are early signals into a greater emphasis on ACOs having more skin in the game in order to create a truly competitive market. In fact, assuming downside financial risk is a major component of the recent changes to MSSP that became final in December 2018. These changes rename the program Pathways to Success and require most participating ACOs to take on risk within two years in the basic track, placing an increased emphasis on “accountability” in accountable care organizations. CMS plans to implement these changes to MSSP in July 2019.

Where are CINs headed?

Shifting focus back to CINs, once a group of provider entities has formed a CIN and met the legal requirements, they must move quickly to demonstrate the value of the network. The trend toward consolidation, focus on controlling costs, and shift toward value-based payments are fueling competition and pushing CINs to increase their reach and network offerings. This is resulting in an increase in the Super-CIN model, or multiple CINs under one superseding structure (Figure 1). The goal of these super-CINs is to allow smaller systems to share additional services and contracts while scaling their operational successes and efficiencies. The ability to scale is becoming increasingly necessary as both consolidation and competition increase.

So much discussion of the ACO model and its evolution begs the question, do ACOs work? That is to say, do they improve care and lower the total cost of care? The short answer is that the results are mixed.

According to a recent CMS publication, the data suggests that upside-only ACOs are losing money, driven largely by hospital-based ACOs (as opposed to physician-led ACOs that did save money). CMS data also shows that two-sided risk ACOs are cost-saving. Possibly more telling than which ACOs are losing money and which are gaining is the fact that the actual net impact is relatively small. With $49 million for upside-only risk ACOs and $33 million in net impact for two-sided risk ACOs, relative to the total budget of CMS, these numbers are a drop in the bucket.

However, recent medical literature suggests more significant savings from MSSP ACOs, with an article in the New England Journal of Medicine suggesting the MSSP program resulted in a net savings of $256 million to Medicare in 2015. And, a whitepaper published in the National Association of Accountable Care Organizations in August 2018 reports that MSSP ACOs generated a net savings of $541.7 million from 2013 to 2015.

Pillars for Success in ACO and CIN Models

Looking at the evolution of alternative payment models from the early 1930s through HMOs and today’s increasingly sophisticated ACOs and CINs, these provider structures have taken on increasing risk over time. It’s more important than ever to look at key components of success for these risk-bearing groups:

1. Know the end goal. This is marathon work and consistently distributing a consistent vision and definition of success focuses these efforts over time.
2. Educate and engage physicians and stakeholders. While defining success orients the group’s vision, stakeholders also must be aware of where the organization is within that framework. Providing education around this progress is crucial from adopting to sustaining that vision.
3. Let the patient be the guide. Patients should be the true north of success, serving as the external stakeholder that supports any population health effort and drives decisions (e.g., what contracts the organization opts into, how the organization looks at benchmarks, etc). These should all be centered around understanding the specific patient population the organization serves.
4. Create a framework for formulaic success. Lastly, creating a framework for success is one of the biggest keys to an organization’s success over time. Adopting a formulaic model helps promote a continual process of operational success that drives decisions—including what payment models to participate in, what opportunities the organization has to improve clinical populations, and what care transformation activities the organization should participate in. Figure 5 shows an example framework for transformation.

What’s Next for ACOs and CINs?

After exploring the evolution of ACOs and CINs, what’s next in the world of alternative payment models? The demands are changing, requiring new competencies to meet them. Below are a few of the changes coming to the alternative payment space:

1. A shift to purposeful, aggressive contracting. Organizations will necessarily need to become more strategic about contracting. This will include mixing various types of contracts and revenue opportunities, such as Shared Savings, PMPM bonus, Care Management PMPM, and bonus fee structures for an overall strategic impact. This will also mean having additional depth in contracting operations, benchmarks, and attribution. Transparent historical data to drive those conversations will be key. Additionally, organizations will need to define upfront expectations on quality measures to create a simple slate of quality metrics across payers.
2. Increasing payer-provider integration. While there’s already been an increase in payer-provider integration, this trend is likely to continue—the only question is what the level of integration will be. CINs and provider systems are already starting joint health plans, but it remains to be seen whether others will compete or join with payers to support new clinic structures. There needs to be a mutual alignment between end goals to allow partners to determine who is most efficient at what operations. The next frontier is the renewed emphasis on the employer space with an increased focus on innovation from some of the big, new players in this arena (e.g., Amazon, Berkshire, JP Morgan, etc.).
3. Enhanced speed in defining impact populations. Organizations are beginning to know whom to target, how, and why, with increasing speed and granularity. Better tools provide more granular data that allows organizations to track specific components of patient populations and quickly and rapidly build upon interventions (Figure 6).

4. Ongoing expansion of Medicaid VBC. An optimistic trend is the ongoing expansion of VBC within Medicaid. Since the ACA was enacted, Medicaid enrollment has grown by about 30%. While many states have been in the Medicaid managed care business for a long time and had early success with Medicaid ACO models, other states are just beginning to explore this work. Expansion into Medicaid will continue to trend upward and impact the kind of investments that health systems make as they transition to a VBC model, such as increased investment in social determinants of health and behavioral health.
5. Increasingly sophisticated data. The ability to leverage increasingly sophisticated data sources and components is a key pillar to success in VBC. The better an organization is at accessing and interpreting data about its risk contracts, the more likely it is to succeed in alternative payment models. The increasing importance and availability of data about social determinants of health, coupled with geo-mapping data, is a compelling area for organizations to focus on in order to provide better care to vulnerable populations. Other forms of data that are going to play an increasingly important role are genomic data, patient reported outcomes (PROMS), and data from patient wearable technology.
6. Evolving care management models. Exciting changes are happening in care management and are expected to increase over the next few years. Care managers will be tailored to the types of patients they serve, leveraging diverse professionals operating at the top of their licenses to target care management for specific populations. This could mean social workers providing care management for patients with primarily psychosocial issues, community health workers from within a specific community targeting care management to those communities, as well as the traditional model. This is an opportunity to strategically target the care delivered to different patient populations.

There’s also an increase in care management outsourcing solutions. While in the past, this has meant billing and technology support, solutions now include a full suite of services. Lastly, is the digitization of care management—which includes patient stratification with machine learning, risk identification for targeted interventions, and telemedicine. These are all exciting developments in care management that will help support evolving care models.

The Journey to Value-Based Care

The journey to VBC can be traced as far back as 1932, with many bumps, twists, and turns along the way. And, while the destination still remains out of reach, there’s been a lot of progress in providing better care, reducing the cost of care, and improving the health of populations, aided, in part, by the transformation of payment reform models.

ACOs and CINs are evolving, and there is more change on the horizon. The types and structures of these organizations continue to shift in a constantly changing landscape. ACOs and CINs must develop new tactics and employ new tools to adapt to changing regulations, increased competition, and more discerning consumers. A move toward strategic contracting, payer and provider integration, Medicaid expansion, evolving care management models, and increasingly sophisticated data are all likely to influence the future of ACO and CIN models. As accountable care models continue to transform, organizations that embrace risk to provide true accountability are likely to lead the way for value-based care.

Additional Reading

Would you like to learn more about this topic? Here are some articles we suggest:

1. Pairing HIE Data with an Analytics Platform: Four Key Improvement Categories
2. Social Determinants of Health: Tools to Leverage Today’s Data Imperative
3. Value-Based Care: Four Key Competencies for Success
4. Five Action Items to Improve HCC Coding Accuracy and Risk Adjustment With Analytics
5. ACOs: Four Ways Technology Contributes to Success

---

PowerPoint Slides

Would you like to use or share these concepts? Download the presentation highlighting the key main points.

Click Here to Download the Slides

ACOs and CINs: Past, Present, and Future from Health Catalyst