Humana and Norton experiment with ACO

A Norton Healthcare and Humana, Inc. co-sponsored pilot program testing the market viability of a commercial Accountable Care Organization (ACO) has yielded measurable improvements in healthcare quality and cost reduction after only two and half years of implementation. These findings were included in a report Marcia Guida James, Director of Provider Engagement with Humana, Inc., presented to the US Senate Committee on Health, Education, Labor, and Pensions (HELP) last May.

The report, which briefed the Senate HELP committee on initiatives for health care quality improvement in which Humana, Inc. is involved, included testimony to the general progress that the Norton-Humana ACO has made since its inception in 2009. The assortment of positive outcomes included a 36.6 percent increase in physician follow up visits within seven days of hospital discharge, and a 12.9 percent improvement in appropriate emergency room visits. There were also measurable improvements in health care quality with increases in diabetic testing and cholesterol management, Guida James reported.

(See to see Marcia Guida James testimony before the US Senate HELP committee)

The Humana presentation to the Senate HELP Committee reflected similar positive results reported in a comprehensive study The Commonwealth Fund published on the progress of the Norton-Humana pilot ACO last January. The Commonwealth Fund is a private national foundation dedicated to the promotion of a national high performance health care system. While the Humana-Norton ACO is still being refined, there is evidence to show that a commercial ACO can succeed in raising health care quality while reducing costs in a self-insured environment.

In 2009, the Engelberg Center for Healthcare Reform at the Brookings Institute in Washington, DC and the Dartmouth Institute for Health Policy and Clinical Practice in New Hampshire (Brookings-Dartmouth) approached Humana about being one of the five pilot sites for the development of a commercial Accountable Care Organization. Humana readily accepted the challenge and subsequently approached Louisville-based Norton Healthcare to be their clinical provider partner.

“We jumped at the chance to develop this type of delivery model,” said Kenneth Wilson, MD, System Vice President for Clinical Effectiveness and Quality at Norton Healthcare. “We see the ACO as an opportunity to provide health care differently than we have been doing in the past.” The ACO model proceeds in a complimentary direction with the way in which healthcare organizations have been moving in recent years.

Where once there were small groups of physicians organized around a single specialty or a limited number of specialties, there are now multi-specialty clinics composed of numerous primary care physicians and specialists. There are hospital based groups and groups organized under a health plan. The structure of an Accountable Care Organization makes sense because it involves a network of physicians capable of providing the full spectrum of care to a patient population.

“An ACO is a logical practice model for these large health care groups,” said Thomas James, Corporate Medical Director, National Network Operations at Humana, Inc. More than that, he said, an ACO physician network presents health care providers a unique opportunity to raise health care quality, cut costs, and benefit from the savings.

The ACO model for health care delivery has been discussed for quite some time. In terms of the treatment of Medicare patients, the ACO model is a prominent feature in the recently passed federal health care law. Under the title of Medicare Shared Savings Plan, the development of an ACO provider network is actively encouraged to promote improvement in healthcare delivery while also reducing the cost. The incentive to a provider network is a share in the savings, provided that certain levels of quality are maintained or improved.

The Brookings-Dartmouth pilot programs are an effort to translate the Medicare Shared Savings Plan into a viable commercial application. Proponents of the delivery system believe that a network of physicians applying the ACO model can succeed in lowering the costs of healthcare to a self-insured population while improving the quality of that care with the ultimate result being a healthier population.

“The central idea is a bit of a departure from a typical fee-for-service approach to health care delivery,” said Dr. Wilson. “At Norton, [prior to embarking on the ACO pilot program] pretty much all of our physicians practiced according to a fee-for-service model.”

The fee-for-service model rewards physicians for the amount of care they deliver. Physicians make their living by seeing as many patients as they can, but are concerned mainly with the reimbursement they get for each individual patient encounter.

There is a general recognition that the current fee-for-service approach has resulted in a fragmented system of health care delivery, Dr. Wilson said, even in a hospital-based system where a significant percentage of the medical staff is employed. There is little financial incentive for physicians to participate in the full continuum of care because the rewards for care are based on the volume of patients seen. Once a patient has been moved elsewhere in the system, there is little bottom-line incentive to follow the patient’s care forward, to share data, limit the duplication of services, or even to take steps to encourage patients to follow through with a long term health care plan.

An ACO, on the other hand, holds the entire network of partners accountable for improving quality by sharing in the benefits of an efficient delivery of care. There are incentives built in to the payment structure that enables, and encourages, the physician network to monitor the overall health of a specific population, coordinate care among the network providers, and, by this cooperative arrangement, reduce costs.

To serve the research purposes of the Brookings-Dartmouth pilot program, Norton Healthcare and Humana, Inc. organized its ACO network utilizing a mix of Norton’s employed primary care and specialty physicians. It took its population of patients from among Norton’s and Humana’s employees, a test population estimated at approximately 7,000.

The pattern in which people engage with their physicians remains unchanged, said Dr. Wilson. They see whomever they wish, whether that provider is in the ACO network or not.

“This is not managed care,” Dr. James added. “People choose their own healthcare providers. However, there are advantages for patients to utilize network providers. If patients receive a better quality health care experience, one in which they feel that their physicians are working together to improve their health, then there is every reason to expect that the patient will seek out their care from within the ACO. I think we have been able to demonstrate, even in this short period of time, that patients respond well to the ACO model if their overall healthcare experience is positive. The network takes ownership of the health of its population,” said Dr. James.

Communication among the network providers is one of the fundamental keys to a successful ACO. When the Norton-Humana ACO began operations, Norton Healthcare was taking the initial steps to create an integrated Electronic Medical Record (EMR). But while the application of an EMR certainly helps an ACO gather data about its population and allows the payer partner in the organization to more precisely formulate cost targets for that population, physicians toying with the idea of establishing a commercial ACO must not feel that an EMR is an indispensable component of the network.

“Used correctly, it is an effective tool,” said Dr. Wilson, “But the essential aspect of an ACO is communication among partners that promotes a seamless continuum of care from the moment a patient engages a physician for treatment.”

That partnership includes not only the participating healthcare providers. The payer plays a vital role as well.

“That aspect of the network is the one of the many things I enjoy about this approach,” said Dr. James. “The ACO enhances Humana’s relationship with Norton so that we are working in concert for the benefit of the patient population. We’re not solely concerned with the numbers.”

Dr. James finds himself in a unique position with his involvement in the development of the Norton-Humana ACO. In addition to his position within Humana, he also works weekends as Norton Healthcare physician. That position enables him to understand issues that arise from both sides of the partnership.

“The measurement of the impact on quality health care through the ACO is really based on those people who use health care services consistently over time and can be attributed to a specific doctor,” said Dr. James. “A network that responds to the needs of Medicare recipients tends to have a bit more stability because those in Medicare tend to stay in Medicare. The challenge in making a commercial ACO a viable business venture for a physician network is managing the fluidity of a participating population. In a self-insured population, people come and go and their patterns of accessing care can be bit more inconsistent than a Medicare population.”

There is also a critical element that both providers and payers reckon with and that is ways to encourage the patient population to also take ownership, or better said, to be accountable as well for their own health.

An important function of reducing health care costs is for patients to take measures to reduce their level of risk. Patient accountability for their health was a major topic of discussion at the annual ACO summit, said Guida James. Historically, the general population has not been made financially accountable for failing to adhere to a plan designed to improve their health.

“It’s always a struggle to get patients to eat right, stop smoking, exercise more, and to do those other things necessary to improve their health. Even if there weren’t regulations that prevent providers from resorting to punitive measures to enforce compliance, it represents the wrong kind of thinking anyway, regardless of the health care delivery model to which a physician adheres,” said Dr. James. “The challenge is finding the right kind of messaging so that taking care of oneself really resonates with the individual.”

But what of the bottom line for providers?

The Medicare Shared Savings Program claims that an ACO earns rewards for reducing estimated costs for health care while also meeting or exceeding quality measures. But the emphasis on the shared savings aspect of the ACO has clouded perceptions somewhat of how physicians benefit.

“It is not accurate to get tied up into the idea that an ACO is completely different from fee-for-service in terms of reimbursement,” Marcia Guida James commented. “In the industry there are several different types of payment methodologies for reimbursing physicians that are being developed around ACOs. Even the Medicare Shared Savings program is built around a fee-for-service chassis. In some ACO models, the fee-for-service chassis may also have bundled payments underneath. There are just many different types of payment models involved.

“We look at the population and determine cost targets with the quality piece built in. That is one of the ultimate goals in the development process – to tie cost and quality in together. That’s probably about the best way to articulate it,” Guida James said.

“In terms of shared savings, we develop cost targets based on the experience of a particular group. Part of the assignment we have as a pilot program is to figure out methodologies of payment. We’ve only been in this thing for 2.5 years – there are still several details to be worked out.”

Regardless of the potential fate of the health care reform law, the Norton-Humana ACO has already seen enough positive outcomes in terms of health care quality and cost reductions. And the effort appears to have resulted in better health for their patient population.

Still, the Humana-Norton ACO remains a work in progress. There is a committee composed of Norton and Humana representatives that meets monthly to address numerous questions about how to maximize the ACO model’s full potential.

“There is no dearth of items on our agenda,” Guida James said.

But so far, the early results are enough to say that an ACO structured network is a viable practice model going forward.

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