Oncology & Biotech News
September 2012
Volume 6
Issue 9

Accountable Care Organizations Come to Oncology


Integrative model unites physicians, hospitals, and payers to deliver evidence-based care and control cancer costs.

Jonathan Gavras, MD

As politicians on Capitol Hill pursue divergent visions for the country’s fractured healthcare system, a growing number of physicians, hospitals, and payers are quietly joining forces to explore new models to meet such shared challenges as rising medical costs and declining reimbursements.

In one notable collaboration, Advanced Medical Specialties, a multisite oncology practice in the Miami-Dade—region Florida Blue, the state’s largest private insurer, and Baptist Health South Florida, the hospital group, are forming a cancer-specific accountable care organization (ACO) that the partners contend will streamline the delivery of care, rein in costs, and improve outcomes.

ACOs aim to improve quality and efficiency by integrating clinical services and communications across practice areas, implementing evidence-based treatments, and keeping close track of care and outcomes through shared electronic medical record systems, among other measures. While conceived as a model for primary care, they are gaining attention in specialty areas such as oncology, where care is especially complex, management-intensive, and expensive.

“We have been seeing rapidly escalating oncology costs in a state with a high incidence of cancer. We are exploring ways to work collaboratively to build an integrated system where high-quality care provided to members will lead to more efficient care. In the end, this reduces the cost of care,” said Jonathan Gavras, MD, senior vice president of delivery systems and chief medical officer for Florida Blue.

Under the new organization, physicians will act as primary navigators who are accountable for patient care, while guiding patients through the healthcare system. When patients enter the hospital, they will retain “strong connectivity” with the physician group, Gavras said, through continuity of care, adherence to clinical pathways, and the use of electronic medical records. The healthcare plan will then aggregate information on the care provided and share those results with the hospital and physician partners. As they seek to contain costs, they will look closely, for example, at avoided emergency room visits.

The partners are instituting a shared-savings program they say will act as an incentive to reduce unnecessary services. In setting it up, they began by identifying a population of patients with common cancers, including leukemia, lymphoma, and breast, gastrointestinal, prostate, gynecologic, and thoracic cancers, and then examined the care they were provided over the course of a year and tabulated its cost.

Leonard Kalman, MD

“We looked historically at the cost of care for this population, and then set a budget per patient, per condition going forward for a year,” said Leonard Kalman, MD, chairman of Advanced Medical Specialties. “We’ll see if we can beat that budget, and if we do, the savings would be split. We’re still in the midst of looking at where dollars have been spent and identifying those areas where we think the cost curve can bend.”

In seeking efficiencies, Kalman said that his practice has focused on evidence-based treatment regimens, advance care planning for end-of-life care, and lowering the number of unnecessary hospital admissions, as well as emergency room visits. The practice employs “chemotherapy educators,” for example, to meet with patients before they receive their first course of chemotherapy as a way of reducing emergency room visits and admissions related to side effects.

“Avoidable admissions are a top priority. We may need to create a lower-intensity triage area, possibly within our infusion suites, so patients don’t have to go to the hospital,” he said, noting that while these services are presently set up for weekday, daytime hours, the partners are exploring ways to avoid emergency room visits and admissions at night and over the weekend.

Access to electronic records, via secure networks over the Internet, will reduce medical errors and ensure that providers are not repeating diagnostic tests, Kalman said, adding that the group is currently working out privacy issues and logistics as it sets up the new system.

“We also need to encourage patients to consider advance care planning, working with doctors and nurse practitioners. This would include avoiding the use of chemotherapy, ICU, hospital or emergency room admissions for the last 30 days of life,” he said, noting, however, that both the health plan and the hospital system will need to “market” advance care planning if it is to be successful.

The cost of drugs continues to pose a challenge that is not easily tackled, the partners said. “Drug prices are significantly rising due to new drugs entering the market. They’re expensive, but they are positive clinical advances. What we can do is make sure they’re used appropriately, under the right conditions, and in the right dosages,” Gavras said.

Kalman explained that for doctors, the new system would provide a way to “to move away from some of the old ways of getting paid, such as on drug margins,” where reimbursements have been declining and where, “following evidence-based care at a high level of compliance, there is little if anything left to save.”

“Our practice has been dealing in a positive way with Florida Blue, and we realized that we should work with them to try to find a new way to get paid. This is a good first step,” he said. “You start overcoming historic distrust and barriers, and that’s invaluable.”

Kalman said that his practice and the hospital will continue to charge on a fee-for-service basis, but would consider replacing it with another payment method after the system is fully up and running in the next 2 to 4 years.

While the payment model does not put a dollar value on services such as the coordination of care or patient education, or reimburse providers for them, it does reward them for the efficiencies and cost reductions that come from implementing them, Gavras said.

“It’s a different way of financing healthcare. It’s margin-based reimbursement versus revenue-based. The better I do, the bigger piece of the savings I keep, once hitting quality metrics,” he said, while declining to discuss how the shared savings would be distributed, other than to say that the formula had been worked out “to the satisfaction of the three parties.”

The partners said that patients struggling with rising copays will also benefit from the new system, which is designed to reduce medical complications and errors and lower their out-of-pocket costs by eliminating duplicated and unnecessary services.

Although patients will still see the same doctor, they will take part in an enhanced system where there is significant coordination of care. Quality parameters will be ensured through the use of evidence-based pathways and Quality Oncology Practice Initiative (QOPI) certification. While the first focus is clinical outcomes, Gavras said, the group plans to eventually measure patient satisfaction via surveys.

He said that employers must agree to participate, noting, “Employers, too, need to understand that this is a different way of paying doctors. Large employers seem prepared to accept this. They should see savings if the program is effective.”

The most important thing was getting the leadership aligned. We all put our cards on the table—our financial data—and shared data that never would have been shared before.”

—Jonathan Gavras, MD

To Gavras, data analysis, “the aggregation and analysis of costs and clinical condition and financial analysis,” is the group’s major investment so far. But before the partners could even begin to look closely at costs, they had to achieve a more significant milestone, he said. “The most important thing was getting the leadership aligned. We all put our cards on the table—our financial data—and shared data that never would have been shared before.”

The senior leadership of each organization then spent months “actively involved and engaged in the strategy setting of the oncology ACO,” said Ralph Lawson, corporate executive vice president and chief financial officer for Baptist Health South Florida. He added that staff members of the respective teams serve as project managers and hold weekly meetings to review data and maintain adherence to timeframes and initiatives.

“For the immediate future, participants must rely primarily on the breadth of data available from the payer to attribute patient population and to guide decision making related to clinical and operational improvement opportunities,” Lawson said. “At Baptist Health, we are in the process of evaluating these aforementioned opportunities, and, if necessary, we will make decisions related to the appropriate staffing mix/complement, as well as department structure, to support the ACO collaborative.”

Kalman called the build-out time a “2- to 4-year proposition.” He explained, “We finished the contracting stage. We are now delineating the care processes that need to be instituted or tweaked or enhanced, such as a triage system, advance care planning, chemotherapy education, and continued adherence to pathways and QOPI. Then we sit back and measure and readjust the care processes, and indeed perhaps the contract, as data is accrued,” he said. “After that, might we be willing to accept a ‘bundled payment’ with the hospital? We will see. The end game is accepting risk, but we need to get all this experience under our belt.”

The Patient Protection and Affordable Care Act directed the Centers for Medicare & Medicaid Services to create a mechanism by this year for sharing cost savings with ACOs—which it defines as provider groups that assume responsibility for the full spectrum of care for sizeable, defined patient populations— if they meet quality targets and can document cost reductions for their Medicare patients.

Gavras said that Florida Blue began working on the new model well before the healthcare reform law was passed. “This was going to happen no matter what. With changes in the cost of drugs and a higher incidence of diseases like diabetes and cancer, the current system is not sustainable,” he said, adding that the insurer plans to expand this model to its Medicare Advantage members within the next few months.

Lawson said that he viewed the industry’s transition from volume-based reimbursement models to value-based models “inevitable and required.” He said, “Simply put, healthcare costs too much. As providers of care, Baptist Health has the responsibility to lead industry efforts to increase quality and decrease costs. There are tremendous opportunities for hospitals, payers, and physicians to align and collaborate to develop and implement the foundations necessary to accomplish these sea changes, and Baptist Health desires to be at the forefront of these important changes,” he said, including doing what he called “the right thing,” such as reducing hospital lengths of stay and performing traditionally inpatient procedures in outpatient settings.

“As the CFO of the largest not-for-profit healthcare system in South Florida, I can tell you with certainty that doing the right thing often times translates to lower reimbursement for the hospital,” he said, adding, “but, there is no doubt in my mind, we as an industry must do the right thing, and arrangements like this allow us to do just that.”

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