Accountable care organizations strike out in Indiana

Medicare touted last month that it saved hundreds of millions of dollars last year even as the federal program paid out hundreds of millions more in bonuses to health systems that achieved high-quality care at lower cost.

But none of the 11 accountable care organizations, or ACOs, with operations in Indiana saved money for Medicare or achieved a bonus.

That was particularly surprising in the case of Franciscan St. Francis Health, which jumped into the ACO concept with both feet and last year scored in the top five nationally among participants in the Medicare Pioneer ACO program. Franciscan last year earned a bonus of $6.6 million for saving Medicare $13.3 million in 2012.

“We did not do as well in meeting our benchmark for reducing the costs of patient care,” Jenny Westfall, regional vice president for Franciscan ACO, said in an e-mailed statement.

And Franciscan says trends are headed in the same direction in 2014.

Franciscan said it would switch from the Pioneer program to the Medicare Shared Savings program. Franciscan hopes that having a smaller group of physicians than it did in its Pioneer ACO will help it achieve savings. Accountable care organizations were authorized by Obamacare to receive a portion of the savings they produced for a set group of patients compared to the previous year’s costs plus an expected percentage increase.

“Because we are including a smaller group of providers–Franciscan Physician Network, Indiana Internal Medicine Consultants, and Major Health Partner-affiliated providers—we feel strongly that we will be successful in this venture,” Westfall's statement said.

But Franciscan and its Hoosier peers are faring no better in the Medicare Shared Savings program.

Franciscan already has two ACOs in the Shared Savings program, and neither saved money for Medicare or earned a bonus for their 2013 performance, according to data released last month by the Centers for Medicare & Medicaid Services.

One is run in partnership with American Health Network, an Indianapolis-based physician practice. It is also part of two other ACOs, including one in Ohio, and none achieved savings for Medicare.

“It's a difficult road. You're trying to practice population-based health care but your population keeps moving,” American Health CEO Ben Park said during the IBJ Health Care Power Breakfast on Sept. 26. “They get well. I mean, they don't need us for a year, and so we don't get those well people attributed to us and then they come back the next year.”

Medicare “attributes” specific Medicare patients to a particular ACO based on the frequency with which they visit the providers in that particular ACO. But the ACO program does not require seniors to go to the providers in that particular ACO. It simply expects the doctors and hospitals in the ACO to take responsibility for the cost of those patients’ care—wherever they go to get it.

That set-up is proving problematic, said Park and Ryan Kitchell, chief financial officer of the IU Health hospital system.

“You don't know what lives you're accountable for until after the fact based on this attribution model,” Kitchell said. He added, “Fifty percent of the 50,000 lives that we have are outside the IU Health system in other systems around the city and so it is hard to be accountable for their care when they're outside your system.”

In the Pioneer ACO model, the assignment of patients to an ACO was done in advance. But even then, few of the organizations could achieve savings consistently.

Park said that might be because the organizations that have been furthest ahead on keeping their patients healthier have a harder time achieving even more savings now that they are part of the Medicare programs.

“Our problem is that we had the lowest cost of any ACO that I've seen for our benchmark. We looked at other people's and their benchmarks were like $12,000 a year and ours was like $8,400 [per patient],” he said, “because we've been doing all of this stuff and we don't have as much room to improve.”