SHARP’S MEDICARE EXPERIMENT
Health system sticks with program that rewards providers who keep costs down without hurting quality
Though it has not yet recouped its initial investment, Sharp HealthCare is sticking with a new government program that rewards health systems if they can deliver quality care at a lower cost.
On Jan. 1, 2012, Sharp was one of 32 “pioneer” health systems nationwide selected by the Centers for Medicare and Medicaid Services to participate in its new accountable care organization program.
The three-year pilot initiative seeks to reduce spending on beneficiaries by offering health systems a cut of any savings earned, but it also asks each participant to share the financial pain if they spend more than expected caring for patients.
Alison Fleury, Sharp’s senior vice president of business development, said Medicare designated 27,894 beneficiaries as part of the organization, calculating that it would expect to spend about $320 million on those patients in 2012.
Fleury said that in its first year of operation, Sharp’s actual expenses on those patients was 0.3 percent higher than the benchmark. The system would have needed to see costs shrink or grow by at least 2 percent to receive a share of savings or pay a share of the losses.
“Basically, we broke even,” Fleury said. “We had no loss, and we had no gain.”
San Diego County is also home to two other accountable care organizations run by Tri-City Medical Center in Oceanside and a group of doctors in the southern and eastern parts of the county. These two organizations, however, are part of a different Medicare program that has not been in operation as long and hasn’t reported first-year results yet.
Sharp’s performance was right in line with the average performance of the 32 pioneer accountable organizations nationwide, according to a report Medicare released in July.
That report said that spending on the 669,000 beneficiaries assigned to the organizations rose 0.3 percent, less than the 0.8 percent growth rate observed for similar Medicare fee-for-service patients.
Thirteen of the 32, Medicare said, saw spending decreases enough to share in gross savings of $87.6 million. Only two of the participants lost money, a total of $4 million. All of the organizations, Medicare said, met quality guidelines designed to keep organizations from saving money at the expense of patients’ health.
Today the number of participating organizations has shrunk to 23, with nine of the original 32 dropping out or moving to a less potentially risky type of accountable care organization.
VERDICT STILL OUT
Lawton R. Burns, director of the Wharton Center for Health Management and Economics at the University of Pennsylvania, said the jury is still out on whether the accountable care experiment will work over the long run.
He noted that the largest and most sophisticated health systems are participating in the pioneer program, and said the true test will be whether the financial model creates efficiencies that change the way services are provided to all Medicare beneficiaries.
“What we would tend to look for is, did they start practicing differently in the larger body of fee-for-service (Medicare) patients?” Burns said.
Fleury said there already has been some spillover at Sharp. She said Sharp has implemented the 33 quality measures required of accountable care organizations for all of the Medicare patients it sees. As a result, she said, all seniors are now getting fall assessments and depression screenings, for example, that they were not getting before.
Sharp has had to pay for these improvements out of its own reserves.
While Sharp did break even in its first year of program participation, Fleury said the region’s largest health system has invested nearly $2 million hiring additional care coordinators and other professionals necessary to shrink spending. So, at the end of the first year, Sharp’s accountable care organization is technically in the hole.
Why then, would Sharp decide to hang in there for a second year?
Fleury said this year’s performance is looking better than last year’s, and there are other benefits, she said, that don’t necessarily show up in the profit-and-loss statement.
“As a board, we discussed the cost-benefit of the program. We have a patient advocate on our board who believes very strongly that this is the right thing for the patients,” Fleury said.
She said those extra care coordinators that Sharp has hired are spending time focusing on the 5 percent of Medicare patients whose medical needs are complex. This may mean a regular home visit, for example, to help a patient decipher the dosing schedule for a slew of medications.
“We’ve found that patients are really enjoying it,” Fleury said.
And, she added, continuing with the program allows Sharp to participate in Medicare’s grand experiment to change the way reimbursement is doled out nationwide.
Exiting now, the executive said, would mute Sharp’s voice in helping shape what could end up being national policy.
“By walking away, you really walk away from helping CMS design a model that is sustainable,” Fleury said.
While it did not walk away, Sharp did decide to reduce the amount of skin it’s exposing in the ACO experiment.
Initially, Sharp could have won or lost up to $37 million based on its yearly performance. Fleury said the company has selected a different variant of the program that shrinks that number to $17 million.