In January 2012 the Centers for Medicare & Medicaid Services (CMS) officially launched the Medicare Shared Savings Program (MSSP) for the formation of national Accountable Care Organizations (ACOs). Early participants were charged with bringing the theory of accountable care into practice.

Premier, a national health care improvement alliance of hospitals and health systems, created a population health collaborative in 2010 designed to assist providers with developing and implementing successful ACOs in both the public and private sectors.

Thus far, the Premier collaborative has advised nearly 30 MSSP applicants, and is working with 30 more, on how to structure and manage an effective ACO. Through benchmarking tools, financial models, the sharing of best (and worst) practices, etc., members of the Premier PACT Collaborative have outperformed the national MSSP cohort.

According to the recent interim report for the first 12 months of MSSP performance, 114 MSSP participants that joined the program in April or July 2012 saved $254 million (including $128 million that went to the Medicare Trust Fund, and $126 million in shared savings to providers). Nine of these MSSP ACOs participate in the Premier collaborative, generating savings of $38.2 million.

This equates to 18 percent of the total net savings coming from 8 percent of the organizations as reported by CMS. Moreover, 78 percent of MSSP ACOs that participate in the Premier collaborative generated savings, whereas 47 percent of 114 participants generated savings.

In working with these systems to implement successful programs, the Premier collaborative has a number of lessons learned that we believe contributed to their success.

Minimum Lives

Many organizations conducted analyses on available data to determine how many lives they believed would align with their MSSP ACO. In each case, fewer lives were aligned with the ACO than anticipated. In many cases, the differential was substantial.

This information is key to determining the adequacy of the ACO primary care networks and achieving the scale necessary to be successful. Among other concerns, smaller ACOs have a higher minimum savings rate that makes it more difficult to achieve savings.

Data Opt-Out

Due to mobile populations, identifying preliminarily assigned beneficiaries and communicating their right to opt out of data sharing has proven to be a challenge. Until this notice is properly furnished to patients, the ACOs cannot access their Medicare cost and utilization data or share beneficiaries’ health records across the ACO.

Thus far, CMS has been unwilling to share the last known contact information from the Social Security files that might assist with improving ACOs’ success in delivering this notice. Thus, many ACOs are providing the notice to all Medicare beneficiaries who receive a primary care service to increase the likelihood opt-outs are obtained for all beneficiaries who preliminarily assign to the ACO throughout the year.

Beneficiary Turnover

MSSP participants report that their difficulty in identifying and contacting their preliminarily assigned population is further compounded by the turnover throughout the year. Beneficiaries may come on and off the preliminary assignment file and in and out of the claims data feed as they seek treatment from different doctors. This makes it even more difficult to target, track, and manage assigned beneficiaries.

The most effective ACOs are able to manage these hurdles by working to identify their preliminarily assigned beneficiaries with their participating physicians; utilizing the claims feed and expenditure and utilization reports to better understand their beneficiaries’ utilization; and developing a process to reconcile their beneficiary lists with the CMS quarterly assignment file.

Moreover, the experience of our members is that approximately 30 percent of beneficiaries who assign to the ACO in one year remain assigned in the next. This is consistent with analyses by J. Michael McWilliams et al. showing 80.4 percent of assigned beneficiaries were assigned to the same ACO from one year to the next, and that only 66.0 percent remained across two years.

To the extent that patients seek care outside the ACO “network” or do not receive primary care services during the year, previously or even preliminarily assigned beneficiaries will not be in the ACO’s final assignment list. A best practice identified to reduce the beneficiary turnover is to work with primary care physicians to schedule appropriate wellness and annual physical exams in order to secure consistent attribution.

Patient Targeting

Despite initial research indicating that MSSP ACO patients were more likely to have higher incomes and incur lower costs, as well as less likely to be black, covered by Medicaid, or disabled, we believe the successful ACO programs recognize the value of initially focusing on high-needs patients. While many are concerned about ACOs “cherry picking” and “lemon dropping” patients,  shared savings payments will most likely result from care management of beneficiaries that have the highest historical spend — specifically beneficiaries with multiple chronic conditions or super utilizers of the emergency department.

Best performers in the Premier collaborative utilize claim analytics to identify patients that are super utilizers. They then use this data to target the 2-3 percent of the population identified with the highest risk for more hands-on, individual care coordination/management attention. In addition, as this high-risk population will continue to change year over year, successful ACOs utilize predictive modeling to identify those beneficiaries who are on the cusp of worsening health, as well as to identify the specific people that will benefit the most from care coordination and management.

Individual Care Plans

The ability to manage the ACOs beneficiary population is directly tied to the utilization of individualized care plans. These plans seek to improve care across the continuum by improving care coordination and transitions, identifying the beneficiary’s wishes, and ensuring that the beneficiary is engaged in and understands the care she will receive. Generally started by the ACO’s patient-centered medical home, care plans begin with a face-to-face visit between the patient and a multi-disciplinary clinical team who together conduct a full assessment of the patient’s health status and health habits.

As a team, they develop a care plan based on mutually agreed upon health goals and discuss empowerment strategies to achieve those goals. In developing care plans that are supported by a multi-disciplinary team, as well as the patient, the most successful ACOs improve health outcomes and encourage healthy lifestyle choices such as smoking cessation, weight management, and medication compliance.

Beneficiary Engagement

Because health decisions drive outcomes and are influenced by social, economic, and community issues, beneficiary engagement is a core principle for top performing ACOs. Most members of the Premier collaborative have in place robust networks of case managers and/or health coaches who contact beneficiaries via phone calls, Skype visits, e-mails, and/or text messages to ensure appointments are being kept, medications are being filled, and care plans are being followed.

Further, most ACOs allow patients to either email or call their care team 24/7. For beneficiaries unable to manage their care plan alone, top-performing ACOs will conduct home visits, offer group visits for patients with the same disease or needs, or deploy other remote monitoring tools.

Such efforts not only improve outcomes but also help ensure beneficiaries seek care within the ACO “network,” thus reducing turnover within the assigned population. However, broadly implementing and scaling these solutions across the community is a challenge and providers are still unclear on the extent to which the MSSP legal waivers apply: For example, to what extent may ACOs provide care coordination and transitions within their networks, versus offering patients all the options at each step? And what patient engagement incentives, such as free gym memberships, are allowable?

Managing The Halo Effect

Since the ACO cannot be sure who will assign to them, it is important to treat all beneficiaries as though the ACO is accountable for their costs. This means that many patients who are not attributed to an ACO may still benefit from its improved care and coordination, a phenomenon often referred to as the “halo effect.”

Successful ACOs deploy sophisticated financial modeling tools to better understand the impact on their traditional revenue streams, and budget to account for changes in utilization that may not manifest in the form of shared savings payments. For most ACOs, the default assumption is that the non-ACO participant’s inpatient and ED utilization will drop comparably to the ACO participants.

This halo effect also extends to other payers. For instance, if an ACO implements same-day scheduling, it does this for all patients. Thus, many of the best performing organizations operate their MSSP in tandem with one or more commercial payer shared savings arrangements.

Many organizations are trying these approaches, but their efforts are by no means systematic. For most health systems, broadly implementing and scaling these solutions across the community is a challenge. Collaboration helps providers learn how these strategies are being implemented in practice, so they can replicate what works and avoid potential pitfalls in a timely and cost-effective manner.

The proof is in the MSSP, where participants are improving health, quality, and costs. Knowing what the critical success factors are, Premier has provided extensive comments to CMS outlining changes they can implement to facilitate greater improvements in health, quality, and costs – a win for patients and for payors. If these changes are adopted, we are confident that the MSSP will become an even more attractive model for providers to pursue.