Rural providers will need to keep pace with new delivery models

With rural providers being asked to join accountable care organizations and clinically integrated networks at an unprecedented rate, providers need to understand the difference between these care models and how they can serve the unique needs and challenges of rural providers.

In a webinar titled “Rural Strategy: ACOs or CINs?,” Lynn Barr, MPH, chief transformation officer of the National Rural Accountable Care Consortium, discussed the importance of informed decision making among rural providers. The National Accountable Care Consortium is the first ACO created by nine rural CEOs in three states.

“Should you join an urban CIN, or should you join a rural ACO?” Barr asked in the webinar. “It depends on how much choice you have, and your strategy for what you are trying to accomplish.”

Barr added, however, that rural providers should avoid being left behind by enrolling in a population health program that offers cost data and is aimed at achieving high scores on ambulatory quality measures.

Fast-moving change

Barr discussed an announcement made by HHS secretary Sylvia Mathews Burwell, describing HHS’s goal of implementing alternative payment models linked to quality of provider care for 30% of all Medicare provider payments by 2016, and increasing that number to 50% by 2018. As the second goal, almost all (90%) Medicare fee-for-service payments must be tied to quality and value by 2018. These goals would be achieved through $114 million to support medical ACOs, and a steady decrease in current payments.

“You can join a physician quality reporting system, or join a CIN, join an urban ACO, form a strategic ACO, or a state rural ACO, or a Practice Transformation Network,” she said. “But don’t let 2015 close without doing one of these things. Whatever you do, do something, and do it now.”

Barr said under these new payment policies, the 2015 physician fee schedule pays a 4% bonus or a 4% penalty in 2017 for top-quartile performers on ACO-like quality measures and cost per beneficiary. By 2019, she said, 25% of physician payments will vary based on cost and quality.

“As rural providers, this makes us nervous, and it should,” Barr said. “In some ways, it puts a target on our backs.”

She said market forces that will drive doctors and patients to choose high value providers and partners will represent a major obstacle to the sustainability of rural health care systems, and potentially threaten to leave rural systems behind.

“We have to find a way to participate in these programs, even though we don’t have to,” Barr said in the presentation.

‘Chef vs. Lunch’

Barr said when contemplating the possibility of joining an ACO or a CIN, a simple analogy can be applied.

“When we think about ACOs or CINs, it really comes down to, do you want to be the chef or do you want to be the lunch?” she said. “Right now, we’re feeling sort of like lunch. We’ve got to seize control.”

She said currently, payor profit is limited to $12 million per year, despite the fact that 10,000 lives equals $80 million in health care spending in a community.

“Something is wrong with this whole equation,” she said. “If you are bringing $80 million to the table, you need to make sure you are being rewarded for the work you do.”

Barr discussed the seven components of a clinically integrated network (CIN). These include legal options (Physician Hospital Organizations, Independent Provider Associations, and now ACOs), physician leadership, participation criteria, performance improvement, information technology, contracting options and flow of funds. She said CINs negotiate contracts that include downside risk for network, and that these risk arrangements are a key difference between CINs and ACOs.

“Most CINs are entering into risk arrangements, while most ACOs do not,” she said. “For rural providers, we think it’s too early in the game to take downside risk.”

A transitional approach

Barr said the Medicare Shared Savings Program, which involves the creation of an ACO, is a transitional savings program that does not involve downside risk. With an ACO, providers become accountable for the cost and quality of care of a specific population. Through the ACO investment model, Medicare pre-pays shared savings for 2 years, with payments recovered from shared savings. If no savings are achieved, there is no repayment as long as the ACO adheres to the program for 3 years.

“When you go into an ACO, at the end of the ACO, you will have 4 years of data to determine what kind of risk you will take; you could really end up learning something,” she said. “That ACO could someday be a CIN, or it could contract with CINs.”

She said essentially, an ACO is a CIN with less risk.

“An ACO is a CIN on training wheels; you can’t fall off, you can’t get hurt, but you can learn, and you can do it from a position of strength,” she said.

Weighing the options

In her presentation, Barr said rural providers should make their decisions about CINs or ACOs based on their specific strategy and needs.

“If you’re considering an urban CIN, ask yourself, is this urban CIN your preferred partner forever?” She asked. “Will they focus on your needs and success? If not, I would not recommend it. They have to commit to helping you build market share.”

Other considerations Barr listed for those contemplating a CIN include:

whether you will have your choice of tertiary care providers;
who will see your data/what data will be provided to you;
how the CIN will help you learn to improve;
distribution of savings; and
deductions from cost savings.

Barr said a rural provider should consider the autonomy they have to own and govern an ACO.

“If you join a rural ACO, you’re going to own it. You’re going to govern it. You create and maintain leverage. You control your rate of change,” she said. “This isn’t a race, it’s a marathon. Don’t go too fast.”

Disclosure: Barr is chief transformation officer of the National Rural Accountable Care Consortium, an ACO.