California and the Accountable Care Movement

The list of 32 medical groups and health systems that were chosen by the Centers for Medicare and Medicaid to participate in the Pioneer ACO project included eight groups whose headquarters are based in California. This means that more groups participating in this program are from our state than from any other in the country.

This comes to no surprise for many who have followed national healthcare trends over the years. California has long been in the forefront of what is currently known as “accountable care,” starting 37 years ago, in 1975, when the California Knox-Keene Act was enacted into law and signed by then (and now) Governor Jerry Brown. While not all of our current groups have been in operation the full 37 years, most of them have been in business at least two decades, during which time they’ve acquired a lot of experience in receiving capitation (that is, managing the care of a patient within a set budget) and delivering coordinated services under different payment constructs. In other words, they have learned a great deal about the accountable care business.

Across the 2400 pages of the Affordable Care Act, we see insurance reforms and efforts to provide coverage for all people. But the single most significant intention reflected in the Act is a clear movement away from fee-for-service payment — away from payment for the volume of healthcare services delivered toward payment for the value of these services in terms of quality and cost-efficiencies. We see this intention manifested in multiple ways in the Act: through bundled payments and the infusion of quality considerations and adjustments in how hospitals will be paid going forward. We see the same considerations being made with regard to the Medicare fee schedule for physicians. But perhaps we see this most clearly in the portion of the law relating to Accountable Care Organizations where at the outset payment will be on a shared-savings basis, which is very capitation-like in many ways. There is clearly a directional movement towards population-based payment methodologies.

California healthcare physician groups and systems are very experienced in delivering quality care accountably.  We have long known that we’ve got a good model. We’ve seen it in the statistics many times over. To have our delivery system model effectively adopted by the US Congress as the most promising one for healthcare reform is very gratifying. It has been breathtaking to watch the movement that we have long supported taking hold across the country, and it is powerful testimony to the level of sophistication in health care delivery across California.

This is not to say that demonstrating our capabilities will not be challenging. The differences are big. In the Pioneer ACO program, there is a direct contract between CMS and the medical group or health system. There is no intermediary. There is no health plan, and that is novel. Plus the population that the Pioneers must serve is fee-for-service Medicare, a population that has not, up until now, been in a coordinated care model. These patients may be difficult to identify and track, since — as fee-for-service patients — they retain the right to get care anywhere they want outside of the Pioneer ACO network of physicians. Likewise, in the commercial ACO work our groups are undertaking with plans like Aetna and Anthem, providing care coordination and value for PPO fee-for-service members is also the goal. Managing care and delivering quality in a fee-for-service environment is a big challenge for our groups.

For those who may be tempted to chalk up any success the Pioneer groups may see to their long-term expertise, I say, watch the rest of California closely. There are many smaller and less sophisticated groups showing good results in pay-for-performance initiatives — nascent groups with low budgets showing how even they can do well in a P4P environment.

Despite the many difficulties associated with this work, I believe our California groups are up to the challenge and will see resounding success. Accountable, coordinated care is what we do. And rather than seeing this movement as problematic, we see opportunity and validation. We all believe that the nation as a whole needs to move into this direction, and we intend to be leaders in the process.

Excerpted from an interview with
Don Crane
President and CEO
California Association of Physician Groups

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