Challenges rise in cutting the government spend

When doctors and health care providers work together, taxpayers and patients benefit.

But considering hospital systems traditionally have been paid for services rendered, and costs per patient are generally low among the area’s largest providers, savings from new coordinated-care models often don’t come easily.

Among local health care providers, Mercy Springfield Communities has worked to become an Accountable Care Organization, which participates in a shared-savings program with Medicare administrators through coordinated care and avoiding unnecessary expenses.

CoxHealth works to produce efficiencies through a bundled-payment program that promotes coordinated care. And Citizens Memorial Healthcare is focused on primary care and follow-ups with patients to reduce its Medicare spend.

Together, they are saving millions of dollars in taxpayer money, but ever-increasing expectations and a lack of Medicaid expansion are putting the pressure on for more.

ACO action
In recent years, the Centers for Medicare & Medicaid Services has established several programs under the Affordable Care Act designed to improve the quality of care and reduce associated costs.

Among them is the Medicare Shared Savings Program for ACOs.

During the past year, Mercy Springfield Communities saved CMS $1.6 million in projected billing.

Dr. Jim Rogers, a Mercy Clinic physician who has helped administer the Springfield ACO for Mercy, said while the savings are modest – less than 0.3 percent of the over $48 million in last year’s Medicare reimbursements – efforts become clear in context when considering the local health system tracks its Medicare spending per patient per year at $8,038. That’s 14 percent below the national average of $9,415.  

“The structure of the program is: do innovative things, save money based on your historical spend adjusted for risk and inflation, and we’ll share that with you,” he said, adding Mercy would have needed to reduce expenses by more than $6.6 million to get returned savings.  

Though a precursor pilot program to the ACO model called the Physician Group Practice Project, Mercy saved the government a total of $17.6 million on its southwest Missouri Medicare spend over a five-year period, according to Springfield Business Journal archives. But now, as an ACO, the savings are getting tougher, Rogers said. The bar is climbing.

In 2014, Mercy Springfield Communities helped inch down total Medicare expenditures through practices such as virtual care, which helped drop hospital inpatient expenditures by 4 percent and deflated nursing-facility spends by more than 12 percent.

And its quality scores landed in the 93rd percentile in 2014, up from the 85th percentile the year before.  

Care coordination
David Raney, vice president of the CoxHealth Network and business development, said the Springfield-based not-for-profit works to reduce costs through CMS’ Bundled Payments for Care Improvement initiative.

Raney said the traditional ACO model, aka Pioneer ACOs, often struggle to achieve real savings despite investments of time and money to change systems, which is why CoxHealth began participating in BPCI.

The CMS program is designed to allow flexibility in selecting the medical conditions to bundle, developing the health care delivery structure and determining how payments would be allocated among participating providers.

“The Pioneer ACO model wasn’t as successful as projected, but the concepts that were introduced continue in the new ACO models, and the ACO-like innovation programs such as BPCI,” Raney said.

For example, 37 of CoxHealth’s adult primary care clinics – all but one – and all of its pediatric clinics are patient-centered medical homes. That effort, which emphasizes coordination among patient providers at all levels, isn’t directly linked to a savings program with Medicare, he said, but can increase efficiency and reduce unnecessary admissions.

“We have to be as efficient as possible. That’s the only way we are going to survive as CMS and – followed closely behind CMS – the commercial payers look to drive down costs in health care,” he said.

Raney said CoxHealth voluntarily participates in the BCPI program to cull ideas to reduce costs and improve quality for care of certain diseases, such as pneumonia. That’s important because CMS, through federal reforms, is taking 2 percent off the top on reimbursements, but via programs such as BCPI, it can share ways to reduce costs.

Among recent savings, he said Cox reduced estimated CMS expenses for pneumonia care last year by $150,000. Year-to-date savings for the treatment of pneumonia, acute myocardial infarction and congestive heart failure is roughly $250,000, Raney said.

And through bundling services and streamlining electronic medical records across doctors and buildings, CoxHealth currently projects $500,000 in Medicare savings for 2016.

The Medicaid problem
Citizens Memorial Healthcare Director of Reimbursement Tim Wolters said federal reforms are putting the pressure on hospitals.

“Over the past five years, our Medicare reimbursement has been cut by approximately $6.5 million in the aggregate. This includes cuts under the Affordable Care Act, as well as the 2 percent Medicare sequestration cut under the 2013 budget act,” he said via email. “The cuts increase incrementally on an annual basis.”

So far, so good, he said.

CMH, which is not an ACO, tracks Medicare spending per beneficiary, and is 9 percent below the national average of $19,679. The Medicare spending per beneficiary relates to hospital inpatients, not all Medicare patients.

And in 2016, the health care providers project to reduce the Medicare spend by $2.5 million.

“I think our focus on primary care and following up with patients is the main reason for our spending being below the national average. We’re also in southwest Missouri, which generally has lower health care costs than other parts of the country,” Wolters said.

According to a CMS report provided by Wolters, CMH’s Medicare spend per beneficiary last year was $17,645, more than $1,500 under the state average.

Wolters believes becoming an ACO is cost-prohibitive, but CMH has recently discovered Medicare’s new program Medicare Chronic Care Management and believes it fits with its approach.

“We’ve enrolled 160 Medicare patients at our largest clinic, and are looking to expand it to other clinics over the next couple years,” he said.

Raney knows reducing expenses while improving quality through better coordination is the right approach, but big changes often take time. Many supported the ACA because Medicaid expansion could offset reductions in Medicare spending. But the Show-Me State expansion never came to fruition.

“I do think we’ll be able to provide better care at lower costs, but it will take a while to get there. It’s a big, huge ship and it can’t turn on a dime,” Raney said. “Medicare is asking us to turn on a dime.”