We started Aledade with the goal of building a new model of primary care – one that’s good for patients, good for doctors and good for our society. In just three years, we have brought this new model to more than 200 practices across 17 states – practices who collectively care for more than a million patients. We have brought it to the Medicare Shared Savings Program (MSSP) as well as other payers including Medicaid, Medicare Advantage and commercial health plans.

Our model isn’t easy. It combines both on-the-ground support and a cutting-edge technology platform – one that works with over 60 electronic health records. But it also requires sweat equity – investments of valuable time and effort by our dedicated partner practices and Aledade staff. So, it’s important that we take a close look at how we define success. To us, it’s always been a clear but challenging metric: is what we are doing good for patients, good for doctors, and good for the health system?

For patients, Aledade emphasizes more personal, preventive, and coordinated care – the quality of care that you’d want for your own mother or father. In 2016, both of our ACOs from 2015 improved their quality measures for things like controlling blood pressure and ensuring vaccinations and screenings. Our ACOs, overall, are improving their quality scores, and their patients are taking note. In a recent Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, Aledade physicians were rated by their patients at an average of 9.3 on a scale of 0 to 10 – above the average for the over 400 MSSP ACOs.

Our practices are doing the right things. They are delivering many more preventive and primary visits, they are reaching out to patients to help them with transitions from hospital to home, they are, for the first time, hiring care coordinators who help those who need extra help. And it works. In every Aledade ACO– not just those that earned shared savings—avoidable emergency room visits dropped, readmissions plummeted, preventable hospitalizations from congestive heart failure, pneumonia, and pulmonary disease fell. Collectively, our ACOs prevented more than 1,500 hospitalizations. Aledade ACO practices are giving their patients better care – and we hear it in their stories, and we see it in the data.

Second, we want to make sure that what we’re doing is good for health care providers. Being part of an ACO has to be valuable, and sustainable, for our partner practices. In a time of increasing consolidation and a health care market that often doesn’t foster real competition, our goal is to help independent primary care practices thrive, and our partner practices succeed in value-based care.

Aledade ACO practices provide more – and more intense – primary care. By conducting more annual wellness visits, helping patients through transitions of care, and implementing chronic care management programs, our practices are seeing a return for their work. By implementing value-based care and practices transformation initiatives, our ACOs redirected health care dollars toward primary care and away from hospitals and emergency care. That is, our practices delivered better care and kept people healthier. The health of their practices did not suffer; in fact, they thrived.

And it’s important to note that they saw these returns in health and the bottom line while also lowering costs for society as a whole. That’s our third target for success.

During the 2016 performance period , Aledade’s ACOs – comprising 142 practices with over 80,000 patients in 11 states (Arkansas, Delaware, Florida, Kansas, Louisiana, Maryland, Mississippi, New York, Tennessee, Virginia and West Virginia) – saved Medicare more than $9.3 million. Five of our seven ACOs came in under the benchmark set by Medicare, and one was right at benchmark. Two of these – in West Virginia and Florida – exceeded the savings threshold so that Medicare will be sending them a shared savings check. We couldn’t be happier for those practices and the teams that support them, and we’re proud to be their partners.

Proud, but not satisfied.

If not for historically-low rates of inflation nationwide and the idiosyncratic way Medicare measures savings, many more of our ACOs would have earned savings. In Delaware, for example, we reduced costs by a whopping 3.3 percent over last year, and we’re on track to do even better in 2017. In fact, research shows that the savings from ACOs are generally undervalued. ACOs should be rewarded based on whether they improved care and lowered costs more than their local competitors – not a nationwide average. We’ve already proposed some improvements to the way that ACOs are measured.

Medicare also offers a regional inflation update to ACOs in their second three-year contract, which means young ACOs face uncertain market dynamics, but ACOs like many of ours, approaching that second contract, will have more accurate benchmarks. The combination of regional inflation for historical costs and regional benchmarking for this year’s costs reward ACOs that have bent the cost curve persistently in their regions, and have the patience and resources to plan for the long term.

The simple answer is that transforming health care just isn’t a simple thing. It takes a lot of work, a lot of creativity, some patience, and some time. But it works. Studies show that the proportion of ACOs that earn savings nearly doubles from year one to year four. We already have data that our ACOs are performing well in their regions. And with our new partnerships with commercial payers and Medicare Advantage, we’re finding new ways to promote value-based care for independent, primary care practices.

We’re on the right track. Our partner practices are taking the right steps. And the data for 2016 proves it. Despite all you hear about our broken health care system, Aledade practices and our staff are working day in and day out to transform health care in our country so that it delivers better care and lowers costs. That’s why Aledade exists. It’s why we’re so committed to our work. And I’m thrilled to see it’s bearing fruit.

It was my second day at Aledade when someone told me to get out.

I thought it was a bit early to be fired, but the new colleague sounded convincing enough. I assumed they knew what they were doing.

Luckily, this wasn’t some drastic HR move. It was the first of many times that I’d hear, “You have to get out into the field. Go visit a practice.”

It’s a mantra here at Aledade. Everyone, even the current and former health care professionals on staff, seemed to have a story of the first time they visited one of Aledade’s partner practices. They all said that setting foot in a practice is the best way to find out what works, what doesn’t, and to get a sense of just how challenging and rewarding it is to work in an independent primary care practice today.

So when I first got the chance to visit Kansas, tagging along with New York Times columnist Farhad Manjoo as he worked on his new piece about Aledade’s work, I hopped on a flight to Wichita.

Before joining Aledade, I worked on the public affairs team at the U.S. Department of Health and Human Services. We promoted Open Enrollment for the Health Insurance Marketplace, talked about programs like Head Start, and got key messages out to the public about health threats like Ebola, Zika, and the opioid epidemic. But there was one story we kept coming back to – the future of health care.

We saw it every time we heard from doctors, and every time the Secretary visited a practice. Data had opened up new frontiers. Patients now had the tools to get engaged in their own care. And payment systems focused on value were starting to reward physicians who kept their patients healthy. There was a palpable sense that you could deliver better care and start to lower costs.

It seemed like everything was pointing down this path. Policymakers from both sides of the aisle saw the promise in this new approach. MACRA, the law that changed Medicare’s payment system into one that rewards the value of care, passed the Senate nearly unanimously and the House overwhelmingly. And down the street at HHS, the Department made a historic commitment – saying that, by 2018, half of all payments in Medicare would be payments that rewarded the value of care, not the old fee for service system.

But it wasn’t until I visited Aledade’s partner practices in Kansas that I realized how far down the path these health care professionals already were.

On Wednesday, the New York Times’ Farhad Manjoo published his piece, and he captured this well. “Thanks to Aledade,” Farhad wrote, “the [Kansas] practices’ finances had improved and their patients were healthier. On every significant measure of health care costs, the Aledade method appeared to have reduced wasteful spending.”

Here’s an example of how they were keeping patients healthy:

For example, say you’re a doctor at a small practice in rural Kansas and one of your patients, a 67-year-old man with heart disease, has just gone to the emergency room.

“In the past, we’d only find out our patients were at the hospital maybe weeks afterward,” said Dr. Bryan Dennett, who runs the Family Care Center in Winfield, Kan., with medical partner, Dr. Bryan Davis. With Aledade, Dr. Dennett is now alerted immediately, so “we can call them when they’re at the emergency room and say, ‘Hey, what are you doing there? Come back here, we can take care of you!”

The care management team at Ashley Clinic talks with Farhad.

At Ashley Clinic in Chanute, I saw a larger care team tackle an even larger patient population. As one care manager said, “before, we had the doctor and the patient; a point A and a point C. But there was no one to serve as point B. That’s changed today.”

Two of Ashley Clinic’s patients – a husband and wife – agreed. Both said the care they got now was much better than anywhere they had been before. “We don’t know what an ACO is,” they said. “But we know we hear from our doctor more. And we like that.”

Most importantly, by talking to the care teams and doctors in these practices, I learned that I had been wrong. Value-based care isn’t some new future in the distance; it’s more of a homecoming. As one doctor told me, “This is why I became a doctor in the first place.”

But getting home isn’t always easy.

It’s taking new ways of thinking – focusing on finding the highest risk patients, keeping a close eye on them through chronic care programs, following up with patients as they leave the hospital, and ensuring that patients are going to the most efficient and effective specialists.

While it asks for more time and effort on the part of doctors and care teams, who already put in countless hours caring for patients, the destination is worth the jounrey. And thanks to Aledade’s technology, dedicated support staff in the field, and some inspiring health care professionals, you can find better health care right down a long stretch of Kansas road.

When we founded Aledade in June of 2014, it was with a tangible goal: to help independent primary care physicians succeed in leading the shift to a value-based health care system.

When we marked our first birthday we had stood up two Medicare Shared Savings Program ACOs with about 20,000 lives under management, and we announced a round of funding that would finance the growth of our model. We said that we would expand in geographies, but also in our capabilities, and in the patient populations we serve.

Since then, we celebrated our company’s second birthday, and it’s been a busy, busy time for the Aledade team. I’m proud to say we have surpassed another measurable benchmark in reaching our goal. It’s an incredible feeling to know that we are helping more than 1,100 physicians across 15 states deliver high-quality, coordinated care to their patients. Aledade’s ACOs now include over200 independent, physician-led practices who are accountable for the care of more than 200,000 patients and responsible for nearly$2 billion in health care spending.

But numerical growth is not the only marker of our progress. The past 18 months have seen our company take important steps as a business and as a network, with demonstrable results.

We got our first results.

While we did not realize shared savings in our first year, the two ACOs in our 2015 cohort delivered top-quality care and set us on the path to success. Last year, Aledade Primary Care ACO – with practices in Maryland, New York, and Arkansas – was in the 98th percentile of quality scores across all 327 ACOs that began in 2012 and 2014, and the Aledade Delaware ACO was in the 88th percentile. We cut down on avoidable emergency department visits, readmissions, and prevented hundreds of hospitalizations. Our primary care partners transformed their practices for value-based care and implemented Aledade’s model of primary care – and have seen the success of their efforts.


We are adding to our capabilities.

Our tech-enabled interventions to improve access, quality and care transitions are by now well developed, reproducible and scalable. But we know there is still much work to be done, and much to learn. We are developing additional core capabilities in care management and referral management that were recently highlighted in an excellent two-part series by Marketplace. I believe that our proprietary Aledade Technology Platform, is already the best tool on the market for embedding population health insights into practice workflows, and it continues to evolve and improve. We are closer to the problems than any software vendor could be, and have added over a dozen developers who use the real-world feedback from our partners to update and improve the tools that we and our practices use every day.

We expanded beyond Medicare.

We founded Aledade with an initial focus on the Medicare Shared Savings Program (MSSP), as Medicare led the way in encouraging value-based payment models. But our goal is to provide the best care possible to all of our practice’s patients, not just a portion. As we approached other payers, we have seen clearly that the shift to value over volume is being embraced and expanded across the country . We have already established commercial risk-sharing agreements with Blue Cross Blue Shield of Kansas, Blue Cross Blue Shield of Louisiana, Florida Blue, and West Virginia Public Employees Insurance Agency; and the pace of our commercial agreements are accelerating, with several important announcements still to come.

We strengthened our company.

Supported by funding from Venrock, ARCH Venture Partners, and Biomatics, Aledade has established our team, technology tools, and expertise across the company. We have added talent like Dr. Mark McClelland to our Board; our first Chief Commercial Officer, long-time tech exec Danny Krifcher, and Vice President of Finance and Operations, Molly Hill Patten. Aledade is now over 100 employees strong, and with amazing partners on the ground in each of our local markets.

We stayed at the forefront.

Aledade’s model of primary care and our network of ACOs rely on some key factors: the strength of the Aledade team, the commitment of our partner practices, and the direction of the health care marketplace. With deep confidence in the first two factors, we must continue to inform and anticipate the third. The past year has seen an unprecedented series of policy supports for our core concept of primary-care centric networks of independent practices taking accountability for the total cost and quality of care for their patients. In June, the MSSP Regional Benchmarking Rule created long-term sustainability for efficient ACOs, and the Comprehensive Primary Care Plus and 2017 Physician Fee Schedule created a path for smaller practices to deliver more intense care management to their patients who need it the most. But the grand-daddy of them all was the Medicare Access and CHIP Reauthorization Act (MACRA) rulemaking. By combining persuasive data and perspectives with practical regulatory solutions we helped ensure that the final MACRA rules included a pathway to advanced alternative payment models that leveled the playing field for smaller practices who are leading the wave of health reform.

Aledade’s growth in such a short amount of time demonstrates the real demand for a new model of primary care, one that empowers physicians to succeed. This appetite extends across the nation from providers, to both public and private payers. As we enter this next phase of Aledade’s growth, we will look for more opportunities for Aledade to enter new markets through public as well as private payers and partnerships that help our doctors deliver better care to patients, better health outcomes, and lower costs.

The trillion dollar shift in healthcare payment “from volume to value” is well underway with both public and private payers and purchasers pushing provider organizations to participate in outcome-based risk contracts, stepping up from pay-for-performance and medical home models to a variety of accountable care and bundled payment programs.

But what are we to take away from the mixed results of these programs — from the lack of savings in the Comprehensive Primary Care demonstration, to the dropouts from the Pioneer program, the recently released underwhelming results from the first year of the Bundled Payment for Care Improvement Initiative, or the 2015 results from the Medicare Shared Savings Program?

One approach would be for partisans for each of these approaches to search for positive nuggets in the results from their preferred program, while heaping scorn on the other “competing” reforms.

Another would be to retreat altogether from the aspirations of achieving better care at lower cost, towards either resignation towards ever-escalating health care costs or more likely to (altogether regretful!) rationing of access to good healthcare for the most vulnerable in our society.

A third path would be to acknowledge that there is no magic bullet for “transforming healthcare” overnight, and that the work of redesigning our delivery systems to meet the expectations of the outcome-based payment models will be slow, hard, and uneven. We would accept that there are likely multiple payment reforms that will need to be implemented alongside each other, targeting different healthcare markets and different participants. (Capitated payments for truly integrated delivery networks. Mandatory bundled payments for proceduralists and hospitals. Accountable care for independent physician networks). And each model will need to be iterated and tweaked and incrementally improved.

That is what I choose to believe.

We are publishing today in the new issue of the American Journal of Managed Care, “A Report From the Field,” the detailed description of what our two ACO “freshman” accomplished in 2015, and openly discussing the challenges we faced, what we are doing differently now, and some policy changes that can put more wind to the backs of those in these trenches.

Here are a few of the key findings:

In the two of our ACOs that were part of the 2015 cohort, we successfully increased primary care utilization (and revenue). We saw significant quality improvements. We achieved rates of aspirin use for patients with ischemic vascular disease of 87 percent, screening and follow up for elevated blood pressure at 90 percent, and tobacco use screening and cessation at 93 percent.

Our independent primary care practices decreased emergency department (ED) visits by being more available and accessible to their patients and educating them about appropriate ED use. They increased contact with their patients after discharge (sometimes with the active help of hospitals, sometimes despite its absence), and substantially reduced readmissions and acute hospital utilization. (see table)


There are regulatory headwinds that ACOs in the MSSP program face. For instance, the calculated “benchmark” used to determine savings is a flawed measure of the counterfactual. By using national trends rather than regional comparators, MSSP program success is an inaccurate reflection of what costs would have been for ACO patients in the absence of the ACO (“difference in difference”). Regional trends (eg. in hospital coding, whereby utilization decreased but cost increased) will not be reflected in some ACO results, while others will benefit simply from downward regional trends. In addition, we (and I suspect many other ACOs) saw millions of dollars of savings evaporate due to downward risk adjustment, as a peculiar feature of the MSSP, wherein risk adjustment can decrease the benchmark, but never increase it. Aledade has the resources to understand and accommodate to these factors, but many ACOs do not. These are the sorts of regulatory tweaks that can make a true difference in health care delivery innovators staying with the program over the long run.

While physician-led ACOs do not have to contend with the “demand destruction” that stymie hospital-led ACOs, they need to pay particular attention to specialist costs. In particular, specialist practices that have been reclassified as hospital outpatient settings can double the cost to Medicare for visits and procedures. As we move forward, we are bringing more focus – and scale—to influencing downstream care through specialist tiering, referral management, and compacts.

There is a lot more detail in the full article. Overall, we have learned that given the right support and incentives, independent primary care practices can deliver better outcomes to patients, boost quality across the health care system, and lower costs. Achieving savings on the total cost of care takes time, but the benefits of the program to patients and taxpayers are not limited to those ACOs that received shared savings distributions. The movement “from volume to value” in payments must co-evolve with the delivery system’s ability to transform itself to deliver better care at lower cost. For the health of patients and the health of the health care system, we cannot retreat.

Yesterday the leadership at CMS wrote a blog entitled “Focusing on Primary Care for Better Health” and we couldn’t agree more. Administrator Slavitt and Dr. Conway articulated four principles for CMS:

• Improve how we pay for care that we value.
• Provide more opportunities for primary care providers to practice the way they think is best.
• Reduce practice expenses associated with operating a primary care or other small practice.
• Explore and encourage far-reaching innovations to connect people with primary care in new ways.

Achieving these principles while ensuring the independence of primary care practice is what Aledade is all about. We are very pleased that the leadership of CMS is aligned with these goals and look forward to continuing to work with CMS on achieving them. So for the first time we post another blog in its entirety on Aledade.com.

Focusing on Primary Care for Better Health
By Andy Slavitt, CMS Acting Administrator (@aslavitt) and
Patrick Conway, MD, MSc, CMS Acting Principal Deputy Administrator and Chief Medical Officer

In the United States, we have historically invested far more in treating sickness than we do in maintaining health. The result of this imbalance is not only poorer health, but more money spent in institutions, hospitals, and nursing homes.

The road to a better health care system means correcting this imbalance. We should reinvest in what we value — primary care — as a practice, as a profession, and as an abundant resource for patients. In recent years, we have begun taking a number of meaningful steps to begin this reinvestment process. Today, we are proposing significant actions to improve how we pay primary care physicians, mental health specialists, geriatricians, and other clinicians. By better valuing primary care and care coordination, we help beneficiaries access the services they need to stay well. In addition to keeping people healthy, health care costs are lower when people have a primary care provider and team of doctors and clinicians overseeing and coordinating their care.

There are four parts to our strategy to emphasize primary care:
1.We are improving how we pay for care that we value. Today, through the Medicare physician fee schedule proposed rule, we are announcing an important set of changes that would improve how Medicare pays for primary care, care coordination, and mental health care. We conservatively estimate that these changes would result in approximately $900 million in additional funding in 2017 to physicians and practitioners providing these services. Over time, if the practitioners qualified to provide these services were to fully provide these services to all eligible beneficiaries, the increase could be as much as $5 billion in additional funding for care coordination and patient-centered care. These changes build on the work we’ve done to improve access to care in Medicaid by finalizing long-anticipatedrules that help support state delivery system reform efforts, and strengthening new policies to align payment with better, more cost-effective care and ensure that access to care is sufficient in key specialties.

2.We are providing more opportunities for primary care providers to practice the way they think is best. Medicare is transitioning to policies that reduce burden on both patients and clinicians by better rewarding coordinated, quality care. We’ve recently launched a new advanced primary care Medical Home model called CPC+, which will be broadly available across the country and will support primary care doctors’ and clinicians’ efforts to spend more time with patients, serve patients’ needs outside of the office visit, and better coordinate care with specialists.

3.We are finding ways to reduce practice expenses associated with operating a primary care or other small practice. We have been convening meetings with physician practices across the country to find ways to reduce reporting and compliance burdens, while at the same time increasing support to their practices. This spring, we proposed to streamline how Medicare pays for quality and value through the new Quality Payment Program, which includes features intended to reduce the reporting burden for clinicians. Through this new program, we’ve moved beyond meaningful use to the new Advancing Care Information category, which supports the vision of providers leveraging health IT to promote efficiency and clinical effectiveness based on their unique needs. In addition, the Transforming Clinical Practice Initiative supports more than 140,000 clinicians in sharing, adapting, and further developing their comprehensive quality improvement strategies.

4.We are exploring and encouraging far-reaching innovations to connect people with primary care in new ways. We have included telemedicine in a number of care models. The Rural Health Council is also helping to promote a strategic focus on access, economics, and innovation issues across rural America.

Today’s Proposals for Primary Care Payments in the Physician Fee Schedule

•With today’s primary care payment proposals, Medicare continues to move toward a health care system that encourages teams of doctors to work together and collaborate in order to provide more personalized care for their patients. Doctors will be compensated for spending more time with their patients, serving their patients’ needs outside of the office visit, and better coordinating care. These changes will deliver improved health outcomes that matter to the patient. Some examples of today’s proposals include:

•Increasing payments for routine office visits for treating patients with mobility-related disabilities. Currently, Medicare pays approximately $73 for these visits, even though the patient might need to spend more time with the physician or require more physical and staff support during the visit. Under today’s proposal, Medicare would pay approximately $119 for the visit.

•Increasing payments to geriatricians or family practice physicians – specialists who provide core services for the Medicare program. Under our conservative assumptions, we anticipate that these clinicians could receive a two percent increase in their payments for providing the care we propose to recognize under the Physician Fee Schedule. Over time, if all of the practitioners that can provide these services provide them to all eligible patients, we estimate that the payment increase could be as much as 30 and 37 percent respectively to these specialties.

•Proposing to pay for care using the behavioral health Collaborative Care Model. The Collaborative Care model supports mental and behavioral health through a team-based, coordinated approach involving a psychiatric consultant, a behavioral health care manager, and the primary care clinician and which extends beyond the scope of an office visit. Payment for care using this model will help address access issues for behavioral health and improve care for patients. This model, increasingly used by primary care practices, has demonstrated benefits in a variety of settings to improve patient outcomes. CMS is also proposing to pay for other approaches to behavioral health integration.

Strengthening Primary Care Beyond Medicare

As more people age into the Medicare program, we know that access to primary care is an essential tool for their health and wellbeing. We know that effective primary care, care coordination and planning, mental health care, substance use disorder treatment, and care for patients with cognitive and functional impairments can improve outcomes and result in smarter spending. Today’s efforts aim to better value primary care to ensure continued – and strengthened – beneficiary access to these valuable services.

We expect to see the impact of this proposal far beyond Medicare beneficiaries and hope that it will help strengthen the fabric of primary care throughout the country.

For more information, please visit: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-07-07-2.html.

This company started two years ago, on a set of beliefs.

We believed that health care payment was going to undergo a fundamental shift “from Volume to Value”- that there would finally be a business case for those who could deliver better care at lower cost. Since that time, the Secretary of Health and Human Services announced a commitment to this transition- to goals and dates- the first of which (30percent value based by 2016) has already been exceeded. The number of Medicare beneficiaries in ACOs has risen from 5.6 million to 8.9 million, and just as significantly, a near-consensus among private payors and employers has embraced this goal as their own.

We believed that high-performing independent primary care practices would want to take accountability for the total cost of care, and would want the technology-enabled services we would offer. Within 6 weeks we had signed up more than 100 hand-picked physicians who believed in our vision, and wanted to help us make it a reality. Last year, we grew to over 400 primary care physicians in 11 states, and we are on track for reaching nearly 1,000 physicians by the end of this year. These proud community leaders are drawn to a model where our interests are aligned with theirs, and we are neither employers nor vendors, but partners. Together, we are taking accountability for over 100,000 patients’ care, and nearly a billion dollars of annual medical costs.

We believed that with the right support, small and independent primary care practices would embrace change and achieve results. Our practices have opened their doors to same-day visits and accepted patient calls 24-7 access. We have seen jaw-dropping rates of quality with preventive screenings soaring, immunizations tripling, and diabetes and blood pressure brought under control for thousands of patients. Preventable emergency department visits and avoidable hospitalizations dropped by 7percent, and readmissions fell by 11-13percent. And now we are extending our network to high-performing and high-value specialists, rehab facilities, and home health agencies. We are getting extra help to patients who are most at risk- identified by computer algorithm, and cared for by their primary care practice who knows them best.

We believed that we could hire an amazing team who share our passion and wish to serve. We have grown from our initial founding team to more than 90 individuals who are world-class at all the multiple disciplines needed to succeed- regulatory and policy, technology and analytics, population health, and practice redesign—and have instilled a common sense of purpose and a dedication to the “North Star” of Aledade. On a recent staff survey with 96 percent participation, 99 percent of Aledade staff said that they were proud to work at Aledade.

We believed that it would be hard, and that we would make mistakes, and we would learn. And we have. We have learned that we can’t roll out initiatives in lock step; we must prioritize interventions for each practice based on their greatest opportunity for improvement. We have learned that we can’t expect the same primary care staff to take on all the additional work required of population health. We have learned that we must continually listen for where we can improve the value of our data and technology to our practices. We have learned that not all patients benefit equally from extra touches, and our practices’ bandwidth is limited, and must be prioritized for those who need it the most. We have learned that there is much that we don’t know, and we must ruthlessly question and evaluate our assumptions by measuring what we are doing, what works, and what doesn’t work.

We believed that we would have many competitors. And we were wrong. While there are many fellow-travelers who we respect and learn from- there is yet no national company that is doing what we are doing- truly partnering and aligned with independent primary care physicians, with cutting edge analytics in the cloud, and helping hands in the practice. We are single-mindedly focused on our Aledade mission: good for society, good for doctors, and good for patients.

We feel this as a humbling responsibility. We are not as good as we will be next month, and next year. But our success will be a marker and a model for whether it’s possible to return control of healthcare to doctors over corporations, if quality can triumph over size, and whether less spending can come from better care not less care.




As a Federally Qualified Health Center (FQHC), Hudson River HealthCare’s mission is to increase access to comprehensive primary and preventive health care and to improve the health status of our community in New York’s Hudson Valley and Long Island, especially for the underserved and vulnerable. We are proud to be a part of the Aledade value based care network, because we share the belief that primary care is the foundation of an effective health care system.

We work hard to coordinate the full range of care our patients receive, including outside of our health centers, to monitor, assess, and manage our patients’ full health and wellness needs, not just care for them when they’re sick. As part of an Accountable Care Organization (ACO), we are quarterbacking our patient’s health care.

One of the ways we do this is through our care management program, which focuses on a team-based, holistic approach to care. This allows Hudson River HealthCare to help patients achieve optimal wellness – from their physical and behavioral health needs, to social services and basic living needs.

As we see every day, low income or underserved patients can experience multiple barriers to care – from transportation challenges to lack of resources to follow up on care options. That’s where Care Managers play an important role, talking with patients individually to understand their specific situations and how they can help. We have seen many examples of how our approach to managing patients’ full-spectrum of health and wellness has made a big difference.

In one recent case, a Care Manager, making a routine check-in call with a patient, learned that the patient had recently canceled a medically necessary surgical procedure she was supposed to have on her eye. After inquiring with both the patient and the surgical center, our Care Manager discovered that it was due to the patient’s inability to afford the required insurance co-pay.

Our care manager took action and helped the patient find a community resource to help cover the co-pay, and ultimately the patient was able to get the surgery thanks to this additional support. Without a pre-surgery check-in call, our practice would not have known about the cancelation, and the patient would have likely skipped the surgery, with disastrous results.

A second case demonstrated the Hudson River’s team-based approach to care. One of our physicians learned during a patient visit that the patient did not have a place to live and was “couch surfing” at multiple friends’ apartments. We knew that without adequate housing, the patient would not be able to focus fully on taking her medications or monitoring her health conditions. Upon relaying that information to the care management team, we worked to get the patient an expedited appointment with a local housing organization. A Care Manager accompanied the patient to the housing organization interview and subsequent lease signing. Because of the swift work of our care management team in addressing an issue outside of basic health care, our patient’s quality of life was greatly improved.

We’ve learned that often, when caring for patients with limited resources, even the smallest barrier to care can become a serious issue, and that’s why we take the time and effort to check in often with our patients. As primary care providers, we know that in order to help keep our patients healthy, we need to focus on what happens beyond the walls of our health centers, from issues like housing or financial wellness. This keeps us up-to-date on our patients, coordinated with other providers, and providing the highest-quality care possible.

Participating in an ACO has allowed us to put even greater emphasis on keeping our patients healthy, and that’s our mission.

The Aledade Delaware ACO is gaining momentum on several fronts in our mission to usher in a new model of primary care. Last year, our ACO doubled in size, and we continue to recruit top independent primary care practices across Delaware that are ready to embrace change by participating in value based programs. Last month, we started participating in the state’s Practice Transformation Services Program in partnership with Remedy Healthcare Consulting. And this week we are excited to announce a new set of agreements that will benefit providers and patients across the state.

Aledade is committed to closing the gaps in health care – coordinating patient care more seamlessly and effectively. In order to do that, primary care physicians need to know what happens to their patients when they see specialists and get treatment outside the four walls of their office. These new arrangements in Delaware will help us do just that – shed light on the care patients receive outside of their primary care practices and empower our Delaware ACO practice partners to deliver coordinated, high quality care.

First, we have recently formed a new partnership with one of the largest groups of hospitalists in Delaware, IPC Healthcare. This will give our ACO practices the ability to share patient data, advise on care, and coordinate with the hospitals where their patients receive care. Partnerships like this are important to value-based care as they reduce unnecessary tests, ER visits, and hospitalizations while improving the care patients receive with provider data access. Aledade’s ACO practices can now also directly admit patients to local hospitals when appropriate, instead of first going to the ER. Doing so, when appropriate, will reduce cost and the time patients spend getting the care they need.

Second, we have upgraded our agreement with The Delaware Health Information Network (DHIN), the state’s health information exchange. While they have long provided patient data on a twice daily basis to our Delaware ACO, the DHIN has now taken the next step, and is providing Aledade ACO practices with real-time patient update. This means primary care physicians will be notified right away if their patient is admitted, discharged, or transferred from a care facility. With real-time data from DHIN, ACO practices will be able to provide more timely follow up with their patients during transitions of care. Transitions of care management are an important focus for Aledade’s ACOs, and an important aspect of providing seamless care.

Another development in Aledade’s data connection with DHIN is that Aledade now receives notifications and data from MedExpress through the health information exchange. MedExpress is a large network of walk-in clinics throughout Delaware, so having real time data from these clinics gives our ACO practices more detailed understanding of the care our ACO patients receive outside of their primary care practices. This too is an important aspect of providing seamless, coordinated care, and we are in the process of arranging further partnerships with walk-in clinics throughout the state.

Lastly, we now have a care compact with The Heart and Vascular Clinic, PA (HVCA) in Delaware. While Aledade believes primary care is the core of a coordinated, effective health care system, we also know that high-quality specialists are a critical piece of the puzzle. That’s why we work to arrange care agreements with high-quality specialists, such as our cardiology referral management program with The Heart and Vascular Clinic, PA (HVCA) in Delaware. These agreements focus on improving care coordination, access, and effectiveness through communication and information sharing, including test outcomes and consultation notes. For patients, this means they can see an HVCA provider within 48 hours for an urgent visit and receive more seamless care.

Taken together, these new agreements and updated services will strengthen the Delaware ACO’s ability to coordinate care, resulting in improved quality and lower overall costs.

Ashley Clinic Sees Immediate Impact of Proactive Preventive Care
Chelsea Buck, RN, BSN, Case Manager, Ashley Clinic

The Ashley Clinic has been committed to providing the highest standard of care to residents and families of our community in southeast Kansas for over 75 years. In order to continue to uphold this mission, our clinic must always look for ways to improve our care. Last fall, we began an initiative that’s already made quite the impact at our practice.

Beginning last year, the Ashley Clinic began working with our Aledade ACO in Kansas to put a renewed focus on Annual Wellness Visits (AWVs). In the past, we had not emphasized AWVs, which resulted in only conducting a handful in 2014. In 2015, that changed. Aledade helped our team build a template and process for our AWVs. The Aledade team worked with us to ensure that both our patients and clinic could get the full potential out of AWVs. Now, our AWV process is in full swing, and as Case Manager I lead the team to coordinate patient identification, patient outreach, and administration of these visits

Our new goal is to conduct 75 AWVs a week to meet our target of about 4,000 in 2016.

What has motivated this ambitious AWV initiative?

Put simply, results. Within two months of formalizing our AWV process last year, we saw clear evidence of its value for our patients. Specifically, two patient stories stand out as exemplary cases for how AWVs can influence a patient’s health – and they only occurred a few weeks apart.

The first case is one in which our practice identified a patient as due for an AWV and contacted her to come into the office. If not for our phone call, she may not have set up an appointment to come into the office for months or more. As part of the AWV, we discovered the patient had not had a mammogram in six years. Additionally, as is part of every AWV, we assessed the patient’s medical and family history and found there was risk of breast cancer in the patient’s family. With this information, we explained the importance of regular mammograms to the patient and immediately got her scheduled for one.

The mammogram turned out to be abnormal and the patient was scheduled for a follow up sonogram, which revealed that the patient had early stage breast cancer. Thanks to our clinic proactively bringing the patient in to be seen for an AWV, the cancer was discovered during a treatable stage. The patient is now receiving the care she needs, having had a lumpectomy in March and moving forward with radiation therapy this month.

Another recent case demonstrated the impact AWVs can have not just on a patient’s health or health care, but on their general wellbeing. In December, during the course of an AWV, a patient explained to our staff that she lived in a home without running water or electricity – and had been for quite some time.

Concerned for the patient, and knowing that she could not operate the medical tools she needed in these living conditions, our team took action above and beyond providing medical care. Clinic staff helped the patient get assistance from the Kansas Department for Children and Families. Due to this, the patient now has both running water and electricity in her home. And, she is using the care tools she needs to maintain her health.

In just the few months after putting a greater focus on AWVs and implementing a workflow, our clinic has seen first-hand the impact they can have on our patients. That’s why, with the tools and continued help from Aledade, we are making AWVs such an integral part of the care we deliver. It’s important that our clinic not only provide high-quality care to our patients when they’re sick, but to take advantage of all the preventive services we can deliver to promote their health and wellbeing.

These are unedited comments on proposed Federal regulation. They aren’t short and they aren’t ACO 101. 

Dear Administrator Slavitt,

Today Aledade, Inc partners with 111 primary care physician practices, FQHCs and RHCs in value-based health care. Spanning eight accountable care organizations in 11 states these primary care physicians are accountable for over 90,000 Medicare beneficiaries. We are committed to outcome based approaches to determine the value of health care. We are committed to using technology, data, practice transformation expertise and most importantly the relationship between a person and their primary care physician to improve the value of health care in the United States.

We believe this proposed rule addresses some of the most fundamental questions facing physician led ACOs and their place in the future of health care during and after the transition to alternative payment models. The move to regional benchmarking is the only sustainable course for a long-term financial model for population health. This is also an opportunity for CMS to right size two-sided risk in preparation for the transition to alternative payment models. Below is a summary of our positions on issues followed by an in-depth commentary of those positions. Thank you very much for your consideration as we move together through this exciting time in health care. Please feel free to follow up with me or Travis Broome (travis@aledade.com) if you or your staff have questions or would like to explore these positions further



Farzad Mostashari, MD

CEO and Co-Founder, Aledade, Inc



Defining Value in Accountable Care

We believe ACO value is “did a person in the ACO get better care than if the person had not in the ACO,” a “difference in difference” approach. In today’s health care system, better care leads to lower costs. Financial models like the Medicare Shared Savings Program (MSSP) create a way to reward doctors for better care and the resulting lower costs. But better care is hard. Creating a financial model that rewards lower costs due to better care, but not due to avoiding care (stinting) is hard. Our comments all strive to get closer to measuring ACO value, but on a path that is good for physicians, good for patients and good for society. We recently published on value and sustainability of ACOs in the American Journal of Managed Care (http://www.ajmc.com/contributor/travis-broome/2016/03/creating-sustainability-in-accountable-care), which is also included as Attachment B.

Regional Benchmarking

We applaud CMS for recognizing in this rule that a policy of continually resetting historical benchmarks has a limited shelf life as improvements get harder and harder and lower costs get dearer and dearer over time. We also recognize that a pure regional benchmark creates such obvious financial winners and losers that it is not good for society or patients. Physicians above the regional benchmark would have no incentive to join the program and physicians below the regional benchmark would have little incentive to continually improve. This creates the need for balance. We agree with CMS that the balance is achieved by blending the two benchmark methodologies to create a path for long-term sustainability for an ACO.We encourage CMS to adopt this approach in Next Generation ACO as well and to make it available to 2012/2013 start MSSP ACOs. This blend requires continual improvement from the ACO, but at the same time rewards the ACO more and more for the true measure of value in a difference in difference approach.

Sustaining Successful, High Cost ACOs

After the first contract period all ACOs will fall into one of four buckets: above regional benchmark (or high cost) and successful; high cost and unsuccessful; below the regional benchmark (or low cost) and successful; low cost and unsuccessful. The inclusion of a regional benchmark benefits directly low cost ACOs. However, we believe there should also be an incentive for high cost and successful ACOs to continue in the MSSP. For this reason, we recommend that CMS include earned savings into the historical component of benchmark for the second and third contract.

Accurate Benchmarking for Population Health

We have advocated, along with many others, for the last two years that to measure real ACO value risk scoring must accurately reflect the measured population. The artificial cap imposed by CMS on risk scoring turns ACOs into mini-insurance companies. This in turn scares ACOs away from two-sided risk because they are no longer responsible for just population health, but also statistical anomalies. Nothing keeps ACOs out of two-sided risk more than the cap on risk scores. It is also the only area where CMS is not leading the accountable care movement, but falling behind commercial health plans.

The next important step CMS can take to measuring ACO value is to include regional inflation update factors instead of national inflation update factors in all contract years. CMS should seek to reward ACOs for the work they do in creating difference in difference ACO value not because they happen to be in a low cost or high cost area on any given year. CMS’s own analysis for this proposed rule shows that very few ACOs can individually impact their area’s cost curve. Every ACO can impact whether the person got better care in the ACO than they did out of it. A regional inflation update ensures that the work of the ACO impacts the ACO’s financial future instead of regional cost arbitrage.

Right Sizing Risk

While not directly addressed in the proposed rule, we believe CMS must consider today whether current MSSP Tracks work in the era of MACRA. Congress created the requirement for alternative payment models to have more than nominal financial risk. Congress could have said substantial financial risk or significant financial risk, but instead they said more than very small in amount. We translate this into motivating, but never ruinous. Enough to create concern, but not enough to instill fear. None of CMS’s current two-sided risk programs pass this test. All three (Track 2 and Track 3 of MSSP and the Next Generation ACO) create significant financial risk for a physician led ACO, potentially even ruinous financial risk. While across the program only a few will face such losses, the fear of being one of the few who are ruined is real and cannot be what Congress intended by the phrase “more than nominal.”

Our solution is for CMS to replace the current loss protection in the least risky Track 2 with loss protection that ensures no ACO will be liable for more the 15 percent of the Medicare revenues received by those who can share in the savings generated by the ACO. Two-sided risk coupled with this right-sized loss protection creates a concerning situation not a ruinous one. It motivates physician-led ACOs without making them fearful.

We support the inclusion of the optional fourth year as a mechanism to move ACOs to risk. CMS should consider whether it would benefit APM policies to have that year count as the 4th year of the current contract or the first year of a new risk-bearing contract.

Changes in ACO Composition Over Time

The benchmark must be reset using the same calculations and not proxies. ACOs live and die on single percentage points. If the proxy calculation is off by even a single percentage point an ACO could lose all their revenue if they dip below the MSR. Until CMS can clarify what the actual correlation of the proxy to current methodology is, no ACO can possibly support this change simply to alleviate the burden of calculation. CMS should not let expediency threaten the accuracy of the program.

Defining Value in Accountable Care

Value is a simple equation, benefit minus cost. Value is also in the eye of the beholder, defined by who gets the benefit and who bears the cost and in what proportions. In health care this is especially true because rarely is value determined in a two party transaction. Nearly every transaction has three parties: the health care provider, the person who receives health care services and the party paying for those services (society at large or a more limited group of people in the same insurance pool). The key to accountable care’s sustainability is to ensure that all three parties benefit as there can be no value without any benefit.

We believe the best definition of ACO value is “did a person in the ACO get better care than if the person had not in the ACO,” a “difference in difference” approach. In today’s health care system, better care leads to lower costs. This creates an opportunity for all three parties to see value creation. The person receiving the care gets more benefit in health and financially, the physician gets more benefit in satisfaction and financially and society gets more benefit financially. Higher quality leading to lower costs is a proven equation inside and outside of health care, accountable care gives us the vehicle to equitably share the value creation among the parties.

Since you have to start from where you are, the path towards the definition of ACO value is not necessarily measuring it directly in a classic difference in difference approach from day one. Our comments layout how to get from where we are today to a place where ACO value is measured most directly that is our view good for physicians and health care providers, good for people receiving their services and good for society.

Regional Benchmarking

ACO’s Regional Service Area

We agree that county is the best available geographic unit on which to base a regional benchmark. States simply vary too much in both geographic and population size to be used in a national program. CBSA, MSA, and CSA would generally be analogous to the counties that make them up as they are economically linked together by definition. There is one case where this may not be true and that brings us to our one recommendation to change the proposed ACO’s regional service area.

There maybe cases where an ACO covers such a high proportion of the residents of a given county that comparison population begins to suffer from small numbers. In those cases, we recommend including the contiguous counties in the ACO’s regional service area. The weight of those contiguous counties should reflect a weight necessary for the validity of the comparison.

Establishing the Benchmark Population for an ACO’s Service Area

In keeping to our definition of ACO value and a difference and difference approach, we must recommend that CMS exclude an ACO’s own population from the regional benchmark calculation. To include an ACO’s own assigned population would include historical benchmarking into regional benchmarking. CMS reported the median county penetration of ACOs as 12 percent. This means that 12 percent of the regional benchmark is actually historical benchmark if CMS does not remove an ACO’s assigned beneficiaries from the population. We appreciate the complexities of doing so, but we maintain that removing the ACO’s assigned population is imperative to an accurate measurement of the ACO’s value.

We fully support the following proposals:

  • Weighting the counties by the proportion of the ACO’s assigned population that resides in the county
  • Only including assignable beneficiaries in all ACO calculations

Determining County FFS Expenditures

We fully support CMS’s proposals for determining expenditures. We particularly note the importance of accurate risk adjustment between the two populations.

Applying Regional Expenditures to the ACO’s Rebased Benchmark

As a voluntary program, CMS should look at policies through the eyes of an individual ACO making a decision on whether to join or remain in the program. From a financial standpoint every ACO will fall into one of four groups at the end of their first contract.

ACO Status

We support the blending of the regional benchmarking into the ACO model as it creates the only truly sustainable path for accountable care and moves us closer to a difference in difference approach. However, we acknowledge that this is a financial disincentive for high cost ACOs. Of particular concern is the financial plight of individual ACOs who are successful at earning shared savings, but still above the regional benchmark at the end of the first three-year contract.

In considering the hundreds of different points on this graph that an individual ACO may find themselves we believe more flexibility is needed. First, hang on to good ACOs. We recommend that for the historical component of the benchmark continue to incorporate earned savings back into the benchmark as is done in the current rules. The adjustment for savings is a critical bridge for these individual ACOs as they work towards getting done to the regional average. The adjustment for savings would only apply to the historical portion of the rebased benchmark lowering its impact over time. Second, allow limited flexibility in the move to a blended benchmark over the first two contracts. We recommend the spectrum of that flexibility to be:

  • Year over year ramp up in the first contract (10% 1st yr, 20% 2nd yr, 35% 3rd yr) second contract is at 35% regional benchmark
  • Historical benchmark for the first contract leading to 35% regional benchmark in the second contract
  • Historical benchmark in the first contract with a year over year ramp up in the second contract (10% 1st yr, 20% 2nd yr, 35% 3rd yr)

This will increase the financial viability of individual ACOs while still moving all ACOs to the same place by the end of the second contract.

We support the move to 70 percent in the third contract period. If the true measure of ACO value is to be whether a person received better care at a lower cost in the ACO then they would have outside of the ACO then regional benchmarking must become the dominate measure. Moving only to 50 percent in the third contract would not be enough to move ACOs along in value.

While we understand that the Next Generation ACO is a model under the Innovation and therefore not subject to rulemaking, we take this opportunity to point out that the same arguments made here apply to Next Generation ACO. The arguments are arguably strengthening by the advanced two-sided risk aspect of the Next Generation ACO. We encourage CMS to adopt an in-contract ramp up of the inclusion of regional benchmarking in the Next Generation ACO model.

Updates to the Rebased Historical Benchmark

We support the move to regional update factors for resetting the benchmark. Furthermore, CMS should use regional inflation update factors instead of national inflation update factors in all contract years. CMS should seek to reward ACOs for the work they do in creating difference in difference ACO value not because they happen to be in a low cost or high cost area on any given year. CMS’s own analysis for the regional benchmarking rule shows that very few ACOs can individually impact their area’s cost curve with a median of 12 percent of the county. Every ACO can impact whether a person got better care in the ACO than they did out of it. A regional inflation update ensures that the work of the ACO impacts the ACO’s financial future instead of regional cost arbitrage. We disagree with CMS’s current view that having a higher hill to climb serves as motivation for the ACO in a high cost growth area to get even more savings. We believe that most ACO’s do all they can at any given moment and artificially raising the bar with inaccurate national updates is discouraging to ACOs not encouraging.

Updates Based on Assignable Beneficiaries

We support the proposed change to only include assignable beneficiaries in all calculations. This gets us closer to accurately measuring ACO value by comparing like beneficiaries to like beneficiaries.

Timing of Revised Rebasing and Updating Methodology

These updates should be made available to ACOs that started in 2012/2013. While we understand the complexities of rule making that appears retroactive, the ACOs that started in 2012/2013 are the pioneers of the MSSP. CMS should give them the option to enter a new 3-year contract at the start of 2017 that includes the regional benchmarking regulations that are finalized in this rule. It is only just that the pioneering ACOs be given the same opportunities as ACOs that came latter.

Risk Adjustment and Coding Intensity Adjustment

Because the same person cannot be both in the ACO and not in the ACO, risk adjustment is the most critical component of accurate measure of an ACO’s difference in difference value. While we understand CMS’s concern with coding intensity we continue to disagree that fear of the unknown justifies the obviously inaccurate comparisons and benchmarks created due to the artificial cap on continuously assigned beneficiaries. Any adjustments to coding intensity should reflect actual coding intensity and not perceived coding intensity. ACOs lack the mechanism of Medicare Advantage (MA) plans to submit codes independently. This will massively reduce coding intensity over what is done in MA because the primary tool is not available. Any residual coding intensity, if it is exists, should be accounted for by a measured adjustment not an arbitrary ceiling be it zero percent as in MSSP or even three percent as in Next Generation ACO. We therefore support the use of risk adjustment in regional benchmarking and encourage CMS to improve risk adjustment across the MSSP.

Adjusting Benchmarks for Changes in ACO Participant Composition

The benchmark must be reset using the same calculations and not proxies. ACOs live and die on single percentage points. If the proxy calculation is off by even a single percentage point an ACO could loss all their revenue if they dip below the MSR. Until CMS can clarify what the actual correlation of the proxy to current methodology is, no ACO can possibly support this change simply to alleviate the burden of calculation. CMS should not let expediency threaten the accuracy of the program.

In order for us to truly consider such a proxy, CMS would need to publish the findings of the modeling. CMS would also need to quantify the reduction in operational burden to CMS and the benefits to ACOs of that reduction.

Facilitating Transition to Performance-Based Risk

Regarding the proposal made, we agree with CMS that a transition year based on the original benchmark and one-sided risk would be beneficial to ACOs as they consider the move to two-sided risk. Only through the lenses of MACRA implementation do we see any difference between whether the transition year should be the 4th year of the first contract or the 1st year of the new, 4-year two-sided risk contract. Despite lack of details on APMs, we can foresee a situation were it would be beneficial for the transition year to be the first year of a new two-sided risk contract that could qualify as “more than nominal financial risk.” While no silver bullet (there is no single silver bullet) to moving ACOs to two-sided risk, it would be a step in the right direction as would floating risk adjustment, regional update factors and a new way of thinking about stop loss that we present below.

We would also like to take this opportunity to comment on why so few ACOs are moving to two-sided risk. Nearly everything about the future of risk in Medicare FFS hangs on the phrase “more than nominal financial risk.” One of the first questions we get is will your ACO qualify as an APM. Our answer is we are not sure. Current two-sided risk models expose primary care physicians to too much risk too quickly. As explained below, the stop loss happens after financial ruin for a physician led ACO rendering the provision nearly meaningless for a physician led ACO while serving as an effective financial safeguard for large hospital led ACOs. In addition, inflation and risk adjustment policies transfer to much “insurance” risk from Medicare to the ACO. In this paper, we make the case that the purpose of two-sided risk should be motivational for all ACOs and not be financially ruinous for any ACO. We believe this view of risk aligns perfectly with Congressional intent for “more than nominal financial risk.” Between the financial investments ACOs make in the work of population health and the 15% of Medicare revenues that represent our new, proposed stop-loss we believe it is clear that ACOs would be taking more than nominal financial risk under our proposal. We include a detailed proposal in Attachment A to our comments.


Attachment A: Framing the Purpose of Risk

There are two reasons for a payer like Medicare to desire that accountable care organizations participate in risk under a total cost of care models:

  • Recoupment of losses
  • Motivation

From the provider perspective there are only two reasons to participate in risk:

  • Only way to access the accountable care model
  • A greater financial reward if they achieve savings

In a voluntary program such as the MSSP, no ACO will remain in the program year over year if they are generating losses so the potential recoupment of losses is limited to at most two years. In addition to losses from of total cost of care, every unsuccessful ACO (one-sided or two-sided) experiences investment and opportunity costs. Estimates are all over the map, but at a minimum an ACO will be spending $500,000 a year. There is also the opportunity cost of seeing few patients to work on population health and participate in other initiatives. For example, ACO providers cannot achieve 2x in the Value Based Modifier and therefore potentially left a significant portion of their fee for service revenue behind. Therefore, we encourage CMS to view risk as a motivating factor to generating shared savings not as a mechanism to transfer money from providers to the CMS trust funds.

A focus on motivation raises a different set of questions that a focus on recoupment of losses. In recoupment of losses, it is simply a financial balance between greater shared savings rates and risk that must be fair to both sides. However, CMS must make this decision at the programmatic level while ACOs make the decision at an individual level and with their specific circumstances in mind. Essentially creating an adverse selection situation just like you have with individuals and the purchase of health insurance. With a focus on motivation, CMS goal is not financial balance, but rather how to get as many folks into two-sided risk as possible so they will be more motivated to achieve savings, and to reduce the number of unmotivated “ACO squatters” in non-performing one-sided risk models.

From the provider perspective, taking on the possibility of losses is taking a gamble. The providers will implement ACO best practices that should generate savings. They believe that if losses were to result instead it would be due to factors beyond their control. Hospital consolidation in their area drives up local health care inflation at three times the rate of national health care inflation as we saw in one of our ACOs. Or the benchmark year was a statistical fluke of a year for risk scoring and since risk scores can not rise they will always be fighting a headwind. Providers, rightly in our opinion, view losses as mostly beyond their control and savings as within their control. Because of this they focus on the worst case scenario. Like someone entering a casino only willing to loose $200, they want to know that the gamble won’t financially ruin them.

Yet in today’s MSSP program even the lowest stop loss of 5% losses in the first year of Track 2 could bring a physician led ACO and its providers to ruin in a single year. For example, let’s explore a 10,000 beneficiary ACO with a $10,000 benchmark or $100,000,000 in costs. The physicians in that ACO account for $4,000,000 of those costs. It is quite possible for those physicians to get a late start and generate a risk adjusted, regional adjusted savings of only 1% in the first year, but be hit with a 7% headwind due to the lack of risk adjustment and regional inflation. This ACO is now responsible 40% of $5,000,000 or $2,000,000. This is ½ of all the revenue they received in Medicare revenue. Practices are potentially out of business. The ACO is completely forgotten. This is a realistic scenario. Again the providers worry about the worst case scenario in year 3 when the stop loss is 10% and they have to pay $4,000,000 if they generate 10% losses wiping out their entire annual Medicare revenue despite having the top quality scores needed for the 40% shared losses rate. At the practice level an individual physician seeing 300 Medicare patients a year bringing in $120,000 from Medicare could individually owe Medicare under the ACO $60,000.

From a behavioral economics viewpoint, it is true that incentives and fear of losses can be motivating, but the literature indicates that excessive fear of losses actually reduces performance on complex tasks. Putting primary care physicians in a position of overwhelming losses also increases the probability that some small number of them will take excessive risks with patient care- stinting on sending a patient for needed emergency or acute care, or surgeries, and putting the public perception of the entire program and movement at risk.

You can see why an extra 10% in the shared savings rate is not enticing physician led ACOs to Track 2 in large numbers.

The Motivation Focus and Alternative Payment Models

Congress highlighted the motivation focus of risk with the phrase “more than nominal financial risk”. The risk needs to motivate, it needs to be enough to matter, it needs to be more than nominal, but more than nominal clearly does not translate into financial ruin.

We propose a new stop loss in MSSP that would make risk motivating for ACOs of all make ups while being financially ruinous to none. After all, what is more than nominal to one entity might be downright miniscule for another entity. To set one fixed dollar or fixed percentage of total cost of care standard for more than nominal financial risk for all entities is to give large organizations a pass on financial risk and to expose small organizations not to more than nominal financial risk, but massive financial risk. Rather than a stop loss of a percentage of total costs, we propose to replace a total cost of care stop loss with a stop loss on the amount an ACO will be liable to Medicare as a percentage of Medicare revenue received by the participants that make up the ACOs. MIPS can create a loss in Medicare revenue of 9% couple that with the 5% bonus for being in an APM and you have a MIPS risk of 14% of revenue. We propose a new stop loss set at 15% – 20% of the fee for service payments made by CMS to all of the participants in the ACO. This sets risk at levels that motivate a specific ACO rather than the current situation where a “fair” policy to recoup losses creates massive disparities in financial risk from ACO to ACO. In this new scenario, our individual physician is only having to write Medicare a stiff, but survivable $18,000 check. See Attachment 1 for a table breakdown where you can see physician-led ACOs are always at more risk than hospital-led ACOs, but this proposal levels the playing field.


Table of Proposed Stop Loss Provision

Best Case Scenario that Involves the Stop Loss

(6% losses in Year 1 Track 2 with a 5% Loss Rate)

Physician-Led ACO Individual Physician Hospital-Led ACO
Beneficiaries 10,000 300 10,000
Benchmark $10,000 $10,000 $10,000
Total Cost $100,000,000 $3,000,000 $100,000,000
Losses (6% ) $6,000,000 $180,000 $6,000,000
Current Best Case Total Cost of Care Stop Loss (5% – Year 1 Track 2) $5,000,000 $150,000 $5,000,000
Current Best Case Losses
(40% Shared Losses Rate)
$2,000,000 $60,000 $2,000,000
Proposed ACO Share Stop Loss
(15% of Medicare Revenue)
$600,000 $18,000 $9,000,000
Proposed Best Case Losses
(40% Shared Losses Rate)
$600,000 $18,000 $2,400,000
Medicare Revenue $4,000,000 $120,000 $60,000,000
Current % of Medicare Revenue Lost 50.00% 50.00% 3.33%
Proposed % of Medicare Revenue Lost 15.00% 15.00% 4.00%




Worst Case Scenario that Involves the Stop Loss in Track 2 –

(11% losses in Year 1 Track 2 with a 10% Stop Loss)

Physician-Led ACO Individual Physician Hospital-Led ACO
Beneficiaries 10,000 300 10,000
Benchmark $10,000 $10,000 $10,000
Total Cost $100,000,000 $3,000,000 $100,000,000
Losses (11% ) $11,000,000 $330,000 $11,000,000
Current Best Case Total Cost of Care Stop Loss (10% – Year 1 Track 2) $10,000,000 $300,000 $10,000,000
Current Best Case Losses
(40% Shared Losses Rate)
$4,000,000 $120,000 $4,000,000
Proposed ACO Share Stop Loss
(15% of Medicare Revenue)
$600,000 $18,000 $9,000,000
Proposed Best Case Losses
(40% Shared Losses Rate)
$600,000 $18,000 $4,400,000
Medicare Revenue $4,000,000 $120,000 $60,000,000
Current % of Medicare Revenue Lost 100.00% 100.00% 6.67%
Proposed % of Medicare Revenue Lost 15.00% 15.00% 7.33%




Attachment B: AJMC Article on ACO Value and Sustainability

Farzad Mostashari, Travis Broome

Accountable Care Organizations (ACOs) are the cornerstone of policymakers’ pledge to convert over half of all healthcare dollars to alternative payment models by 2018. The Centers for Medicaid and Medicare Services (CMS) has led the way by creating new models like the Medicare Shared Savings Program (MSSP) which rewards doctors for delivering better care and lowering the total cost of care (Disclosure: Aledade partners with primary care practices to create and operate ACOs). Under the MSSP, providers share in savings realized over a projected benchmark if they meet quality targets. A study byLeavitt Partners shows the number of Americans in ACOs currently at around 23 million will soar to over 100 million by 2020. But is “accountable care” merely a transitional pathway from totally unmanaged “Fee for Service” towards capitated payments and HMO-style managed care? Or will accountable care prove to be a third durable payment and delivery destination offering more choice than managed care and better value than fee for service, with softer incentives for both providers and patients.

I don’t believe that we know the answer to that question yet, and perhaps wisely, policymakers have been somewhat cagey about committing to one strategy or another. The Next Generation ACO program ingeniously created a pathway towards capitation or all-inclusive population-based payments as CMS refers to them, by allowing ACOs – with full immunity from what would normally be considered violations of anti-kickback regulations—to negotiate capitated Medicare payments to “affiliates” in essence using CMS as their claims administrator. Meanwhile, the Medicare Shared Savings Program (MSSP) also continues to evolve towards sustainability with continual improvements- none more significant than the recent proposed rule issued by CMS around how the “benchmark to beat” is to be calculated in the future. The comment period on this rule closes on March 28, and I assure you that this is no boring technical detail, it is in fact a fascinating example of the delicate balancing act of good policymaking that merits our attention and input.

The goal of good policy in a market economy is to align individual incentives with societal good. Successful policy creates an environment where public welfare is furthered not only by direct government action and grants, but also by private organizations acting in their own interests. In health care, the “volume to value” movement seeks to align the interests of healthcare providers with the societal triple aim of better care, better health and lower costs. But how should that “value” be measured and rewarded? How to establish the counterfactual “expected costs” as the benchmark for ACO doctors to beat?

The policy goal is to reward both improvement and attainment, without creating perverse incentives. If the ACOs started with a regional benchmark (“attainment”) then providers with higher than average benchmark have no incentive to participate, taking away the biggest societal gain, while providers who are already lower cost are paid more automatically without anything changing. So the program began by setting the first three-year contract’s benchmark by projecting forward from recent historical costs (“improvement”). Perhaps wisely, policymakers punted on the inherent and obvious flaw in this approach. The most common question asked by sophisticated investors and policy neophytes alike has been unanswered until now: “if the organization has to keep reducing costs below historical benchmark, won’t the returns dwindle to nothing? What happens in the long run?”

Continually resetting a purely historical benchmark gets harder and harder over time, and will lead the most successful ACOs to drop out of the program. Last year’s rules provided a temporizing stop-gap, replacing a “full ratchet” with a “partial ratchet” whereby the pace of adjustment was slowed but leaving the fundamental inexorable unsustainability unaddressed.

Regulators have struggled to strike a balance between maintaining incentives for private organizations to continue to seek profit in reducing cost, while also seeking to ensure that there continues to be value created for society and the taxpayer. In keeping with comments submitted by us and others, CMS is now proposing to gradually move away from a purely historical benchmark (beat your own past performance) to a regional benchmark (beat your neighbor’s performance). In this way, value created by ACOs is defined commonsensically as “did people in the ACO get better care than they would have if the ACO had not existed.”

We acknowledge that getting the transition right – from rewarding improvement to rewarding attainment– is devilishly difficult. Transition to a regional benchmark too fast, and ACOs that still have high costs will leave the program. Transition to a regional benchmark too slow, and ACOs with low costs will lose their financial viability. We support the proposed transition of 35 percent regional comparison in an ACO’s 2nd contract (years 4, 5, and 6) and 70 percent regional in its 3rd contract (years 7, 8, and 9).

But this is only part of the solution. With healthcare costs rising every year, the benchmark must also be projected forward. CMS currently uses national inflation for annual updates of the benchmark within a contract period, but this creates an imperfect view of the counterfactual (what would have occurred had the ACO not existed). Regional updates using county weighted, risk adjusted costs (as is done in Medicare Advantage) create more accurate benchmarks and therefore more accurate measure of ACO value. CMS is indeed proposing to switch to such regional inflation in future contracts but is adding complexity and reducing predictability by proposing to continue to use national inflation in the first contract (first three years). An ACO should be rewarded because a person in Dover, Delaware got better care in the ACO than a like population outside of the ACO. Regional updates do that, while national inflation updates dilute that difference.

The benchmark must also account for differences between people’s health in order to accurately compare one person’s costs to another. To be sure, this adjustment creates opportunities to shift money around in the health care system without creating value, a practice CMS calls “coding intensity” in the proposed rule. Currently, CMS using a blunt instrument to combat this practice. Simply put, they do not let risk scores to go up for the same population year over year. This is done without consideration of whether that population had a bad run of cancer or an unusually high number of unavoidable accidents. This prevents accurate comparison and therefore prevents accurate measurement of value. This transfer of insurance risk to ACOs is one of the biggest barriers to ACO sustainability over the long run, and increases the risk of providers dumping patients whose true risks are rising. People do in fact tend to get sicker over time, and pretending otherwise can only last so long.

2016 is shaping up to be the most pivotal year in health care policy in a long time, possibly the most pivotal year since 1965. CMS is actively listening and working with private sector partners to iterate and improve the alignment between what’s good for society, what’s good for patients, and what’s good for doctors entering these new payment models. All of us in health care, and particularly those of us who are population health, must make the most of every opportunity to inform the changes that will be happening this year, and will illuminate the path forward.