Hierarchical Condition Categories (HCC) and Accountable Care Organization Risk Adjustment: Is Prediction Accuracy of 11-12% of Expected Utilization Enough?

Take a spin on HCCs?

Addendum - DavidN below points out there is an important difference between individual (the topic below) and aggregate HCC-determined risk.  The explanatory power can  go as high as 60%, which is on par with many commercial predictive models. The DMCB appreciates the reader input and placed the new insights into the text below in bold font.

It also wonders if even a "low" 40% unexplained variation may still be too much for ACO wannabes...... 

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In a prior post, the Disease Management Care Blog introduced budding Accountable Care Organizations to "ambulatory sensitive conditions" and its curious mash of of "applied" health services research and reimbursement. 

In this post, the DMCB introduces the ACO wannabes to managed care's notorious "hierarchical condition categories" (HCC).
This is important because in the ACO Proposed Rule (**NEW** link over on the right of this page), CMS is proposing that HCC be used to risk-adjust the ACO's attributed population's claims expense "benchmark" baseline.  Comparison of that baseline (plus an actuarial trend) versus the ACO's expenses will determine whether the ACO is a hero.... or, literally, a zero.

HCC use age, gender, Medicaid eligibility, Medicare status (age, disabled or end stage renal disease) and the ICD-9 claims record of prior "encounters" to assign patients to 70 different "categories."  Those categories are designed to  "bucket" patients that are not only clinically similar (based on organ systems) but follow similar cost patterns. 

The reason the system is "hierarchical" is because it reconciles the presence of multiple concurrent conditions by identifying a dominant one.  As additional conditions are added to the model - since patients often have multiple diseases simultaneously - their predicted impact is incrementally adjusted upward. The "rate" of that upward adjustment decreases as more conditions are included.  In other words, it's not additive.

HCC have been CMS' answer to the perennial complaint of hospitals and physicians that their patients are "sicker."  Confront any provider with higher than normal claims expenses, unexpectedly long lengths of stay, higher than average rates of surgery, lower satisfaction scores or substandard quality measures, the first explanation will always point to the patients, not the care.  HCC case mix risk adjustment is designed to use the Medicare patients' characteristics to mathematically reconcile the observed rate versus what would be expected so that the quality of the care can be isolated and understood.

With one significant exception, HCC, like "ambulatory sensitive conditions," have been used in health services research to compare and contrast patterns of care and inform public healthcare policy.  That exception is that HCC have also been used to risk adjust the payments from CMS to its Medicare Advantage plans.

CMS experience with MA Plans has introduced a HCC "wrinkle" in the Proposed Rule.  Reportedly, when HCCs first arrived, MA Plans responded by hiring consultants and upgrading their claims systems to increase the "accuracy" of the coding.  This also increased the "coding intensity," resulting in an upward trend in their claims profile, which made patients appear sicker.  This cleverly shifted the HCC case mix and led to higher payments in the following year.  CMS, arguing claims expenses for beneficiaries generally remain stable year to year, proposes to avoid a reprise of that trickery by using the same HCC from the baseline year for all three of the ACOs' contract years.

And, in case you're interested, new Medicare enrollees would be risk adjusted on just age, gender, Medicaid eligibility and Medicare status. Indirect medical education (IME) and  disproportional share hospital (DSH) payments would not be backed out of the case mix adjustment.

All well and good, says the DMCB, but what ACOs really need to know is how accurate the HCC system is.  The answer, from the perspective of health services research, is "pretty good."  If, however, you are betting millions of dollars of investment, the answer may be "not very."  According to this definitive paper, the individual "explanatory power" of HCC ranges between 11% and 12%.  In other words, close to 90% of the year-to-year variation in the observed vs. expected claims expense that will determine payment levels from CMS under the Proposed Rule could be unpredictable. 

If aggregated and rolled up, the explanatory power may range between 60-70%.

Managed care organizations - with hundreds of thousands, if not millions, of enrollees - are used to underwriting cycles and understand the mathematics of transferring risk.  They use underwriting, the law of large numbers and surplus to cushion claims expense unpredictability.  They can handle 90% (or 40% in aggregate) swings in unexpected utilization. 

It remains to be seen whether smaller and lower capitalized ACOs will be willing to accept that level of uncertainty.  One possible answer to that will be addressed in tomorrow's DMCB post.

Image from Wikipedia

The “Path to Prosperity”—Where’s the Health Care Cost Containment?

Paul Ryan’s overview of his proposed 2012 Budget Resolution contains an honest and compelling description of America’s debt and deficit spending dilemma.Every American should read it.As I read through his discussion of the huge hole we’re in and the imperative to fix it, he had me thinking that we finally have a politician willing and ready to deal with the problem. But when I got to the end of

Ambulatory Care Sensitive (ACS) Hospitalizations and Accountable Care Organizations: A Complicated Measure of ACO Quality

Food fight!

Imagine being a C-suite, VP or lead administrator in a newly formed Accountable Care Organization. At some point, you'll need to have a physician meeting to go over the terms of the CMS contract.  Because such meetings often occur after clinic hours, you may be tempted to provide dinner.  While the docs are working on their chicken breast, white bread rolls and iced tea, you'll remind them there's a Medicare claims-expense threshold to beat.  You'll point out that once savings being to accumulate, the ACO will get a percent as a bonus that could add up to millions of dollars. 

However, you'll also need to point out that certain quality measures also have to be met in order to get the full bonus.  That's when you'll say:

".... and every time we admit a patient with urosepsis, pneumonia, dehydration diabetes (short and long term complications), COPD and heart failure, we lose quality points."

The DMCB suggests, at this point, that is when  hospital administrators will rue the decision to provide dinner. That's because the doctors will be throwing it at them.

The DMCB explains.

As noted in a prior DMCB post, ACOs shared savings will be contingent on attaining sufficient levels of clinical quality in their attributed population. Go to the just-published New England Journal "Perspectives" article by CMS Administrator Don Berwick on ACOs and you'll find this table that summarizes CMS' proposed measures for assessing ACO quality.  That Journal table is taken from a more complicated table in the proposed rule (go to page 174) on how ACO quality will be assessed.  

As the DMCB understands it, CMS is proposing 65 quality measures. Each would be worth "two points," for a maximum of 130 points.  With a few "all or none" exceptions (for example, diabetes), each participating ACO would be compared to a yet-to-be-determined benchmark on each of the quality measures.  The more the ACO "beats" the 30th percentile for each of the 65 benchmarks, the greater the fraction of the available two points that is awarded.  Divide that rolled up point sum by 130 and that will be the fraction of the shared savings that is awarded.

All well and good, but this is where it gets interesting.
 
In the suite of ACO "Care Coordination" quality measures is a subcategory called "management of ambulatory sensitive conditions."  It includes diabetes (short and long term complications), COPD, heart failure, dehydration, urinary tract infection and pneumonia.  That's 14 points.
 
Just what are "ambulatory sensitive conditions" (ASC) you ask?

ASC is all about measuring the rate of "avoidable" hospital admissions in each of those disease categories.  It assumes that a hospitalization for an ASC can be used as a surrogate measure of access to appropriate outpatient primary health care.  If the patient had optimum outpatient access, evidence-based care and close follow-up, the hospitalization could have theoretically been avoided.  An excess number of hospitalizations in those seven disease categories could mean that the outpatient primary care system is failing.

For more information, here's the definitive AHRQ summary on the topic.  It's testimony to how ASC-logic has been used for years by academic researchers and health policy types to assess managed care, health care quality, Medicare and Medicaid.  For example, CMS has looked at ASCs to scrutinize managed care.  States have also relied on them (example) to assess quality of care. Here's an example of ASC methodology being applied to conclude that 7% of hospitalizations among Medicare beneficiaries with diabetes "could be avoided."  Here's a ten year old Medicaid study showing there's a link between ASC hospitalizations and not having at least 3 outpatient visits in the prior year.

To put this in perspective, imagine that you or a loved one has just come down with pneumonia.  Laypersons may expect to be hospitalized for intravenous antibiotics.  The research-based rationale on why you may be wrong is here.

The ultimate question in all these studies is - and for the ACOs will be - whether the observed rate of ASC hospitalizations is "disproportional" to what would be expected.  That's why the AHRQ summary mentioned above prominently points out that some ASC hospitalizations are always expected to happen and why CMS will use benchmarks for ACOs.  As the DMCB understands it, the "specifications" and risk-adjustment methodology that will be used to establish those benchmarks has not been "refined" yet and will be subject to feedback obtained during the 60 day comment period.

The DMCB has been thinking about this and has several worries:

1.  ASC are not a familiar metric to physicians, who will misinterpret them as an attempt to deny hospitalizations for all patients that need them.  Administrators won't do a good job of dissuading the physicians from that point of view.  What should happen is that both administration and physicians need to think about systems of expedited management for patients with those seven conditions upstream in the course of care.  Do that and the hospitalization rate will go down - but not vanish.

2. It may invite coding gamesmanship.  The detailed ACS methodology relies on ICD-9 coding in its calculations.  While this was a subject of research, most hospitals had no reason to code around ACS-based metrics.  Now that there's money attached to it, ACOs could change that.

3. And finally, the DMCB is unaware (readers?) of  a nerdy corner of health services research like ACS hospitalization rates being tied directly to reimbursement in such an astonishing scale.  Assuming they're adopted, if this part of the regulations collapses under the weight of misinterpretation, mismanagement or bad measurements, it could put the ACO concept at risk.

random on a rainy day

There's something about a cold, rainy day that makes me just want to crawl back under the covers. I've resisted that temptation all day but I'm fighting a cold and my brain doesn't seem to want to function, except in fits and starts.

Here are some random thoughts, that I'm posting as a compromise between cogent and nothing at all.

1. All four performances of my son's play went very, very well this week end. I could not be prouder of him. He worked very hard for many months, to learn his lines and his blocking and he got himself to every rehearsal on time. The director gushed about him and said that she'd loved to work with him again. He had a big part and he was brilliant.

2. I thought, as his mother, that I was very restrained. I found myself reacting quite viscerally to the kids and teacher who bullied him on stage (Sacha tells me that they are all very nice people) and had to remind myself that they were actors in a play.

3. I was also very restrained during the after-party at a local pub. We sat in a different room from Sacha, gave him money (hey wait - the community centre paid for dinner and drinks and he still kept our twenty bucks!) and we only went to talk to him when it was absolutely necessary. I did call out "There's my baby!" when he walked in the door but otherwise did my best to embarass him only minimally.

4. The pub did not have a wide selection of food, so I decided to pretend I was a student again and share calamari, antijitos and nachos, washed down with beer. Afterwards, my GERD reminded me that I no longer have the constitution of a student. My GERD is well managed but apparently fried things can knock down the best defenses.

5. My jaw is very sore today. I think I'm going to have to break down and wear my mouthguard. Every time I think of it, I remember Tina Fey and Steve Carell in Date Night. It really is that sexy.

6. I've been editing a book in progress for a friend and loving it. It's made me remember how much I love that kind of work - especially when I'm working with good writing and interesting information (which I definitely am).

7. My skirmish with Zellers ended with them sending me a cheque for $7.48 because they "value my business."

8. This blog post was interrupted when Daniel's school called. He was sent home with a tummy ache. He was fine when he got home. This happens every Monday afternoon. Time for a meeting with the school.

9. Daniel just told me to "stop being so moody."

An ACO Rountable For Your Listening and Learning Pleasure

On April 1, the Disease Management Care Blog got to participate in a virtual round table discussion on the hot-off-the-presses ACO Proposed Rule.  Including lawyers, docs and administrators, listeners will get a "first read" impression of what the regulations would - and wouldn't - do. Participants include brainy bloggers Mark Browne, MD, Vince Kuraitis, and David Harlow and the DMCB, all ably herded by host Gregg Masters of ACO Watch.  It went so well, it led to a new Twitter hashtag "ACOchat."

Listen to internet radio with ACOwatch on Blog Talk Radio

The Accountable Care Organization Proposed Rule: Spin, Waves, Congressional Intent, Not for the Faint of Heart & A Political Sideshow

A cause for voter excitement?

While the Disease Management Care Blog continues to prayerfully commune with each of the 429 pages of the ACO Proposed Rule ("?ambulatory sensitive conditions?"), it's also been checking out some other documents.

Spin?  

Based on a read of this "Sensitive or Controversial QandA" document (HT to The Hill with their handy summary), it appears CMS staffers have crafted a preemptive "talking points" memo. It opens with an appeal to consumerist frustrations over fragmented care and lost medical information with a promise of rehabilitated doc-patient partnerships with greater care coordination while preserving "choice" and access to "information."  That's followed by consumer "protections" verbiage, including a "vigorous monitoring program" with "site visits," data privacy protections, patient "opt outs" and the use of "identifiable data."   Whether this is enough to convince Medicare beneficiaries - who are largely satisfied with the current status of the program - that ACOs area good thing remains to be seen.

This is a Pilot, Right?

Not exactly. Recall that the Affordable Care Act (ACA) refers to ACOs as a program.  This just published New England Journal Perspective, authored by CMS Administrator Don Berwick, lauds the "coming waves of ACOs." It would have been bad taste to use the word "tsunami," but the point is that CMS seems intent on making sure that ACOs will never go away. 

As an aside, the Berwick Perspectives article echoes much of QandA document mentioned above.  It too tut-tuts the heartbreak of "fragmented care" and promises that ACOs will cater to patients' care preferences, achieve better information management and preserve the right to "seek care from any Medicare provider."  Given their similar themes, the DMCB wonders if it was Dr. Berwick who wrote the "QandA" document above and if the Journal's academic role includes a "talking points"style promotion of the Administration's health reform agenda.   

Just what is the definition of "shared savings," or better yet, just what was the intent of Congress?

As readers will recall, the statutory language of the ACA refers to "shared savings." Yet, in the Proposed Rule, CMS recommends that the gainshare implied by the "shared savings" language be, um, adjusted so that ACOs are also exposed to downside risk if savings are not achieved. 

The DMCB went back to take a second look  at the ACA original language (bolding by the DMCB):

"Subject to performance with respect to the quality performance standards established by the Secretary..., if an ACO meets the requirements under paragraph (1), a percent (as determined appropriate by the Secretary) of the difference between such estimated average per capita Medicare expenditures in a year, adjusted for beneficiary characteristics, under the ACO and such benchmark for the ACO may be paid to the ACO as shared savings and the remainder of such difference shall be retained by the program under this title.....

The DMCB is still going through the Proposed Rule, but it can't find a vigorous argument that "shared savings" really means "two sided" risk.  However, the QandA document linked aboves above refers to the need to "intensify the incentive for shared savings as outlined in the Affordable Care Act, making the policy more likely to meet the goals laid out in the law." It also points out that MedPAC recommended a two-sided risk model.

So there you have it.  Congress really didn't mean "gainshare" and MedPAC says its OK.

By the way, the Proposed Rule also repeatedly refers to the "three part aim." While that certainly has merit, that's really a paraphrase of the term "Triple Aim" from Dr. Berwick's Institute of Healthcare Improvement.  If you're going to rewrite a law like the ACA, might as well go all the way. 

Not For The Faint of Heart

It's one thing, says the DMCB, to put a lot of money into forming an ACO and not achieve a gain share, but what if you make the investment and end up on the negative, money losing and short-end of the two-sided risk model?  It looks like tough luck. The ACA language says "there shall be no administrative or judicial determination of whether an ACO is eligible for shared savings under subsection and the amount of such shared savings, including the determination of the estimated average per capita Medicare expenditures under the ACO for Medicare fee-for-service beneficiaries assigned to the ACO and the average benchmark for the ACO under subsection..."  CMS' word is final.

Vince Kuraitis over at e-CareManagement has it right: "Tire Kickers" need not apply, e-specially if they're not very brave.

 Yet, This is Still A Minor Sideshow?

While ACOs seem to be the progressive ACA supporters' Great White Hope for the our national problem of unremitting cost inflation and substandard quality, the DMCB doubts mainstream voters will "get it."  As this James Capretta Kaiser HealthNews article points out, much of the ACA simply hasn't resonated with the public consciousness.  Not only are the "risk pools," "coverage of 26 year olds" and guaranteed coverage non-events, the same logic seems applicable to "ACOs." 

questions for candidates

From the Canadian Breast Cancer Network: Questions to ask your local candidates during the election campaign

 

Question 1: The Financial Impact of Breast Cancer

  

In May 2010, the Canadian Breast Cancer Network released the research report entitled Breast Cancer: Economic Impact & Labour Force Re-Entry, which firmly positioned breast cancer as an economic as well as a healthcare issue.

  

The economic impact of breast cancer is significant, and in many cases devastating for patients and their families. 80% of respondents experienced an economic impact following their diagnosis, often with distressing long-term financial consequences.

  

Some report findings:

• Average decline in household income was $12,000 or 10% of family income
• 44% of respondents used savings, while 27% took on debt
• One fifth of respondents returned to work before they were ready because of financial pressure
• Those who had chemotherapy had a greater loss of household income and were 49% more likely to take longer than 16 weeks off work

Survey respondents reported that the average duration of their breast cancer treatment was 38 weeks, and two-thirds of the respondents took 16 weeks or more off from work. Because Employment Insurance Sickness Benefits last for a maximum of 15 weeks, there was an average gap of 23 weeks during treatment without coverage.

  

If elected, will your government:

  

A. Lengthen Employment Insurance Sickness Benefits for Canadians undergoing treatment for breast and other cancers as well as other illnesses and chronic diseases that require long periods of treatment so that no one who is ill is penalized by the current limit of 15 weeks of sickness benefits?

  

B. Cancel the two-week waiting period for EI Sickness Benefits so that sick Canadians are not penalized?

  

C. Immediately extend the Employment Insurance Compassionate Care Benefit to cover family caregivers providing care to those with breast cancer, other cancers and other long-term conditions?

a. Increase the benefit to 75% of workers' earnings?

b. Increase the benefit period to a maximum of 52 weeks?

c. Allow partial weeks of compassionate care leave over a longer period?

d. Expand the eligibility criteria beyond imminent death within 26 weeks?

  

Question 2: Drug Approval Process in Canada

  

The drug approval process in Canada is lengthy and complex. Currently the performance targets as outlined on the Health Canada website is 300 days for "non-priority" drugs and 180 days for "priority" drugs.

  

Once drugs are approved by Health Canada, cancer drugs pass through the Pan-Canadian Oncology Drug Review (pCODR), formally the Joint Oncology Drug Review (JODR).This process can take up to a year for recommendation to be made. Provinces and territories may then either confirm or disagree with pCODR's recommendations, often resulting in further significant delays and an uneven patchwork of drug coverage across Canada.

  

Cancer patients in Canada face unduly long waits for much-needed drugs, and medications available in one province or territory may not be available in another. But when it comes to cancer treatment, especially for advanced or metastatic cancer, time is of the essence.

  

If elected, how will your government:

  

A. Ensure that the approval processes for new treatments are shortened to permit timely access to new treatments for those who need them

B. Ensure that no cancer patient in Canada goes without internationally recognized gold standard treatments

  

Question 3: Wait Times 

The Canadian Breast Cancer Network's 2008 Breast Cancer Wait Times in Canada Report Card showed that not all Canadian women are receiving equal access to breast cancer treatment. The project was undertaken in order to gather information about what happens across Canada in terms of wait times in four important areas: from abnormal screen to diagnosis, from diagnosis to surgery, time to radiation, time to chemotherapy.

  

We found some outstanding examples of best practices and much evidence that many jurisdictions across the country are working on innovative solutions to the wait time issue. However, the most disconcerting finding was that there are no national benchmarks for wait times and no standards for wait time reporting systems across the continuum of care. The data reported are calculated differently across jurisdictions making it impossible to compare wait times. This has not changed since 2008.

  

In the absence of comprehensive and consistent wait times data, there is no certainty that people diagnosed with breast cancer are receiving optimal care.

  

This is a complex issue. There needs to be national benchmarks for maximum wait times for diagnosis and treatment. Electronic health records must include consistent reporting of wait times across jurisdiction. Best practices must be shared and implemented across the country. Access to timely cancer care cannot depend upon ones postal code.

  

If elected, how will your government:

  

A) Provide the infrastructure necessary to ensure comprehensive and consistent standards for wait time reporting for breast cancer diagnosis and treatment across Canada

B) Ensure that national benchmarks are established for wait times associated with surgery and chemotherapy

C) Ensure the adoption of electronic health records

  

  

Join our survivor advocate campaign and make canada's decision makers aware of the issues that are important to you. Contact khurley@cbcn.ca for more information on how a little bit of your time can make a big impact.