Franciscan St. Francis Health earned a $6.6 million bonus from the Medicare program for its success at keeping central Indiana patients out of the hospital and the emergency room. So the hospital system will expand its participation in so-called accountable care programs to all its Indiana territories.
That performance ranked Franciscan in the top five out of 32 groups of health care providers participating in the Medicare Pioneer ACO program—one of the Obama administration’s earliest tests of a key Affordable Care Act strategy for controlling future increases in health care costs.
Franciscan actually reduced spending—a rarity in health care—on 20,000 Medicare patients in 2012 compared with the cost of care those same patients received annually in the three previous years.
The federal Medicare program, the largest health plan for seniors, projected it would spend $230 million last year to care for the 20,000 patients, based on their health status and claims experience. That number represented a 4.8-percent increase over the average annual amount Medicare had paid to care for those same patients in 2009 through 2011.
Franciscan’s efforts to keep the patients healthier and out of the hospital led to spending $216.7 million on them—a 6-percent reduction from Medicare’s projected amount. The federal Medicare program will pay Franciscan a bonus of $6.6 million—its half of the $13.3 million Franciscan saved.
Franciscan executive Jay Brehm said accountable care is a key strategy for Franciscan’s future success.
“There is a lot of support throughout the organization,” said Brehm, senior vice president of strategic planning and business development for Franciscan Alliance, the Mishawaka-based parent Franciscan St. Francis Health. “We think it helps Franciscan improve its service offerings and value to the payers and the beneficiaries that seek our services.”
The overall results of the Pioneer ACO were mixed. Franciscan was one of just 13 participants that saved money compared with their expected spending. Four spent more than their target and 15 spent the same. Nine organizations left the program after the first year.
But combined, the 32 organizations spent $87.6 million less than projected by Medicare’s actuaries. In order to be eligible for bonus payments, they also had to report quality data in 15 areas.
Among all the Pioneer ACO participants, spending still went up—0.3 percent compared with the average over the previous three years. But that was less than the 0.8-percent increase in the cost of care for similar Medicare beneficiaries, according to an analysis by the Centers for Medicare & Medicaid Services, the federal agency that administers the Medicare program.
Franciscan’s care actually cost Medicare less than it had been paying—about $2.8 million less than the annual average in the three prior years. That represented a 1.3-percent spending reduction.
Franciscan achieved savings by reducing the number of patients coming back to the hospital a second time for the same condition, reducing patients’ use of the emergency room, and by working with long-term care providers to shorten patients stays by improving their health faster.
Franciscan identified about 2,000 patients it deemed in need of in-home visits and other interventions from its team of complex care nurses and social workers.
Franciscan identified those patients by running their past Medicare claims through predictive modeling software, which essentially identified patients suffering from or were at high-risk of developing three chronic diseases: diabetes, congestive heart failure or chronic obstructive pulmonary disease—or in many cases, all three.
“Most of those people were hitting the ER a lot. Most of those people had readmissions. Most of those people had 15 to 20 medications,” said Jenny Westfall, regional vice president for Franciscan ACO.
These high-need patients also had transportation and income issues that frequently prevented them from getting the care they needed.
“We’ve used a lot of social workers to help these patients," Westfall said. "They don’t have a lot of support at home. Oftentimes, they have no transportation. They don’t have the money to buy the prescriptions that we prescribe for them when we send them home. So we just did a lot of hand-holding.”
Franciscan also identified patients in need by surveying the roughly 700 physicians who are part of its Pioneer ACO organization. Those doctors will get a chunk of the $6.6 million bonus, Brehm said, but the size of their take has yet to be decided by Franciscan executives.
The rest of the bonus, he said, would be reinvested in Franciscan’s in-house systems and personnel that support its ACO programs.
In addition to the 2,000 patients who received home visits and coaching, Franciscan placed telephone calls to about 75 percent of its 20,000 patients. And all patients received written materials about the Franciscan ACO, which included educational materials about various health conditions.
Franciscan is trying to keep those efforts going this year. It also has to step up its game on its quality metrics. To qualify for another bonus, it has to hit goals set by Medicare.
But Franciscan is committed to making it work. The system plans to start two new ACOs by year end. One, in the Lafayette area, will likely include 10,000 Medicare patients. Another, in northwest Indiana, will include 10,000 to 12,000 patients.
Franciscan is also operating two other accountable care organizations. One is a partnership with Indianapolis-based physician group American Health Network. That organization includes about 28,000 Medicare patients. The other is a partnership with Union Hospital of Terre Haute, which includes about 14,000 Medicare patients.
So by year’s end, Franciscan will be serving at least 82,000 patients in its accountable care organizations.