A large national payer recently announced the opportunity for Accountable Care Organizations (ACOs) to share in 100 percent of the savings they create for the payer’s largest book of business. Providers will have complete autonomy in how they manage the health of their population, and the payer will ensure the timely flow of datasets needed to support care improvement activities. The payer will pre-define the ACO’s population and its spending benchmark, which will be adjusted for the risk of the ACO population. Consumers aligned to the ACO will be offered supplemental benefits and financial incentives to seek care from the ACO’s network.

Market-watching ACOs can be forgiven for wondering how they missed the slew of journal articles, blogs, and op-eds lauding the “best practice” design features of this new model — because they never materialized. The deal in question is, of course, the Next Generation ACO model currently being offered by the CMS Innovation Center (CMMI). But perhaps because of the hit-and-miss track record of the Centers for Medicare and Medicaid Services’ (CMS) ACO portfolio over the past five years, the reaction of the health policy intelligentsia has been curiously tepid. Savvy provider organizations, however, are increasingly gravitating toward Next Gen’s market-leading deal terms. Those ACO operators that don’t consider the Next Gen model this spring risk being locked out for the foreseeable future.

Early Models

Early ACO models from CMS suffered from a number of flaws that hindered their effectiveness; this is particularly true for “Track 1” of the Medicare Shared Savings Program (MSSP), which ACCOUNTED for 330 of the 353 total Medicare ACOs in 2014. Three main flaws were most commonly cited by frustrated health system executives:

  • ACOs only share in a maximum of 50 percent of savings they generate — an amount that simply isn’t sufficient to fund the population health infrastructure and physician incentives necessary to fundamentally change practice behavior;
  • Physicians don’t know which patients they are financially responsible for until after the year is over, which prevents them from targeting care management interventions and ultimately improving patient care; and,
  • Patients have little incentive to receive care within the ACO’s network, which reduces the ability of physicians to coordinate care.

And yet, even with these flaws, a majority of early ACOs did save money relative to their target — indicating that the basic model, if modified, could work well for both health systems and CMS.

Incorporating Feedback

Fortunately, CMS heard the complaints about early MSSP models and addressed the majority of them through the progressive structure of the Next Gen model. In fact, the core difference between MSSP Track 1 and the current Next Gen model is that the latter is based upon extensive feedback from health systems regarding their concerns about MSSP Track 1.

Next Gen is therefore a program that health systems have directly asked for. The model still has room for further improvement — for example, Next Gen ACOs should have access to the full toolkit of benefit- and network-design strategies found in Medicare Advantage and other provider-led offerings. But the CMMI leadership has pledged to pursue additional features that could take effect in the later years of the Next Gen model, and will continue the virtuous cycle of improvements. The most significant improvements that the Next Gen model embodies are highlighted below.


Would-be Next Gen ACO participants must grapple with two primary hurdles: risk exposure and a closing decision window. Next Gen ACOs are at full risk for spending in excess of their target, subject to a 15 percent stop-loss cap. This financial exposure is certainly not trivial, but ACOs can mitigate it through two interrelated financial and operational strategies.

First, Next Gen ACOs should focus on a core set of population health capabilities — namely an analytics-driven approach to care management for the small segment of complex patients who are predicted to have high but impactable costs, and a disciplined approach to optimizing the risk adjustment and quality bonus portions of the ACO’s financial benchmark. And second, ACOs should protect themselves by sharing operational risk with an experienced partner and/or through the purchase of market-based financial protections such as reinsurance.

CMS is only offering new admission to Next Gen this spring for a January 1, 2017 start date. ACOs that want a shot at participating need to submit a non-binding Letter of Intent by May 2, 2016, with the full application due by May 25. After that window closes, a similar model is unlikely to be available again any earlier than 2020, when CMS could decide to expand it nationally.

The Next Generation ACO Model may come to be seen as the cornerstone of CMS’s efforts to shift the majority of its payments towards value-based care. For health systems it represents an opportunity to secure provider-friendly deal terms and help define their own destiny in a rapidly-evolving Medicare payment landscape.


Although connectivity among medical devices is not new, the Internet of Things (IoT), or the Internet of Medical Things if you will, is gaining traction as the healthcare industry has been increasing efforts to improve quality and the continuum of care.

What is IoT?

A report from The Advisory Board Company’s Health Care IT Advisor defines the Internet of Things (IoT) as “the connectivity and interoperability of increasingly smart objects, such as appliances, sensors, controllers, wearables, and medical devices.” estimated in 2015 the healthcare IoT market segment would hit $117 billion by 2020. Consulting firms, researchers, technology companies, among others, believe IoT platforms, composed of Internet-connected devices, will substantially develop over the next few years.

North America dominated the global healthcare IoT market in 2014 with about $24.6 billion in revenue and is expected to continue its dominance at least until 2020, a P&S Market Research report shows.

Individuals can play a more active role in their care with IoT wearables that capture and track their health data. Also, IoT has the potential of having a profound impact in healthcare areas such as remote patient monitoring, medication adherence, and intelligent hospital rooms. For example, Philips Lifeline offers a medication dispensing device that functions as an IoT product. It automates patients’ pill-taking process by sending reminders and dispensing medication at a pre-scheduled time.

Patient health data, such as electrocardiograms and blood glucose levels, can already come from a number of connected devices as the ability to keep tabs on this type of information is vital for some. Smart devices can reduce the need for face-to-face follow-ups with physicians, which in turn could lower costs as well as enable patients to comply with instructions.

How one company is using IoT to help the physician/patient relationship

Biotricity, a developer of medical remote monitoring solutions, offers physicians a health IT solution called bioflux, composed of an electrocardiogram (ECG) monitor, software, and a monitoring lab, that targets cardiovascular disease through diagnostic and post-diagnostic care processes. The ECG device is put on the patient and constantly tracks data. Anytime the product detects arrhythmia, it transmits the ECG data from a minute before and a minute after detection to a monitoring center.

When an event occurs, a note pops up on a screen at a monitoring center saying something along the lines of “Device detecting some arrhythmia.” While the instructions are defined by the physician, the physician and monitoring center have access to the transmitted data, but the patient does not. ECG technicians at the call center will read it along with a note from the patient’s physician saying, ‘If tachycardia occurs, please call me’ or ‘Please call the patient.’

“We’re looking at a technique focused on arrhythmia detection so once you have an arrhythmia, the doctor will tell you how to manage this condition,” Biotricity CEO and founder Waqaas Al-Siddiq told Healthcare Dive. Al-Siddiq states having a complete IoT platform is crucial to monitoring for longer term care while minimizing risks, especially chronic illnesses, because as long as Internet service is available, up-to date health data can be quickly transmitted to a professional.

As always, challenges abound. Will regulations follow?

In its report, the Advisory Board Company states IoT implementation challenges in a healthcare setting include:

  • Interoperability;
  • Regulation;
  • Privacy protection;
  • Dealing with data overload;
  • Complexity; and
  • Security.

Research shows physicians already face a great deal of burden, which has been primarily attributed to administrative tasks. If an IoT platform is designed in such a way that physicians are overloaded, too much data would distract them from their mission of treating patients, Al-Siddiq says.

However, if devices and IT platforms are not compliant from a development or regulatory standpoint, potential dangers with regards to patient and privacy safety become vastly greater.

According to Al-Siddiq, regulatory integration is going to start creeping up on IoT. ABC’s Ken Kleinberg echoes this statement.

Kleinberg told Healthcare Dive some technologies are so powerful and dangerous that they will have to be regulated. “But the current trend is for government to do less regulation, not more, when it comes to IT, to not be accused of stifling innovation and holding back the economy,” he says.

Security concerns will rise alongside the Internet’s evolution

Al-Siddiq envisions the industry will begin seeing healthcare wearables 2.0 or 3.0 as patient monitoring technology becomes faster and better. They will become smaller, and could even be integrated into shirts or tattoos. More than 70 million health devices will have been adopted across the world within the next few years as new ones receive FDA approval, according to a recent study conducted by Juniper Research. Juniper Research also concluded that although interoperability with personal smartphones will become more valuable to patients, the number of individuals being monitored by devices will increase fourfold by 2020.

However, concerns remain with healthcare wearables’ vulnerability to hackers.

Each connectivity point among different healthcare technologies on an IoT platform is an opportunity for hackers to assume control over and expose private and personal information.

“It was hard to believe a few decades ago that the Internet would ever be – that so many companies, people, ideas, and competing interests and technologies could ever come together enough to exist on one useful network – one that has changed the world perhaps more than any other human advance since the printing press,” Kleinberg says.

While it may be an increasingly common topic of conversation, according to Kleinberg, IoT is still a relatively new concept so it’s too early “to see how the proliferation of so many devices, operating systems, sensors, standards, and competing interests will all work together.” However, he adds that having device connectivity across the world would be a step towards the evolution of the Internet.


With 30% of Medicare payments now tied to alternative payment models (APMs), and HHS planning to raise that percentage to 50% by the end of 2018, providers are looking for ways to increase quality of care and patient access while holding down costs. One mode that stands to gain is telemedicine, which got a boost in last year’s Medicare Access and CHIP Reauthorization Act (MACRA).

The legislation, signed into law by President Obama in April 2015, creates a 5% annual payment bonus for physicians who participate in APMs and exempts them from participating in the Merit-Based Incentive Payment System (MIPS). It specifically mentions telemedicine and remote patient monitoring as services that APMs may cover, even if those services are not reimbursed under traditional Medicare.

MACRA essentially lifts all restrictions that would otherwise exist under fee-for-service and allows doctors to utilize telemedicine and remote patient monitoring services where appropriate — offering a green field opportunity to rethink care delivery in a way that’s patient-centered and promotes care coordination and communication.

What are the options?

The American Medical Association, which has long supported telemedicine, is working to identify condition-based APM options and how telemedicine may play a role in them.

One of those options is Next-Generation Accountable Care Organizations, which went live with applications earlier this year. Unlike the Pioneer ACOs, which did not anticipate a lot of telehealth use, the next-gen ACOs feature special carve-outs and waivers and opportunities for virtual care, said Nathaniel Lacktman, a lawyer at Foley & Lardner and head of the firm’s telemedicine and virtual care practice.

Lacktman predicts that 2016 will be the year of the ACO. “I think it will hold true that a lot of them, when you check at the end of the year, will have added telehealth technologies within their existing operations,” he said. He told Healthcare Dive he would not be surprised to see some Pioneer ACOs and hospitals or health systems that have been on the sidelines of ACOs apply to become next-generation ACOs because of the telehealth opportunities.

Telehealth allows patients to connect remotely with physicians via phone or videoconference to address healthcare concerns. It has been used for years to conduct specialty consultations in rural areas, where access to doctors is more limited.

It is also convenient, allowing busy people to address health issues on the fly, rather than giving up a chunk of their day for an in-person doctor appointment.

“Where it really shines is it allows the providers to manage risk better, and because they can manage risk better they’re able to enter into capitated contracts, and that’s where the money is,” Lacktman said.

With telemedicine, you are increasing patient touches and the frequency of those touches, while remote patient monitoring allows you to be more informed about the patient’s actual state of health.

Another APM model is the Medicare Shared Savings Program (MSSP). Thanks to MACRA, MSSP now recognizes telehealth services as a clinical practice improvement activity, one of four components required to qualify for incentive payments.

Recent rule changes to the MSSP program allow physicians who provide patients with some free equipment for remote patient monitoring to be eligible for fraud and abuse waivers. An example CMS gave was a patient with high blood pressure using home telehealth to monitor their condition.

According to CMS, only 27% of MSSPs actually had cost savings and quality improvements sufficient to trigger their reward payments. But a separate study found that only 20% of MSSPs were using telehealth, Lacktman noted. While he cannot say there is a correlation, “all of the plans I work with that used telehealth technologies in 2014 received incentive payments,” he said.

Why is telemedicine become increasingly popular?

Some medical specialties, such as mental health and radiology, are well-suited, for telehealth. Another area where telemedicine is having an impact is neurology and stroke services, where consulting with a neurologist within four hours of having an event can have a huge impact on patient outcomes.

A less obvious example is the emergency department where teams of board-certified physicians in a central hub provide round-the-clock access to underserved rural hospitals via two-way video, teleconferencing, and other technologies.

Legislation now before Congress could give telehealth an even bigger push. The Creating Opportunities Now for Necessary and Effective Care Technologies (CONNECT) for Health Act, introduced in February by a bipartisan group of senators, would remove remaining Medicare barriers to use of telehealth at a projected savings of $1.8 billion over 10 years.

Under CONNECT, for example, physicians and health systems participating in APMs would be able to use remote patient monitoring for patients with chronic conditions. And it would expand use of telemedicine and remote patient monitoring in rural health clinics and community health centers. A similar bill was introduced in the House.

Telehealth payment parity is also gaining traction at the state level, with 29 states and the District of Columbia having enacted telemedicine laws. These laws are expected to drive uptake of telehealth among commercial insurers. An example is Independence Blue Cross of Philadelphia, which recently announced plans to cover telemedicine.

“Change is happening, and we know that the Medicare program drives change on the commercial side as well,” Lacktman said. “That means that it won’t just affect the people who are 65 and older. It will affect all the younger people as well.”

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