Premier's Joe Damore Expresses Optimism About the Next Generation ACO Program

January 14, 2016 Courtney Tobe

This article was originally published at on Jan. 14, 2016.

January 14, 2016 by Mark Hagland

Joe Damore, vice president, population health management, at Premier, Inc. shares his perspectives on the newly unveiled Next Generation ACO Program

On Monday, Jan. 11, the federal Centers for Medicare & Medicaid Services (CMS) fully unveiled the new Next Generation ACO program, revealing both the details of the program’s parameters, and the list of 21 accountable care organizations (ACOs) that had joined the program, which was officially fully launched on Jan. 1.

As noted in this publication’s report on the unveiling on Monday, the Next Generation ACO Program now joints the Pioneer ACO Program and the Medicare Shared Savings Program (MSSP) as programs that patient care organizations nationwide can join and participate in, around accountable care concepts and principles.

Among those closely tracking all the CMS-sponsored ACO programs are senior leaders at the Charlotte-based Premier Inc., a leading healthcare alliance. The Washington, D.C.-based Joe Damore, vice president, population health management, at Premier, has been helping to lead the alliance’s advisement of the patient care organizations that have been wading into participation in CMS’s several ACO programs, including the Pioneer ACO Program, the Medicare Shared Savings Program (MSSP), and now, the Next Generation ACO Program. Damore spoke this week with HCI Editor-in-Chief Mark Hagland to share his perspectives on the current landscape around accountable care. Below are excerpts from their interview.

What was your initial reaction to CMS’s unveiling of the details of the new Next Generation ACO program?

We [at Premier] knew that this was going to come about, but we couldn’t talk about who would be in it until it was announced; but we knew who the participants were [before Monday’s announcement]. And they’re really good organizations, most of them having had a lot of experience with population health management. And I see this as the next stage in evolution; I’m calling it two-sided risk with guardrails. We’re seeing that happening across the country. Most organizations start one-sided without downside risk. So then you’re going to go to risk corridors—the original track 2 model under the MSSP model, which just a few organizations selected it, and we’ve worked with Mosaic Life in St. Joe Missouri, that elected to with that. Year 1 under that model allowed for downside risk of 5 percent of the capitated dollar amount, per member, so that, for example, $500 of a $10,000 payment per beneficiary would be at risk; in the second year under that model, the downside risk rose to 7.5 percent; and in the third year, to 10 percent. I call that “two-sided risk with guardrails.”

And that’s kind of the next step. But of all the MSSPs in the country, over 95% have been in upsided risk only. And on average—we’ve worked with 65 MSSP organizations, and on average, it’s a $1.5-2 million that organizations spend in startup to build an MSSP, so that money is at risk, in my opinion, because they’re betting that they’ll achieve shared savings.

So we’re seeing stages of risk. And there is downside risk in Next Generation, but there’s downside risk, and you can choose the percentage of downside risk, much as in track 3 of MSSP. And it allows you to select based on your appetite for risk. And that’s what I see organizations taking on now, they’re asking, what’s our appetite for downside risk? And we’re helping organizations think through that and manage it. And we’re helping them determine the capabilities that should be in place in order to take on that downside risk. And 95 percent of the commercial arrangements in the country are still organized around upside risk only, but some are shifting now to downside risk with guardrails. And, for example, Humana has a Medicare Advantage program where they’ll sub-capitate; but very few are doing it yet.

In your view, will the Next Generation ACO Program move forward more smoothly than has the Pioneer ACO Program so far, in terms of ACOs being able to stay in?

We’ve been involved in helping Pioneer participants for nearly three years now. I would say that a lot of organizations wanted to jump into it to learn, but once they found that two-sided risk was too much, they switched out, but most that left went over to MSSP.

On a certain level—perhaps a symbolic level—does it feel as though the Pioneer program’s struggles are destabilizing for healthcare leaders to hear about?

My interpretation is that Pioneer was an experimental program, it was the first shared savings model. And a lot of organizations learned and realized they weren’t quite ready to take on two-sided risk, even though they had thought they were. And this is still fairly new. And if you look at the ones that have done well, they’ve usually owned their own provider-sponsored plan. And the organizations that have switched out of Pioneer wanted to be early adopters and gain that knowledge. So in that sense, that’s highly successful, in my opinion. Two-thirds made money and all of them improved quality scores, and all then tailored activities to their own organizations.

This is not easy for organizations that have never done this before. Think about how complex healthcare delivery is. And one of the things we’ve learned in doing this is, what percentage of a provider’s business is tied to value-based payment is very important. For example, if only 5 percent of a physician’s payment is tied to value-based payment, it doesn’t make that much of a difference. We’ve found that once 20-25 percent of a physician’s payment is tied to value-based payment it really makes a difference.


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