WakeMed Health & Hospitals and one of the state’s biggest physician practices on Monday announced a partnership designed to minimize federal penalties and maximize financial rewards under the national health care law.
Under the arrangement, WakeMed and Key Physicians will stay in regular contact with Medicare patients after they are sent home from the hospital, an approach long viewed as impractical because of the cost involved. Health assistants will call patients to make sure they take their medications and schedule follow-up doctor appointments to manage their health and limit the need for emergency care.
The strategy to improve patient care and reduce hospital admissions and procedures is one of the lynchpins of the Patient Protection and Affordable Care Act.
The hospital and doctors have filed an application with the federal Medicare program for authorization to operate as an Accountable Care Organization, or ACO. Currently there are just seven ACOs in North Carolina and 254 nationwide, but some medical experts predict that such relationships will become the nation’s dominant model for providing health care in the future.
“It’s about 50 years late to be doing something like this,” said WakeMed chief executive Bill Atkinson. “It’s not just about readmissions. It’s about access, quality and safety of service.”
The WakeMed and Key Physicians combination will start Jan. 1, the effective date of key provisions of the Affordable Care Act, dubbed by critics as Obamacare. The Key Physicians doctors and nurses will remain an independent practice rather than selling their business and becoming WakeMed employees.
To qualify for an ACO designation, a medical practice needs to have at least 5,000 Medicare patients. Key Physicians has 25,000, Atkinson said. Key Physicians has more than 300 doctors, nurse practitioners and physicians assistants spread over 61 locations in Wake, Durham, Orange and Johnston counties. In Johnston, the practices are Family Wellness Clinic and Jeffers, Mann and Artman Pediatric and Adolescent Medicine, both in Clayton.
The ACO, to be called WakeMed Key Community Care, will cost an estimated $2 million to operate in its first three years. The cost will cover hiring about 15 health coordinators to call and advise patients. The money will also buy data-analytics software to monitor the patients and their care.
Cost vs. savings
WakeMed and Key Physicians expect the savings to exceed the cost of staffing and operating the program. Nationally, the ACO strategy could save up to $1.9 billion in medical costs, according to an estimate by the U.S. Department of Health and Human Services.
Before the mandates of the Affordable Care Act, hospitals, doctors, specialists, labs and clinics operated separately, without sharing information or even knowing when and how often their patients were using each other’s services.
One of the goals of the Affordable Care Act is to reduce system costs by reducing waste inherent in the fee-for-service system. The law is designed to reward doctors and hospitals for reducing unnecessary procedures and taking proactive steps to limit costly hospital admissions.
Medicare shared savings
The incentive for creating an ACO is the federal “Medicare shared savings” program, which allows medical providers to share up to 50 percent of the savings they generate from following new efficiency guidelines. But on the flip side, failing to meet the benchmarks will result in financial penalties, which begin in fourth year of an ACO’s operations.
Some penalties are already in effect. Penalties for excessive patient readmissions started last October for hospitals. The fines started with a 1-percent reduction in Medicare reimbursements and will increase to a 3-percent reduction in 2015. The readmission guidelines apply to patients with heart failure, heart attack or pneumonia, but the number of diagnoses and conditions is expected to increase in the coming years.