As I write my 2012 Chief’s report, I am astounded at the rate by which changes in the health care profession continue to occur. In the aftermath of the mid-term elections and the change in the balance of power in Washington, I felt optimistic. I hoped we could create a health care system that preserves attributes of the Patient Protection and Affordability Care Act while providing an affordable health care program – one that integrates prevention, wellness, public health and the sophisticated care we are accustomed to delivering in our academic medical centers.

Since then, much has happened.  The US Supreme Court has ruled in favor of the Act.   In an attempt to bend the curve of health care spending at the state level, our Governor recently signed an even more regulatory Massachusetts Cost Containment Bill.  Under this new state law our academic medical centers and other medical institutions will be required to report to the state our financial performance, price trends, market trends, market share, and a variety of other metrics soon to be determined.  An 11-member Health Policy Commission will use this information to enforce regulatory rules to ensure that growth of health care spending is no more than 0.5 percentage points lower than gross state product (which, at this point, no one knows how to define).  I worry that the Commission will try to control the practice and organization of medicine in such a broad and deep way where the outcome is far from predictable.  As we all anxiously await further information about this comprehensive bill, the leadership within our institutions and Partners are closely monitoring the situation.  Now more than ever, your involvement in the political process is needed.

Accountable Care Organizations

In December 2011, the Center for Medicare and Medicaid Services (CMS) notified Partners Healthcare that it was selected as a pioneer Accountable Care Organization (ACO) model. Sponsored by CMS, this innovative and untested federal program aims to transform the delivery of health care. It provides Medicare patients with high quality care, while simultaneously slowing cost growth through an enhanced Care Coordination Program. ACOs seek to avoid the old HMO models by having all of the providers jointly at risk for the care of the patient.

In late December of 2011, our patients (more than 45,000) were notified that their primary care physicians were participating in a new Care Coordination Program. We are now approximately nine months into the program and awaiting the first set of metrics on expenditures. As orthopaedic surgeons, we can take a leadership role by coordinating orthopaedic care among the specialist, the PCP and other providers (see Arthroplasty Care Redesign). This important communication between specialists and referring physicians will increase in significance as more fiscal pressure is applied from CMS.

For some common orthopaedic procedures the actual payment mechanisms involved in the ACO will move us from a fee-for-service to a more bundled payment. By avoiding complications (reoperations, readmissions), our ACOs can anticipate cost-savings, which will theoretically be passed along to the physicians.

The efforts in the pioneer ACO are paralleled by new at-risk contracts with our commercial insurers. In the latter circumstance, as specialists we will be charged to continue implementing enhanced low-cost access to the most efficient and highest quality specialty services possible. While the risk pool from the big three payors is relatively modest at this point (1.25%), the dollars at risk are substantial.

The pioneer ACO is the second CMS innovation project at the MGH. The first was a care management program–one of only 26 nationwide–to develop new strategies to improve delivery of health care at a reduced cost to the most vulnerable, high-risk patients in a Medicare population. The MGH program was successful, while many others were not.

These new reimbursement paradigms are substantial and real, and will have an enormous impact on us in the future. The infrastructure costs, full definition of the metrics, as well as the investment in population management will hopefully lead to sustained cost reduction trends in the future. I will update you on the outcome in next year’s report.