Podcast - Value-Based Care and Shifting Away from the Healthcare Fee-for-Service Model
In this episode of "Counsel That Cares," healthcare attorney Daniel Patten is joined by Susan Dentzer, president and CEO of America's Physician Groups (APG), to discuss the benefits and incentives for healthcare providers to switch from the current healthcare fee-for-service reimbursement model to payment models that put more emphasis on value-based care and quality outcomes of patient care. Together they explore alternative payment models and how artificial intelligence (AI) is driving the value of care by providing patients with care outside of conventional settings, plus share their advice for new groups who are just beginning their transition into value-based care arrangements.
Morgan Ribeiro: Welcome to Counsel That Cares. This is Morgan Ribeiro, the host of the podcast and a director in the firm's Healthcare Section. On today's episode, we are continuing our series on value-based care and other shifts away from the fee-for-service model.
I am joined by Daniel Patten, a partner in the firm's healthcare regulatory and enforcement group, and Susan Dentzer, the president and Chief Executive Officer of America's Physician Groups, which is an organization of more than 335 physician practices. Daniel and Susan, welcome to the show.
Susan Dentzer: Terrific to be with you, Morgan. Thanks so much.
Daniel Patten: Thanks, Morgan.
Morgan Ribeiro: Daniel, I'll start with you. Could you give us some more background on your practice and the work that you do specifically in the value-based care arena?
Daniel Patten: Yeah, so my practice focuses exclusively in the healthcare world, regulatory space. It covers a lot of the anti-kickback to Stark issues to institutions and physician practices and everywhere in between.
Over the last several years, though, I've been focused on a lot of value-based care, and there have been a lot of value-based care opportunities, whether that be on the ACO side, or that's Medicare Advantage, commercial payers, everything from primary care physicians, specialty care physicians, to more enablers, tech-based groups or lower acuity providers. So, really runs the spectrum in terms of setting up value-based programs with payers and just thinking through the issues there and trying to help push change and promote new models.
Morgan Ribeiro: Great. And Susan, as our guest today, I know Daniel and I are very interested in learning more about your organization and your members. Before we jump into some of that, we'd love to hear more about your background and how you got to the organization as well as some more information about the organization's purpose and who your members are.
Susan Dentzer: Terrific. Let me start with APG, our organization, and then I'll back into how I got to the privileged position of leading APG.
So we are a national organization. We represent now about 360 mostly large physician groups, all of whom are committed to being held accountable for the costs and quality of health care. They are committed to value-based care models. Roughly 170,000 physicians are working for our collective member organizations. They're providing care to about 90 million patients in the country, and those include about 30 percent of all the enrollees in Medicare Advantage, for example. Our organizations are among the nation's leading participants in the Medicare Shared Savings Program, ACOs. We were among the top performers just announced by CMS in the 2022 performance year in terms of Shared Savings recorded in that model. Our members also work with Medicaid managed care organizations to serve hundreds of thousands of Medicaid patients. And they're also engaged in many of the other alternative payment models, such as the Enhancing Oncology model brought out this year by CMMI, the Center for Medicare and Medicaid Innovation, the Kidney Care First model and a number of the other episodes and bundles.
So, across the board, the commitment is to value-based care. And as an organization, what we seek to do is be one of the nation's leading exponents of the need to continue to move to value-based care, as well as the ultimate source for our members on the specifics of all of these value-based care models.
How I got here is a long trajectory. I started off in life as a journalist, largely covering healthcare and health policy. I then morphed into a role as the editor-in-chief of Health Affairs, the leading health policy journal. I continue to get deeper and deeper into health policy. I spent some time as a Senior Policy Advisor at the Robert Wood Johnson Foundation and at the Duke Margolis Center, which is the arm of Duke that's focused on health policy. Working under Mark McClellan, a former CMS administrator and my longtime friend and colleague, I was then recruited to join APG, an organization I had worked with and been familiar with for a very long time. And so I'm here now leading this effort, as I say, to really be the leading exponent of the move to value-based care and the leading source of advice to our groups on how to do that.
Morgan Ribeiro: Well, I just learned something new. I had no idea your path to getting to the organization. I've been a reader of Health Affairs for a long time. So that's a really interesting sort of start to your career and the evolution of how you got there. I know that also APG has had somewhat of an evolution over the last few years. Can you tell us more about how the organization got started and where it is today?
Susan Dentzer: Sure. The roots of APG date back close to 30 years, largely out of movements that took place in California. California, as many people will know, often leads the nation in terms of the evolution of healthcare for various reasons. And California, having been home for many years to large integrated systems such as Kaiser Permanente, also gave birth in the '80s and '90s to the formation of larger physician groups, starting off many of them as independent practice associations, linking groups together, forming a backbone to enable those groups to go and negotiate contracts with health insurers, etc. And then those structures became much more formalized under common ownership and growing from what were initially primary care-focused organizations into multi-specialty organizations and again, growing in size along the way.
California, being a little bit of the Republic of California, obviously a separate regulatory structure was set up to govern this type of movement and the overall movement toward managed care. So, unlike many states, California, long ago, set up a separate regulatory structure to oversee what at the time was referred to as managed care. So there's a separate department of managed care that oversees a lot of the activities of groups such as ours, many of whom are classified as risk-bearing organizations. They're in capitated contracts with health plans and others. So, a separate regulatory structure grew up in California, and of course, as is the case with any regulated sector, those who are regulated often feel the need for an organization that represents their interests in front of regulators. And that gave birth to California Physician Groups.
Over the years, as the Affordable Care Act was enacted, as the movement to value-based care picked up steam, as the Medicare Shared Savings Program was created, etc., many other organizations began to take up the mantle of moving to value, moving to accountability for cost and quality, moving beyond the classic fee-for-service payment platform that so much of the country, frankly, still remains wedded to. As these other organizations came to California to learn how our groups handled the whole phenomenon of capitation and accountability for cost and quality, we expanded the membership so that we had many more than just California organizations within the membership. At that point, it seemed wise to change the name to America's Physician Groups, which happened.
And now we represent physician groups in all but about five states. And I should say those five states by and large are, relatively speaking, deserts of value-based care. So it's perhaps not a surprise that we don't have members literally in every state of the union, although we're working on that.
Morgan Ribeiro: That's awesome. Super helpful as we now turn over and look at a big role that the organization plays obviously is on advocacy and making sure that guiding members through the policy objectives that these organizations have. So at a federal level, can you tell us more about APG's legislative agenda and your main policy objectives?
Susan Dentzer: Absolutely. And I would say in addition to our advocacy objectives, we have a very strong educational agenda. Educating everybody around value, including members of Congress, of course, but also the public, because we want the public increasingly to understand why it is wisest to move to more value-based care delivery mechanisms. So education and advocacy are really our top priorities.
Number one among both those advocacy and educational priorities is accelerating the overall movement to value. The Biden Administration has committed to making sure that all Medicare beneficiaries and most Medicaid beneficiaries are in accountable relationships with providers by the year 2030. That's a very ambitious agenda. It frankly is going to mean moving about 4 million or more Medicare beneficiaries per year from the uncontrolled fee-for-service system into more accountable relationships, either because they are in effect attributed members of accountable care organizations, are in Medicare Advantage or in some other mechanism that is really being held accountable for cost and quality. So, that is our number one priority, is to do whatever we can do in any respect, both to encourage a movement of healthcare providers into these models and also encourage a belief and a commitment by Medicare beneficiaries themselves and Medicaid beneficiaries that they truly will be better off if they are in accountable relationships with providers.
So, that's number one. Number two, as we drop below that overarching agenda to specifics of various value-based care models, we do very much want to drive better value in the Medicare Advantage program. As I mentioned, our groups treat almost a third of all the enrollees in Medicare Advantage in the country. And as we know, most Medicare enrollees now belong to Medicare Advantage as distinct from being in the traditional fee-for-service Medicare program. That's not to say that Medicare Advantage is by any stretch of the imagination perfect. It's highly variable across the country. It's, of course, to a large degree in the hands of private health insurance plans. And the means of control that the government has over Medicare Advantage, it has very important means of control, but they haven't always worked to engender the best value in Medicare Advantage. So, we want to be proactive in, for example, encouraging CMS to acknowledge that there are models within Medicare Advantage that truly are more accountable.
I'll give you an example. Many of our members are contracted with MA Health Plans, Medicare Advantage Health Plans, on a fee-for-service basis. So, essentially, they're being paid just the way almost all other providers are being paid. That is to say, by unit of service. We honestly don't think that is the best way to run this particular railroad, and we vastly prefer the arrangements where our groups are in delegated relationships with health plans, where in effect the risk is transferred over to them. So they have the exact same set of incentives to manage care as effectively as possible, and therefore truly live up to the notion of accountability for everybody in the system. That's not current policy. But we have advocated, for example, to CMS that they introduce a star rating value that reward plans that are in the delegated relationships with providers as a way of increasing this degree of accountability. So that's an example of how we would like to drive more value in Medicare Advantage.
We're also working very hard to strengthen other alternative payment models. I mentioned that some of our members were among the top performers recently announced for performance year 2022 in the Medicare Shared Savings Program. This bears out a reality that has become increasingly clear over time that physician-led ACOs achieve better results in terms of, for example, per capita shared savings, than do hospital-led ACOs. It's not a big mystery why this is so. It's hard for a hospital, even though many health systems and hospitals are committed to the movement toward value. Let's face it, moving to value often means getting people out of the hospital or keeping people out of the hospital in the first place. It's hard for a hospital or health system to reconcile that incentive up against the other imperatives of running a hospital or health system. Physician-led ACOs don't have that problem. They understand clearly what the motivation is. The motivation is to keep Medicare beneficiaries and others in ACOs as healthy as possible and out of the hospital until they absolutely need to be there. And when they do need to be there, getting them out of the hospital in an expeditious way and getting them the services in the post-hospital phase that will keep them from being re-hospitalized. So those are very clear motivations that physician-led ACOs have, and that bears out in the superior shared savings results that we've just seen.
So our final, very important advocacy priority, and frankly, also educational priority, is we want to ensure the continued stability of the Medicaid program. Most of the states now are moving or have already moved to putting Medicaid in the hands of managed care. So, in effect, the states contract with Medicaid managed care organizations to deliver Medicaid benefits to those enrolled in those states. As we are now going through the unwinding of the COVID era, which literally means people who were on Medicaid during COVID are getting off Medicaid now, sometimes for procedural snafus, somebody didn't send in the right form on time, sometimes because the eligibility of those people is no longer valid. Whatever the case, we want to make sure that the Medicaid program, which is now, as we know, the largest healthcare program that the nation runs in terms of numbers of enrollees, and it's going to get even bigger over time, we want to make sure that whole structure also delivers truly accountable care to the tens of millions of people who will be getting their primary care through Medicaid over time.
So that kind of sums up what are our guiding lights as we go through this current era.
Morgan Ribeiro: I have a lot of questions and follow ups to a number of those policy objectives. Daniel, any comments from your end before I jump into some of that?
Daniel Patten: That was great, Susan. One in particular, we talked about... obviously there's large physician groups, but there's also small physician groups out there too, and that's always a discussion, is how do we get the more rural providers. How do we incentivize providers that are big or small? What do you see there as some opportunities to help really shift and have these smaller providers getting in the game as well?
Susan Dentzer: It's a tall order for a number of reasons. Number one, if you're in value and you're truly holding accountability for cost and quality, of course, the ultimate value construct is essentially capitation. Right? You get a per member, per month payment, and you've got to provide care within that per member, per month payment. And sometimes you have accountability just at the primary care level, but many entities want to move to more global risk arrangements where they're essentially taking the risk for the whole ball of wax. So not just primary care, but even, for example, hospital care. That means, in essence, you have to be able to run a kind of an insurance function, which is not a role for the faint of heart or for the thinly capitalized because you're really at risk for the dollars involved in the care provided. It's hard for a very small physician practice to play in that particular game.
So CMS and others have basically advanced the notion of upside-only risk in many of the models, which is to say, you can meet certain parameters of cost and quality, and you can get some additional payments if you clear those hurdles, but you're not going to lose if you actually lose money on the care provided. So you're not in what's known as two-sided risk. And that is a pathway that, frankly, now CMS has even proposed to extend even further so that organizations could be in upside-only risk arrangements within ACOs, for example, for up to a decade while they continue to develop the infrastructure and, frankly, just the knowledge of how to manage care and be in a two-sided risk model. So, a timeline that allows entities to come into the program, learn how to do all of the things that are necessary to be an accountable risk model and then grow over time is very important.
The other very important piece is to give organizations advanced upfront incentives to do this. You can't morph from being a classic, small, fee-for-service-based practice to a practice that is truly operating on value without more infrastructure than is the case for the typical small practice. You need very sophisticated electronic health records, for example. You need probably a different mechanism of workflow within your practice.
I'll give you an example. We've all heard the stories of how small primary care practices basically have to survive by churning through patients, as many as 20 patients a day per physician, if not more, in and out of the office. Twelve-minute visits, not a lot of accountability for things other than what the patient presents for at that particular time, etc., etc. You can't manage a population of patients and worry about all of the healthcare needs that might eventually land them in the hospital in a 12-minute visit. It's just not possible. Nor can you do things like maintain registries to understand when was the last time your patients with diabetes came in to have their blood pressure checked.
So, maintaining both the infrastructure to do that, as well as the staff to do that, is really next to impossible for a really small physician practice. Which by definition means that practices have to grow in size, and often they're going to need a partner of some sort to, first of all, help them manage care and understand the differences in running a volume-based fee-for-service practice versus a practice where a given physician maybe sees six patients a day or seven patients a day and spends an hour and a half with them, and has many of them come in once a month for a checkup to make sure that everything is under control. Particularly for older adults who often suffer from multiple chronic conditions. So it's a completely different way of practicing care, and unless some organizations get upfront incentives to make these kinds of investments, they're never going to make it to the point where they actually can provide care this way.
CMS and CMMI have recently moved to increasing the number of these advance incentive payments that are available for small practices to get into value-based care arrangements, and we are frankly a proponent of increasing those incentives further. In some instances they're useful, but they're pretty small. And so, thinking of ways that we can accelerate the transition of many of these smaller practices by frankly footing them more money up front to make this transition, holding them accountable for making the transition, but really giving them more assistance at the front end seems incredibly important and frankly foolish not to go down that route.
Morgan Ribeiro: Thank you. And my next question was going to be more around the state-specific policy agenda, if any. I know, obviously, you mentioned California earlier, where organization has its roots, but where that line of federal and state come into play where you talk about Medicaid, what about these states that have opted not to expand Medicaid?
Susan Dentzer: Our provider organizations in those states, obviously, are very concerned about that phenomenon. We have a number of members, for example, in Texas who wringed their hands, frankly, about the fact that Texas remains one of the holdout states that has not expanded Medicaid, and as a consequence has the largest number of uninsured people in the country, in part as a result of that neglect of Medicaid expansion. We haven't as an organization advocated directly on that, but we have advocated indirectly because you can't have people in value-based models who aren't insured in the first place. It's critical to get them into an insured environment. So, in that sense, we have been very much advocates of Medicaid expansion as a direct path to engendering more value-based care for the Medicaid population.
Beyond that, we have primarily focused our Medicaid-related advocacy at the federal level because of the enormous influence, obviously, the federal government has in the Medicaid program. We think that's where we can make the most difference for our members as distinct from working very often at the state level. There are some exceptions to that. We have a number of members, for example, in Puerto Rico, and we've been working very hard to influence federal policy with respect to making sure the Medicaid program in Puerto Rico is in place indefinitely for a long period of time. So in individual circumstances, we have been very active at the state or territorial level.
Morgan Ribeiro: Hey, so, I want to shift gears here. I know that you all are hosting your annual fall conference in October, and I saw on your website that the theme for this year is focused on the potential for AI and its ability to drive better value. How have you seen AI drive greater value, and where do you see the potential for positive innovation?
Susan Dentzer: Lots of ways. And I say that even though it's clear that the healthcare sector, as has been the case in the past, has been somewhat late to the game in terms of adoption of these new technologies. But that's changing, and it's changing very rapidly.
So I'll just cite a few quick examples. AI, of course, is a big bucket that comprehends a lot of things. One is machine learning, where you're actually teaching machines, that is to say computers, how to recognize patterns that often aren't even evident to the human eye and consciousness that can enable people to do things better, particularly rote things that require doing it over and over again, but do it better and more precisely. And so that whole machine learning enterprise has led to some very exciting types of interventions. One, of course, are clinical decision support systems, where essentially you're feeding computers reams of data and teaching them to recognize patterns that can then come back and inform clinical practice. And we've seen clinical decision support systems now being created within a lot of health systems and essentially enabling better provision of care. Now that's not always the case. And we know that there have been well-publicized instances where the garbage in, garbage out phenomenon has played out, whereas if you feed the systems data that is in any way biased or flawed, the assumptions that will come out the other end are going to be biased and flawed. And so we know that's an area that needs to be guarded against. That said, clinical decision support systems now are being used regularly as a backstop for clinical decision making that essentially enables doctors to be better doctors, and that's very positive.
Another example of a machine learning technology are technologies now that can enable a high school educated aide to sit in a primary care physician's office and administer an ophthalmological scan that can pick up signs of diabetic retinopathy and refer a patient on for further treatment. This is the kind of exam that it used to be the case you had to go to an ophthalmologist office to have this kind of degree of scan. Now, as I say, it can be done very routinely with a machine learning-enabled technology available in a primary care physician's office and not even necessarily conducted by the primary care physician. So what we're doing is, we're using AI to extend care capacity outside of conventional settings and broaden it and enable access to many, many more people as a consequence of AI.
And then a final area that I'll cite is one that has gotten a lot of attention lately, which is the use of large language model generative AI like ChatGPT. We know that ChatGPT, for example, has already passed the medical licensure examination. Because, again, these models are trained on very extensive amounts of human knowledge. So, no wonder they can now pass the medical licensure exam. How this translates into actual day to day practice is very, very exciting. ChatGPT is now being used, for example, to enable clinicians to very quickly write up their notes of an encounter and make them better. It's being used to make notes that clinicians send to patients more human centered and friendly and less clinical and more emotive. It is going to be used in many other applications, again, largely to take things that people have to do over and over again and make them not only easier and faster to do, but better. And so I think we're just on the verge of seeing some of these very important applications of AI.
This field is not without many risks, and there's a whole coalition of health AI that has been put together now among leading health systems and others to essentially look for the guardrails that are necessary to make sure that these systems really are fully accountable, not only to clinicians, but also for patients as well. So, that will be a very important point of development as we go through this, but we shouldn't minimize the potential applications. Particularly those that are going to take a lot of the duress out of healthcare for healthcare workers and probably produce savings as well.
Morgan Ribeiro: Excellent. I know, Daniel, you mentioned earlier the diverse client base that you work with, working with clinicians, working with physician practices, working with private equity and venture capital firms that are investing in this space. We're just curious how you've seen AI applied and really being able to drive value.
Daniel Patten: It's the buzzword of 2023 for sure. AI in a day is algorithms, right? Algorithms have been around forever. What's coupled with is the amount of data that's being collected now and the processing power. It's all come together just to have a, I don't want to say a passive tool, but almost just the workforce that you can put on AI and the amount of data you can put in.
Everyone's wearing an Apple Watch with heart data. You're seeing better consumer devices get closer to the medical device level. So, recognizing the kind of scientific element of medicine. We're not handing over the reins to the AI. It's a resource available to the physicians that they can choose to decide, is this garbage in, garbage out? How does this impact decisions? But being able to parse through that data and come up with better clinical models or validations or kind of trigger impacting clinical decisions. Every client is interested in that. And that comes with risks, right? Putting your data into certain models and protecting that and understanding that.
So that's a lot of discussions that I have on my team and our front, but it kind of embraces a scientific model of let's always changing, always learning to improve and being informed. Whether it's called AI next year or not, I think that's here to stay, right? And that's exciting to see a lot of innovation getting pumped into the medical space.
Morgan Ribeiro: So Susan, I'm going to switch gears here a little bit and go back to some of the policy objectives that you mentioned earlier. Your board chair Dr. Daghestani is the CEO of Austin Regional Clinic. He testified to Congress in June regarding MACRA and the progress we've made today, but also some of the challenges that still remain. Can you tell us more about that testimony and what was covered in that conversation?
Susan Dentzer: Absolutely. And MACRA, most of your listeners will know, is an awkward acronym for the Medicare Access and CHIP Reauthorization Act of 2015, and the seminal achievement of that law from the perspective of healthcare providers was it got rid of a longstanding formula that drove physician payment called the Sustainable Growth Rate Formula, which turned out, first of all, not to be sustainable, and secondly, to seem to constantly compel large cuts in physician payment under Medicare that Congress routinely overrode. So it was a very broken system, and MACRA came in and replaced it with a new system that was designed to get off that trajectory, number one, but also to try to incentivize physicians and other clinicians to provide higher quality care.
And so there were a couple of major features of MACRA. One of one was the creation of the MIPS program, which is another awkward acronym meaning that physician payment was going to be linked to the achievement of certain quality measures, and physicians who achieve those quality measures would get paid more. And then the second feature was to move toward more advanced alternative payment models. 2015, of course, was several years after the enactment of the Affordable Care Act, and so the effort was to mimic some of the movement of value-based care in the Affordable Care Act and create another avenue whereby physicians could move into some of these alternative payment models and gain rewards as well.
The law was put into effect in 2015. I think it successfully got everybody off of that bad sustainable growth rate system and so should be lauded for that reason. However, other aspects of that program have not worked as well. We noted in our testimony that only about half of clinicians are essentially participating in the MIPS program. So they're not really doing what the whole goal of MIPS was, which was to get more physicians into the program and be rewarded for quality. We think the premise of that was flawed because we don't think that the reason we don't have quality in healthcare, or as much quality as we'd like, is not about individual physician motivation for quality, it's about the whole system being motivated on quality. So, just giving small increments to physicians because they hit some random quality measures is not the way to move the needle. So no wonder it hasn't really worked out all that well. And then separately for the physician-focused alternative payment models piece, that also hasn't worked for complicated reasons. It's probably not worth spending the time to go into here. So, what we have advocated for is that there be a MACRA 2, an overhaul of MACRA, that essentially produces much greater motivation for clinicians as a whole to move into alternative payment models. And frankly, we think it's time to just scrap the MIPS system. It's produced a lot of busy work for many clinicians, it hasn't reached all of them and it hasn't really achieved a greater movement to quality, best as we can tell. So why do it anymore?
So again, we're advocating for a wholesale revision of the system, which again, is very much in link and in sync with our goal of getting the system to move more toward value-based care, and because of that, it's going to be a hard sell. Because, as we know, there are many, many organizations that are living still quite happily in fee-for-service and probably reluctant to say goodbye to it.
Daniel Patten: Yeah, I'd encourage anyone to, if you just Google Dr. Daghestani testimony Congress, it pops up. APG has it on their website. It's a great breakdown of MACRA MIPS, where it's going, and some of the suggested changes.
What struck me, and Susan mentioned this, is MIPS is designed to look at a single physician instead of the system. And I get asked all the time, like, why we're talking about value. Value's been around forever. Remember HMOs? Doctors aren't ordering things. And sometimes value-based care is met with this cheaper care approach, but Dr. Daghestani gives a great example from the first year of his practice. Was when the Medicare ACO talking about a husband had 65 visits in the emergency department in one year, 90 percent were preventable, and so he worked with a nurse navigator to establish a weekly call with the patient and monthly clinic visits and coordinated with community-based organizations to address the patient's transportation, food security, medication and other social service needs. It's really highlighting the holistic approach. And in my experience with value-based care, as a potential patient and a patient, that sounds great to me. It's invested in you.
We talked about the technology and AI piece that can help leverage cross-disciplinary cooperation and monitoring, but culturally, you've seen the physical, mental health, now this holistic, full body health. Even food is medicine, right? And so after the great telehealth experiment, right, where everyone's comfortable with telehealth in some extent and radicalized delivery of medicine and what patients are expecting, I'm surprised we don't have more advocates on the patient sides rattling the cages for something like this more holistic approach. I don't want to go to the ER 65 times a year. I'd much rather see my doctor and have that personal experience. So I think that's an important thing. I know APG is focused on that. From the patient's side, this is not cheaper care. Look at this example. That's better care. That's better for all.
Susan Dentzer: That's absolutely right. And that example is also telling to the extent that by participating in that particular ACO, as Austin Regional Clinic did, it gained $70 million of shared savings, which means it saved the Medicare program more than that because those shared savings are split between the government and the provider participant organizations. So the fact that $70 million went to ARC means that $140 million was saved for the U.S. taxpayers, just by virtue of the care provided for their attributed patients. Those $70 million were used to reinvest in the system to provide this kind of care, because as that example showed, you have to have a nurse navigator who's working for you. You've got to have systems that enable the nurse navigator to track, when was the last time this patient was in? You've got to have the capability to link with other providers, to refer people to the right providers of care, including community-based organizations, providing food, etc. So it's a much bigger enterprise, in the way that you have to run, that cares about much more than just what is right in front of you for a patient you're seeing once every number of months for 12 minutes. And that makes the point of why this can be such a virtuous cycle.
We save money for the Medicare program overall by providing better care. We take some of those savings, and we continue to reinvest them to make the care better and better. And... It's hard for me or a lot of other people to say, why would we not go down this road when it's so clear that we are seeing very important results, not just for the nation's taxpayers, but for patients themselves?
Morgan Ribeiro: Absolutely. In June, results were released by CMS showing that Medicare's Shared Savings Program, MSSP, generated $1.8 billion in savings. So I think to your point you just made, Susan, that savings again is directly seen by taxpayer dollars, but also I think ultimately the impact that has on patient care. It's just further demonstrating the power of physician-led accountable care organizations in transforming our nation's healthcare system. So what is APG's response to this, and how are you maybe using that data point to really further your efforts?
Susan Dentzer: Our overall response is ecstasy because it's proof of concept of what we've just been talking about, and also because a number of our members were among those organizations that proportionally were recording the biggest per beneficiary savings, frankly. And again, bearing out the thesis that these physician-led entities really have the best incentives. No disrespect intended to hospital led ACOs. They are trying within their own worlds to do the best job they can, but they're up against a very different set of incentives than physician-led ACOs are up against. Because there's always a CFO, there's always somebody worried about getting hospital beds occupied. There's always somebody worried about making sure that even if a particular care need is there that does not require an inpatient hospital bed, but maybe it could be done in a hospital outpatient department and a facility fee could be tacked on and more money could be spent. That's better for the health system than if it goes to another site for care. All of those incentives, which are very complex and very real for hospitals and health systems, physician-led ACOs don't have those incentives to worry about, to get in the way of making decisions about care for beneficiaries that are attributed to the ACOs that they participate in.
So it's not rocket science why the results proportionally are better coming out of physician-led ACOs. It's why, as we discussed earlier, we need to get more physicians into these alternative payment models and practicing care this way under this set of incentives. We're trying now to document with our groups what they intend to do with the shared savings they received. I mentioned what Austin Regional Clinic has done in the past. That's pretty much the way we think most of our groups are responding. They're going to take the shared savings dollars and reinvest them. Right now, let's just point out all healthcare providers face two very important realities at the moment.
Number one is, as the Medicare trustees have said, the projections of future payment are not adequate to keep in place a vibrant healthcare system. Medicare is just not paying providers much relative to the cost of providing health care in our system. So that's a fundamental reality that all healthcare providers in the country are living with, and that vise is going to squeeze them even harder in the future unless we change policy. So that's number one.
Number two, right now, there are such pronounced — shortages is the word commonly used — but difficulties finding the bodies to provide healthcare in sufficient numbers anywhere. There is probably not a hospital system in the country right now that is not understaffed when it comes to inpatient nursing care. There are inadequate numbers of primary care physicians being educated in today's medical schools and trained in today's residency programs. There increasingly are going to be needs for any of a number of greater allied health professionals to provide some of the team-based care that we're going to need in the future, and there's a real question mark about whether we're even going to have sufficient numbers of those. So, labor costs are rising very rapidly for all of these systems. So, to keep the ship afloat right now, I imagine some of our providers are going to be employing some of those shared savings, frankly, in raising compensation for the healthcare workforce to continue to draw people into the field.
So we'll see, and as I say, we're trying to get a best sense from our members how they are using those shared savings because we think they can make a pretty compelling case that that virtual cycle I described earlier is continuing. That they are reinvesting these dollars in a number of ways to continue to drive even greater value for patients and for the nation's taxpayers.
Morgan Ribeiro: Susan, you mentioned earlier on that the goal of the organization is not only to advocate on behalf of its members, but also education. And so I'm curious if you have any practical tips for providers who are new to value-based arrangements. CMS and CMMI have been created to facilitate the entry of new groups into these value-based care arrangements, but we'd love to hear just from your perspective, any practical tips and how to get started.
Susan Dentzer: Of course, not completely and exclusively self-interest, I'll say join APG. Join APG because you will meet all the other physician-led organizations in the country that are committed to value, that have a lot of knowledge and information to share and can help you. That has been a motivator for groups joining APG in the past and will continue to be in the future. Join us, and by virtue of joining us, you can take advantage of, for example, a number of coalitions that we run. We have a Medicare Shared Savings Program coalition. We have an ACO Reach Program coalition. We have a Medicare Vantage coalition and we have a Medicaid coalition, and they meet on a monthly basis to learn about important issues that face all of those different alternative payment models and programs and figure out what to do about it and learn from what others are doing and also compile everybody's collective experience to input back to the federal agencies. To tell them, here's what's going on and here's what you ought to think about as you think about a new regulation involving this program or what have you.
So, learn. Learn what's out there. Take advantage of all of the other entities, not just APG, that can support you in understanding and transitioning to value. And don't fret that you've missed the boat because we have this goal in front of us as a nation now to get to that goal of getting all Medicare beneficiaries and most Medicaid beneficiaries into value-based models by 2030. If anything, the time is now. So don't worry if you're not where you think you should have been, just get going and learn from our collective community and how to get there as expeditiously as possible and truly deliver on the promise of greater value for all of society and of course very importantly for your patients.
Morgan Ribeiro: And to piggyback on that, a lot of our listeners are providers, and whether or not they're a hospital, a health system, home health, hospice, and a lot of those are obviously partnering with primary care providers. Any advice that you have for our listeners that are not primary care providers on how best they can be thinking about how to engage with and how to partner with your member organizations?
Susan Dentzer: I think it will be very important for all entities in healthcare to keep their eye on the real value proposition here. We all know that there was a lot of acquisition by hospitals and health systems of primary care practices — this is now going back 10 and 15 years — out of the theory that if you bought these practices, they would refer more patients to your hospitals. And by and large, that has not borne out, and it's been a disappointment for many hospitals that they got a lot of referrals out of buying and owning primary care. We would have said, good, you never should have bought them for that reason. By the same token, there've been a lot of acquisition by hospitals of specialty practices. I think something north of 80 percent of all cardiologists now are employed by health systems, about 60 percent of orthopedic surgeons are employed by hospitals. It's been a similar kind of a thing. Keep all the care within the tent. That was a way for organizations to think that they could survive. I don't think that's necessarily the way things are going to work all that well in the future.
As we're increasingly trying to move to value, what we really want are systems that keep people out of hospitals as much as possible, get them into really great hospitals when they absolutely need to be there. We need hospitals, and we've got to support them in what they really should do. But for the care that doesn't need to be in hospitals, it should move out of hospitals. Hospitals are the most expensive place to provide care in our system, as they should be for the type of care that really has to be in hospitals. So we've got to really rethink the strategies that are being employed that, frankly, were mainly oriented around driving volume and revenue and really think about what would we do if we were really trying to drive to value.
And by value, value to everybody, to taxpayers, to patients. Essentially preserving their health as best as possible, keeping them out of the hospital except when they absolutely need to be there, and getting them the holistic types of care that we've described so far today that are really going to help them live truly their best lives. That's value, and the more we can get more of the system focused on that as the main driver, even though it's going to be a rocky road, why would we go down any other path but that one?
Morgan Ribeiro: Daniel, I'd love to hear from you. I know you work with a number of providers — oncology, cardiology, orthopedics — those that are also playing in this value space and obviously play a big role. What are you seeing from your clients who are engaged in this transition to value-based care?
Daniel Patten: Morgan, when we talk to the clients, I think we have to embrace this non-traditional arrangement with partner organizations. What I mean by that is, it's not necessarily always a quid pro quo, provide X service for Y. As we're moving to this value world, data is important. A lot of these providers are taking on an insurance role. So, what does that mean, right? It means there's going to be a lot of actuarial exercises, which requires data and understanding of what's going on. So, cooperation and learning and building models is critical.
So, if you have the specialty physicians partnering with primary care, but even beyond that, to more ancillary providers, your dieticians, your mental health talk therapists, things in that world, it might not be apparent right now, providing a dollar amount that, say, a social worker is able to provide to a patient on the bottom line for total cost of care, but I think we're moving there, and we need to try to figure that out. Sometimes you don't know the answer until you're in there. I think CMS' safe harbors Stark exceptions regarding trying to find a value-based purpose. They recognize we're not always going to hit that on the first try or first thought, but it's the scientific method. Rinse and repeat, find a new way, re-aim, line up and fire again. That's what I encourage the specialty physicians, the ancillary providers, primary care, protect your data, but also let's share data and share results and see what we can find.
So that's a lot of discussions I have with my clients.
Morgan Ribeiro: Awesome. Thank you. Susan and Daniel, thank you so much for this conversation. And Susan, I'm so inspired by the work that you all are doing and feel honored that you joined us today.
Susan Dentzer: Thanks so much. It's been great to meet with you both, Morgan and Daniel. Thanks again for having me.
Daniel Patten: Thank you, Morgan.
Morgan Ribeiro: Thanks, Susan.