[{"innerBlocks":[],"name":"core\/freeform","postId":126065,"blockType":{"name":"core\/freeform","keywords":[],"attributes":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"}},"providesContext":[],"usesContext":[],"selectors":[],"supports":{"className":false,"customClassName":false,"reusable":false},"styles":[],"variations":[],"apiVersion":3,"title":"Classic","description":"Use the classic WordPress editor.","category":"text"},"originalContent":"While 2017 was a year of turmoil with legislative uncertainty over the potential Affordable Care Act reforms, vendors entered 2018 with optimism that providers would accelerate their shift towards value-based care and risk-sharing contracts.

However, this optimism seems to have subsided as the year has progressed, with many now painting a bleaker picture for the remainder of the year.

Population health management is a core long-term growth driver for many EHR vendors. After a lull in the market in 2017 where the PHM market saw single digit year-over-year growth for the first time, there was a sense that the market could continue to grow in line with its historical rates. However, the market has suffered to some extent because of the proposed changes to the CMS Medicare Shared Savings Program (MSSP) via the introduction of the \u2018Pathways to Success\u2019 proposed rule.

MSSP has been a key driver for the PHM market with the formation of risk-adopting ACOs. Initially the CMS offered an MSSP \u201ctrack\u201d where an ACO could start its transition from a fee-for-service (FFS) model to a value-based care (VBC) model without taking on downside financial risk, known as Track 1. ACOs were initially permitted six years in Track 1\u2014during that time if an ACO made savings against benchmarked spending targets, it shared those savings with the CMS (assuming quality was maintained), while overspending was not penalized. However, with no downside risk being taken by the providers on this track, incentives for innovation to reduce costs were limited.

While analysing 2016 ACO performance data two things became apparent:

As a group, ACOs in Track 1 increased their Medicare spending relative to their cost targets, with the exception of lower-revenue physician led networks.<\/li>
ACOs on the two-sided risk tracks (where there were financial penalties for overspending vs. the benchmark) were able to drive cost savings as a group. <\/li><\/ul>
This has prompted the CMS to introduce the new \u201cPathways to Success\u201d reform, reducing the time an ACO can spend on the first track from six to two years, forcing them into rapidly taking on two-sided risk models. About 82 percent (460 of 561) of the ACOs are currently on this first track, with the majority of those now having to implement a two-sided risk model by mid-2019.

This could have two major impacts on the PHM landscape, and it has left these networks with a difficult decision to make.
- An ACO could choose to adopt the new model, knowing that the shift to VBC is inevitable. This could drive additional spending on PHM IT or performance and optimization solutions to drive efficiency and preventative healthcare. ACOs following this process are forecast to focus more on managing the health of their highest risk patients, which account for the majority of expenditures, driving higher average revenue per life managed for PHM platform vendors, particularly those offering clinical care management, care coordination and patient engagement solutions.<\/li>
- Alternatively, an ACO may decide it won\u2019t be able to meet the targets set by the CMS or determines that the downside risk is too much of a gamble and so it leaves the initiative. This is a major concern for digital health IT vendors, particularly as many of their PHM customers are delaying health IT purchasing decisions as they decide on their future VBC strategy.<\/li><\/ul>
  Some of the major public PHM vendors have various perceptions of how this uncertainty will affect them.
  
  For example, during a recent earnings call, Cerner executives said that, \u201cOur clients are all at different stages of experience with value-based payments. Many have had modest success with upside-only agreements such as an Accountable Care Organization or Medicare Shared Savings Programs. They are now considering expansions into contracts where they can capture a more significant portion of the premium dollar through value they provide through care delivery.\u201d
  
  As such, Cerner has taken a positive outlook on the above despite a slowdown in overall company growth in 2018. The challenge for the company going forward will be driving higher per-member-per-month (PMPM) revenue through upselling its HealtheIntent (PHM solution) to its Millennium customers. Assuming its ACO customers take on more risk, they are more likely to need those higher maturity PHM modules such as care management workflows and patient engagement solutions.
  
  In addition, Allscripts seems to see potential in the PHM market. Recent acquisitions of the McKesson EIS and Healthgrid businesses have driven growth for Allscripts\u2019 PHM reporting segment. Bringing together the various solutions it has obtained from its acquisitions into a single platform PHM offering and proving its potential cost savings to its customers will become increasingly important when selling to ACOs that have taken on upside and downside risk.
  
  Finally, Evolent is seeing the shift towards two-sided ACO risk as a positive for driving risk-sharing contracts for high-acuity populations where it continues to focus its efforts. Evolent does not have an existing EHR customer base from which it can leverage business. Instead, Evolent targets these high-risk ACOs with managed services and a PHM portfolio targeted at high-acuity populations.
  
  Thus, while many vendors have taken a positive view of the MSSP changes, the challenging environment in the EHR market and a slowdown in ACO decision making until next year is likely to create difficult conditions near term.
  
  It\u2019s difficult to see all of the current ACOs remaining in the revised MSSP tracks, particularly while most have struggled to drive cost savings in their first trial of the initiative. That said, the final quarter of recent years has historically been the strongest for PHM vendors.
  
  Vendors\u2019 focus over the next quarter should be on highlighting the benefits of their solutions to their ACO clients, potentially entering their own risk-sharing contracts with their customers to help balance that first step into two-sided risk.","saveContent":"While 2017 was a year of turmoil with legislative uncertainty over the potential Affordable Care Act reforms, vendors entered 2018 with optimism that providers would accelerate their shift towards value-based care and risk-sharing contracts.
  
  However, this optimism seems to have subsided as the year has progressed, with many now painting a bleaker picture for the remainder of the year.
  
  Population health management is a core long-term growth driver for many EHR vendors. After a lull in the market in 2017 where the PHM market saw single digit year-over-year growth for the first time, there was a sense that the market could continue to grow in line with its historical rates. However, the market has suffered to some extent because of the proposed changes to the CMS Medicare Shared Savings Program (MSSP) via the introduction of the \u2018Pathways to Success\u2019 proposed rule.
  
  MSSP has been a key driver for the PHM market with the formation of risk-adopting ACOs. Initially the CMS offered an MSSP \u201ctrack\u201d where an ACO could start its transition from a fee-for-service (FFS) model to a value-based care (VBC) model without taking on downside financial risk, known as Track 1. ACOs were initially permitted six years in Track 1\u2014during that time if an ACO made savings against benchmarked spending targets, it shared those savings with the CMS (assuming quality was maintained), while overspending was not penalized. However, with no downside risk being taken by the providers on this track, incentives for innovation to reduce costs were limited.
  
  While analysing 2016 ACO performance data two things became apparent:
  - As a group, ACOs in Track 1 increased their Medicare spending relative to their cost targets, with the exception of lower-revenue physician led networks.<\/li>
  - ACOs on the two-sided risk tracks (where there were financial penalties for overspending vs. the benchmark) were able to drive cost savings as a group. <\/li><\/ul>
    This has prompted the CMS to introduce the new \u201cPathways to Success\u201d reform, reducing the time an ACO can spend on the first track from six to two years, forcing them into rapidly taking on two-sided risk models. About 82 percent (460 of 561) of the ACOs are currently on this first track, with the majority of those now having to implement a two-sided risk model by mid-2019.
    
    This could have two major impacts on the PHM landscape, and it has left these networks with a difficult decision to make.
    - An ACO could choose to adopt the new model, knowing that the shift to VBC is inevitable. This could drive additional spending on PHM IT or performance and optimization solutions to drive efficiency and preventative healthcare. ACOs following this process are forecast to focus more on managing the health of their highest risk patients, which account for the majority of expenditures, driving higher average revenue per life managed for PHM platform vendors, particularly those offering clinical care management, care coordination and patient engagement solutions.<\/li>
    - Alternatively, an ACO may decide it won\u2019t be able to meet the targets set by the CMS or determines that the downside risk is too much of a gamble and so it leaves the initiative. This is a major concern for digital health IT vendors, particularly as many of their PHM customers are delaying health IT purchasing decisions as they decide on their future VBC strategy.<\/li><\/ul>
      Some of the major public PHM vendors have various perceptions of how this uncertainty will affect them.
      
      For example, during a recent earnings call, Cerner executives said that, \u201cOur clients are all at different stages of experience with value-based payments. Many have had modest success with upside-only agreements such as an Accountable Care Organization or Medicare Shared Savings Programs. They are now considering expansions into contracts where they can capture a more significant portion of the premium dollar through value they provide through care delivery.\u201d
      
      As such, Cerner has taken a positive outlook on the above despite a slowdown in overall company growth in 2018. The challenge for the company going forward will be driving higher per-member-per-month (PMPM) revenue through upselling its HealtheIntent (PHM solution) to its Millennium customers. Assuming its ACO customers take on more risk, they are more likely to need those higher maturity PHM modules such as care management workflows and patient engagement solutions.
      
      In addition, Allscripts seems to see potential in the PHM market. Recent acquisitions of the McKesson EIS and Healthgrid businesses have driven growth for Allscripts\u2019 PHM reporting segment. Bringing together the various solutions it has obtained from its acquisitions into a single platform PHM offering and proving its potential cost savings to its customers will become increasingly important when selling to ACOs that have taken on upside and downside risk.
      
      Finally, Evolent is seeing the shift towards two-sided ACO risk as a positive for driving risk-sharing contracts for high-acuity populations where it continues to focus its efforts. Evolent does not have an existing EHR customer base from which it can leverage business. Instead, Evolent targets these high-risk ACOs with managed services and a PHM portfolio targeted at high-acuity populations.
      
      Thus, while many vendors have taken a positive view of the MSSP changes, the challenging environment in the EHR market and a slowdown in ACO decision making until next year is likely to create difficult conditions near term.
      
      It\u2019s difficult to see all of the current ACOs remaining in the revised MSSP tracks, particularly while most have struggled to drive cost savings in their first trial of the initiative. That said, the final quarter of recent years has historically been the strongest for PHM vendors.
      
      Vendors\u2019 focus over the next quarter should be on highlighting the benefits of their solutions to their ACO clients, potentially entering their own risk-sharing contracts with their customers to help balance that first step into two-sided risk.","order":0,"get_parent":{},"attributes":[],"attributesType":{"content":{"type":"string","source":"raw"},"lock":{"type":"object"}},"dynamicContent":""}]

How shifting ACO incentives could impact HIT vendor strategies

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