Health reform pilot program includes 3 Minnesota groups

Three Minnesota health care organizations will take part in a federal pilot program designed to improve the quality of health care for seniors by remaking the way physicians, hospitals and clinics get paid.

Allina Hospitals and Clinics, Fairview Health Services and Park Nicollet Health Services are among 32 organizations in 18 states to be named as Pioneer Accountable Care Organizations, the U.S. Department of Health and Human Services said Monday.

Accountable care organizations, or ACOs, are a key part of the sweeping 2010 health care reform law. Naming these "pioneer" organizations is the first major push in trying to set specific standards for how ACOs will work in practice. Federal officials estimate that widespread adoption of the accountable-care model could save up to $1.1 billion in health care costs over five years.

Under the pilot, hospitals and doctors will share in cost savings when people stay out of the clinic or emergency room, unlike the current fee-for-service model, which pays separate fees for every procedure and visit.

"The ACO model moves the payment from volume to value," said Dr. David Abelson, CEO of Park Nicollet Health Services, based in St. Louis Park, which sees about 17,000 Medicare recipients. "I see it as critical to helping to solve the country's rising health care costs."

Participating hospitals and clinics will have unprecedented access to Medicare insurance claims, which could provide useful data about medical conditions, as well as prescription medicine use and visits to specialists.

"For example, we may find out that patients are unable to afford prescriptions and are not filling them," said Dr. Penny Wheeler, chief clinical officer for Allina, where about 14,000 patients could be part of the pilot. "Right now, our only data is for those within the umbrella of our care. This will give us the whole picture."

Minnesota joins California, Massachusetts and Iowa as the only states where multiple health systems will be participating. Under the competitive process, health care organizations had to show that they already were on their way to changing the way they treated patients, particularly those with chronic diseases.

The Rochester-based Mayo Clinic, expected to be a key player in shaping ACO policy, opted out, as did other large health care systems, including the Cleveland Clinic and Intermountain Health Care, based in Salt Lake City.

"We are pursuing a number of value-based payment options with various partners, but decided not to participate in the federal government pilot programs," Mayo Clinic spokesman Bryan Anderson said on Monday.

Widespread reform will be a challenge, said Roger Feldman, a health economist and Medicare expert in the School of Public Health at the University of Minnesota. He noted the failure of 1990s-style HMOs to lower costs or live up to patients' standards. He also worries about what will happen to patient choice and competition under the ACO model.

"It's quite a task to rebuild an organization," he said. "You have to improve on the existing, fragmented system, where doctors have one incentive, the hospitals have another, the insurance company may even have different incentives."

With about 20,000 Medicare patients, Moen said he's ready to push forward with the accountable care model, no matter how imperfect it may be at first.

"People have to begin to understand that this is not about less care," he said. "It's about more and effective care in the right places at the right time."

Some believe the ACO pilot will help level the playing field for Minnesota hospitals and clinics, which collect less in Medicare payments than states such as New York, California and Florida for a number of reasons, including an aggressive focus on prevention.

The federal government aims to judge hospitals against a national standard of 33 parameters. Providers that have demonstrated savings of over 1 percent over the standard threshold can begin sharing in the first dollar saved.