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Berwick embargoed comments on ACO



                                      AS PREPARED FOR DELIVERY

                                        Donald M. Berwick, MD
                              Centers for Medicare and Medicaid Services
                                 ACO Learning Development Sessions
                                            June 21, 2011


We are in an historic period of change in American health care. We’re ready as never before for a leap
forward into the health care system we want, need, and can have.

This possibility comes from a convergence of factors – some positive and some not.

On the good side, the possibility comes from new knowledge.

We know more than we ever have before about the defects in care – problems in patient safety,
reliability, patient-centeredness, timeliness, efficiency, and equity – and about how to fix those

We know that as many as one out of every three hospitalized patients has a significant injury from care,
like an infection or a medication mix-up, and we also know how to prevent – indeed, eliminate – a
majority of those injuries.

We know more about how many things go wrong in the care of chronically ill people – like 40% or more
of Medicare beneficiaries – the people with diabetes, or congestive heart failure, or depression, or more
than one of those – whose lives and function depend on high-quality care, but who too often get lost in
the complexity of modern medicine.

And we also know what great, world-class chronic care management looks like, supporting people to
stay well, in control of their care, and never forgotten in seamless, coordinated care.

It is tempting – exciting – hopeful, both that we know what is wrong, and that we know how to fix it.

But that knowledge has made us ever more aware that the current health care system simply isn’t up to
the job.

It is too fragmented. It is, in fact, built on fragmentation. That’s how we constructed it; that’s how we
manage it; and that’s how we reward and pay for it.

Chronically ill people, for example, don’t want to be in hospitals; they want to be home and healthy with
their loved ones.
And yet we don’t pay for the coordinated care that can keep them there, and we even reward hospitals
for staying full, not for finding ways to help avoid the need for their services by staying well.

There is another reason, an unwelcome one, why this is an historic period. It is because of the economic

Our debt, our deficit, our troubled economy… these are now linked inescapably to the vitality and
supportability of health care in America.

Our care problems and costs – the highest costs by far in the world – without the economic pressures
would be uncomfortable. With the economic pressures, they are unacceptable. The tension for change
has now risen to the breaking point.


It is into this context of tension, that the Affordable Care Act has arrived -- giving us an unprecedented
chance to reinvent our health care system so that we are providing patient-centered, high quality, high
value care throughout this country.

It offers us the chance to get out of this mess by doing the right thing about it – reinventing health care –
improving it so that we can both thrive in it and afford it – rather than the wrong thing – the easier thing
– withholding care, cutting back on care, throwing in the towel on invention as the route to the future.

This grand premise is foundational to the best possible path to health care’s future: that we can invent
our way to success… that we can improve our way to a sustainable, proud, and excellent American
health care system.

This grand premise is that we can make health care more affordable for our country by making it better
for the people who depend on it - that better care will be, overall, less costly care.

We call that system of goals in CMS the “three-part aim.” It means better care for people, better health
for populations, and lower costs through improvement.

The three-part aim is not achievable in the health care system today. It is achievable in a new and better
health care system. The one we know how to build. The one we can build. The one we are starting, at
last, to build.


Accountable Care Organizations are one big step toward that system. And, to mince no words, it is a
very, very difficult step. That’s because ACOs are not supposed to be the status quo repackaged with a
new name. That won’t help us. They are not a way to get more money for the same care patients are
receiving now.

Everyone in this room knows the basic vision of the ACO. It is to be a new type of health care
·     Grounded in primary care;
·     Avid for and capable of high levels of coordinated, seamless care;
·     Able to manage information, with full attention to privacy, to support anticipation, outreach,
proactivity, and communication in the service of people in care, especially the chronically ill;
·     Accountable for what it does and what it achieves, so that everyone can be assured that patients
and families thrive, and that the care they need is the care they get;
·     And, crucially, rewarded economically for success in all of this, as that success is reflected in lower
costs of care, not by withholding care, but by improving care. When Mrs. Jones wins, because her
congestive heart failure is kept under control so she does not end up needlessly in a hospital bed,
missing her granddaughter’s grade graduation, the ACO that Mrs. Jones’s doctor is in wins, too, because
it shares in the savings that Medicare realizes because she went to graduation instead of the hospital.

In short, the ACO is an organization whose business plan and self-interest lie in this: “pursue the three-
part aim.”

The boldest idea of all, perhaps, is one final one: that Mrs. Jones doesn’t lose her choices at all. She is
not locked into a network, not restricted in her choices of provider. In the ACO world, Mrs. Jones can still
see any Medicare provider she wants. From her viewpoint, she is still in Medicare Part A and B, and no
one can tie her hands.

Some critics think that’s impossible. They just don’t believe that free choice and great care coordination
can go together. For them, “lock-in” – at least soft lock-in through pricing incentives – is a precondition
to great coordination. I disagree, and apparently so did a majority of our Congress. They – and I – have
a little more trust both in Mrs. Jones’s cleverness, and in the health care providers’ ability to build loyalty
from attraction, not restriction. Mrs. Jones could seek care outside the ACO; the best strategy is to help
her so much that she does not want to.

Do we know for sure that ACOs can work? I’d say, “In the long run, yes.” The logic is compelling; the
technologies are in hand; the examples exist; and the need is strong. Our challenge is not so much the
destination; it’s better and it’s feasible. The challenge is the journey – the transition. Between us now
and ACOs ahead lie many obstacles – ones like these:

·    Stranded capital in a system reorienting from hospitals to home;
·    A workforce under-invested in primary care and supports to continuity;
·    Capitalizing and modernizing information systems;
·    Immature metrics and limited capacity to use mature ones;
·    Incomplete coordination between public sector and private sector stakeholders;
·    Misaligned payment, sending conflicting signals about what success is;
·    And more….

The obstacles are very high, and any serious effort to help us all get to the seamless, sustainable care we
want is going to meet with some protests, even among the willing.

We hear the protests, of course, but they will not deter us from the goal. With the ACO rule, we intend
to issue an invitation to organizations that really want to create far better patient care, and who will do
that by redesigning systems, investing in coordination, and becoming more patient-centered than they
have ever been before.

And, we want to invite organizations interested in making those changes now, not at some distant,
vague time in the future.

For almost all organizations, this will require a shift in thinking away from “business as usual.” Of
course, not everyone is ready for this shift.

To take advantage of this model, leaders – boards, executives, providers, and staff – will need to rethink
how they are doing business.

This will not happen overnight for many organizations. We know that. It is quite possible that a single
leap into that future is not plausible for most organizations.

But it can happen, if not in a leap, then step-by-step. And, we are looking for those organizations that
are authentic in their commitment to beginning that process – organizations like you in this room.


To make this leap happen – to make excellence the norm – to have the best care everywhere, involves
substantial adjustments for every single stakeholder in American health care. All improvement is
change. And change is uncomfortable.

For professionals, it means reorganizing into new formats for teamwork (like building care teams for
people with chronic illnesses), embracing new ways to make care reliable (like using checklists in
operating rooms and ICUs), and embracing modern information systems (like electronic health records
and registries). It means rebalancing our workforce toward primary care as the mainstay and prevention
as an obsession.

For patients and families, it means learning how to use newfound information about health care
performance – what hospital is the best for your needs? – and new opportunities for self-care and
prevention – how can you prevent your diabetes or, if you have diabetes, how can you keep it from
hurting your kidneys and heart?

For hospitals and other organizations, it means developing new models for management and new
business plans, in which keeping people healthy and making sure that the care people get is exactly the
care that will help them, not less and not more, are celebrated as successes. We need hospital boards
and executives who celebrate when beds are empty because people are healthier, not full because
people are sicker.

For payers, it means a long, hard look at the question, “Are we paying for what we really want?” Are we
paying for health, or for activity? Are we paying for better care? Or just for more care? Are we paying
for customized, individualized, truly person-centered care, or just for meaningless, senseless, and maybe
harmful variation?

To get through this transition – from fragments to stories, from volume to value, from doing more to
doing better, from pursuing activity to pursuing health and well-being, from soloists to symphonies – we
need to support, encourage, reward, and insist on change.

And that is one of the things we are trying to accomplish with the new ACO proposed rule. Let’s take a
closer look at it.

The ACO Proposed Rule

As you know, we released the ACO proposed rule two months ago and the period for providing
comments on the rule closed on June 6.

The first thing to realize is that it is just that, a proposed rule. It was our initial best thinking on how to
establish the ACO program, but we knew it could get better.

We received over 1,200 comments on the proposed rule and we are now reviewing them carefully, so
that we can make the Final Rule better.

In the proposed rule, we asked stakeholders to comment on a number of different questions. For

How should beneficiaries be “assigned” to an ACO?
·     Should the ACO know up front which beneficiaries they would be held accountable or find out
retrospectively only at the end of the period?
·     Should the ACO have to clear a certain level of savings before they could share in the savings, so
that we could avoid rewarding just random fluctuations?
·     How should we measure quality, to protect beneficiaries from skimping? How many metrics
should be used?
·     How quickly should ACOs be required to take on risk of losses, as well be able to share in gains?

All of these questions and more are about balancing. The Rule is and will be an exercise in balancing
competing, important goals:

·     Balancing financial rewards for savings against measurements and accountabilities for high-quality
·     Balancing the need to return dollars to the Medicare Trust Fund against offering care providers an
attractive on-ramp to coordinated care;
·     Balancing data sharing with beneficiaries’ privacy needs;
·     Balancing risks and rewards for both providers and for Medicare;
·     Balancing speed, which our nation needs, with time for learning, which many providers need;
·     Balancing cooperation among providers with the requirement to prevent anticompetitive

And much more…

Our proposed rule generated debate and discourse. That’s encouraging. It’s engagement. It is part of a
needed and valuable national conversation about the future of health care.

I’m confident we’ll deliver an ACO final rule that reflects these balances and will capitalize on the
enthusiasm of those in this room.

Three Levels of ACOs

Regardless of where you might be in your development, all ACOs need to be serious about changing care
delivery. In my mind, this is probably the biggest prerequisite of any organization thinking about doing

But, we also know that different organizations are at different stages in their ability to move toward an
ACO model. We want to try to meet you where you are. Our hope is to offer models of participation to
encourage organizations across the spectrum of readiness to join in and begin this work.

So, what’s the game plan? In thinking about ACOs, we can see three different levels of readiness that
reminds me of the rating of difficulty for ski slopes:

For Pioneers - Black Diamond Slopes…

Last month, we announced the Pioneer ACO program through the CMS Innovation Center.

These are organizations that are well on their way to changing care design and that may already be
pretty good models of the Accountable Care Organizations we ultimately hope for.

They have the people and programs already in place that they need to coordinate care; they already use
Electronic Health Records; they have a track record in quality improvement; and they have some type of
shared governance, supporting cooperation.

They are the most ready and able to take on risk. They’re the organizations others can emulate as they
learn how to coordinate and be accountable for care.

As the name implies, they are the Pioneers – teachers – the sources of best practices.

For the Intermediates – Blue Square Slopes…

These organizations have some of the pieces in place for being ACOs, but they’re still on the steep side
of a learning curve. They may not have had as much experience as the Pioneers; but they’ve made
enough progress in coordinating and improving care to build their confidence on where they’re headed.

They have some infrastructure and are working on more.

They are able to take on some risk for savings and losses, but not a ton yet.

For the Beginners – the Learners – Green Circle Slopes…

This is probably the most exciting group. These organizations, like many of you, I’m sure, are really
committed to making care better for patients, but maybe haven’t had much experience in coordinating
and being accountable for care.
Beginners are talking with their boards, executives, and staffs about how they can get involved, but
they’re unsure about exactly how to move forward. Can they take the risk?

They don’t have extensive systems for quality improvement or data collection, but they’re interested in
developing them.

And, they’re a little bit afraid. Can they do this? Will they lose more than they should, or gain less, while
they learn their way to success?

We want you all – every one of you. At CMS we’d like, if we can, to put out a welcome mat for
organizations at many levels of readiness – just as long as they are truly interested in realizing the
promise of ACOs.


Part of the welcome mat is support to learning. The Center for Innovation will be reaching out with
programs like this to foster your learning. We’ll draw on the lessons we have learned from foundational
experiences like our own Physician Group Practice Demonstration, from private sector programs, and
others. ACOs are new, but coordination of care isn’t.

We know that coordinated care works. We have examples of health care organizations showing that it
·    Denver Health – saving a hundred million dollars with better care, and having the lowest case-mix-
adjust mortality among 112 academic medical centers;
·    Virginia Mason – pioneering with lean production principles;

We’re exploring some Advance Payment models through the Innovation Center, in which aspiring ACOs
who lack front-end resources to start can have access to some financial support.

We’re working to improve our Medicare data systems to allow us to provide more timely information.

In short, we intend to help.

What Does the Future Look Like with ACOs?

If we get this right, and we are committed to getting this right, ACOs will improve care, and they will
reduce costs by improving care. That’s the definition of success. Better care; better health; lower cost
through improvement.

How many ACOs will we have at the start? I don’t yet know. We will produce a final rule that, we hope,
will attract many. But, every one that joins needs authentically to be part of the search for better, more
sustainable health care in America. We are on an expedition, and, if you stand still, you won’t be on it.

The Affordable Care Act is a big tent, and ACOs are only one part of it. Change is in the wind, and there
are many opportunities to join in it.
But, among those changes, the notion of the ACO is bold, exciting, and a glimpse at the future. Some – I
hope many – of you in this room will see the possibility, take the leap, and join in helping to navigate us
to the care we can be proud and confident to hand to our children: coordinated, seamless, reliable,
patient-centered, rooted in health, grounded in primary care, and economically sustainable. It is not
there yet, but we can build it. Of course, you’re worried about the risks that change like that inevitably
involves. But, I ask you to think again about what you risk if, while the world shifts around you, you
choose to stand still.

Some day in America, people who know about and care about health will look back on a time when care
was in pieces, when too many patients got lost and confused because no one was there to guide them,
when there was no option but to wait for trouble because no one could prevent it. They will look back
on a time when waste in care drove costs so high that health care took resources away from schools and
roads and recreation and economic vitality, itself, just to make it through the day. They will not look
back with nostalgia. They will look back and say, “Thank goodness that’s over.” They will celebrate the
transition finally achieved to seamless, coordinated, safe, effective care, and to the new organizational
formats at last able to produce that care. They will thank the leaders who had the vision and the
courage to start that change, and to teach the rest that the ice wasn’t so thin, after all.

This isn’t the only chance you will have to be one of those leaders, but it’s a good chance. A chance
worth taking. Here is my recommendation: take it. Sixth grade graduations are far too good to miss.

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