2017 Management Excellence

John Pilotte and Heather Grimsley

Improved patient care and saved $1.3 billion through a new health care delivery system that compensates doctors and hospitals for the quality of medical outcomes as opposed to the quantity of patient services

For decades, health policy experts in and out of government have strived to create a system that combines high-quality care with reasonable costs—a system that is accountable and affordable, and deals holistically with a patient’s needs.

John Pilotte, Heather Grimsley and their team at the Centers for Medicare & Medicaid Services led the Physician Group Practice Demonstration project designed to create such a system, one that moves from rewarding the quantity of patient services delivered to a system that rewards the quality of health outcomes, improves service delivery and reduces cost growth.

This successful pilot project, which began during the George W. Bush administration, became permanent under the Affordable Care Act in 2010, creating what are known as Accountable Care Organizations—groups of doctors, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care to Medicare patients.

As of January 2017, there were 480 Medicare Shared Savings Program ACOs located in all 50 states, the District of Columbia and Puerto Rico. These ACOs now serve more than 9 million Medicare patients. Collectively, all Medicare ACOs have generated almost $1.3 billion in savings—$466 million in 2015, $411 million in 2014 and $417 million in 2013.

In addition, the private sector has piggybacked on this concept, and today there are millions of non-Medicare patients across the country enrolled in ACOs.

“I can say with certainty that the quality of care in our system is higher, the costs are lower and the health care system is much more sensitive to what patients want to receive rather than what the system wants to provide,’ said Jon Blum, a former CMS principal deputy administrator and now executive vice president for medical affairs at CareFirst BlueCross BlueShield.

“I think it is significant that hundreds of different organizations that weren’t mandated to participate stepped forward voluntarily. That’s a huge accomplishment,’ Blum added.

Blum said there are many reasons for this transformation, but he believes a large part of it was the work by Pilotte, Grimsley and their team.

ACOs are designed to encourage doctors, hospitals and other health care providers to form networks that coordinate patient care. Sometimes it’s as simple as making sure that doctors work together, do not duplicate tests and coordinate a patient’s prescriptions. Providers who deliver care more efficiently can receive a share of the money they save.

The bottom line is that medical professionals make more money if they keep their patients healthy. CMS tracks the performance of the ACOs through 31 quality measures. According to the most recent results, the ACOs continue to improve quality with average performance improving on 84 percent of the measures.

Pilotte’s expertise was grounded in his work as a health care consultant and with a hospital trade association. He knew how to involve stakeholders to get the buy-in needed to make ACOs a success. And he knew how to overcome the skepticism that accompanied such an innovative idea.

Elizabeth Richter, deputy director of the Center for Medicare, called Pilotte a “creative policy thinker.” One of his strengths, she said, is his ability to think through “how you would actually develop the scaffolding that you are building the programs on—regulations, infrastructure, all of that—and what that means for the program to be successful.”

“When he hears an issue someone comes up with,’’ she said, “he thinks about how to reassure them if we don’t see it the same way, or how to address it in a way that still accomplishes what the program wants to accomplish.”

Grimsley leads the team that focuses on quality reporting and doing the financial calculations on the ACOs. Terri Postma, a CMS medical officer, said Grimsley has a drive for excellence, a dedication for public service and a concern for the beneficiaries and the Medicare program.

In many ways, Pilotte and Grimsley were ahead of their time. They began working on the development of this model in 2001.

“This was innovative,’’ Postma said. “They did this in an era before we really had the authorities. They both have such a drive for excellence in everything they do.”

Mark McClellan, the director of the Duke Margolis Center for Health Policy, worked with Pilotte at CMS when he served as administrator from 2004 to 2006. Pilotte and his team are “having a fundamental impact on the overall direction of the health care system,” he said.

McClellan said the success of the ACO program has enabled CMS to show “that it can be an important influence on the further development of new payment models and new ways of delivering care that can help improve our entire health care system.”