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AIS's Health Business Daily
Featured Story, July 1, 2010 ACO Conundrum: Everybody Wants in the Game, but Nobody Knows the Rules Reprinted from AIS's HEALTH REFORM WEEK, a new newsletter designed to help savvy business leaders in health care understand what the enormous changes mean to them ... and what they can do about it. By James Gutman, Managing Editor (jgutman@aishealth.com) Preparations among would-be participants in Medicare Accountable Care Organizations (ACOs) under the health reform law now are at a critical but semi-impossible stage, based on comments at a major conference June 7-9. The potential participants know they need to gear up now since the program starts Jan. 1, 2012, under the reform law, but the preparations are dependent on rules and clarifications that have not yet been issued and may not be for many months.
ACOs are a “lawyers’ and consultants’ dream,” said, for instance, attorney Noah Rosenberg of Rosenberg and Kaplan, speaking at the Accountable Care Organization Summit in Washington, D.C., June 8. “Everyone wants to form one, and they don’t know what it is, and neither do I,” quipped Rosenberg, a former HHS general counsel.
Among the big questions, he said, is whether the federal law regarding ACOs pre-empts state laws such as the restrictive ones in California where he is based. Moreover, Rosenberg contended, the Federal Trade Commission “will be scrutinizing” the impact that ACOs have on competition.
The reform law’s provisions on ACOs leave a lot of things unclear, according to numerous speakers at the sold-out conference. The statute defines ACOs as provider-based organizations, comprised of multiple levels of providers and responsible for the full continuum of care, which are held accountable for the cost and quality of care and share in savings from it.
Regs Expected to Be Out by Early 2011
The timetable for defining how this will be done, said ACO proponent and former CMS administrator Mark McClellan, M.D., Ph.D., June 9, includes an HHS Open Door Forum “listening session” to be held this month. The actual regulations, according to McClellan, who now is director of the Engelberg Center for Health Care Reform at The Brookings Institution, which had a prominent role in developing the ACO provisions in the bill, should be out in late 2010 or early 2011.
ACO programs won’t be implemented nationally as one discrete format, McClellan contended at a June 7 session of the conference. He said implementation will be an “iterative process” as it was on the Medicare Part D startup he presided over. There will be “some standardization” of the performance-measurement process, according to McClellan, and early emphasis on models of ACOs outside of Medicare “that aren’t just theories.”
This leaves a lot of room for interpretation, and some major organizations are doing just that in order to prepare for ACOs. Premier, Inc., the national hospital alliance, is “gearing up our hospitals so that they’ll be prepared to deal with a Medicare pilot rate [for ACOs] across their entire population,” said President and CEO Susan DeVore. She explained that if Medicare builds ACO models, then Medicaid and commercial payers will follow.
But importance doesn’t equate with clarity, other speakers emphasized. “There’s an element of a lottery to this program,” said, for instance, Thomas Bradley, unit chief, health systems and Medicare cost estimates, at the Congressional Budget Office. The government needs to ensure “the odds are in favor of the house,” he added.
Bradley explained that the $5 billion that CBO says ACOs can save “is just an estimate” and that they have the potential to save much more — or to cost the government money. The outcome, he added, will depend partly on program-design choices and provider response to them, neither of which is known yet. He said he “wouldn’t be surprised” if HHS/CMS set different percentage thresholds for the cost savings that would trigger payments for the largest provider panels versus those for smaller ones. Caps on total bonus payments may have to be “sensitive” to the size of the panel, he added.
GE Exec Warns of ‘Unintended Consequences’
The concept of ACOs is “far from proven” although “promising,” said Robert Galvin, M.D., director, global healthcare at General Electric Co. Galvin, who called himself an “ACO agnostic,” said there hasn’t been enough consideration of “unintended consequences” and questioned whether there should be sweeping policy changes aimed at bringing physicians and hospitals together. GE, he said, is getting 15% to 20% annual price hikes from hospitals that align with physicians. Terming it an example of the kind of cost shifting that can result “in these cases,” he contended that this situation, including the antitrust-law aspects of it, need to be addressed before ACOs start.
Mark Miller, Ph.D., executive director of the Medicare Payment Advisory Commission, agreed that the ACO concept is “unproven” and said MedPAC worries that if ACOs are prevalent only in Medicare, it may not be enough to “change behavior.” An “all-payer model needs to be looked at and tested,” he asserted. A cost-shifting problem exists in the market, he said later, “and ACOs may or may not be a solution. Even if Medicare raised [payment] rates tomorrow,” it is unlikely that would result in lower costs for the private sector.
There also are some particular requirements to make the Medicare ACO program feasible, according to Miller. One is that there needs to be more “real-time exchange of data.” Another, he said, is that CMS will have to arrange a “set of waivers” for the program, such as ones related to Medicaid and medical-home demonstration programs.
Even ACO proponent DeVore conceded that it will be difficult to have competing hospitals in a market work together. “How willing everybody is to open the kimono is something we’re still working with,” she said. |
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