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First Reactions to ACO Proposed Rule

March 31, 2011
by Mark Hagland
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Associations respond with caution, some concerns

Within hours of the release of its proposed rule on the development of accountable care organizations (ACOs) by the federal Centers for Medicare and Medicaid Services (CMS), provider associations were reacting with caution to some of the details of the rule, while working to analyze its provisions.

Some were more positive than others in their first statements and comments.

At the Englewood, Colo.-based Medical Group Management Association (MGMA), president and CEO William F. Jessee, M.D., released a statement that said, “The formation of ACOs has the potential to greatly improve the coordination of care received by Medicare beneficiaries, and offers the promise of safer, more efficient and effective care.” But, Jessee immediately added, “The complexity of the program as proposed is significant. With multiple agencies proposing rules on the same topic, physician practices need to thoroughly examine how participation in ACOs may affect their practice operations. MGMA and our members will develop specific feedback to CMS and the other agencies to ensure that any overly restrictive or administratively burdensome requirements are addressed so this well-intended concept can become a practical reality."

And Linda Fishman, senior vice president for policy at the Washington, D.C.-based American Hospital Association, added her concern from the hospital industry perspective, when in a statement, she said, “This is an historic effort among government agencies to achieve the goal of better coordinated care… However, it does not go nearly far enough to eliminate the barriers to clinical integration among caregivers.”

Representing healthcare IT executives, Sharon Canner, senior director of advocacy for the Ann Arbor, Mich.-based College of Healthcare Information Management Executives (CHIME), said, “The industry is striving to deliver better care for less money. And I believe the core components of ACOs—efficiency through collaboration, cost reduction through networks—are largely dependent on the tools of health IT.” She added, “Having the ACO rules at this time helps to focus policy discussion on the all-important payment component of healthcare.”


Sharon Canner

Meanwhile, Blair Childs, senior vice president of public affairs at the Charlotte-based Premier healthcare alliance, said in a statement, “The Premier healthcare alliance supports CMS in its efforts to develop people-centered, sensible regulations for ACOs. This new model of care delivery represents one of our best hopes for overcoming fragmentation in care delivery. In forming ACOs, we believe that we will achieve greater clinical integration and collaboration among doctors, hospitals and other care providers, and foster alignment of accountable care principles across public and private payers. The end result will be better, safer and more convenient care delivered at a lower cost for the benefit of healthcare consumers nationwide.”


Blair Childs

Childs’ statement went on to say, “Premier believes it is critical that government regulations do everything possible to remove impediments that could derail ACO development, as well as select ACOs and structure the program to maximize the potential for success. With this in mind, Premier offers reactions to several key provisions in the rule.”

And he added that “We are extremely pleased that CMS will allow multiple payment models within the ACO program from the start. As we have learned from members of the [Premier] Accountable Care Collaboratives, different ACOs are at different points in their journey to deliver accountable care, with some prepared to participate in a one-sided shared savings program, while others are able to accept downside risk. As ACOs are local and subject to regional market conditions, multiple payment models will allow a variety of approaches to be tested, as well as a broader scope of learnings for CMS. However, noticeably absent from the rule are partial and full capitation payment models. We hope such options will be considered either in the final rule or through the CMS Innovation Center.”

Risk, Data-sharing Concerns Cited
In an exclusive interview with Healthcare Informatics, Chet Speed, vice president, public policy, at the Alexandria, Va.-based American Medical Group Association (AMGA), acknowledged that CMS authorities “had a huge task in developing a regulatory framework for a new provider entity. And that’s probably why it took CMS a fair amount of time to publish the proposed regulation. That said, Speed went on to say, “there are several new additions in the proposed rule that many people did not expect. First and foremost, CMS has created two tracks of ACOs. And the second track allows ACOs to accept risk in the first, second, and third years of their performance period. And the first track requires ACOs to accept risk in the third year of their performance period. And there’s been a lot of discussion at MedPAC [the federal Medicare Payment Advisory Commission] about both upside and downside risk issues for ACOs.”


Chet Speed

For Speed, “The surprise is that CMS is going to require all ACOs to have some downside risk; and for those in the first track, they’ll have to accept downside risk in their third year. And this is a national voluntary program. And I think a lot of less well-organized, community-sized provider types, will look at that requirement with great skepticism,” Speed contended. “Most providers are not used to sharing risk or to being measured on a quality basis; and it’s probably too much to ask for a lot of them. Most of these providers are not used to that type of financing mechanism, and when you think about the very expensive infrastructure requirements in an ACO—you need to set up care management processes to manage these chronically ill patients, and that requires hiring people; and these infrastructure requirements require on average a million dollars in startup and a million dollars in maintenance costs. So when you combine those costs with an unfamiliarity with managing shared risk, it’s not going to be a very attractive proposal for a lot of otherwise-interested providers.”

One particular concern, Speed said, is the provision in the proposed rule that would allow Medicare enrollees to opt out of having their information shared within ACO organizations, and would require them to give permission for such data-sharing. Speed said he doubted that most consumers would be sophisticated enough to understand the rationale for such information-sharing, and problems getting such permissions could significantly impact ACO operations.

Speed said that AMGA’s comments to CMS during the current public comment period would reflect those concerns.” In short, he said, “I believe this proposed rule needs to be tweaked in a number of places in order to make this attractive to our members, who tend to be among the more advanced groups.”

As to whether and to what extent CMS authorities might consider such concerns as they move toward a finale rule, Speed said, “Obviously, if it becomes clear to CMS that this poses a significant obstacle to ACO enrollment, they might modify their requirements.”


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