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Skeptics Begin to Warm to ACO Program

October 21, 2011
by Mark Hagland, Gabe Perna, and Jennifer Prestigiacomo
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Industry reacts with cautious optimism to relaxed regulations

Some of the industry experts who had been most disturbed by elements in the proposed ACO rule that they felt were impracticable or counterproductive are expressing at least cautious optimism, as they begin reading through the 696-page final rule that was released yesterday. Among these is George Roman, senior director, health policy, at the Alexandria, Va.-based American Medical Group Association (AMGA).

“I thought the proposed rule was a disaster; it was nothing but impediments, barriers, and burdens,” Roman says bluntly. “But as I make my way through the final rule, based on a preliminary, cursory examination, I would say that it seems that CMS officials have responded to the large volume of negative commentary they received following the release of the proposed rule” on March 31. Among the key changes for the better, as far as Roman is concerned: first, the reduction in the number of quality measures from 65 to 33. The original number “was way too many, and provided a real disincentive,” he says.

No Downside Risk
A second major, positive change, Roman says, is in the elimination of downside risk from the “one-sided risk model,” one of two being offered under the program. Under the proposed rule, provider groups participating under that model would have faced downside risk (meaning, they would have had to pay back money to Medicare for unsuccessful attempts at cost savings and quality) in the third year of participation in the program. The fact is that most providers right now would not feel ready to take on any downside risk in order to participate, Roman notes, so that change should be warmly greeted in the provider community.

Another change has to do with one facet of the physician group demonstration that a number of AMGA member groups participated in, and which provided the conceptual basis for this program. Under the demonstration project, essentially the first two cents of any dollar saved was withheld from reimbursement shared savings to providers, under the theory that such initial savings might possibly be the result of random statistical flukes. That withhold has now been eliminated, and the fact of its elimination could mean multiple hundreds of thousands of dollars to participating provider groups of a large enough size, Roman notes.

Blair Childs, senior vice president of public affairs for the Charlotte, N.C.-based Premier healthcare alliance, says that his members that are in different ACO collaboratives are at different points in their journey to deliver accountable care, with some prepared to accept shared savings, while others are able to accept risk. “Particularly in the early years when providers are still developing and testing effective strategies for coordinated, cost-effective care, a no-risk option that mimics agreements already in place in the private sector will be important to encourage provider participation, and a broader set of learnings for CMS,” he adds.

Patient Alignment
Many in the industry strongly support the change, made in response to providers’ outcry, around patient assignment. Under the proposed rule, CMS would have been retrospectively assign patients to ACO collaboratives, meaning that clinicians might not know until the end of a year of caring for particular patients, that they were responsible for their care coordination and management under the program. Patients will now be assigned prospectively, which, Roman says, will be a great relief to provider leaders.

“In the proposed rule it was going to be all retrospective and that made sense for Medicare because they don’t want to do anything that would limit the choices of the beneficiaries to choose their providers,” says Jordan Battani, principal researcher at the Waltham, Mass.-based Global Institute for Emerging Healthcare Practices at the Falls Church, Va.-based CSC. “So they seem to have crafted a good compromise solution on that. There’s still nothing that restricts beneficiaries from going to a particular ACO, but the new mechanism that they’ve created in this rule is much like the member assignment in the commercial sphere.”

Pam McNutt, senior vice president and CIO at Methodist Health System, in Dallas, says one of her biggest concerns that patients could opt-out of their data shared, which would made patient management much more difficult, has been assuaged by the new rule. “How can you manage a patient if they say, ‘but I don’t want you to see any of my data’?” she asks. “They fixed that, and they said while patients still have the ability to opt-out, the physician will be aware of that and can have a discussion with the patient about what that means.”

Childs says he’s very pleased that CMS opted to waive its initial requirement that at least 50 percent of all primary care physicians in the ACO would be considered meaningful users of electronic health records (EHR) in order to participate in the program. “As we stated in comments to CMS, existing penalties associated with an inability to meet meaningful use requirements should provide appropriate incentive on its own,” he says. “Such a duplicative policy would only serve to limit the inclusion of innovative physicians who are seeking to improve their patients’ care.”

Battani was surprised by another piece of the final rule regarding ACO marketing, as she notes that Medicare generally has very strong restrictions on marketing. “In the first version of this rule the restrictions on ACOs doing outreach to beneficiaries were very tight, and they have been significantly relaxed. It’s an acknowledgment that the Medicare administration doesn’t have the resources itself to monitor and regulate those activities as quickly as they would need to be able to do it.”

Home Run Yet?
Will enough provider groups participate to make the ACO shared-savings program a success? “There’s not enough information yet to answer that question definitively,” Roman says, “but I hope that turns out to be the case. And if the information I’m reading turns out as I think it might, then I’m shifting my stance from ‘disaster’ regarding the proposed rule ‘to one of cautious optimism’ with regard to the framework embodied in the final rule.”

Battani boils it all down to business. “Organizations that are dependent on a big chunk of their business from Medicare really have to be serious about this shared savings program because it’s one of the few places they are going to be able to capture additional reimbursement from the Medicare program,” she says.

“I think they’ve gotten the message loud and clear that no one was going to participate,” says McNutt. “I think they’ve made enough changes to the kind of model that healthcare providers were looking for. It’s the kind of model that we as healthcare providers envisioned putting together to do ACOs. There may be some gotchas in the details, but on the surface it appears to be much more workable like we thought they would be.”


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