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Are ACO’s Good or Bad for Competition?

By Naveen aka @naveen101

Earlier this week, I sat in on a roundtable discussion of health insurance plan CEO’s from around the country. The topic jumped from Medicare Advantage bonus payments to general quality improvement, to the insurance industry’s perception by Joe Q. Public, and of course, what role health plans will end up playing in Accountable Care Organizations (ACO).

As any insurance executive would rightly observe, the conversation to date has largely revolved around the providers of care. Because ACOs were designed as much to control health care spending as they were to improve quality, discussions often oversimplify them into a network of doctors and hospitals reimbursed with global capitation or bundled payments (fancy terms for a one time fee as opposed to a ‘fee for service’ itemized bill). The other details – advanced IT infrastructure, rigorous care management programs, skilled nurses and primary care providers, billing and claims competency, and marketing and communications activity, to name a few, are usually forgotten. But eventually, this stuff will come up, and whoever is ready to roll will find themselves in high demand.

Hospitals and doctors seem to be more focused on getting the money. The early rumblings from the trenches indicate that the ACO craze is causing a shift towards market consolidation – providers of care are merging together, buying each other out and gaining share in their local markets. At my meeting, CEOs from Minneapolis to Seattle and Buffalo to Pittsburgh all reported the same trend in their markets. This is likely being done for a few reasons. The bigger a provider group, the better prices they can demand from insurance companies, as shown last year in a sophisticated study released by the office of Martha Coakley, the Massachusetts State Attorney General:

A. Price variations are not correlated to (1) quality of care, (2) the sickness or complexity of the population being served, (3) the extent to which a provider is responsible for caring for a large portion of patients on Medicare or Medicaid, or (4) whether a provider is an academic teaching or research facility. Moreover, (5) price variations are not adequately explained by differences in hospital costs of delivering similar services at similar facilities.

B. Price variations are correlated to market leverage as measured by the relative market position of the hospital or provider group compared with other hospitals or provider groups within a geographic region or within a group of academic medical centers.

This means a few things. First, that if ACO’s are simply big groups with lots of clout in their market, they will likely screw over insurance companies on the commercial side to get better rates (I somehow doubt anybody will lose much sleep over this) – especially if Medicare ACO money incentivizes them to cost shift so they don’t exceed those spending targets. (Cost shifting in a nutshell: If a new knee costs $22,000 and Medicare says it will only pay $20,000, a hospital can bump up the price for private insurers like United or Aetna to $24,000 to make up for the difference.) So, any money ‘saved’ by the Medicare program would just be taken out of somebody else’s purse or wallet.

Second – and more importantly, Coakley found … (Read complete blog post, here).

Naveen Rao lives in Washington D.C., and consults in health care. The majority of his work is clinical quality improvement analytics for community-based health insurers, with broader involvements in clinical redesign efforts such as the medical home and increasingly, the accountable care organization.

The Future of Accountable Care Organizations (ACOs): An Interview with Bill DeMarco

By Richard L. Reece, MD

What follows is an interview with Bill DeMarco, a health care consultant for more than 30 years and an advisor on Accountable Care Organizations (ACOs). The subject of Accountable Care Organizations (ACOs) accounted for only 10 pages of the 2500 page health reform bill. Yet ACOs are now the buzz, the rage, the hottest 3-letter acronym since sliced bread, and the most talked about subject in hospital board rooms, medical staff lounges, and the medical talk circuit, and consultant enclaves. I am cautiously pessimistic about the future of ACOs. My views on ACOs are available in an e-book , Pros and Cons of Accountable Care Organizations (www.practicesupport.com).

How long have Pendulum Healthcare and DeMarco and Associates Consulting been in existence?

Pendulum since 2001 and DeMarco and Associates since 1980.

As you know, you and I go back a long way, starting with the formation of the SHARE corporation in Minneapolis.

Yes, I was one of the 10 people who started SHARE, a small primary care group that contracted with specialty physicians as a staff model HMO, which we might call today a medical home.

Today let’s talk about Accountable Care Organizations (ACOs). ACOs are the hottest subject going, as hospitals and physicians contemplate implications of the health reform law and their future.

Yes, ACOs are a hot subject. I prefer to call them Medicare Shared Savings programs. They are connected to the prepaid demonstration projects CMS conducted with several of the big multi-specialty groups five or six years ago. Also they tie into the discussions about cooperative organizations. CMS had a meeting last week encouraging hospitals and doctors to become cooperative health plans.

I’ve been reading your articles on ACOs. One thing that comes through is that you believe ACOs are a “new path” for physicians and hospitals.

Yes, they are indeed a new path. They are truly an opportunity, for physicians specifically, to generate a bonus in exchange for increased consistency, efficiency, and effectiveness. ACOs put dollars on the table for quality.

Previous variations of the ACO model, PHOs and IPAs, have failed or faltered for various reasons, one reason being physicians fearing hospital control and the other being lack of any revenue advantage for physicians. Do ACOs change the control and revenue landscape?

I think they do. They create an opportunity for Medicare, the biggest payer by far, to generate savings in conjunction with aligned physicians. There will now be physician dollars available to reward efficiencies and to offset startup costs. ACOs are moving away from a production mentality of PHOs to a value-based mentality. They are crossing the quality chasm by focusing on medical management to bring costs down by removing waste from the system. ACOs are about population management, and physicians who participate and lead this change are going to get paid for quality.

What are the start-up costs for an ACO?

It depends on where the physician organization is on the integration scale. If they are fully integrated, like Geisinger and the Greater Marshfield Plan, they could go ahead quickly and be part of the ACO class of 2012. If the physicians don’t have anything in place, you are easily talking about $3 to $5 million to organize for the first year and then ongoing administrative costs to have a licensed driver in the driver seat. There are management companies out there to provide the needed management services, and there are some shrewd investors interested in providing the start-up capital for ACOs in exchange for a part of the bonus.

The electronic infrastructure by itself required to track data to calculate rewards would be a huge expense, with EMRs on both the hospital and physician sides.

In an ideal world, having that EMR will be important. However, when we started HMOs in the 70s, we needed the same kind of utilization data, and we survived. In addition, many physicians are already using some sort of data clearinghouses because they get an extra 3% to 4% using electronic billing. Many of these ACOs will be administrated through a fiscal intermediary. You could start an ACO without an EHR.

But you are right, it would be expensive to put in an internal EHR from scratch. That’s why you need to earmark some of your savings for that purpose integrating HIT and EHR.

Who are your clients? Are they mostly hospitals or physician groups?

It’s been a combination of physicians, physician organizations and IPAs who want to set up a data warehouse, and who want to be certified as an ACO. We’re working with a couple of hospitals, who want to do a joint venture with physicians. I am also talking to two companies, with another in the wings, who want to form an ACO for their employees. Employers are taking it upon themselves to go out to hospitals and physicians and create their own custom networks versus the insurance company discount networks of the past.

This is something most hospitals were not aware of, and many of their existing physicians could wind up joining a competing ACO. Also Phycor-like organizations are roaming the countryside to form ACOs by buying practices right out from underneath the hospitals’ nose. So we’re telling hospitals, don’t be shy about forming your own ACOs. Sit down with medical staff and tell them you are interested in cooperating with them to form their own physician driven ACO.

In preparing for this interview, I ran across this statement “Hospitals are the raw meat physician-ACOs will feed upon.” Is that an over-statement?

I think it is. Removing waste from the delivery system is not all about physician ACOs chopping out hospital days. Many existing physicians and hospitals are leaving dollars on the table because they are not coding and documenting correctly. ACOs will help correct these problems, and help both parties’ reimbursements but there are so many things that can be done before chopping out days per thousand.

Hospitals need doctors to help them correct problems like re-admissions, which come at hospital expense. And you’re going to be looking at better coordination between primary care doctors, specialists, and the hospital. Under bundling of hospital and doctor fees, pay will be more predictable and controlled than under fee-for-service because there will be agreement in advance as to what the “package “ of services are and what the Medicare payment rate may be for that package.

You mentioned bundling, which comes under the guise of global payments, and reducing fee-for-service. Is that one of the main thrust of this reform law?

Should we have “bundles” only, or should we have modified fee-for-service? That’s one thing holding up discussions of ACO legislation. Many years back we had cost HMOs and risk HMO contracts with the government. The choice was up to the HMO but risk arrangements usually offered better opportunity for additional revenue from savings. If we extend this down a bit we could have risk and cost ACOs. I think it will eventually go mostly into bundling, but not necessarily capitation. Capitation is paid on a per member per month. Bundles work differently because you’re paying for episodes and your success is tied to patient population management.

ACOs are targeted at the Medicare population. It is my understanding that a physician in private practice can belong to an ACO and continue to conduct fee-for-service in private practice independently for seniors not in the ACO and for his non-Medicare patients. Is that correct?

Absolutely. The private physician is not a government employee, and this is not government takeover. What the government is going to do is set the criteria for bundling for an episode of care. The physician can manage within that framework. But I do think ACOs will be a vehicle many employers will look to for managing non-Medicare employees, and we are seeing this with Humana and Norton as well as similar shared savings arrangements between Blue Cross and Advocate hear in Chicago.

Hospitals are hiring primary care doctors as well as specialists in record numbers. The number of physicians in private physician-owned practices has dropped from 75% of physicians to less than 50% in the last five years. Doesn’t having physicians as salaried employees make the creation of ASOs easier for hospitals?

The reform law is directed at physician- owned and physician- driven enterprises. The statute mentions hospitals in only one aspect – when hospitals own primary care physicians. These hospitals are eligible to apply, all the other ACOs are “physician-driven.” In my opinion, ACOs are really an “physician-anointed” program. Hospitals are hiring more doctors to make sure they don’t wander off the reservation. And yes, salaried physicians would help hospitals to form ACOs, if the primary care physician practices hospitals buy are seeing more than 5000 non-Medicare Advantage patients. And yes, having both primary care physicians and specialists under one corporate roof as employees would help in care coordination. Many specialists and primary care doctors see cooperative groups involving specialists, primary care physicians, and hospitals as their future over the next 3 to 5 years.

The federal government is moving very fast on ACOs, and just like another business you need to get ahead of the curve. State governments are moving even faster with Minnesota, Michigan, Colorado, Massachusetts, Pennsylvania already having ACO like organizations operate in conjunction with Medicare.

Florida, Arizona and others are also moving this way as the money for these and similar programs are cut. The states are very interested in partnering with providers to hold the line on unnecessary care costs. Vendors and purchasing organizations, on their part, are taking a serious interest in forming ACOs. As the ground shifts underneath physicians, they are realizing they may be left out of these cooperatives that are being built. As Dr. Jack Lewin likes to put it,

‘Either you have a seat at the table, or you are on the menu.’

Another powerful trend is the consolidation and concentration of health care into larger and larger entities, many of whom may have the power to negotiate higher and more favorable rates. This may be an unintended consequence of health reform and raises anti-trust issues. How do physicians avoid anti-trust in forming ACOs?

You manage anti-trust by making sure physicians who are part of your organization understand the difference between competitive and anti-competitive behavior. How do you do that? The first thing you do is read the document that the Federal Trade Commission prepared in 1966 that offers several pathways to “safe harbors” when physicians develop their own networks. The 50 page document says you have an exemption from antitrust if you are clinically integrated OR financially integrated. If you are taking capitation or at risk financially , you are exempt. Then the government doesn’t see you as a bunch of competitors, but as a cooperative group with a community benefit.

The same occurs when a group becomes clinically integrated, they are exempt because instead of being seen as competitors trying collude to a anti-competitive strategy you are building a cooperative strategy to improve quality. But beware. If you are not truly clinically integrated, you are at risk for an antitrust action. In Chicago, an insurer challenged the Advocate health system as not being clinically integrated, and Advocate spent tons and tons of money defending themselves. But Advocate did take clinical integration very seriously. Now that they have done that, they have re-engineered their system to the benefit of both their hospitals and their physicians. Blue Cross Blue Shield has offered them an exclusive for their ACO bundled payment plan.

This example shows that ACOs offer a new pathway for physicians and the government for their mutual benefit. Physicians need to read the FTC document, not sit in a room talking about price and contracts, and to hire a good antitrust lawyer to advise them.

The Association of Health Care Lawyers has a whole list of qualified lawyers to advise on antitrust issues. Definitely get yourself a good attorney to review what you’re doing. You do not need to apply to the FTC to proceed with an ACO, but you do need to follow the rules in the six pathways advised by the FTC. I think CMS will defer to the FTC to enforce the rules even though, as written CMS has that power today.

So, to conclude, “re-engineering” the health delivery system is underway. To navigate the maze, get yourself a good lawyer to avoid antitrust issues.

First you would want to find out who your best referrals are coming from and defines your virtual group. Talk with this series of doctors about what an ACO is and what could be done in terms of developing a loosely knit group to meet high performance standards

Once you have at least a core group to discuss the vision you need to get advice on operational ACOs and also get a lawyer to make sure you have a pathway through the clinical integration steps. There are a lot of good things in this health reform law for physicians. And there are a lot of good things being published by medical societies to help doctors avoid the pitfalls in forming an ACO. The Massachusetts Medical Society just published a one-page summary of what to avoid in forming an ACO. The Physicians Foundation is also preparing tools and background information to answer physician questions.

Physicians need to do their homework, even before hiring a lawyer, before proceeding with an ACO.

Richard L. Reece, MD, blogs at Medinnovation and has a website under construction. http://www.doctorreece.com. He is the author of three recent books, Obama, Doctors, and Health Reform (Iuniverse, 2009), Innovation Driven Health Care (Jones and Bartlett, 2007), and an E-book, Pros and Cons of Accountable Care Organizations (Practice Support Resources, 2011). He works with The Physicians Foundation, a 501C3 organization representing physicians in state medical societies. Opinions expressed in his blogs are his alone. He can be reached at rreece1500(at)aol(dot)com, 1- 860-395-1501

An ACO Watch: Mid-Week Review ‘Mea Culpa’!

The brodcast today on ACO Watch: A Mid-Week Review was a, well, d/i/s/a/s/t/e/r:

Per Wikipedia:

A disaster is a natural or man-made hazard that has come to fruition, resulting in an event of substantial extent causing significant physical damage or destruction, loss of life, or drastic change to the natural environment. A disaster can be ostensively defined as any tragic event with great loss stemming from events such as earthquakes, floods, catastrophic accidents, fires, or explosions.

Well perhaps not that dramatic, but the subject ‘how to engage independent physicians’ in the ACO conversation from vision to fulfillment, was and is a subject worthy of an intelligent and coherent discourse which yours truly just did not deliver. So, as host and producer of the broadcast, upon reviewing the rather marginal audio, coupled with a meandering and monotone rendering of the narrative, I elected to delete it.

We will have another go at the subject next week perhaps aided by a co-host at that time.

Meanwhile, here are some of the links referenced during the broadcast. The intent was to weave them into a narrative worthy of your time. We’ll do our best to deliver on February 2nd 2011.

The issue of crowd-sourcing or even strategic targeting of key physician (aka ‘champions’) engagement in ACO’s is a BIG issue. Considering the history of the medical staff organization, it’s roots and nature as a voluntary entity, and prevailing organizational designs, is a worthwhile exercise as we continue our march towards clinical/financial/legal or ‘virtual’ integration. Who can properly steward this transformational bridge? The answer to that question is one of the key determinants of success this go round, imj.

ACO Watch: A Mid-Week Review

Tomorrow, January 26th, 2011 we’ll review headlines in the ACO market, and focus specifically on the cultural antecedents and pathways for engaging ‘independent physician’ participation in ACOs.

Other than mature IDN’s such as Mayo, Kaiser and Geisinger, et al, who have risen to the head of the class when discussing ACO potential, there is a second tier of ACO candidates that include Advocate Health Partners, and Monarch Healthcare; for context click here. We’ll consider their cultural standing, organization model, and strategies to appeal to the independent physician market, while also exploring the ability of physician leadership sourced from voluntary medical staff culture to add value to the ACO development conversation.

To join us live or for an archived replay, click here.

On February 9th, self proclaimed ‘ blogvocateur’ Jaan Sidorov, MD, former medical director with Geisinger Health Plan, and publisher of the witty and insightful ‘Disease Management Blog‘, joins me to discuss his series of very informative blog posts, and key conference take aways, from ‘ACOs Summit: A Transitional Model to Full Risk Care Management‘. To listen live, or via archived replay, click here.

On February 16th, Kevin Fickerscher, MD, joins me to discuss ‘ACO’s vs. Medical Homes: Is there a difference?’ Dr. Fickenscher serves as a Strategy, Development and Thought Leadership Officer for Dell Healthcare Services on an international basis. Prior to his current position, Dr. Fickenscher served as the Vice President for International Healthcare for Perot Systems which was acquired by Dell in November 2009. Dr. Fickenscher is a physician executive and leader with extensive experience in strategic and operational development in complex healthcare organizations. He has provided leadership for various organizations related to technology and information management, organizational transformation and development, physician management, health policy analysis, leadership development, clinical quality and resource/care management, among other areas. Dr. Fickenscher is considered to be a dynamic, visionary leader in healthcare throughout the world.

To listen live or via archived replay, click here.

The Importance of The Shared-Savings ACO Model

By Ron Klar

Certainly no Medicare provision of the Affordable Care Act (ACA) has generated more interest among health care providers, policy analysts, and consultants than the Medicare Shared Savings Program (MSSP) for accountable care organizations (ACOs). Because there are so many design elements for which the Secretary of Health and Human Services must “determine”, “establish”, and “specify” the details, all potential participants have been anxiously awaiting the proposed rule before deciding how, and if, to proceed. These details will have important implications for the future of traditional fee-for-service (FFS) Medicare and the program’s acceptance by physicians and beneficiaries.

The MSSP is based on the Physician Group Practice (PGP) Demonstration and incorporates a “shared savings” model (SSM) of potential bonuses for eligible groups of providers that meet annual performance standards of beneficiary quality and per capita expenditures. Payment for covered services will remain fee-for-service, and all of the fundamental and enduring FFS freedoms of choice, equality, and privacy are to be preserved. There will be no financial penalties or down-side risks for these groups other than their unreimbursed services and other investments. The SSM is not yet another version of managed care by at-risk entities for enrolled beneficiaries.

In spite of the clear Congressional intent to include this model, some are now questioning its adequacy to achieve delivery system “transformation” and its possibility for “unearned” bonuses, i.e., groups participate – do nothing – hope for a favorable random outcome.

Therefore, now being considered for the MSSP is the “option to use other payment models”, as authorized but only cryptically referenced, such as “partial capitation”, or “two-sided risk” recently suggested by MedPAC.

The “sentinel” issue should not be which model to promote, but which models and their differentiated design elements. This would optimize initial participation, ongoing “upward” progression (from one model to the next), and ultimate program impact.

The SSM will allow interested groups that are not willing or able to…. (Read complete article at Health Affairs).

Dr. Klar was recently named Chief, Health Systems Innovation & Performance, by the GW Medical Faculty Associates to lead their implementation of integrated, coordinated, patient-centered, and accountable care initiatives.

More Accountable Care Organization Conference Notes: No Faux ACOs Here!

By Jaan E. Sidorov, MD, MHSA, FACP

After a second and equally rewarding day at the Opal Summit, the Disease Management Care Blog has decamped from Austin Hyatt Hotel venue armed with additional Accountable Care Organization insights.

In yesterday’s post, the DMCB mentioned that it discovered there already are a host of ACO-like legal organizations providing patient-centered care to thousands of commercial insurance beneficiaries using evidence-based guidelines and data reporting with feedback under full or almost full capitation. More of them strutted their stuff today. The DMCB was impressed with their physician-friendly culture and repetitive use of the phrase “do the right thing.” While CMS Administrator Berwick has warned the industry that he won’t tolerate applications from faux ACOs, it looks like there are some genuine provider organizations that are primed and ready to go. The only things they’re missing are 1) an upside gainshare contract with Medicare and 2) invites to the conferences, symposia, meetings and forums being held inside the D.C. beltway.

One thing even more striking than the spandex on the Hyatt’s treadmills was that ALL of these organizations had made a huge investment in non-physician coaching programs that, depending on patient need, used both face-to-face and telephonic counseling to change patient behavior.

Additional food for thought:

Organizations that are ready to go for the ACO demos took at least 3-4 years to get where they are today. Unless the building blocks are already present, the DMCB thinks it will be very daunting for a regular hospital or a vanilla physician group to get up to speed by January 2012.

Want to be a truly “accountable” organization? Then you should, in this order, build: 1) an HIT infrastructure that includes an electronic record with an information exchange, 2) a primary care medical home network, 3) nurse-based patent counseling/coaching capability that is either embedded in the medical homes or shared among several medical homes, 4) an ability to assess the needs of your population and your organization’s performance in meeting those needs and then 5) be prepared to negotiate insurance risk-based contracts with the insurers.

Yes, evidence-base patient care protocols are important, but there are exceptions to every rule. Those exceptions are more common that you might think, especially in the elderly. Be prepared to support your providers when they break those rules.

Since it is unlikely that the Federal Trade Commission and the Department of Justice will allow ACOs to zip up an entire local provider market, will ACOs allow those non-participating providers access to their information systems? The DMCB thinks they should because patients “attributed” to ACOs will inevitably wander outside the network and benefit from the information sharing. The economics of upside gainsharing says they shouldn’t allow access, but that wouldn’t be the right thing to do, now would it?

Want to reduce readmissions? Then: 1) have a care management nurse conduct a in hospital visit with the patient, 2) conduct one or more home visits 3) carpet-bomb the patient with phone calls, 4) refer the patient to every community-based organization you can think of 5) over-communicate with the primary care provider 6) expect every discharged patient to be seen by that provider within seven days of discharge and 7) make sure the home health agencies understand you are not out to steal their business.

Heard of “hospitalists?” How about “post-hospitalists,” who are outpatient physicians responsible for seeing a patient within seven days of discharge? Two of the ACO-ready organizations mentioned above are doing this. Really.

While ACOs are taking on gainshares and capitation, they might also want to announce that they have a “center of excellence” that is open for the rapidly accelerating medical tourism business. Since they’re organizing providers to drive better clinical outcomes at lower cost, they could also argue that their hand, plastic or heart surgeons are among “the best” and steal some overseas business from places like the Cleveland Clinic.

Jaan E. Sidorov, MD, MHSA, FACP, is President of PMSLIC, a Pennsylvania physician-directed carrier with proven stability coupled with a strong personal commitment to physicians and physician practices.

ACOs and the Shared Savings Program: Some Common Misconceptions

by Reed Tinsley, CPA

Section 3022 of the Patient Protection and Accountable Care Act (the Act) creates the Shared Savings Program for Medicare. Under the Shared Savings Program, which is to take effect no later than Jan. 1, 2012, Accountable Care Organizations (ACOs) that meet certain requirements established by the Secretary of Health and Human Services will be eligible to receive additional payments from Medicare where certain performance guidelines are met and cost-savings targets are achieved. The amount of the additional payment will be a percentage of the difference between the estimated per capita Medicare expenditures for patients assigned to the ACO and the cost-savings per capita Medicare expenditures threshold.

While ACOs are often touted as the solution to many of the ailments of the current model of healthcare delivery for Medicare, including the need for enhanced quality, improved outcomes, better coordination of care, and greater cost-savings, there are many misconceptions about the Shared Savings Program and a growing list of questions about what form ACOs will take under the law.

The Centers for Medicare and Medicaid Services (CMS), which will be responsible for implementing the Shared Savings Program under the authority of the Secretary, has issued scant guidance on any specifics aside from a brief Preliminary Questions & Answers document posted on its website (the Q&A).

A number of unknowns exist at this time. This article tackles some of the common misconceptions about ACOs and the Shared Savings Program. In a second installment, we will address a number of unanswered questions about ACOs and the Shared Savings Program.

ACOs do not necessarily have to involve a hospital. ACOs are defined by the Medicare Payment Advisory Commission as a set of physicians and hospitals that accept joint responsibility for the quality of care and the cost of care received by the ACO’s patients. Many confuse the concept of ACOs with the concept of payment bundling models involving hospital and physician services and hospital and physician integration efforts.

While existing and developing ACOs often involve the integration of hospitals and physicians through contractual arrangements or employment of physicians, the Act and the Q&A make clear that, for purposes of the Shared Savings Program, group practices, physician networks, and networks of group practices can all be ACOs without including a hospital.

There is not much detail available at this time about specific participation requirements for ACOs that want to participate in the Shared Savings Program, but the Act does specify some minimum requirements, including: having a formal legal structure that allows the ACO to receive and distribute payments for shared savings; having a leadership and management structure that includes clinical and administrative systems; and having a defined process to promote evidence-based medicine, report on quality and cost measures, and coordinate care. The Act also specifies that, in order to participate in the Shared Savings Program, an ACO will be required to enter into an agreement with the Secretary to participate for no less than a three year period. In addition, the ACO must be of a size sufficient to provide the bulk of primary care services to a minimum of 5,000 beneficiaries. As the rule-making process with CMS proceeds, we will have more information about the particular characteristics that a given organization must have to participate in the Shared Savings Program.

An ACO is not a “provider network.” Beneficiaries assigned to an ACO are…… (read complete article, here)

Reed Tinsley is a Houston-based CPA, Certified Valuation Analyst, and healthcare consultant. He works closely with physicians, medical groups, and other healthcare entities with managed care contracting issues, operational & financial management, strategic planning, and profit strategies. His entire practice is concentrated in the health care industry.

How To Get Independent Physicians Into An Accountable Care Organization? Lessons Courtesy of One Large System

By Jaan E. Sidorov, MD, MHSA, FACP

The folks at Advocate Physician Partners (APP) argue that they’re a national model for Accountable Care Organization (ACO) wannabes. They’re saying that because they assert that they’ve figured how to out how to “Integrate Independent Physicians.” The intrigued Disease Management Care Blog first got a close look at them at the recent Health Affairs “Across The Nation In Health Care Delivery Conference” (second video down) and, when it got snowed in today, decided to take a closer look at their hot-off-the-presses published report.

As the DMCB understands it, Advocate Physician Partners is a 15 year joint venture between a consortium made up of over 2700 independent community-based physicians and the ten-hospital/800 salaried physician Advocate Health System (AHS) located in northern and central Illinois. It appears the independent docs are aggregated into the local physician-hospital organizations that make up AHS. Each PHO sends a delegate to the overall APP Board, which has oversight of an entity that can commit with a “single signature” to HMO and commercial fee-for-service insurance contracts.

All their physicians are required to meet individual clinical and work performance measures. Examples of the latter include their number of active patients in a registry, use of computerized order entry and efficiency measures such as length of stay. APP favors goals that also advantage their hospitals and are common across payers. They cite data collection with reporting feedback, strong governance and enforcement of mandatory protocols as the key to their success. As evidence of their discipline, they noted that the “partnership removed more than fifty physicians for noncompliance with their policies on the availability of information technology.”

The published “Integrate Independent Physicians Into ACOs” report linked above is modest about its outcomes (eICU, top ten rankings, HEDIS-based measures, asthma care, generic drugs and electronic data exchange). In contrast, their 2010 Value Report, which seems to be based on extrapolated data, says (on page 7) that they’ve saved millions of dollars.

What does the DMCB think? While this isn’t quite generalizable everywhere, there are some interesting lessons when it comes to wrestling the independent docs into ACOs:

When you’ve seen one ACO, you’ve seen one ACO: The Affordable Care Act may make you think ACOs can be neatly categorized. The mix of players in this physician-led APP suggests that the reality will be a complicated mix of integration approaches. This may complicate CMS’ ability to draw any generalizable conclusions about physician-led ACOs that can be effectively used in health reform.

Can’t accomplish this overnight: As noted above, APP had a 15 year head start. The current ACO models don’t contemplate taking years to develop a governance structure involving the buy-in of thousands of physicians. Pulling something like this off by January 1, 2012 may prove to be daunting.

The need for speed: While APP is herding cats, they’ve already demonstrated their ACO chops with a signed ACO-style commercial contract. If you think that’s complicated, imagine what the Medicare regulator-lawyers are going to do to this. And they are already – and unsurprisingly – behind schedule.

Only works in a city: While not mentioned above, the Health Affairs manuscript points out that APP has not drawn FTC ire because it occupies only 15% of their local market. Being able to simultaneously fire physicians and maintain a base of thousands of providers is impossible in rural America.

Whither disease management? On page 13 of the 2010 Value Report, there is a mention of “personalized one-on-one professional coaching by health and wellness professionals” but in reading further, the DMCB suspects APP has been largely focused on improving the physicians’ day-to-day performance. The DMCB suspects most doctor-dominated ACOs will initially stick to that formula, wasting precious physician time on stuff that non-physician professionals can do more efficiently and cheaply. They all come around, which is the real insight from the note that “personalized coaching” has started. Smart move.

While We Wait for CMS Guidance on ACO’s

Medicare “Accountable Care Organizations” | Shared Savings Program | New Section 1899 of Title XVIII | Preliminary Questions & Answers

The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). ACOs facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. This document provides an overview of ACOs and the Medicare Shared Savings Program.

Q: What is an “accountable care organization”?

A: An Accountable Care Organization, also called an “ACO” for short, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.

For ACO purposes, “assigned” means those beneficiaries for whom the professionals in the ACO provide the bulk of primary care services. Assignment will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.

Q: What forms of organizations may become an ACO?

A: The statute specifies the following:

Physicians and other professionals in group practices
Physicians and other professionals in networks of practices
Partnerships or joint venture arrangements between hospitals and physicians/professionals
Hospitals employing physicians/professionals
Other forms that the Secretary of Health and Human Services may determine appropriate.

Q: What are the types of requirements that such an organization will have to meet to participate?

A: The statute specifies the following:

Have a formal legal structure to receive and distribute shared savings
Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
Agree to participate in the program for not less than a 3-year period
Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
Have a leadership and management structure that includes clinical and administrative systems
Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.
Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall (Editors Note: Now expected in early 2011).

Q: How would such an organization qualify for shared savings?

A: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of perbeneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Q: What are the quality performance standards?

A: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Q: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

A: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Q: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

A: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.Q: When will this program begin?

A: We plan to establish the program by January 1, 2012. Agreements will begin for performance periods, to be at least three years, on or after that date.

Q: How do I get more specific information?

A: CMS plans to hold a listening session to hear stakeholder ideas on ACOs this summer.

Further details about this listening session, to be held as a special open door forum, will be posted by June 11 on the following special open forum website.

Further details for the shared savings program will be provided in a Notice of Proposed Rulemaking which CMS expects to publish this fall (Editor’s Note: Pushed to January/February 2011).

Reference source, click here.

Accountable Care Organizations, Explained

by Jenny Gold

As the House begins debate today on an effort to repeal the health care law, we took a closer look at one of the provisions of the law that health care providers are talking about the most — accountable care organizations.

ACOs take up only seven pages of the massive new health law but the idea has providers buzzing. ACOs are a new model for delivering health services that offers doctors and hospitals financial incentives to provide good quality care to Medicare beneficiaries while keeping down costs. A cottage industry of consultants has sprung up to help even ordinary hospitals become the first ACOs on the block.

Yet the concept is still short on details. ACOs have been compared to the unicorn: Everyone seems to know what it looks like, but nobody’s actually seen one. Exactly how ACOs would work in practice remains to be seen, though that hasn’t stopped the health care industry from embarking on a frenzied quest to create them as quickly as possible. The Centers for Medicare & Medicaid Services is expected to release detailed rules on ACOs within a few weeks.

Here is a brief guide to what we know about ACOs so far.

What is an accountable care organization?

An ACO is a network of doctors and hospitals that shares responsibility for providing care to patients. Under the new law, ACOs would agree to manage all of the health care needs of a minimum of 5,000 Medicare beneficiaries for at least three years.
Think of it as buying a television, says (read complete article, here).

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health care policy organization that isn’t affiliated with Kaiser Permanente.