ACOs: The Last Best Hope to Retain Pluralism

NEJM - Remaking Health Care

The April 28th issue of the New England Journal of Medicine contains a series of papers on Health System Reform:

Consensus and Conflict in Health System Reform — The Republican Budget Plan and the ACA
Timothy Stoltzfus Jost, J.D.

The “Roadmap for America’s Future,”1 put forward by Representative Paul Ryan (R-WI) and adopted in principle as the Republican budget proposal for 2012, offers a vision of the role of government and the nature of a good society that contrasts sharply with the vision inherent in the Affordable Care Act (ACA). Nevertheless, the Roadmap and the ACA have much in common, suggesting that there is a growing consensus regarding the way in which the U.S. health care system should be structured. The Republicans have borrowed ideas from the ACA, and the ACA drew heavily on earlier Republican proposals. Exploring the shared elements of the two plans (see Similarities and Differences between the Affordable Care Act and the Ryan Plan) to clarify the extent to which consensus has emerged in U.S. health policy may enable us to begin addressing the serious conflicts that remain.

Reforming Medicare — Toward a Modified Ryan Plan
Gail R. Wilensky, Ph.D.

Medicare reform, an issue that is rarely out of the political spotlight for long, has once again achieved a position of prominence. The current focus is primarily on the role that Medicare and other entitlement programs play in driving up the deficit, but the need to reform Medicare long predates the economic collapse of 2008.

High-Risk Pools — Merely a Stopgap Reform
Linda J. Blumberg, Ph.D.

A central goal of health care reform is to ensure that everyone, regardless of health status, has access to adequate, affordable insurance coverage and medical care. The Affordable Care Act (ACA) aims to achieve this goal by prohibiting insurers from engaging in practices that discriminate against the sick and requiring that the vast majority of Americans have insurance coverage — allowing the costs of care for people with substantial health care needs to be shared broadly by the whole population. Because most people are healthy at any given time, the sharing of expected health care costs should mean only small increases in premiums for the healthy and large savings for people who may incur disproportionately high medical expenses. However, these broad-based reforms will not be implemented until January 1, 2014.

Medicaid at a Crossroads
John K. Iglehart

Approximately 68 million Americans were enrolled in Medicaid at some point during 2010, when the program spent $406 billion on acute and long-term care services for its beneficiaries.1 Another 16 million people are slated to gain Medicaid eligibility through the Patient Protection and Affordable Care Act (ACA), which would make the federal–state program responsible for financing services for more than one in four Americans. Enacted in 1965 as an afterthought to Medicare, Medicaid has become a vast public enterprise that underscores the limits of the private insurance market even as it squeezes state budgets already stretched by the recession. These realities, along with the fact that an increasingly conservative electorate has given Republicans control of the U.S. House of Representatives, raise a fundamental question for policymakers: What level of support should government provide to people who can’t afford private insurance and are not offered employer-sponsored coverage?

How Not to Reform Medicare 
Henry J. Aaron, Ph.D.

Medicare reform has become a hot political issue. The program is wildly popular but expensive. It is the principal source of projected increases in budget deficits. With deficits increasingly seen as a mortal economic threat, many believe that now is the time for Medicare reform.

The reform flavor of the day is “premium support.” What is it? What are its strengths and weaknesses?


The ACO Regulations — Some Answers, More Questions
John K. Iglehart

Recognizing that physicians allocate most of our health care resources, Congress and the Obama administration challenged doctors in the Affordable Care Act (ACA) to develop more accountable, quality-driven health care delivery systems, promising performance bonuses for those who succeed. The vehicle that Congress created for tackling this task is the accountable care organization (ACO), which is built on a strong foundation of primary care.1 To qualify as an ACO, a group of health care providers must have the capacity to deliver the full continuum of care to at least 5000 Medicare beneficiaries and to be held accountable for the costs and quality of their care. Although the law links ACOs to Medicare, the administration has encouraged private health plans to contract with these new organizations as well. With the launch of ACOs, the reform law raises new issues that are certain to roil relations between primary care physicians and specialists. Managing care utilization more efficiently could require a rewiring of long-standing referral and hospital relationships. And conflicts may well arise over how to divide ACO savings, with primary care doctors, whose incomes are appreciably lower than those of most specialists, striving to reduce that differential. The implications for hospitals could also prove profound, given the complex new equation for calculating shared savings under the ACA.

New Report: Accountable Care Organizations Have Potential to Curb Costs and Improve Health Care

If implemented successfully, accountable care organizations (ACOs) have the ability to achieve better care, better population health, and lower costs, according to a new report released today by the Commonwealth Fund Commission on a High Performance Health System. Implementing ACOs effectively will be vital to their success and, to that end, the Commission report also includes 10 recommendations for effective implementation, focusing on the design, payment and functioning of ACOs. An accompanying Commonwealth Fund perspective contains an analysis of how the proposed rules for the new Medicare Shared Savings Program for ACOs issued recently by the Centers for Medicare and Medicaid Services (CMS) align with these recommendations.


The Affordable Care Act establishes ACOs as a new category of provider within the Medicare program, creating the potential of paying for care in new ways that reward clinicians for improved patient care while reducing health care costs on a broad scale. Interest in establishing ACOs is also responsive to the public’s call for better coordinated health care—in a recent Commonwealth Fund survey nine of 10 people reported that it was important to them to have one place or physician responsible for their primary care, and coordinating care with other providers.

The Commission report, High Performance Accountable Care: Building on Success and Learning From Experience, presents the rationale for ACOs, based on research demonstrating that better organized care systems provide higher quality, lower cost care, and describes several models that might be considered in developing ACOs, including primary care medical home fees, bundled acute case rates and global fees. These models, and variants of them, could be used to move toward a more organized and effective health system.

"A number of health care providers and systems across the country are already developing accountable, coordinated care models, and implementing new payment models that reward better care. We have seen the potential they have to improve quality and lower costs,” said Commonwealth Fund President Karen Davis. “The Affordable Care Act provides the opportunity to replicate what we know is working in accountable care, and to give patients what they want and need—well-coordinated, high-quality, affordable health care.”

Commission Recommendations

The Commission’s recommendations focus on core strategies to ensure successful implementation and spread of ACOs that are accountable for care, outcome, and costs:

■Strong Primary Care Foundation: ACOs should build on the concept of the patient-centered medical home, to ensure access to a regular source of care, and coordination across providers and settings.

■Accountability for Quality of Care, Patient Care Experiences, Outcomes, and Total Costs: ACOs should be required to report on and be held accountable for quality, patient care experiences, outcomes, and total costs, with any savings distributed based on their performance.

■Informed and Engaged Patients: ACOs should notify patients that their providers are part of an organization that is being held accountable for high performance and engage them and families as partners to ensure the best care and outcomes.

■Commitment to Serving the Community: CMS should make an explicit commitment to serving their community, including low-income and uninsured patients, an integral part of qualifying as an ACO

■Criteria for Entry and Continued Participation that Emphasize Accountability and Performance: CMS should establish minimum entry criteria for ACOs that include availability of primary care, access to needed services, and the ability to provide meaningful evidence of quality and cost performance. Continued participation should be contingent on accountability and performance, rather than structural characteristics.

■Multi-Payer Alignment to Provide Appropriate and Consistent Incentives: CMS should work with providers and payers to develop multi-payer arrangements to simplify administrative processes and align incentives for high performance.

■Payment that Reinforces and Rewards High Performance: Calculation of savings should be set to appropriately reward ACOs that achieve savings and high performance and made in a timely manner to encourage positive outcomes, with upfront support available to organizations that show promise of success but face certain circumstances that require such support.

■Innovative Payment Methods and Organizational Models: CMS should be prepared to apply different payment approaches as appropriate for different organizational models operating in different areas and circumstances, contingent on achieving performance benchmarks.

■Balanced Physician Compensation Incentives: ACO compensation of clinicians should include incentives to provide evidence-based care and ensure that appropriate care is not withheld.

■Timely Monitoring, Data Feedback, and Technical Support for Improvement: CMS and other payers should provide baseline data to ACOs, track their performance, disseminate information on alternative payment and delivery models, and provide technical assistance to support and spread effective approaches, with a maximum of transparency and a minimum of administrative complexity.

An accompanying perspective piece from Commonwealth Fund researchers Mark A. Zezza and Stuart Guterman reviews the rules CMS recently released for ACOs and uses the Commission’s framework to identify issues for CMS to consider in finalizing the rules. Zezza and Guterman recommend that CMS:

■Investigate ways to get shared savings as quickly as possible to ACOs that perform well on quality and cost.

■Work with ACOs to assure they have the most timely data available and facilitate access to the technical support ACOs may need to be successful.

■Focus on high standards for performance in setting criteria for ACOs’ continued participation in Medicare.

■Work aggressively toward aligning multiple payers to create consistent and effective incentives to increase quality and control costs and reduce administrative burdens.

“The rules set forth by CMS are a needed first step towards implementing ACOs in a way that will encourage accountable care, improve health care quality, and reduce health care costs,” said Stuart Guterman, Commonwealth Fund Vice President for Payment and System Reform. “But, in order to achieve the level of success we need, the rules and the implementation process need to enable both CMS and health care providers to operate differently than has been the case in the past.”

The Commission’s report is intended to offer information and guidance not only to CMS but also to providers, other payers, and patients who will be forming and interacting with ACOs.

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OIG Posts New Information on Accountable Care Organizations

On March 31st, OIG posted new information on Accountable Care Organizations. Thhe links provided below will take you directly to the new material.

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Federal Agencies Address Legal Issues Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program
http://oig.hhs.gov/fraud/aco.asp

Today, as part of a cross-agency, coordinated effort, several Federal agencies issued documents addressing legal issues regarding Accountable Care Organizations participating in the Medicare Shared Savings Program
(Shared Savings Program).

The Centers for Medicare & Medicaid Services (CMS) issued a proposed rule that would establish accountable care organizations (ACO) under the Shared Savings Program. The CMS proposed rule is available online at
http://www.cms.gov/sharedsavingsprogram

CMS and HHS Office of Inspector General (OIG) jointly issued a notice with comment period outlining proposals for waivers of certain Federal laws-the physician self-referral law, the anti-kickback statute, and certain provisions of the civil monetary penalty law-in connection with the Shared Savings Program. CMS and OIG are also asking for comments on further waiver design considerations for the Shared Savings Program and for the separate waiver authority for the Center for Medicare and Medicaid Innovation under section 1115A of the Social Security Act. The joint notice with comment period is available online at
http://www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1

The Federal Trade Commission and the Department of Justice jointly issued a "Proposed Statement of Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program" (Antitrust Policy Statement). The Antitrust Policy Statement is available online at:
http://www.ftc.gov/opp/aco/
 
And the Internal Revenue Service (IRS) issued a notice requesting comments regarding the need for guidance on participation by tax-exempt organizations in the Shared Savings Program through ACOs. The IRS notice
is available online at
http://www.irs.gov/newsroom/article/0,,id=222814,00.html

Launching Accountable Care Organizations — The Proposed Rule for the Medicare Shared Savings Program | Health Policy and Reform

by Donald M. Berwick, M.D., M.P.P in NEJM

A common criticism of U.S. health care is the fragmented nature of its payment and delivery systems. Because in many settings no single group of participants — physicians, hospitals, public or private payers, or employers — takes full responsibility for guiding the health of a patient or community, care is distributed across many sites, and integration among them may be deficient. Fragmentation leads to waste and duplication — and unnecessarily high costs.

Section 3022 of the Affordable Care Act (ACA) establishes the Medicare Shared Savings Program for accountable care organizations (ACOs) as a potential solution.¹ The creation of ACOs is one of the first delivery-reform initiatives that will be implemented under the ACA. Its purpose is to foster change in patient care so as to accelerate progress toward a three-part aim: better care for individuals, better health for populations, and slower growth in costs through improvements in care. Under the law, an ACO will assume responsibility for the care of a clearly defined population of Medicare beneficiaries attributed to it on the basis of their patterns of use of primary care. If an ACO succeeds in both delivering high-quality care and reducing the cost of that care to a level below what would otherwise have been expected, it will share in the Medicare savings it achieves.

On March 31, 2011, the Department of Health and Human Services took a major step toward establishing ACOs by issuing a notice of proposed rule-making that will define how physicians, hospitals, and other key constituents can adopt this new organizational form. The issuing of the proposed rule follows months of obtaining informal and formal input from throughout the health care delivery system, but at this point the rule is only a proposal. The Centers for Medicare and Medicaid Services (CMS) will carefully review the comments we receive in response to the proposed rule before issuing a final rule later this year.

A critical foundation of the proposed rule is its unwavering focus on patients. We envision that successful ACOs will honor individual preferences and will engage patients in shared decision making about diagnostic and therapeutic options. Information management — making sure patients and all health care providers have the right information at the point of care — will be a core competency of ACOs. Held to rigorous quality standards (see table), ACOs will be expected to be proactive in their orientation and to regularly reach out to patients to help them meet their needs for preventive and chronic health care. Patients who seek care at their ACO will know that their physicians are part of that ACO, but as beneficiaries of fee-for-service Medicare, they will continue to be free to seek care from any Medicare provider they wish. They will not be locked into seeing only particular health care providers.
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Success Factors in Five High-Quality, Low-Cost Health Plans - The Commonwealth Fund

Authors: Robert A. Berenson, M.D., and Teresa A. Coughlin, M.P.H.
Contact: Robert A. Berenson, M.D., The Urban Institute, rberenson@urban.org
Editor: Deborah Lorber

Downloads

• Full Report (922K PDF)

Overview

In this report, the authors conducted case studies of five health plans that received high scores on quality and resource utilization, using data collected by the National Committee for Quality Assurance. The focus of this study was to understand how health plans with delivery systems that include a significant network of independent, community physicians achieve high performance. Plan leaders identified several factors they believe contribute to being a high-performing plan: building a physician–plan partnership, establishing the plan as a resource for physician practices, providing physician quality and cost data on performance, and emphasizing a local area orientation. Because employers are primarily responsible for arranging the health insurance coverage for their employees, there is market pressure for health plans to work with broader networks than they would otherwise want, which in turn interferes with the factors that lead to high performance.

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Healthcare Economist · Legal Barriers to ACO Implementation

by Jason Shafrin

Accountable Care Organizations (ACOs) are the latest rage in health policy circles. Health reform legislation will allow for federal health agencies to create waiver programs to allow for the creation of ACOs. For ACOs to actually come to fruition, the waivers must take into account existing laws which currently greatly limit the scope under which ACOs could operate. These statutes include restrictions on:   Continue Reading

The End Of Internal Medicine As We Know It – Health Affairs Blog

by Caroline Poplin

Physicians have doubtless been issuing jeremiads since before Jeremiah. We are overworked, underpaid, and underappreciated.

But today, general internists have a real problem. And it is our leaders who do this to us. As summarized in the Annals of Internal Medicine:

To realize the full benefits of the Affordable Care Act, physicians will need to embrace rather than resist change. The economic forces put in motion by the Act are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups. The most successful physicians will be those who collaborate with other providers to improve outcomes, care productivity and patient experience.

In the future envisioned by the health policy community, including the leadership of the Amercian College of Physicians and the American Medical Association, patients who want a personal physician, someone they know and trust, who understands and cares about them as individuals will have to pay extra for “concierge” care. Everyone else will migrate to team care from large “Accountable Care Oranizations” (accountable to whom, one may ask—certainly not the patients). These teams may well improve patients’ blood pressures, glucose control, lipid panels, maybe even weight, and indeed improve the outcomes of patients whose outcomes can be improved. Their care will be efficient: providers (yes, providers) who do not see enough patients, whose patients do not improve adequately, who order too many tests, do not meet the fifteen criteria for meaningful use of EHRs, or do not continuously pursue quality improvement projects, will see their incomes fall.

Perhaps the new organizations will provide better care for some patients and some conditions. Will other patients — those with poor prognoses, bad attitudes, complex or ill-defined diagnoses, multiple complications, cognitive limitations, even just morbid obesity — be lost in the shuffle.

And whether this radical overhaul of the health care delivery system will reduce health care costs overall, ostensibly the point of the exercise, is unknown. The cost of multiple layers of highly paid managers (including multi-million dollar executives) and the extensive information technology infrastructure on which these elaborate systems depend, is not trivial. Indeed, modern industry abandoned command-and-control style vertical integration decades ago in favor of flatter, more nimble institutions that pay serious attention to suggestions from production workers and those who deal directly with customers. What little evidence we have on cost savings from ACOs is largely anecdotal and equivocal.
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Accountable Care Organizations — The Fork in the Road | Health Policy and Reform

by Thomas L. Greaney, J.D.

Despite the uncertainty and controversy it has generated, the Patient Protection and Affordable Care Act (ACA) has sown the seeds for a major reorganization of the U.S. health care delivery system. In almost every region of the country, hospitals and physicians are forming (or talking about forming) accountable care organizations (ACOs) and entering into other arrangements designed to integrate care, manage chronic conditions, and enable evidence-based practices. Critical to the achievement of these ends are the regulations and guidance soon to be issued by the Centers for Medicare and Medicaid Services (CMS) and the Federal Trade Commission (FTC). One of the most important judgments these agencies will be called on to make entails determining how best to ensure that ACOs foster, not hinder, competition in health care markets.

Although not precisely defined by the new law or the theorists who proposed the concept, ACOs are best understood as affiliations of health care providers that are held jointly accountable for achieving improvements in the quality of care and reductions in spending. ACOs may take a variety of organizational forms, including integrated delivery systems, primary care or multispecialty medical groups, hospital-based systems, and even contractual or virtual networks of physicians, such as independent practice associations.¹ In designing an organizational framework, providers and regulators will have to contend with trade-offs involving such factors as control and governance of the organization, the extent of integration among providers, allocation of risk and rewards, and exclusivity of membership.

It appears likely that the regulations will allow for considerable variation in the form of ACO that providers adopt but will nudge them toward greater integration and more interdependent relationships. And well they should. Economic analyses of the current state of U.S. health care markets suggest that they are plagued by both fragmentation and concentration.² ACOs offer a much-needed vehicle for integrating health care delivery and reducing the well-documented shortcomings of the system that are attributable to payment and organizational features that reward high volume rather than low cost or high quality.

At the same time, ACOs do little to address the problem of market concentration. Indeed, the ACO phenomenon may well encourage some mergers, joint ventures, and alliances that will exacerbate this considerable problem.
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ACOs and the Enforcement of Fraud, Abuse, and Antitrust Laws | Health Policy and Reform

by Robert F. Leibenluft, J.D.

Hospitals and physicians are eagerly awaiting regulations for accountable care organizations (ACOs), which many observers view as the best hope provided by the Patient Protection and Affordable Care Act (ACA) for needed delivery system reform. Starting in 2012, health care providers in ACOs that furnish efficient, high-quality care to Medicare patients will share in Medicare’s savings. Providers are concerned, however, that in creating ACOs they risk violating fraud, abuse, and antitrust laws.¹ To address these fears, the Department of Health and Human Services (DHHS), the Federal Trade Commission, and the Department of Justice, under the direction of the White House, are collaborating to provide waivers, safety zones, and guidance to providers.

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Assessing an ACO Prototype — Medicare’s Physician Group Practice Demonstration | Health Policy and Reform

by John K. Iglehart

One of the few major provisions of the Affordable Care Act (ACA) with solid bipartisan support establishes a new delivery model: the accountable care organization (ACO). Congress directed the Department of Health and Human Services (DHHS) to develop an ACO program to improve the quality of care provided to Medicare beneficiaries and reduce its costs while retaining fee-for-service payment. Under this program, medical groups would have to take responsibility for achieving these goals and would share in any savings derived by Medicare.

Despite the burst of interest in ACOs, little attention has been paid to the results of a demonstration project sponsored by the Centers for Medicare and Medicaid Services (CMS) that was the model for the reform law’s ACO provisions. In the Medicare Physician Group Practice (PGP) demonstration, the CMS contracted with 10 large multispecialty groups with diverse organizational structures, including free-standing physician groups, academic faculty practices, integrated delivery systems, and a network of small physician practices.¹

As a share of total Medicare spending, fee-for-service expenditures for physician services have been relatively stable (13% of $491 billion in 2009). However, this payment model has been under attack because of its inherent incentive for increasing the quantity, but not necessarily the quality, of physician-delivered care. But policymakers vividly remember the backlash against managed care, whose capitation payments were seen as an incentive to stint on care, so with no new alternative to fee for service in the offing, Medicare’s physician-payment policy has remained essentially static.²

In 2000, Congress tasked the DHHS with testing incentive-based payment methods for physicians, directing Medicare to encourage care coordination and investment in processes for more efficient service delivery and to reward physicians for improving health care outcomes. In response, the CMS designed the PGP project to examine whether care management initiatives could generate cost savings by reducing avoidable hospital admissions, readmissions, and emergency department visits, while improving quality.¹
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