the accountable care organization · physician group practice (pgp) ... by meeting ever increasing...

The Accountable Care Organization

wallerlaw.com© 2010

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Kim Harvey [email protected]

615-850-8722

3968555

ACOs: Will I Know One

When I See One?

• Relatively New Concept Derived from

Various Demonstration Programs

• No Set Structure

• ACO is a Goal, not Necessarily a


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• ACO is a Goal, not Necessarily a

Mechanism

Physician Group Practice (PGP)

Demonstration Project

• Initiated by CMS in April 2005

• Offered 10 large practices opportunity

to earn performance payments for


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to earn performance payments for

improving the quality and cost-efficiency

of health care delivered to Medicare

fee-for-service beneficiaries

PGP Demonstration Program

• Billings Clinic: Billings, MT

• Dartmouth-Hitchcock Clinic: Bedford, NH

• The Everett Clinic: Everett, WA

• Forsyth Medical Group: Winston-Salem, NC


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• Geisinger Health System: Danville, PA

• Marshfield Clinic: Marshfield, WI

• Middlesex Health System: Middletown, CT

• Park Nicollet Health Services: St. Louis Park, MN

• St. John’s Health System: Springfield, MO

• University of Michigan Faculty Group Practice:

Ann Arbor, MI

PGP Demonstration Results

• All physician groups improved clinical management of patients

• Some physician groups saved CMS money and shared in savings

Year 3: 5 groups shared in 25.3 M savings for


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• Year 3: 5 groups shared in 25.3 M savings for achieving 2% per year reductions in spending growth below “control” populations

• Program provided initial insight into ability of physicians to manage a population of patients (FFS)

Healthcare Reform: Patient Protection

and Affordable Care Act

• Shift in the reimbursement system from traditional FFS payment toward a more risk-based approach to payment or “accountable payment.”


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• Create incentives for providers to become more coordinated, more integrated, more reliable, lower cost, and more focused on treating chronic disease in a sustainable way.

• No more “the more care you provide, the more money you make” and hospitals will need to work to keep people out of the hospital

What Are ACOs?

• Entity willing to become accountable for

the quality, cost, and overall care of

Medicare FFS beneficiaries assigned to it

• Expected to meet specific organizational


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• Expected to meet specific organizational

and quality performance standards

(still to be determined)

• If standards met, eligible to

receive cost sharing

ACA: Who Can Be an ACO?

• Physicians in group practice arrangements

• Networks of individual practices of physicians

• Partnerships or joint venture arrangements

between hospitals and physicians


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between hospitals and physicians

• Hospitals and their employed physicians

• Such other groups of providers of services and suppliers as the Secretary determines appropriate

� Providers continue to submit individual claims and

be paid separately.

� If targets are met, the ACO receives back-end

percentage of the shared savings which are shared

across providers.

Accountable Care Organizations


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“…a percent (as determined appropriate by the Secretary) of

the difference between such estimated average per capita

Medicare expenditures in a year, adjusted for beneficiary

characteristics, under the ACO and such benchmark for the

ACO may be paid to the ACO as shared savings and the

remainder of such difference shall be retained by the program

under this title. The Secretary shall establish limits on the total

amount of shared savings that may be paid to an ACO under

this paragraph.”

H.R. 3590: Patient Protection and Affordable Care Act

• Division of savings between ACO and Medicare is

unspecified

• ACO organizations responsible for determining how

savings split among themselves

• Secretary authorized, but not required, to use other

payment models



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payment models

• Partial capitation – arrangement under which

highly integrated care systems assume full

financial risk in return for fixed monthly payment

per beneficiary

• Risk corridors – ACOs’ potential for

profit or loss is limited

• Must establish a mechanism for shared governance and formal legal structure to receive and distribute payments for shared savings

• Prohibited from taking steps to avoid patients at

risk in order to reduce likelihood of increasing



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risk in order to reduce likelihood of increasing costs to ACO

• Secretary may impose sanctions on ACO that tries to avoid such patients, up to and including termination from Medicare program

ACO in Healthcare Reform Legislation

• ACOs will be eligible to receive a percentage of the cost savings that they have realized under the traditional fee-for-service Medicare system

• ACO shall enter into a three-year agreement with HHS whereby the ACO must agree to contain at least 5,000 Medicare beneficiaries, while being prevented from


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Medicare beneficiaries, while being prevented from engaging in risk selection

• ACO must define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth or other remote patient monitoring tools

• ACO must also demonstrate to HHS that it meets defined criteria for “patient-centered care”

It’s Going to Be All about “Quality”

• ACOs need to have the ability to capture and report

data, at the group and individual provider level,

relating to measures necessary to evaluate the

quality of care furnished

• ACOs will be expected to meet third party (e.g.


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ACOs will be expected to meet third party (e.g.

Medicare) performance standards measuring the

quality of care furnished

• The bar will not be static – ACOs will be expected to

improve the quality of care furnished over time

by meeting ever increasing standards for

purposes of assessing quality of care

• To earn incentive payment, the ACO will be

expected to meet certain quality thresholds

Potential Issues with ACOs

• Anti-Kickback Statute and CMP Law

• Requirement of hospitals, physicians and other

providers to accept one payment for services and

share financial incentives could be in violation of

previous interpretations


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previous interpretations

• Antitrust consequences

• Uncertainty may deter precompetitive,

innovative arrangements

• Nonprofit hospitals

• Determine whether involvement with for-profit

physician practices complies with IRS guidelines

for nonprofit institutions

Center for Medicare and Medicaid

Innovation

• New entity within CMS established

by ACA

• Has authority to test proposed methods of

coordinated care delivery such as ACOs


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coordinated care delivery such as ACOs

• To test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care furnished to individuals

• Preference to be given to models that also improve the coordination, quality, and efficiency of healthcare services

• The CMI shall consult representatives of relevant Federal

Center for Medicare and Medicaid

Innovation


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• The CMI shall consult representatives of relevant Federal agencies, and clinical and analytical experts with expertise in medicine and health care management

• Use open door forums or other mechanisms to seek input from interested parties

• Select models to be tested from models where the Secretary determines that there is evidence that the model addresses a defined population for which there are deficits in care leading to poor clinical outcomes or potentially avoidable expenditures

Challenges for ACOs

• Critical mass of provider participation

• Critical mass of payor participation

• Adequate financing for ACO start-up costs:

IT, analytic capabilities, clinical support

infrastructure, time and effort


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infrastructure, time and effort

• Technical issues – patient assignment algorithm,

performance measures and budgeting methodology

• Changing provider culture and patient behavior

– Medicare: No enrollment, no lock-in, no change

in benefits

– Modest financial incentives (at least with Level I –

shared savings)

Notice of Proposed Rulemaking

• Draft regulation for shared savings program for ACOs in the fall of 2010 (December or January)

• CMS currently soliciting input from providers, patient advocacy groups and other stakeholders


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– Written comments or statements may be sent via e-mail to: [email protected] or sent via regular mail to: Attn: ACO Legal Issues, Mail Stop C5–15–12, Centers for Medicare & Medicaid Services,

7500 Security Boulevard, Baltimore, MD 21244–1850.

Systems Implementing ACOs

• Kaiser Permanente: integrated model, 35 hospitals employ 14,000 physicians, thereby removing incentives for providers to

over-utilize care, Kaiser has also improved clinical outcomes for

chronic disease patients under coordinated care model

• Geisinger Health System: Charges flat rate for coronary bypass

procedures, which has reduced readmission rates and cost of

care


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care

• Baylor Health Care System: Converting 13 of its 26 hospitals to

an ACO model by 2015

• Montefiore: 2,500 salaried physicians, including 500 community-based primary care – to provide unified system of care. Enrolled

150,000 members under its own HMO. Flat annual fee.

Extensive EHR system.

• Piedmont: Piedmont Physicians Group and Cigna launch an

ACO pilot program in Atlanta for better care coordination in September 2010.

Secretary of HHS

• Required to establish shared savings program specifically relating to ACOs no later than January 1, 2012

• Final authority over:

– Establishment of quality performance


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– Establishment of quality performance standards and assessment of ACO’s performance

– Assignment of Medicare fee-for-service beneficiaries to ACO

– Determination of whether ACO eligible for shared savings and amount of shared savings

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BUT, ACA does:

• Permit Secretary of HHS to waive

requirements of Anti-kickback Statute,

Stark and CMP laws as necessary to

administer ACOs


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“You’ve Got a Friend in Me”


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FTC Chairman Jon Leibowitz

• FTC will consider New Safe Harbors for

ACO Arrangements

• FTC will consider establishing Expedited

Review Process


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Review Process

HHS Inspector General Daniel Levinson

• Fraud and abuse laws should not stand

in the way of provider innovation to

improve quality and reduce costs

• OIG looking closely at how HHS


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• OIG looking closely at how HHS

Secretary can effectively use the waiver

authority to develop new safe

harbors and regulatory exception

to facilitate ACO development

CMS Administrator Don Berwick

• ACO Goals

– Improving individual patient care

– Improving the health of communities


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– Lowering the cost of healthcare

services without any diminution

in quality

ACOsMedicalHome

BundledPayments

Comparison of Payment Reform

Models(The Dartmouth Brookings Accountable Care Organization Learning Network)


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ACOs

MedicalHome

BundledPayments

Comparison of Payment Reform Models(The Dartmouth Brookings Accountable Care Organization Learning Network)


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NCQA Draft ACO Criteria

• Whether the criteria should specify the types of specialists that should be included in the ACO and, if so, whether the specialists

must be part of the organization’s legal structure.

• The capabilities that should be expected for each of the four proposed ACO levels.

• Whether the eligibility criteria proposed by NCQA capture the organization types that have the capability to act as ACOs.


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organization types that have the capability to act as ACOs.

• Whether the criteria align with stakeholder expectations for

ACOs and whether the criteria fails to address areas that should

be included.

• Whether organizations seeking to become ACOs will be able to

demonstrate compliance with the criteria, and, if not, which areas

of the criteria will be most challenging.

• Whether there are critical functions not included in the current

draft standards.

Note: Deadline for comments – November 19.

Some say accountable care organizations

are like unicorns – they want to believe

in them, but they’ve never seen one.


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Others say ACOs do exist and they know

this because they have seen them in

California.

54% of insured population in California

covered by ACO-like arrangements.


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covered by ACO-like arrangements.

— Modern Healthcare Cover Story,

November 1, 2010.

ACO Lessons Learned in California

• Structure is important, but at least as important as structure is an organization’s capabilities, culture, and infrastructure, as well as the alignment of goals between the organization and its individual physicians.

• Alignment of incentives between physician organizations and hospitals offer important opportunities for performance


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and hospitals offer important opportunities for performance improvements across the entire continuum of care.

• Capitation can be effective, but payment methods should vary depending on ACO’s ability to assume risk. Note: Fee for service payment with shared savings has not been successful for efficient delivery of care.

• Health plans working together on payment methods and performance measures helped facilitate growth of ACOs in California.

ACO Lessons Learned in California

• ACOs are not the be all/end all for healthcare spending control.

• ACOs must be agnostic to insurance type.

• Difficult to balance patient choice with the desire to decrease costs and effectively coordinate care.


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• Regulation of the financial solvency of provider organizations is important to ensure market stability.

• Consumer protections from capitated provider organizations need to be balanced, not overburdening.

• Establish ACOs in geographic areas with identifiable social and economic challenges.

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