The next round of accountable care organizations (ACOs) is out at last.

 

The Centers for Medicare and Medicaid Services announced the selection of 89 new ACOs on Monday, including John Muir Physician Network in the East Bay. This is more than triple the number of ACOs selected in the previous round. As of July 1, the newly anointed networks became responsible for providing better, cheaper care to 1.2 million seniors on Medicare.

 

The Medicare ACO program was created under the 2010 federal health law, and there had been some worry among health care providers about what would happen to the program if the Affordable Care Act was ruled unconstitutional.

 

Now that the law has been upheld by the Supreme Court, Medicare ACOs that have sprouted up throughout the country can proceed with more confidence.

 

ACOs are networks of hospitals and doctors that receive financial incentives to coordinate care for a defined population of patients.  The idea is to improve the quality of care while lowering costs, for example, by making sure that patients with chronic conditions like diabetes and high blood pressure get the preventive care that keeps them out of the hospital.

 

The ACO model has also become popular throughout the private insurance world as well, and almost every major insurer is sponsoring its own ACOs for patients who are not on Medicare.

 

“Better coordinated care is good for patients, and it saves money,” said HHS Secretary Kathleen Sebelius in a press release.

 

More than half of the ACOs announced in July are “physician-driven organizations serving fewer than 10,000 beneficiaries, demonstrating that smaller organizations are interested in operating as ACOs,” according to the HHS announcement. The majority of the ACOs announced in April were also physician-led organizations, which may help quell concerns that ACOs will become hospital behemoths that dominate certain communities, making it difficult for insurers to negotiate low rates for consumers.

 

New ACOs will now be accepted annually, with the next cohort beginning in January 2013. CMS says that 400 systems have already expressed interest in applying.

 

Click here for the CMS press release about new ACOs on July 9, 2012.

 

Click here for the full list of the 89 new ACOs announced by CMS on Monday.

 

Click here for a list of FAQs about ACOs.

Medscape One-on-One interviews Elliott Fisher, MD, MPH, Director of the Center for Population Health at the Dartmouth Institute for Health Policy and Clinical Practice, about ACOs, the final rules, and how it affects Americans. Click here to view the full video and interview transcript.     Source: Medscape.com, January 25, 2012.

It will be a busy year for health care reform as the Patient Protection and Affordable Care Act, commonly referred to as the Affordable Care Act, continues to reshape America's health care system. Here’s what lies ahead for health care reform in 2012.

Accountable Care Organizations

Effective: January 1, 2012.  The Affordable Care Act started providing a financial incentive for physicians, hospitals, and health care providers that voluntarily join together to form Accountable Care Organizations (ACOs) and coordinate care for patients with original Medicare. Under the law, those that demonstrate improved quality and outcomes in care, lower costs and patient priority will share the savings with the Medicare system. ACOs are expected to save Medicare $960 million over three years, according to HealthCare.gov.

Fewer disparities in health care

Effective: March 2012. Not all Americans have equal access to or similar outcomes from health care, according to HealthCare.gov. Depending on your race, ethnicity, or income level, you may have a higher incidence of certain diseases, fewer treatment options and reduced access to care and insurance. Countering decades of disparity is a tall order, but the Affordable Care Act aims to do so by accelerating data collection, funding community health centers, increasing racial and ethnic diversity in the health care professions and, by 2014, providing affordable health insurance for all through insurance exchanges.

Insurance rebates

Effective: June 1, 2012. The biggest impact from health care reform consumers may feel in 2012 is actually the result of an initiative that began last year called the medical loss ratio (MLR). This formula requires health insurance companies to spend at least 80 percent of their premiums on direct medical care or quality improvement or 85 percent for large group-based plans. Those that don’t meet the mark must provide a rebate to policyholders.

Electronic records

Effective: October 1, 2012. Health care remains one of the few industries still tied to paper records. The new law kicks off a series of changes to usher in electronic records. The savings from non-duplication of services alone could be staggering. One physician points out, “Say a patient comes to me with a painful knee, and I take an X-ray. And tomorrow, their knee is worse, and they go to the emergency room. If the ER physician can't see the X-ray I did yesterday, they're going to do another X-ray. The patient is going to get double X-ray exposure and double expense.” If the information is available to other physicians, it helps both on cost and patient safety.

Value-based purchasing

Effective: October 1, 2012. Another piece of health care reform that starts in 2012 under the law is Medicare’s new Value-based Purchasing program (VBP) which is designed to improve the quality of patient care by linking provider payments to the cost and quality of the care they provide. It also requires that hospital performance statistics be made publically available for the first time. Some physicians believe VBP is the payment paradigm of the future. The idea is to pay better for quality medical groups and doctors who have low infection rates (and) high scores on quality measures for care of diabetes, asthma, heart failure, low hospital readmission rates. The model pays for quality—meaning value—as opposed to just volume. Source: Jay MacDonald, January 06, 2012, Bankrate.com

Modern Healthcare reports on the many companies that are lining up to play a role in the services, marketing and other related ventures to support accountable care organizations (ACOs). Meanwhile, Politico Pro reports on a poll released Monday that shows support for the health law's individual mandate is growing. Modern Healthcare: ACO Service Industry Blooms A rocky start to Medicare's approach to accountable care has done little to deter companies eager to market ancillary services and products to hospitals and medical groups. The University of Pittsburgh Medical Center's health plan and the Advisory Board, a consulting company, announced a joint venture last week to market accountable care technology and outsourcing services. In Minnesota, meanwhile, specialty benefit underwriters the Star Line Group, insurance brokers U.S. Advisors and consultants Ascendant Care said they would sell reinsurance to accountable care organizations in the Medicare shared savings program (Evans, 11/14). CQ HealthBeat: Can ACOs Deliver? NCQA Launches Program To Help Purchasers Decide The National Committee for Quality Assurance — an independent industry group that government and businesses rely on to better gauge the quality of health care — previewed a program Monday that it intends to launch next week to accredit accountable care organizations. Purchasers, including Medicare, Medicaid and commercial insurers, are likely to increasingly rely on ACOs to lower costs and improve quality in fee-for-service medicine. Analysts say health care is inefficient and poorly organized under that type of payment system and that ACOs are a way to begin coordinating services and improving quality (Reichard, 11/14). Politico Pro: New Poll Finds Spike In Support For Mandate Public opinion shift or quirky poll? A CNN/ORC International Poll released Monday found that support for the individual mandate — arguably the most contentious aspect of the health law — is growing, and a narrow majority now back it. The survey — released on the same day that the Supreme Court agreed to review the health reform law — found that 52 percent said they backed "a provision that will require all Americans who do not have health insurance to get it." Forty-seven percent opposed it, and 2 percent had no opinion (Kenen, 11/14).

Last week, CMS released its final rule on the Medicare Shared Savings/ACO program which was outlined in our October 20 post “HHS Releases Final Regulations For Accountable Care Organizations.” Also released was a new Advanced Payment initiative specifically for physician organizations, a final FTC-DOJ Policy Statement on Antitrust Enforcement for Medicare ACOs, and an Interim Final Rule on fraud waivers for Medicare ACOs. Based on AMA’s preliminary review, there are significant changes to the Final Rules and significant advocacy wins for the AMA and physicians. While AMA staff is now reviewing in detail, the following changes have been made to the rule that are very positive and reflect AMA comments on the proposed rules:

ACO Payment and Structure

• The standard financial model for ACOs will still be shared savings, i.e., there will be no change in the underlying payment system, and the program will function essentially as a pay-for-performance program based on total cost. However, they are creating a complementary program through the Innovation Center to provide “Advance Payments” specifically to physician organizations and rural providers that do not have the capital reserves available to finance needed changes in care processes or to cover short-term losses while waiting for shared savings payments to be made.
• There will still be two different tracks for ACOs, but one will be “upside only” during the three-year contract period, i.e., the ACO will not be liable to pay CMS if costs actually increase. The second will be both upside and downside, as in the proposed rule. (The proposed rule made ACOs even in the first track liable to pay CMS back for cost increases in the third year.)
• There will no longer be requirements to withhold shared savings payments to cover potential future cost increases.
• ACOs will be allowed to share in savings beginning with the first dollar of savings earned. The proposed rule gave ACOs a share of savings above a minimum threshold. ACOs must still meet a minimum threshold of savings but they can earn back more of the savings they generate.
• There will be 33 quality measures instead of 65, and they have dropped the Hospital Acquired Conditions (HAC) measures, as we urged. There will be no flexibility, though, for different quality measures in different regions.
• They will have a more prospective method of assigning beneficiaries. ACOs will get a list of “probable beneficiaries” and the list will be updated quarterly. There will still not be mechanisms for beneficiaries to sign up voluntarily, though; the ACO will only get credit for them after the attribution methodology determines that they have had a majority of their primary care visits with the ACO. In addition, as the AMA recommended, CMS will include primary care services provided by specialist physicians in assigning patients to ACOs, and not limit the attribution method exclusively to primary care physicians.
• They eliminated the requirement that at least 50 percent of an ACO’s primary care physicians must be “meaningful users” of EHRs by year 2 of the program.  Instead they will double weight the quality measure "Percent of PCPs who successfully qualify for an EHR Incentive Program Payment." ACOs only have to report a percentage and not meet a specified percentage when reporting this quality measure and the term "qualify" covers PCPs who participate in either the Medicare or Medicaid EHR Incentive program.
• There will be a rolling application process, so prospective ACOs will have time to prepare without having to meet arbitrary deadlines that are too short.

Antitrust

FTC-DOJ has adopted two important changes that the AMA requested:

• They have eliminated the need for mandatory review of ACOs above the 50 percent threshold of the primary service area (PSA) calculation. While the Agencies will still rely on the PSA calculation, eliminating mandatory review will result in significant removal of burden and cost on potential ACOs.
• The statement applies to ALL collaborations among otherwise independent providers. The draft statement applied only to new entities formed after March 23, 2010. This would have placed all collaborations that existed prior to March 23, 2010 under a separate antitrust review system.

Fraud Waivers

• CMS and the Office of Inspector General adopted the AMA recommendations that the waivers begin sooner so that they will apply during the process of planning a Medicare ACO, and that ACOs will be able to offer certain additional medical benefits to patients, such as care management, without having them viewed as inappropriate inducements. In addition, the agencies issued the new waivers regulation as an interim final rule instead of a final rule, as the AMA had recommended.

links to key documents

ACO final

Advanced Payment

OIG waivers

FTC / DOJ statement