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Formation of Accountable Care Organizations Takes Center Stage in 2011
Formation of Accountable Care Organizations Takes Center Stage in 2011 | Accountable Care Organization, ACO, healthcare reform, Thomas Bartrum, Baker Donelson, Patient Protection and Affordable Care Act of 2010, Renee Frazier, Healthy Memphis Common Table, Dr. Ed Homan, Dr. Jerry Thompson, Melanie Schwer, ServData Inc., Advanced Medical Technology Association.

HMOs on steroids. The hula hoop of healthcare. The wave of the future.

However referenced, healthcare providers are buzzing about the newly forming, enigmatic Accountable Care Organizations (ACOs), the new model birthed by the Patient Protection and Affordable Care Act of 2010 by which the federal government plans to dole out healthcare dollars. ACOs are tasked with the mission to curb rising costs and boost quality, yet many industry leaders are wary of the long-reaching tentacles of the ambitious program.

“ACO is just the old 1980s model for managed care organizations with a different name,” said Jerry Thompson, MD, 2011 president-elect of the Memphis Medical Society and chairman of the Tennessee Medical Association’s insurance committee. “Instead of distributing savings and profits with shareholders, it goes to the government and ACOs. What’s old is new again.”

Melanie Schwer, an account executive with ServData Inc. in Odessa, Fla., said the ACO model “has paraded under the guise of managed care,” defined as “any system that manages healthcare delivery with an emphasis on controlling costs.”

“Commercial health plans have been doing it for years,” she noted.

Thomas Bartrum, a Nashville attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz PC, and co-chair of the American Health Lawyers Association’s new ACO Task Force, calls the new model “a march toward more financial risk being borne by providers.”

Medicare’s Shared Savings Program—the drawing card for ACOs—involves groups of providers joining forces, even former competitors, to coordinate care and share in the resulting savings.

“Through federally mandated ACOs, the government wants to write one check,” said Ed Homan, MD, an orthopedic surgeon from Tampa, Fla., and a state legislative leader from 2002-10. “Let’s say a patient needs a total hip replacement. The government might write a check to the ACO for $15,000 to distribute among all parties providing care. The hospital might get $11,000, leaving $4,000. The ACO might give $500 to the anesthesiologist, $1,000 to the orthopedic surgeon, $1,000 to the home health agency, and have $1,500 left over. The ACO will distribute the savings at the end of the year if there’s money in the bank.”

Here’s the squeeze on the ACO plan: The Shared Savings Program is set to launch at the start of next year. The Centers for Medicare and Medicaid Services ended the ACO regulations comment period a week before Thanksgiving. Much work needs to be done during the remainder of 2011.

“How do you develop an ACO … to be operational Jan. 1, 2012,” asked Bartrum, “when you really don’t even have rules yet?”

Renee Frazier, executive director of Healthy Memphis Common Table, said the greatest challenge for the healthcare community is that “we don’t really know what the measure of success is.”

Because competitors will collaborate to set pricing, antitrust concerns remain a major legal hurdle in the development of ACOs. “The FTC has indicated that they’re going to provide an expedited process for resolving and giving advice to ACOs on their antitrust exposures,” said Bartrum.

Even though many questions linger around the formation of ACOs, this much is known:

  • Early guidelines require ACOs to commit to a 3-year arrangement. Because payments from the program will not be available immediately, ACOs will require extensive operating capital for the first two years.
  • Because evaluation of quality, use, and outcomes will be critical to the program, data infrastructure will be required to enable review of progress toward the defined benchmarks. Electronic Health Records (EHRs) and Electronic Prescribing (eRx) may be among the required programs.
  • Transparency will be evident in the assignment of Medicare beneficiaries to an ACO, which will be fiscally and clinically responsible for those members. However, a member may seek care from any Medicare provider, regardless of their ACO assignment.
  • Primary care providers must be exclusive to one ACO. However, specialists may belong to multiple groups.
  • The U.S. Secretary of Health and Human Services has the authority to waive anti-kickback, antitrust and civil monetary penalty issues. So far, there’s no waiver process and no indication of new safe harbors and exceptions.
  • The National Committee for Quality Assurance’s web-based survey tool will measure ACOs under the proposed criteria. ACOs would be scored on a scale of Levels 1-4 on how they improve quality, increase patient satisfaction, and lower per capita costs.

So far, much of the focus on ACOs has involved physicians, hospitals and insurers, yet the new organizations also impact medical device makers, employers, labor unions, nurse practitioners and pharmacists. Industry leaders have shared concerns that if ACOs become too powerful, they’ll see less money and fewer patients. The Advanced Medical Technology Association, which represents medical device makers, is lobbying for safeguards in the ACO rules to make sure new technologies aren’t discouraged and for independent monitoring to insure that patients get appropriate care.
John Coster, senior vice president of government affairs at the National Community Pharmacists Association, said the extended medical community needs to continue being proactive about the formation of ACOs. “We either get on the train,” he said, “or get run over.”

 

 

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