Provider groups gearing up to participate in the Medicare Accountable Care Organization (ACO) pilot programs created in the new health reform law face a daunting task of preparing. That’s because even though the programs start in January 2012, CMS is nowhere close to issuing the regulations defining how performance will be measured or savings computed and shared with providers, and says it can’t even discuss those topics yet. But there are some recent public- and private-sector programs that give a good idea of what to expect, experts say.
One clear implication is that the law’s ACO provisions “massively” favor multispecialty physician practices not associated with hospitals, Francois de Brantes, CEO of Bridges to Excellence, tells HRW. His private-sector organization now operates in 13 states and has paid $12.4 million to providers through programs with financial incentives to deliver safer, more effective and efficient care.
At least initially, ACOs probably will use claims-based measures and will measure savings based on a three-year trend, with the precise terms perhaps negotiated individually between CMS and each ACO to account for geographical and other differences, Larry Kocot tells HRW. A former top CMS official, Kocot now is deputy director of the Engelberg Center for Health Reform at the Brookings Institution, which has been co-sponsoring a private-sector ACO initiative that influenced the ACO provisions in the reform law.
The statute, which authorizes ACOs in fee-for-service Medicare, defines them as provider-based organizations comprised of multiple levels of providers and responsible for the full continuum of care. They are held accountable for overall costs and quality of care and share in the savings from it. The statute lists certain provider entities as eligible to participate (e.g., group practices, networks of individual practices, physician-hospital organizations and integrated delivery networks), but also allows for other groups that the HHS secretary deems appropriate.
The statute does not spell out performance measures, expenditure benchmarks, how savings would be measured, savings thresholds to qualify for payments, or even the portion of savings ACOs would get. And CMS spokesperson Peter Ashkenaz tells HRW “it’s too early for us to discuss any of this.”
With little concrete detail, the first step for provider entities wanting to participate in the new ACOs is to measure current and historical Medicare spending, and recognize that the reform law provides no new money to pay for the ACO program, says Douglas Hastings. A frequent speaker at ACO conferences, Hastings chairs the board at health care law firm Epstein Becker & Green. Then, he says, the government needs to set target savings levels and a formula for splitting savings if those targets are achieved.
While he cautions there is no basis for saying the CMS rules will come out this way, Hastings notes that an ACO project involving the Brookings Institution, the Dartmouth Institute for Health Policy and Clinical Analysis and hospitals gives 80% of the savings to providers.
ACOs under the new law, he points out, will need to have enough primary care physicians to deliver care to at least 5,000 Medicare beneficiaries. The law doesn’t specify payment methodology for the program but does allow use of partial capitation arrangements.
He says ACOs should expect to be measured on the basis of patient outcomes and satisfaction as well as cost efficiency.
Expect Use of Claims Data to Measure Quality
Specifically, says Kocot, providers should expect claims data to be used in such quality measures as cancer screening, depression follow-up and management, testing for hemoglobin A1c and lipid levels, testing for appropriate use of high-risk medications, and timely outpatient follow-up for congestive heart failure (CHF) patients. It is not yet known, he says, whether just process measures as opposed to actual results will be used as quality measures.
Kocot contends although “some ACOs will fail,” successful ones could share in significant savings, based on factors such as the results of the recent Medicare Physician Group Practice (PGP) demonstration program. After three years, he notes, all 10 participating sites in the PGP met quality goals and, in the third year, five of the 10 met savings goals and reaped a total of $25 million in rewards.
For physician groups, the steps needed under an ACO-type structure are clear and measurable, suggests de Brantes. They include avoiding hospitalizations, emergency department visits, and unnecessary use of specialists and diagnostic services, plus improving outcomes on patients with chronic illnesses, he says. With CHF patients, he adds, the bulk of expenditures may be on avoidable hospitalizations, so that groups preventing these can save “real money.”
The ACO language “seems to be implying some sort of gain-sharing,” de Brantes asserts, adding “whether it’s 50-50 or 60-40, I don’t know.” He notes that in the PGP, which involves very large groups, it has been 50-50.
For hospitals, measuring and compensating for performance in an ACO is “tremendously challenging,” he contends.
The scope of services is far greater, he explains, and you’re dealing with inpatient, acute medical and even outpatient services if the hospital has a clinic. Computing savings becomes “very tricky” since you have to assess such things as what should be the prevalence of knee replacements and strokes. There might be 500 or more measures, says de Brantes.
There are issues even for multispecialty group practices, de Brantes adds. If the group is already doing well, according to de Brantes, it may be hard to achieve additional savings. And practices tied in with hospitals may have another issue since the revenue gain of a small reward stemming from cutting hospital utilization may be dwarfed by the loss of hospital revenue.
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