Accountable Care Forum - From Volume to Value

Squire Sanders attorneys, Chris Gordon, a Principal in the Washington, D.C. office, and Rob Nauman, a Senior Associate in the Columbus, Ohio office, were recently interviewed by Modern Healthcare for their take on the relaxation of the interim final rule on waivers of fraud and abuse laws and the antitrust policy statement on ACOs.  Their comments appear in the article, “Dodging an ACO Chilling Effect,” in the October 31^st edition of Modern Healthcare.

This post has been contributed by Chase Matson, Manager, Government Relations, AMDR

When we published last week’s blog post, MEDICARE ACO RULES NEAR FINAL HURDLE, we knew it would only be a matter of time before CMS released its final ACO regulations. Sure enough, only two days later, CMS officially published their long-anticipated rules, ending months of speculation surrounding one of the cornerstone provisions of President Obama’s Patient Protection and Affordable Care Act. Here is a sampling of the buzz-worthy articles that best encapsulate these hot new HHS regulations:

• New England Journal of Medicine published an official response from the top official at CMS, Dr. Donald Berwick, summarizing his organization’s take on the new rules in Making Good on ACOs’ Promise – The Final Rule for the Medicare Shared Savings Program:  

“CMS is making several significant changes in its final rule to strengthen the ACO program for providers and beneficiaries alike (see table). Major changes include providing better, and more timely, information to ACOs at the outset of the performance year through preliminary prospective alignment of beneficiaries (while retaining a retrospective reconciliation to ensure that ACOs are measured on the basis of the patients they actually care for during the year); retaining a strong monitoring and quality-measurement mechanism while streamlining the metrics to focus on what matters most, including reducing the total number of quality measures by about half; allowing start-up ACOs to choose a “savings only” track without financial risk during their initial contract period; sharing savings with successful ACOs on a “first dollar” basis when the ACO achieves meaningful savings for the Medicare program and improves care or provides high-quality care; and creating a pathway for full participation of federally qualified health centers and rural health clinics that provide a primary care safety net for Medicare beneficiaries in underserved areas.”

• Kaiser Health News provided one of the best summaries about the final regulations in their article HHS Releases Final Regulations For ACOs:

"Today, most hospitals and doctors get paid more by delivering more, not necessarily better, care. ACOs will reward providers for holding down costs and meeting certain quality measures, such as reducing hospital readmissions or emergency room visits. In many ways, ACOs aim to replicate the much touted models of care at the Mayo Clinic in Rochester, Minn., and the Geisinger Health System in Pennsylvania, where hospitals and doctors coordinate their efforts within the same organization."

• HealthLeaders Media released an array of initial industry feedback in ACO Final Rule: 10 Healthcare Leaders Sound Off, including one comment by Neil Kirschner, senior associate for regulatory and insurer affairs with the American College of Physicians, that struck a perfect balance of confidence and caution with the final ACO rule:

"CMS went as far as it could to make the ACO as attractive as possible for physician participation. I can't remember a time when CMS has been so responsive. 

The risk-free track, elimination of the electronic health record requirement, the first dollar payment after the lower cost threshold is reached, "and the change from retrospective to prospective assignment make it easier for ACOs to keep track of how they're doing and better respond to the needs of their patients.

These changes, will make it more likely providers will consider forming an ACO, and I believe more actually will, but you have to remember that this is not for the faint of heart; There is still a great deal of capital and infrastructure requirement."

• Fierce Health Care included the CMS chart comparing proposed vs. final rules in Providers Cheer ACO Final Rule: Reactions to the Revised Cut and included responses from – among many others – the  American Hospital Association, American Medical Association, Association of American Medical Colleges, American Association of Retired Persons, and the following from the Campaign for Better Care:

"We are very pleased that this final rule will require ACOs to adhere to strong patient-centered criteria, use beneficiary experience of care measures to evaluate performance, and ensure full transparency, notification and choice for beneficiaries," Campaign for Better Care Leader Debra L. Ness said in a statement yesterday. "This new rule is not perfect, but it provides a path away from the broken, dysfunctional health care system we have today toward a system that offers higher quality, better coordinated and more patient-centered care."

• The Hill echoed hospital satisfaction with the final CMS ruling in New Coordination Program in Healthcare Law Pleases Hospitals, Irks Employers and Insurers, but also warned of concerns voiced by the medical device industry who categorized the rule as a “missed opportunity”:

Ann-Marie Lynch, executive vice president of the Advanced Medical Technology Association, said the association was "concerned the rule does not address the very real danger of slowing the development of new treatments and cures. 

"The failure to consider how innovative products play an important role in improving patient care threatens medical progress for current and future patients," she said. "Without certain design elements, the ACO program may have the effect of limiting treatment options and discouraging physicians from adopting new advancements in care."

• And rounding out the list is Modern Healthcare’s optimistic outlook Final ACO Regs Include Bigger Bonuses, which focused on incentives offered under the new rules for ACOs and  affiliated providers:

"As proposed in March, ACOs may choose one of two incentive options under the final rule. However, providers no longer face possible penalties under both options. Previously, providers that failed to achieve quality and savings targets could be at risk for penalties either for one year or three years, depending on the option. The CMS eliminated the possible one-year penalty under the final rules. 

The CMS also increased the amount of bonuses that providers may earn. Now, once providers clear a savings target, the CMS agreed to share savings earned from the outset. Previously, providers were eligible to share savings after the first 2% in cost-reductions."

On October 20, 2011, the Department of Justice and Federal Trade Commission jointly issued their “Final Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medical Shared Savings Program.”  The policy statement, which largely mirrors the agencies’ proposed policy statement issued on April 19, 2011, outlines how the agencies will enforce U.S. antitrust laws with regard to accountable care organizations (“ACOs”).  However, the final policy statement differs from the proposed policy statement in two material respects. 

First, the final policy statement applies to all collaborations that are eligible or have been approved to participate in the Medicare Shared Savings Program (“MSSP”).  The proposed policy statement was limited to collaborations formed after March 23, 2010.

Second, and more importantly for those contemplating the formation of an ACO, the final policy statement eliminates the mandatory antitrust review for ACOs meeting certain market share thresholds.  This change tracks the MSSP final rule, which no longer requires a mandatory antitrust review for certain collaborations as a condition of entry into the MSSP.

The final policy statement otherwise retains many of the elements of the proposed statement.  Specifically, the statement provides that ACOs satisfying CMS’s eligibility requirements for, and participating in, the MSSP will receive rule of reason treatment under the antitrust laws, and the statement preserves the antitrust “safety zone” for certain ACOs, as described in the proposed policy statement.

Finally, the FTC and DOJ will offer voluntary expedited 90-day reviews for newly formed ACOs that are seeking additional antitrust guidance. Parties seeking expedited review must submit their request for review prior to entering into the MSSP, and they will be required to produce strategic planning and other materials as outlined in the policy statement before the 90-day review period will begin.  Thus, parties seeking expedited review face a potentially significant production burden and should consider whether expedited review will be sought, and, if so, begin gathering and submitting documents to the agencies well before they plan on entering the MSSP.

As analysis and implications of these new rules become available, www.accountablecareforum.com will continue to serve as a free resource. Please join the discussion by offering your view, or if you're interested in submitting an analysis, write me at christopher.gordon@ssd.com.  Also, journalists seeking expert sources on the implications of ACO and other health care reform rules should contact dsheon@WHITECOATstrategies.com. 

On October 20, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released the nearly 700-page, final rule for payments to health care providers and suppliers participating in accountable care organizations (“ACOs”) under the Medicare Shared Savings Program (“MSSP”).  In response to approximately 1,320 public comments to the proposed rule, the final rule makes a number of significant changes, including:

• Expanding eligibility for participating in the MSSP
• Eliminating down-side risk and permitting first-dollar sharing in Track 1 (i.e., the payment option under the MSSP for new or less experienced ACOs)
• Removal of the 25 percent withhold of shared savings
• Preliminary (prospective) assignment of beneficiaries to ACOs rather than retrospective assignment
• Modification of the antitrust review policies
• Providing for federally qualified health centers and rural health clinics to participate in the MSSP by becoming their own ACOs, or by joining an ACO as an ACO participant along with other organizations

CMS has prepared a chart summarizing these changes and others under the final rule.

As analysis and implications of these new rules become available, www.accountablecareforum.com will continue to serve as a free resource. Please join the discussion by offering your view, or if you're interested in submitting an analysis, write me at david.kopans@ssd.com.  Also, journalists seeking expert sources on the implications of ACO and other health care reform rules should contact dsheon@WHITECOATstrategies.com.

Many healthcare executives may still be on the fence about the future impact of accountable care organizations (ACOs), but most of them still believe their institutions will ultimately join an ACO, according to FierceHealthcare's report on the results of a survey released by U.S. News and Fidelity Investments earlier this week.  According to the survey, 66.4 percent of the more than 1,800 hospitals and researchers surveyed were "likely" or "extremely likely" to join an ACO, whereas only 3.7 percent said they were "not at all likely" to join an ACO. 

But as to whether or not ACOs will significantly improve the quality and efficiency of healthcare delivery, the jury is still out.  Respondents are split with a large 36.9 percent saying they were unsure.  Time will tell.  

For those in the life sciences industry that don’t want to take a wait and see attitude, at least one third-party consulting firm has jumped in with early constructive advice.  The Alliance Life Science Consulting Group, Inc. released a white paper, Accountable Care Organization Clinical Integration: What the New Framework Means for Life Sciences Manufacturers and the Market.  While aimed primarily for manufacturers in the life sciences, the document makes observations and recommendations on how to appeal to new ACOs.  Alliance Life Science Consulting points out that ACOs Pharmacy and Therapeutics (P&T) Committees are going to be focused on efficacy, safety and cost and it’s incumbent upon manufacturers to have the data demonstrating the value proposition of their products.

We will continue to monitor for further discussions on the ability of ACOs to improve quality and efficacy, and reduce costs.  We also hope to begin highlighting companies that are providing solutions for hospitals/ACOs looking to purchase high-quality, lower-cost product options.

The American Medical Association (AMA) recently issued its comments to CMS relating to the proposed Medicare Shared Savings Program ACO regulations.  The comments cover numerous areas of the proposed regulations, and overall, the AMA makes clear its concern that the program as currently proposed provides insufficient incentives for physician participation.  While acknowledging that the ACO program “can be an effective tool to improve quality, manage care coordination, reduce health care costs, and create a supportive environment for practicing physicians,” in light of the issues and uncertainties facing the program, the AMA asks CMS to consider issuing interim final rules, rather than final rules, to maintain flexibility to modify and improve the program as more information is learned.

With respect to payment and risk structure under the program, the AMA urges CMS to provide a payment option that includes a one-sided risk model as an alternative to the two-sided risk model currently proposed.  The AMA identifies several reasons why it is inappropriate to force all ACOs to accept down-side risk, including lack of data, lack of risk-adjustment, and the fact that costs can be driven by non-physician providers.  The AMA also proposes that CMS consider (i) allowing first-dollar sharing of savings for all ACOs, (ii) providing ACOs a higher share of savings, (iii) reevaluating the structure of the 25 percent withhold provisions, (iv) include a risk adjustment based on patient health status, and (v) consider adopting provisions to address the impact of outliers on an ACO’s performance.  The AMA also asks CMS to include several “transitional” ACO payment models as part of the program.  Suggested models include partial capitation, condition-specific capitation, and development of accountable medical homes.  Again, the AMA concludes that without these changes, the proposed “one-size fits all” ACO program payment structure will limit participation to large groups, shutting out smaller participants that do not have the same access to necessary capital.

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I recently co-presented a session regarding ACO’s with Tony Colarossi of Plante Moran.  We presented to the Michigan Hospital Association Excellence in Governance Fellows.  The audience consisted of hospital board members who participate in the fellowship program.  The board members were from hospitals large and small.

The audience was keenly interested in the topic and asked many practical, probing questions.  Below are some of the questions/concerns from those “real world” potential ACO users and related answers.

1.  How is an ACO’s baseline affected if the number of assigned beneficiaries changes from year to year?

Answer:  The baseline value is a per-beneficiary value.  Although this per-beneficiary amount will change year to year, the number of assigned beneficiaries is not a factor that will cause the amount to vary.

2.  Can a practice based in the Upper Peninsula and a large hospital in Detroit (hundreds of miles away) both be ACO participants in the same ACO?

Answer:  Yes, there are no geographic limitations on participants in an ACO.  If a participant satisfies the participation requirements for an ACO, then it may participate in that ACO.

3.  How would a potential ACO participant control which other potential ACO participants would be in a proposed ACO?

Answer:  This is a material question, considering that an ACO participant’s economic risk (upside and downside) could be largely dependent on other ACO participants.  The proposed rule does not affect an ACO’s ability to function like a partnership, etc. that grants its initial/current participants the right to govern which participants might join in the future.  I expect that a form of ACO participant due diligence will quickly emerge to assist providers to assess potential ACO dance partners.

4.  If a rural hospital wants to be the sole ACO participant in its own ACO and it is a dominant player in some service areas, must it still seek anti-trust review?

Answer:  Yes, regardless of the nature of an ACO participant or its relation to a market prior to forming/participating in an ACO, the FTC/DOJ guidance requires that ACO participant to seek review if it forms/participates in an ACO.

5.  Is there a practical advantage to participating in an ACO sooner rather than later?

Answer:  It seems that for the great majority of providers, there is little to recommend immediate participation in an ACO.  The upfront costs and governance issues are certainties, while potential economic benefits will be deferred, if they come at all.  I believe that most providers would be wise to permit the early adopters to absorb painful lessons and develop best practices.

We love seeing accountablecareforum.com bloggers gain recognition.  Today, Dan Vukelich, blogger and President/CEO of the Association of Medical Device Reprocessors offers an insightful bylined news article that headlines today's Hospital Informer, a Fierce Healthcare news outlet distributed to 15,000 hospital management subscribers.  The article offers an understanding of how the FDA-approved practice of third party reprocessing for certain medical devices labelled for single use could save the health system billions of dollars without compromising patient safety.  Look for more coverage of the issue in other influential news outlets in the coming days.  Incidentally, AMDR's comments to CMS on the ACO regulations were co-written by Squire, Sanders & Dempsey attorneys John Kirsner and  Kristin Harlow.  

The results from the five year "Group Practice Demonstation" project, which incentivized ten leading health systems if they could reduce costs by “treating older patients more efficiently while providing high-quality care,” were reported June 1 in the Washington Post.

Although the article acknowledges that the test does not completely reflect the blueprint for ACOs eventually offered by CMS, the broad concepts of physician driven management, and incentivizing better disease management and lowering costs were included in the test.

www.accountablecareforum.com blogger and Squire, Sanders & Dempsey Senior Attorney Kelly Leahy offered a detailed analysis of the four year results of the Group Practice Demonstration in a previous blog post.

The study reports that innovation and better disease management were attained, but that “four of the 10 sites, all long-established groups run by doctors, slowed their Medicare spending enough to qualify for a bonus, according to an official evaluation not yet made public. Two sites saved enough to get bonuses in all five years, the evaluation shows, but three did not succeed even once.”

The readers’ comments following the article reflect a debate as to whether the Post was fair in its assessment that from a financial perspective the results were a failure.  Some argue that the start up years for converting to being an ACO model are bound to be more expensive, others argue that the health benefits from better disease management payoff over time, allowing for cost savings down the road. Others argue that the results show that ACOs are destined to fail because the point is to save money over the status quo.

What’s your view?  Does the experiment fairly reflect the current ACO model?  Are the Post’s criticisms fair? We welcome your constructive comments. 

The Center for Medicare and Medicaid Innovation (CMMI) recently unveiled the Pioneer Accountable Care Organization Model.  This program is intended to complement—not replace—the ACOs developed under the Shared Savings Program (SSP) authorized in Patient Protection and Affordable Care Act.  About thirty organizations will be chosen as Pioneer ACOs; letters of intent are due June 10, 2011, and applications are due July 18, 2011. The first performance period could begin as early as the fourth quarter of 2011.

The Pioneer ACO program is very similar to the Shared Saving Program in terms of encouraging integration of care, quality improvement, and cost savings.  However, the Pioneer model offers additional flexibility and upside opportunity to organizations with some experience in shared savings, performance-based contracting, or value-based purchasing.  The chart below features some of these differences.

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