Washington Report to the Physicians Foundation on ACOs

May 24, 2011 - In my mind, there is not better source of physician attitudes towards the various manifestations of the Health Reform Law (ACA, aka, Obamacare) than the Washington Report to the Physicians Foundation by Lee Stillwell. Stillwell, a veteran lobbyist for physician organizations, knows the ins-and-outs of Inside-the-Beltway political developments related to physicians better than anyone. Here is his May 23 report of the reaction of leading physician organizations to recently announced CMS initiatives. The Physicians Foundation has taken no position, for or against ACOs, and prefers to remain neutral.

WASHINGTON REPORT

May 23, 2011

So, what is the federal government going to do when it’s new pet project to develop a new health care delivery model—Accountable Care Organizations (ACOs) — is threatened with extinction because of mounting criticism from physicians and hospitals who believe the current proposed regulation is unworkable?

In this case, the Obama Administration decided to double down, adding three more initiatives to the three comment processes already underway for the current proposed rule!

Potential ACO candidates already are sending in comments to the Centers for Medicare and Medicaid Services (CMS), due by June 6; the Internal Revenue Service (IRS), May 31, and the Department of Justice (DOJ)-Federal Trade Commission (FTC), also May 31.

The three new initiatives announced last week by the CMS Center for Medicare & Medicaid Innovation include:

--A pioneer ACO model designed to nudge quickly into the government fold as many as 30 health care organizations and providers that already are experienced in coordinating care for patients across care settings. This new program still would require participants to follow the 65 quality measures now proposed in the rule but would permit participants to suggest different arrangements for shared savings and financial risks. Interested parties must send a letter of intent to the Center by this June 10. Final applications are due by July 18.

--An advance payment program to permit participants with limited capital to receive up front some of the projected shared savings in the program. The Innovations Center asks for suggestions and reactions to the proposal by June 17.

--Four free accelerated development learning sessions in 2011 for potential ACO leadership teams with the first session already set for Minneapolis, Minn. June 20-22. Interested groups are asked to send two to four executives—chief executive officer, chief operating officer, chief medical officer, chief information officer, etc. Participants, who must pick up their own expenses, will be chosen on a first-come, first-served basis. All participants should be prepared to conduct pre-session planning, attend an intensive in-person meeting, participate in follow-up webinars, and complete a comprehensive ACO implementation plan. The dates and locations for the other three learning sessions will be released soon. Individuals can register on the Center’s website.

The government’s objective in creating an ACO program is to offer incentives to providers to work together to offer quality care while driving down costs.

Physicians and hospitals have beaten the drums of discontent louder and louder as their lawyers and accountants pour through the proposed ACO federal rule, pointing out serious financial risk, stringent regulatory requirements and a lack of needed detail for such an expensive undertaking.

The American Hospital Association (AHA) released a study that concluded cost of creating an ACO would be six to 14 times as high as predicted by government t officials. AHA estimated the first year cost of starting an ACO for a hospital would be between $11 million and $26 million.

Officials at four institutions often cited as models for ACOs have expressed doubts to the press about the viability of the ACO program without major changes. They include Cleveland Clinic, Mayo Clinic, Geisinger Health System and Intermountain Health.

Most devastating to CMS was a letter on May 11 critical of the ACO rule from the American Medical Group Association (AMGA), an organization of 400 physician groups and health systems.

“We write today, however, to express our serious concerns over the direction of the Proposed Rule,” said Donald W. Fisher, AMGA President and CEO. “On its face, it is overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive. As you know, most policy experts believe multi-specialty medical groups are best poised to become ACOs in the short term. However, in a survey of AMGA members, 93 percent said they would not enroll as an ACO under the current regulatory framework.”

Fisher said his membership’s concerns were many and focused on issues such as the risk sharing requirement, static risk adjustment, retrospective attribution, quality measurement requirements, the Minimum Savings requirements and others.

“Without substantial changes in the Final Rule, we fear that very few providers will enroll as ACOs and that CMS and the provider community will miss the best opportunity to inject value and accountability into the delivery system,” Fisher added.

Donald M. Berwick, CMS administrator, has not responded directly to the AMGA letter but did address criticisms of the proposed ACO program to media. “Of course, we are listening to their concerns,” Berwick said. “We are going to come up with a way to work together. We will produce a better final rule.”

Berwick gave no indication on the date for issuing a final rule. But from where I sit, this tedious process has a long way to go before we see one.