Friday, June 17, 2011

Health Reform: What Long Does It Take to Set Up an ACO and Generate “Shared Savings”?

Big things take time.


June 17, 2011- Setting up Accountable Care Organizations (ACOs) with hospitals and doctors in order to “save” and “share “money for Medicare takes time to develop.

CMS has bet its political clout on ACOs, which it prefers to call “Medicare Shared Savings Programs” as a principle means of salvaging Medicare. The basic idea is that hospitals and doctors, working together, can” save” and “share” money within three years, by coordinating care for a minimum of 5000 Medicare recipients for each ACO. CMS have estimated it will take three years to put ACOs in motion to begin to generate savings. CMS is misguided. Three years is not enough time for such a sweeping concept.

How realistic is this three year goal? Not very, according to hospitals and doctors, including integrated care organizations that have been working on developing ACOS for six years and more.

Eighteen months ago, in January 2010, I wrote the following blog regarding experiences of advanced integrated organizations.

“Since 2005, Medicare has engaged in a demonstration project with 10 large groups - Billings Clinic in Billings, Montana; Dartmouth-Hitchcock Clinic, in Lebanon, New Hampshire; Everett Clinic in Everett, Washington; Forsyth Medical Group in Winston-Salem, North Carolina; the Geisinger Clinic, in Danville, Virginia; the Marshfield Clinic, in Marshfield, Wisconsin, the MIddlesex Health System in Middletown, Connecticut, the Park Nicollet Clinic, in St. Louis Park, Minnesota; St. John’s Clinic in Springfield, Missouri; and the University of Michigan Faculty Group Practice, in Ann Arbor, Michigan - to prove beyond reasonable certainty that ACOs will save Medicare money.

The only thing certain about ACOs saving Medicare money are their uncertainties in doing so. To date, in 5 of the 10 clinics, Medicare money has been saved at one time or another, but in only 2 of the 10 have these ACO prototypes saved money every year."

Because so few of America’s doctors belong to these big clinics and because of the length of time it takes for these clinics to achieve results, one article concluded of ACOs “Congress may need to take more sweeping steps to slow the growth of Medicare spending long before the ACO model can prove whether it is up to meeting these challenges.”

CMS Rules for ACOs

On March 31, 2011, CMS released its long-awaited, much-anticipated rules for implementing ACOs. Hospitals and doctors quickly proclaimed ACOs as DOA (Dead on Apprival) because of a number of factors – the expense of setting up ACOs, complexity and unworkability of the rules, risks of being sued as a monopoly by the Justice Department, and the unrealistic time frame for documenting savings and sharing those savings.

CMS countered by proposing: One, that ACOs would be eligible for “modest savings” with two years, but responsible for losses in year three; Two, that ACOs would be eligible for 1st dollar savings in the 1st year, but responsible for losses all three years.

No deal, said overwhelming numbers of potential ACO participants, including those with early experience in the ACO game.

Their reasons? It takes years, even a decade, to set up and organize an ACO or its fascimile, to recruit primary care doctors, to win specialists over, and to install an electronic record system linking all participants to document savings that CMS would recognize.

Three years to set up, link participants, recruit 5000 Medicare recipients, and dispense shared savings is simply not realistic.

Today I had a taste of how a fledging ACOs might function. Thanks, in small part, to a grant from the Physicians Foundation, the Middlesex hospital system in Middlesex County, Connecticut, has been working for years on an integrated system bring together the various players – the Middlesex Hospital, a salaried primary care network, affiliated clinics, ERs, surgicenters, and center for chronic disease management.

With a relative with newly diagnosed diabetes, I visited a primary care physician. He counseled the patient in some detail about the various ramifications of her disease, ordered the appropriate lab work, and referred her to the system’s chronic disease management center, which evaluates, coordinates, manages five or so major chronic diseases.

There a nutritionist will explain diabetes management further and will recommend a diabetes diet. She, the patient, will then return to the primary care doctor who will prescribe an oral diabetic drug and a beta-blocker.

This approach to chronic disease management has been evolving over a decade. Recently Middlesex installed a system-wide electronic record , in itself at least five years in the making, to help coordinate care. Whether it will help produce shared savings and improve outcomes remains to be seen.

The object lesson is: It takes years to develop workable, flexible, functioning coordinated care system. It cannot be done in three years.