Medicare ACO options added after criticism

The Medicare agency unveils a shared savings pathway for early adopters and weighs startup funding for practices and hospitals.

By Charles Fiegl — Posted May 30, 2011

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The Obama administration has offered new options for Medicare accountable care organizations to entice wary physicians and other health care professionals to participate in the shared savings concept.

The Center for Medicare and Medicaid Innovation on May 17 unveiled a pioneer ACO model for doctors and hospitals that are deemed ready to start coordinating their Medicare patients' care as soon as October instead of waiting until January 2012.

The Centers for Medicare & Medicaid Services, which runs the innovation center, also floated an idea to provide potential ACO participants with startup capital and four training seminars.

Through care coordination and a shared savings -- and shared risk -- concept, Medicare officials hope to encourage more efficient, higher quality care in the program.

The original proposed ACO regulations, released on March 31, were met with immediate skepticism. Physician and hospital critics viewed the proposal as too risky and burdensome. The estimated upfront cost of forming an ACO is about $1.8 million per organization, according to CMS. ACO members would be penalized for failing to keep patient costs in line with CMS targets, heightening the risk that they would not see a return on investment.

The new shared savings components are separate from, but also complement, the proposed rules that will be finalized this year, said CMS Administrator Donald M. Berwick, MD. He insisted that the pioneer model had been in the works for months and that the latest announcement was not in response to skepticism about the proposed rules.

"This is responsive to some of the concerns on how to get started faster," Dr. Berwick said. "That's what we're getting asked about a lot. The criticism is comment we're welcoming."

Physician practices and hospitals looking to form pioneer ACOs must move quickly. The innovation center plans to accept applications for participation in the pioneer model until July 18. The agency plans to approve 30 organizations to launch on Oct. 1.

The agency's announcement was a step in the right direction, but more changes to the shared savings program need to take place to ensure physician involvement, said American Medical Association Immediate Past President J. James Rohack, MD.

"The AMA is pleased that [the innovation center] is working to assist physicians at varying stages of readiness who want to participate in Medicare ACOs," Dr. Rohack said. "The benefits of this new care delivery model cannot be fully realized unless physicians in all practice sizes can be involved."

The AMA has encouraged CMS to provide more assistance to small practices, including startup capital and small-business loans, to meet the large initial costs of forming an ACO.

CMS held a conference call on May 23 with large multispecialty groups that have participated in Medicare's physician group practice demonstration project, which was an early shared savings model.

One such group, the University of Michigan Medical School, is inclined to choose the pioneer pathway over the regular ACO plan as proposed by CMS, said David Spahlinger, MD, senior associate dean for clinical affairs and executive director of the university's faculty group practice.

"The pioneer offers more flexibility and opportunities to experiment," Dr. Spahlinger said. "The difficult issue for us is that the deadline is mid-July, and revision to the ACO rules will not likely be out by that time."

The decision whether to participate in either ACO model will come down to weighing the upfront costs and the potential risks, said Arthur McDowell, MD, the vice president of clinical affairs at Middlesex (Conn.) Hospital.

Middlesex, also one of the group practice demonstration groups, has saved the government money, but it has not generated enough savings to earn Medicare bonuses through the demonstration.

"These initiatives don't pay for themselves, but it's the right thing to do," Dr. McDowell said.

Help with startup costs and training

A lot of the components in the pioneer proposal hinge on the final Medicare ACO rules, said Blair Childs, senior vice president of public affairs for Premier Inc., an alliance of 2,500 nonprofit hospitals. But the unveiling of the pioneer model shows that CMS is willing to offer multiple pay models to try to make the program work, he said.

CMS has suggested that it will set up an advance payment initiative that would help interested parties form Medicare ACOs. The agency has not offered many specifics, instead requesting comments on how it should craft the advance payments.

In general, a new ACO would receive an advance on its share of the money it expects to save Medicare. The organization would provide a plan on how it would use the startup money to coordinate care.

The agency assumes it would recoup the advance payments later through savings that are credited to Medicare, but it does not indicate what would happen if an ACO accepting the money failed to produce enough savings.

The AMA will submit comments on upfront assistance to physicians interested in forming ACOs, in addition to its comments on the proposed ACO rules, Dr. Rohack said.

Questions still remain about the proposed rules. The amount of risk inherent in the ACO initiative, the number of quality measures groups must report, and the concept of retrospectively assigning certain Medicare beneficiaries to ACOs are the top concerns, said Anders Gilberg, vice president of public and private economic affairs with the Medical Group Management Assn.

CMS will attempt to answer some of these outstanding questions during four training sessions to be held across the country.

The first session will be June 20-22 in Minneapolis.

Gilberg said he appreciated that the agency would reach out to physician practices across the country, but he noted that the proposed ACO regulations will change after the public comment period ends on June 6. "A challenge at this point in time is [that] the rule won't be final. Variables will still be up in the air."

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Regular vs. pioneer ACOs

The pioneer Medicare accountable care organization model is designed for a limited number of physician and hospital groups that are deemed ready to team up to promote care coordination and health care quality. The pioneer model differs from the regular ACO shared savings model, which was proposed on March 31 and will be finalized this year.

Measure Regular ACO Pioneer ACO
Contract length 3 years 3 to 5 years
Minimum patients 5,000 15,000*
Initial start date Jan. 1, 2012 Oct. 1, 2011
Application due date To be determined July 18, 2011
Estimated number of groups 75 to 150 30
Quality measures 64 64
Projected Medicare savings $960 million $430 million

* Pioneer ACOs with a majority of physicians in rural areas would need a minimum of 5,000 patients.

Source: Centers for Medicare & Medicaid Services

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How to submit comments

The Center for Medicare and Medicaid Innovation will test the idea of providing startup capital to physicians who form accountable care organizations. The payments would be an advance on projected group savings and would help offset the roughly $1.8 million in startup costs per ACO, according to agency estimates. Comments and suggestions on the proposal can be sent via email by June 17 (link).

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External links

Center for Medicare and Medicaid Innovation (link)

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