ACO changes show the power of organized medicine

A message to all physicians from AMA President Peter W. Carmel, MD.

By Peter W. Carmel, MDis a pediatric neurosurgeon in Newark, N.J., and is immediate past president of the AMA. Posted Nov. 28, 2011.

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When word came down in October that CMS had adopted nearly all of the AMA's recommended changes in the final rule on Medicare accountable care organizations, the medical community could heave a collective sigh of relief.

It was a major victory for organized medicine. Due to the determined efforts of the AMA and state and specialty societies, Medicare ACOs again have become a viable option for physicians.

From the outset, the AMA supported the concept of ACOs -- 21st-century networks of doctors and hospitals that share responsibility for providing care to patients. As envisioned, ACOs will offer physicians and hospitals financial incentives to provide good quality care to Medicare beneficiaries while keeping costs down.

Yet despite a concerted AMA advocacy campaign during the development of the draft rule to ensure that ACOs would be physician-led, the proposed rule issued in March had features that were highly discouraging to most physicians, as well as to the entire health care community. Startup costs would be enormous. Requirements for physician participation would be excessive. And physicians would share in any losses but not be able to share in any savings generated by ACOs until a threshold had been met. Plus, there remained significant antitrust hurdles.

In short, even though ACOs were seen as a leading new model for the future -- a way to shift the focus from the volume of service to the quality of service, and hopefully save money along the way -- they were virtually closed off as an option for the average physician.

So the AMA redoubled its efforts. With the counsel and help of the medical specialty and state societies and innovative leaders in existing physician-led integrated group practices, we suggested specific and comprehensive changes in the regulations that would make ACOs the kind of physician-led organizations that would be affordable to form, workable for the physicians involved and beneficial to patients. We urged changes that would enable physicians, even those who were in small practices, to participate successfully.

And we didn't stop there.

The AMA submitted extensive comments to CMS, the Federal Trade Commission, the Dept. of Justice and the Health and Human Services Office of Inspector General, and backed those comments up with oral testimony. We were there to answer questions from government officials.

Throughout the entire process, the AMA stressed our support for ACOs. But we insisted on changes that ensures that it would be financially feasible for physician groups to set up ACOs, and further that these new patient-care models be led by physicians. And we called for capital to help physicians form ACOs.

Our broad-based efforts paid off.

The final rule includes a number of positive changes called for by the AMA:

  • The new rule allows ACOs to share in the first dollar of cost savings and includes an option that limits financial risk to physician practices. This is critically important, especially for physicians in small practices. The AMA had asked for this change because it makes it easier for physicians to envision their practice as part of an ACO.
  • Physician practices also will benefit from a new $170 million advanced payment initiative created through the Center for Medicare and Medicaid Innovation to provide financial assistance specifically for physician organizations with less than $50 million in total annual revenue.
  • A rolling application process will allow more time for practices to prepare and ultimately will result in greater physician participation.
  • The original requirement that 50% of primary care physicians in an ACO must be meaningful users of electronic medical records has been removed.
  • Significantly, the AMA asked that ACOs be required to report on fewer quality measures -- ones that were most relevant to their patient populations -- and for removal of measures associated with hospital-acquired conditions.

The final rule reduces the number of required measures by half -- from 65 to 33 -- and eliminates the use of hospital-acquired conditions measures. The AMA would have preferred even greater flexibility on which measures practices are required to report.

Further, the AMA is gratified that the FTC and the Justice Dept. have made changes to their antitrust statement on Medicare ACOs. They have removed the requirements for mandatory review and clarified that that statement covers all collaborations among independent providers that apply to be a Medicare ACO.

These important changes will significantly lower both the administrative burden and cost for potential ACOs to comply with federal antitrust regulations.

And we are pleased that CMS and the HHS Office of the Inspector General adopted our recommendations to expand the waivers of certain Medicare fraud laws, including the Stark self-referral and anti-kickback laws for ACOs.

Taken together, the new rules make it easier for physicians to lead and participate in this new model of care and give physicians much greater flexibility overall, especially in terms of available risk and payment structures.

Now, the rules go a long way toward meeting the AMA principles that ACOs be physician-led, place patients' interest first, ensure voluntary physician and patient participation, and enable independent physicians to participate.

This is a very good thing for American medicine. It also is an excellent example of what the AMA and organized medicine can accomplish. Working in concert with the state and specialty societies, with the administration and Congress, we have been able to make significant changes in health care policy -- changes designed to the benefit of American physicians and our patients.

The AMA has long been committed to ensuring that physicians in all practice sizes can lead and participate successfully in new health care models that allow them to provide the best care to their patients.

And we are delighted that when we asked CMS to make Medicare ACOs more accessible for physicians, CMS listened.

Peter W. Carmel, MD is a pediatric neurosurgeon in Newark, N.J., and is immediate past president of the AMA.

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