Physicians will lead ACOs forward

Giving doctors more opportunities to participate in programs targeting costs and quality allows them to demonstrate that innovation can flow from practices of all sizes.

Posted May 14, 2012.

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That 21 of the 27 accountable care organizations chosen to participate in the Medicare shared-savings program are physician-led is a positive sign for doctors — and for the health system overall.

The decision by the Centers for Medicare & Medicaid Services to approve so many physician-led organizations for the program is a validation of the American Medical Association’s contention that any practice of any size can help promote payment reform. At the AMA’s behest, CMS adjusted its ACO rules to make the shared-savings program more financially practical for physician practices. For the health system, getting physician practices into the shared-savings mix means that widespread payment and quality reform can take place while the diversity of practice arrangements that has been a strong suit of American medicine is preserved.

In the program, ACOs — which can consist of hospitals, practices and others that aren’t already financially connected — can work together to earn bonuses for curtailing spending growth for a specific pool of Medicare patients. Savings are achieved by promoting preventive medicine, coordinating care and pursuing other means to keep patients as healthy as possible and away from unnecessary hospitalizations. Collectively, the new ACOs, which officially started April 1, include about 10,000 physicians treating around 375,000 patients. They were preceded in 2011 by 32 pioneer ACOs and six other organizations taking part in the similar Physician Group Practice Demonstration project.

With a minimum of 5,000 patients required for participation in each ACO under the Medicare shared-savings program, it was always clear that small practices would need to band together. However, CMS’ original requirements for participation made it financially and administratively difficult for practices of all sizes to be involved.

Fortunately, the CMS listened to the AMA’s suggestions on changes for the program. Among the most-discussed new provisions are, for the first three years, adding a track that doesn’t require ACOs to repay Medicare if costs go above their targeted rate, and adding an advance-payment model that allows ACOs to collect savings up-front to help cover startup costs. Other, lesser-known changes include reducing the quality measures ACOs must report from 65 to 33 and providing more information to ACOs about beneficiaries so they can target care and investigate possible savings more effectively.

As a result, the majority of new ACOs are physician-led, and many of them consist of independent practice associations — physician groups of any size that share some business operations with a larger organization, but keep their corporate structure as individual practices. Also, five of the 27 ACOs are working under the advance-payment model, four of which are physician-run.

Without physician-led ACOs, a program like this could slide into validating the notion that large, well-known health systems were the only ones capable of finding ways to increase quality while reducing costs. That would be a disservice to patients and doctors alike.

Instead, the program is an opportunity to demonstrate that any physician in any practice of any size can have a voice and a role in finding ways to reform the health payment system. That’s an important message when many physicians look at hospital employment as their only financial and administrative lifeboat against the choppy waters of a changing health system.

The preponderance of physician-led ACOs puts doctors in position, regardless of the size of settings, to deliver what they know and what the health system needs: how to manage patients to keep them healthy. Except now, physicians will be getting paid for those efforts, rather than getting compensated based only on how much treatment they provide.

CMS reports that more than 150 potential ACOs have applied for the next round of approvals in July, although it did not say how many were physician-led. If the enthusiastic physicians at the dozen seminars the AMA has hosted on ACOs are any indication, many doctors are going to be front and center in those applications. Another round of approvals is scheduled for January 2013, and if physicians want to know more about what ACOs are about, the AMA has that information online (link).

By the way, ACOs aren’t the only innovative payment program in which physician practices can participate. For example, CMS’ Center for Medicare & Medicaid Innovation is taking applications until June 28 for participation in one of four models under its Bundled Payments for Care Improvement initiative, which would link payments for multiple services received during an episode of care. This is different from private insurers’ efforts at bundled payments, which merely lumped services together in a ham-handed attempt to cut costs, rather than improve quality and coordination of care. The AMA has more background on payment models online (link).

By changing its ACO rules to make them more accessible to physicians, CMS now has greater doctor interest in the Medicare shared-savings program. More can be expected to participate, which means that more money can be saved while giving more patients quality care. It adds up to good news for physicians — and for the financial and physical health of this nation.

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External links

American Medical Association on accountable care organization (link)

Payment Model Resources for Physicians, AMA (link)

CMS Bundled Payments for Care Improvement initiative (link)

CMS Center for Medicare & Medicaid Innovation (link)

CMS on accountable care organizations (link)

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