Early next year, analysts widely expect CMS to issue regulations that dictate the rules behind the establishment and operation of a Responsible Care Organization, as authorized by the new Medicare Shared Savings Program and established by the Safeguarding Health Act. Low Price Patient and Health Care. In short, the regulations will outline the precise rules of ACO formation, as well as the system through which CMS will allocate shared savings to providers. However, on the eve of this important event, some commentators are focusing on the wrong topics. Calls from both federal and private organizations to increase provider risk and strengthen ACO accreditation will only deter providers from participating in the voluntary program.

Public health policy experts praised the Shared Savings Program after the passage of the Affordable Care Act for its power to address the broken fee-for-service of the Medicare system. If CMS wants the program to usher in an era of patient-centered healthcare delivery, it must stay true to the flexibility of the program. Only by attracting the largest group of participating providers will CMS be able to determine whether the ACO model works in practice. After all, that’s what a pilot program is all about.

Brief history and overview

Shortly after the Affordable Care Act was enacted last March, much attention was paid to insurance mandates, coverage reforms, health insurance exchanges, and the like. However, as attention to these provisions began to wane, many policy experts turned to the Shared Savings Program. The ACO model, if properly nurtured, could serve as a model for change in health care delivery, a model that private payers could adopt if the Medicare model proved successful.

In theory, an ACO works quite simply. In an ACO, provider groups, including physician groups or physician and hospital groups, are responsible for the health of a defined population of patients. If that group of providers increases the overall level of care of the patient population using various quality measures over a defined period of time and does so at a lower cost than expected, then that group of providers may enjoy part of the cost. of the financial savings you get. produces. In a way, an ACO is similar to a managed care model with a pay-for-performance aspect, although the two differ crucially in that an ACO provider takes no additional risk. In other words, an ACO is not paid according to a capitation model; even if the cost of care exceeds the expected estimate, providers are not penalized as a result. Therefore, the underlying system can be characterized as a conditional bonus payment system, not as a share-based system.

As applied to Medicare through the Shared Savings Program, the ACO takes a leading role in managing Medicare payments. The program is voluntary and allows participating providers to share in the additional savings it produces when treating a defined population of Medicare patients. However, the bonus payments are in addition to the standard fee for Medicare service payments, making participation in the program potentially lucrative. However, the model structured by the Affordable Care Act maintains its separation from a capitation system, as it does not penalize providers who do not meet financial or quality objectives other than disqualify those providers from that they do not earn additional bonus payments (although, in particular, you leave it to CMS the discretion to modify this part of the model to your liking in the future). Finally, since the program is voluntary, providers must bear all the costs of forming an ACO network. If the ACO meets the guidelines soon to be released by CMS, it will be allowed into the program once it goes live on January 1, 2012.

Recent developments

Because the Affordable Care Act leaves many of the details of the Shared Savings Program for CMS to determine, healthcare consultants and attorneys have been eagerly awaiting pending regulations. However, other organizations have taken a more proactive role in the process by suggesting to CMS what the ACO program needs to become viable.

One organization that currently advises CMS on such matters is the Medicare Payment Advisory Commission. In a letter sent to CMS last month, MedPAC suggested that CMS implement a bilateral risk aspect in the ACO model. Essentially, this suggestion would completely alter the ACO delivery model. In this case, providers would expose themselves to cost overrun risk, where they would be penalized for charges above the ACO’s financial goal. So this would boil down to a pure capitation model, precisely the kind of model around which managed care was built, and the same model that failed in the 1990s.

Other groups have made suggestions about the criteria an ACO must meet, beyond the criteria CMS publishes later this year, to seek accredited status. One such organization is the National Committee for Quality Assurance, a private, nonprofit health care accreditation organization. In a published draft establishing rating and monitoring standards for ACOs in October this year, NCQA advocated for a process in which each ACO would be rated on a tiered system, based on existing infrastructure and other rating criteria. Although the organization has yet to publish the final draft of its criteria, adding an additional accreditation process will only deter providers from voluntarily joining or forming an ACO. Suppliers already expect to fulfill the projects that will be a long list of requirements established by CMS. Forcing them to meet more accreditation requirements will keep some from adopting the ACO model.

conclusion

As it stands today, providers in the process of forming an ACO already face large start-up costs. These costs range from non-financial, such as retraining your staff and learning a new electronic health record software system, to financial, such as legal and consulting fees paid to create a new responsible entity. However, many providers have considered the above and moved forward in the hope that the additional savings payments will more than offset the cost of the investment.

Without a doubt, adding a cumbersome accreditation process will deter some of the providers willing to join an ACO. Furthermore, injecting substantial loss-absorbing risk into a two-sided risk model will have an even greater effect by preventing providers from joining the program. If CMS wants the Shared Savings Program to be successful, it will remove as many barriers as possible to attract as many providers as possible. Only then will you know if expanding the program in the future is a good idea.