The Accountable Care Organization Idea

Francis J. Crosson, M.D.

The Permanente Medical Group

The Forum

November 13, 2011

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Accountable Care Organizations (ACOs)

• Definition

• ACOs in health care reform legislation

• Issues/barriers regarding ACO formation

• Hope? Or fear and loathing?

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ACOs- One Definition

“ The defining characteristic of an ACO is that a set of physicians and hospitals accept joint responsibility for the quality of care and the cost of care received by the ACO’s panel of patients”

MedPAC Report to the Congress, June, 2009

Potential Value of ACOs to Physicians and Patients

• Unified medical records

• Improved care coordination across physicians, settings and time

• More systematic care data for quality improvement

• Opportunity for physicians to accept responsibility for and manage the full “health care dollar”

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Issues with the Term “ACO”

• Often synonymous only with the Shared Savings section of the ACA

• There are really three different ACO “fields of play”

• Will the public and the media like “ACO” any more than they liked “HMO”?

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ACOs in the ACA

• Medicare was directed to lead this idea

• ACA, Sec. 3022, Medicare Shared Savings Program

• ACA, Sec. 3021, Medicare/Medicaid Innovation Center

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Medicare Shared Savings Program

• Effective January 1, 2012• Based on the Medicare Group Practice

Demonstration • ACOs paid for Part A+B services by

FFS, plus any “shared savings” (or losses) against a benchmark

• Some regulatory relief• Beneficiaries retain “freedom of choice”• CMS draft “rule” was very controversial;

final rule (10/20/11) seems to be more accepted

A Few of the Final Rule Changes

• Upside-only option for three years• First dollar sharing if threshold exceeded• Lower quality measure hurdles• Preliminary assignment plus quarterly

attribution• Specialist primary care services counted• Lower EMR hurdle• More anti-trust and regulatory relief

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Center for Medicare/Medicaid Innovation (CMMI)

• Became effective January 1, 2011• Broad authority for CMS to innovate in

delivery system structure and payment methods – Dr. Richard Gilfillan

• Not required to be budget neutral • Secretary can extend scope and length,

waive some rules • Allocation of $10 Billion/10 years• CMMI as now proposed the “Pioneer ACO

model”

The Pioneer ACO Model

• Designed for large existing groups• Option for prospective attribution • “Affirmative attestation” for

beneficiaries• Requires multi-payer arrangements

for “outcome-based payments”• Potential for coordination with Part

D plans

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Key ACO Design Elements – Options

• How is the population served established?• What payment/incentive designs are most • likely to be successful?• Is there a role for health plans?• Should hospitals be part of ACOs?• Who will lead: physicians or hospitals?

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Barriers to ACOs/Integration

• Knowledge and skills needed to be successful

• Inadequacy of payment incentives and up-front costs

• FTC/CMD/Stark laws and regulations• Payer concerns about provider market

power• Physician/hospital cultural and

governance issues

• The Shared Savings Program model may or may not gain widespread acceptance; there are still concerns with the rule

• The work of CMMI may be more important in the end because of more flexibility

• Commercial ACO development is proceeding much faster, and may have the most profound impact on physicians and patients

Will the ACO Model Succeed?

Are ACOs “Good” or “Bad” for Physicians and Patients

• It depends upon who organizes and runs them, and

• It depends upon whether there is a better set of alternatives to solve the nation’s problems and preserve sustainable professional environments for physicians to work and thrive in

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The Work Going Forward

• Physician leaders and physician organizations should help all interested physicians to develop realistic, effective and ethical ACO models

• The whole physician community must take the lead in determining the nature of physician-hospital integration in the future

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If the ACO idea fails………..

what comes next?

Because……………..

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