Bringing ACOs Back to Life

By Matthew Weinstock	October 21, 2011
The final ACO rule garners praise, but providers must still decide if the reward outweighs the risk.

Just in time for Halloween, the Centers for Medicare & Medicaid Services seems to have brought its shared savings program back from the brink of death. OK, maybe not death, but the agency's proposed rule on accountable care organizations, issued back in March, was certainly scaring off health care entities. (Can you tell that my kids are a little excited about Halloween? It occupies nearly every conversation these days. You have my apologies).

Yesterday, CMS unveiled the final shared savings program and initial reaction from providers, insurers and others was amazingly positive. The American Hospital Association "is very pleased" with the changes in the regulation, Linda Fishman, senior vice president for public policy at the AHA, said during a press call. She added that the agency made the program "more attractive" for hospitals to participate (here's a link to the AHA's official statement).

I heard similar responses all afternoon while doing several interviews:

• Chas Roades, chief research officer at the Washington-based Advisory Board Company: "I think CMS brought ACOs back to life."
• Anne Hance, a partner in McDermott Will Emery's health industry advisory group: "It certainly shows an effort by CMS to be responsive to the comments it received."
• Amanda Forster, senior director of public affairs, Premier: "Our initial interpretation is that the program is greatly improved and we would expect more organizations to be interested" in pursing an ACO."

Then there were the official statements that flooded my inbox:

• American Medical Association: "After preliminary review, the AMA believes this final rule includes a number of positive changes."
• America's Health Insurance Plans: "The ACO program takes important steps towards achieving greater accountability and better quality care for patients across our health care system."
• The National Association of Public Hospitals and Health Systems: "By listening and responding to provider concerns, the administration has taken positive steps toward developing a program that will provide more integrated care to patients in a framework feasible for providers."

To be sure, the rule has its detractors. The American Benefits Council, for instance, lamented that CMS, along with the Department of Justice and Federal Trade Commission, eased some of the antitrust provisions from the proposed rule. And, even groups that applauded CMS' effort had some criticism. The AHA, for instance, wanted the agency to increase the savings split. It did not. Some questions also remain over the governance model for an ACO. Trade associations and others are likely to find more potholes as they comb through the 696-page rule in the days and weeks ahead.

Overall, though, it is clear that the agency took to heart the comments it heard from the field. So what changed? Why is everyone so happy? We can't go into all of the changes here, but the agency did put together a handy side-by-side comparison of the key changes. Here are some highlights:

• CMS is still offering two tracks for ACOs, but Track 1 no longer has a shared losses component. Providers can participate in the track for three years without the risk of losing money. In this track, providers can share in up to 50 percent of the savings. Track 2, which is geared toward more mature ACOs, maintains a shared savings and losses approach, but ACOs are eligible for 60 percent of the savings.
• The number of quality measures an ACO has to hit to qualify for performance bonuses was cut from 65 to 33.
• The agency waived the requirement that 50 percent of primary care docs in an ACO be in compliance with meaningful use regulations.
• CMS, in coordination with the DOJ and FTC, eliminated a requirement that ACOs get a mandatory review for antitrust purposes. Instead, the agencies are suggesting providers get a voluntary review by DOJ. Melinda Hatton, the AHA's general counsel, said the prospect of a mandatory review would have been a "real barrier" to participating in the program.

Richard J. Gilfillan,M.D., acting director of the Center for Medicare and Medicaid Innovation, also highlighted a companion program aimed at enticing financially strapped small providers. Though the Advance Payment Model, physician-owned and rural ACOs can get funds from the government up front to get things off the ground. The money would be recouped as savings roll in.

The question remains, however, if the rule goes far enough and if providers are really sold on the ACO concept. It's clear that they are committed to accountable care. We see it in the private market with insurers, providers and others structuring new business arrangements. But as Fishman said, every hospital will now have to do its own financial analysis to see if the rewards outweigh the risks of buying into CMS' vision.

Watch for much more coverage of this topic in future issues of H&HN Daily and H&HN magazine. We'd also like to hear what you think about the final regs. Write me at mweinstock@healthforum.com.

The opinions expressed by authors do not necessarily reflect the policy of Health Forum Inc. or the American Hospital Association.

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