Let’s Wake Up About ACOs

Paul Levy

Posted 11/30/11 on Not Running a Hospital

Comments by two folks recently should reawaken our concern about how to hold accountable care organizations accountable and whether creation of ACOs will lead to market dominance that will not bring value to patients.

Back in 2009, I noted: 

Here in Massachusetts, there is only one such entity that approaches the definition of an ACO, Partners Healthcare System. But there is no sign that it has used its size and scale to deliver care at a lower cost. Indeed, there is evidence that it has used its market power to extract higher rates from insurance companies. Likewise, there are no data to show that quality, safety, and efficacy in the delivery of care throughout the Partners system is better than other community hospitals or academic medical centers.

Continue reading “Let’s Wake Up About ACOs”

The Leavitt ACO Report: Does it Overstate or Understate Accountable Care Activity?

Vince Kuraitis

Posted 11/30/11 on the e-CareManagement Blog

Accountable Care Organizations (ACOs) have been likened to

unicorn — a fantastic creature that is vested with mythical powers. But no one has actually seen one.

camel — a horse designed by a committee, one that already has its nose in the tent

With this background, you can begin to appreciate the difficulty of conducting an accurate census of ACO animals in the wilderness.  Yet, this is exactly the task undertaken in the excellent Leavitt Partners report measuring ACO activity in the US.

As I will explain, the Leavitt report has the potential both to overestimate and underestimate ACO and accountable care-like activities. In my judgment, however, it’s far more likely to be understating just how much accountable care activity actually is going on.

Continue reading “The Leavitt ACO Report: Does it Overstate or Understate Accountable Care Activity?”

Accountable Care Organization Regulations – The ACO is a Camel, Not a Unicorn

David Harlow

Posted 10/31/11 on HealthBlawg

232323232-fp53393-nu=3238-235-766-232923585737;ot1lsiThe final Accountable Care Organization regulations are out, the initial flurry of commentary is out (including my own ACO webinar with simultaneous  #ACOchat tweetchat –available for download/replay soon; slides here now: “ACOs, Bundled Payments and the Future of Health Care“), and we can now all catch our collective breath and contemplate the draft vs. final ACO regulation comparisons, the meaning of this new, final set of regulations, guidances and statements from CMS, FTC, DOJ, OIG, and IRS on ACOs and Medicare Shared Savings Programs, and all of the attendant antitrust, antikickback, Stark, and other fraud and abuse matters, and of course tax issues.

So, now that these final regulations are out, and the mythical characteristics of the ACO will soon be dispelled (see under: unicorn), I propose a new animal kingdom metaphor for discussion of Accountable Care Organizations:

The Camel’s Nose is in the Tent.

The definition of a camel, as those of you who tuned into my ACO webinar already know, is a horse designed by a committee.  And, given the nature of the legislative and rulemaking processes, that’s exactly what we have before us – a camel.

Continue reading “Accountable Care Organization Regulations – The ACO is a Camel, Not a Unicorn”

ACOs: The Good and the Bad

To muted applause and some sighs of relief from providers, HHS released the final ACO regulations last week. 

The final version superseded the much-criticized draft regs published several weeks earlier. This previous draft was widely regarded as imposing overwhelmingly complex rules for the chance of sharing in any gains. As one commentator noted: “The promise of integrated, coordinated and cost-effective care provided by hospital-physician networks had run into the reality of having to invest millions dollars with a questionable ROI, a complex maze of up and downside risk calculations, reams of burdensome quality measures and overlawyered antitrust regulations.

So the final less-unwieldy rules have been relatively well-received. On the other hand, fundamental questions about the viability and impact of ACOs remain:

  1. Will the potential “bonuses” justify the financial investments? Major hospital systems (likely to be the primary ACO sponsors) seem to be willing to play so long as the regulations are not too onerous. And as with other HHS initiatives, those willing to participate are likely to be those who are most confident that they can readily cut costs and gain the savings bonuses. On the other hand, ACOs that aren’t able to do a much better job of coordinating care will be unable to recoup their investments.
  2. Will there be losers? Physicians and hospitals who don’t participate in ACOs may find HHS squeezing rates to be in line with costs of competing ACOs. And even in successful ACOs, hospital staff and individual physicians may be in danger of losing their jobs as the ACOs try to reduce variable costs in order to achieve the “bonus-eligible” level.
  3. Why are hospitals so interested in ACOs? It’s a great opportunity to tie physicians more tightly, thereby guaranteeing referrals and admissions and strengthening the hospitals’ rate negotiating positions.  At the same time, the hospital risk is small; the ACO component is expected to be tiny relative to the size of the Medicare program, and with beneficiary assignment made prospective in the final rules, the costs and risks for participating providers are even less.
  4. Will ACOs really enhance cost-effectiveness? In some cases the answer will be yes, with the ACOs achieving the objectives of their government designers. In other cases, however, the pros of better integrated care will be more than outweighed by the cons of quasi-monopolistic hospital systems able to dictate their terms to insurers and other payers.

There is one more fundamental problem with the present ACO design: by randomly assigning Medicare beneficiaries to ACOs, much of the opportunity to impact the highest cost cases may be lost. A more targeted approach might begin to show the savings that the Medicare program desperately needs. On the other hand, HHS’ track record of success with its chronic care demonstrations gives little confidence that the government could indeed achieve these potential savings.

The bottom line seems to be: ACOs will generally demonstrate the virtues of integrated care (something that was known already), while in too many cases encouraging monopolistic hospital systems to become even more entrenched.

Roger Collier used to be CEO of a large health care consulting practice. Now he writes at Health Care Reform Update.

CMS Wants Docs To Ante Up To CMS Poker Game

Michael Millenson

Posted 10/20/11 on Forbes

In a high-stakes political, clinical and economic poker game that goes by the name of Accountable Care Organizations (ACOs), the Centers for

Medicare & Medicaid Services (CMS) has just issued a call for doctors and hospitals to grab some chips and ante up.

The set-up goes like this: one of the biggest potential changes in how health care is actually delivered contained in the Accountable Care Act was ACOs.

They’re voluntary, but they allow doctor- or hospital-led organizations that take responsibility for coordinating the care of at least 5,000 Medicare beneficiaries to get reimbursed at a higher rate for providing better-quality, lower-cost care. It’s supposed to be a win-win-win for providers, patients and taxpayers and part of a more general move towards “value-based purchasing.”

Continue reading “CMS Wants Docs To Ante Up To CMS Poker Game”

Nurse Care Managers: The Mortar Holding the Bricks of Medical Homes

Jaan Sidorov

First posted 9/22/11 on the Disease Management Care Blog

It’s no secret that the Disease Management Care Blog is an enthusiastic believer in nurse care managers. In its humble opinion, it makes no difference what “bricks” are used to build a Patient Centered Medical Home, an Accountable Care Organization, a Population Health Management Program or an employer-based care support/wellness initiative, the nurses are the mortar.

Continue reading “Nurse Care Managers: The Mortar Holding the Bricks of Medical Homes”

Another Skeptical ACO Paper

Jaan Sidorov

First posted 9/19/11 on Disease Management Care Blog

Adding to a continuing drumbeat of skepticism about Accountable Care Organizations (ACOs), Gail Wilenksy offers a “sobering” Perspective in the New England Journal about their underlying business model.  She draws on the lessons of the Physician Group Practice Demonstration, where – despite “glowing” press releases – the financial savings were decidedly elusive.  Summarizing things nicely, Ms. Wilensky points out that only 2 out of the 10 Demo participants were able to achieve savings in the first year of operation and that only half of the group had savings after three years.

Why did this happen?  She agrees with many of the criticisms noted by your Disease Management Care Blog: there were some important “design” issues involving the comparator groups (the use of “rural” settings may have set the baseline too low), CMS struggled with providing timely claims data and the risk adjustment methodologies may have fallen short (for example, the Demo participants had high-cost specialty services which may have inflated their cost).

While Ms. Wilensky previously served in a Republican administration, the Disease Management Care Blog has always found her to be a reasonable pundit.  That’s why it’s telling that she concludes her paper with a damning observation candy-wrapped in bureaucrat-speak: as currently envisioned, she says, the proposals “seem inconsistent with the hopes that have been pinned to ACOs as a viable alternative to both traditional Medicare and traditional managed care.”

Jaan Sidorov MD writes at Disease Management Care Blog.