Accountable Care Organizations - Second Attempt

Accountable care organizations (ACOs) are the keystone of PPACA (Obamacare) as far as restraining costs and improving quality.

Early this year there was great excitement about ACOs in the provider community, but the publication of the (first phase) Medicare ACO rules threw cold water on the concept.

The rules were at best complicated and convoluted and providers ran for the hills. The administration tried calming the fleeing providers with fast track and modified programs, without much success.

On October 20th the Obama administration published revised Medicare ACO rules. The "simplified" rules run 696 pages! Most of us are still reading and analyzing, but the response seems to be less one of fear and more one of disinterest - but time will tell.

The administration finally got smarter and announced modifications to antitrust policy so Obama's DOJ would not be wrecking the work of Obama's DHHS.

Bad news though, employers and insurers see the possibility of intense ACO activity as anti-competitive.

This is a mess.

IOM Recommendations

The Institute of Medicine (IOM) an influential organization long known for criticizing health care providers and advocating reform, has issued process recommendations for deciding the "essentials" of health insurance plans. An essentials list is required by DHHS by 2014 for all health plans available on the state health exchanges. The essentials should balance quality of care with projected premium costs.

PPACA does specify ten (10) broad areas of coverage, but not a specific plan menu.

The IOM study was a disappointment to some because it did not specify benefits, as this would have been a good discussion starter and would have given DHHS some political cover. The IOM focused on an approach to making the decision, and it is to start with costs and then work into benefits.

IOM also suggested an annual review of the programs beginning in 2016, and some waiver flexibility for states to customize plans.

Not exciting, but very very important.

see: http://www.iom.edu/Reports/2011/Essential-Health-Benefits-Balancing-Coverage-and-Cost.aspx

Bundled Payments Proposal

PPACA (Obamacare) included initiatives to create "bundled payment" plans for Medicare (which would likely encouraged bundled payment for other payers as well).

This week the CMS Innovation Center issued directives encouraging creation of four (4) models of bundling services.

Rather than paying for quantity of services, Medicare wants to pay for quality and outcomes (this can become problematic in elder care).

This could be one PPACA initiative that actually brings some significant results, or the bureaucrats could bungle it. Time will tell. For now providers are on board or even ahead of CMS, racing to get ahead of the changing revenue cycle.

There are significant business complications in making this shift, so we do not expect quick progress or instant success.

ACOs Becoming IPWACOCs?

Accountable Care Organizations (ACOs) are the keystone of the Obamacare efforts to improve quality and control costs.

After considerable initial enthusiasm providers have cooled on the ACO concept, especially as envisioned by the Center for Medicare and Medicaid Innovations. Why? Apparently.....

* ACOs are very difficult to organize and assemble
* ACOs are very difficult to operate and manage
* ACOs are unlikely to provide gain sharing dollars higher than new administrative costs

So is there good news? Yes.

Providers appear to be picking various components of the ACO concept and creating new and innovative models for improving care and containing costs.

It is way too early to declare a trend or to make definitive statements, but it appears providers are creating Innovative Projects With ACO Characteristics, or IPWACOCs.

He4alth Insurance Exchanges

The Obama administration has published draft rules for the formation and operation of Affordable Insurance Exchanges, a key element in the PPACA (Obamacare) plan to increase insurance coverage.

There is a 75 day comment and then more time to digest the comments before final rules are issued. Implementation is due by January 1, 2014.

See the rules here, 244 pages:

http://ofr.gov/OFRUpload/OFRData/2011-17610_PI.PDF

Physician Briefing Paper Number 1

We have published our first Physician Briefing Paper. Click the title line to link to our library.

Obama Administration Mystery Shoppers

If there is anything most health policy wonks and politicians agree on, it is the shortage of primary care physicians, a shortage that may get worse.

So now the Obama administration is setting out to prove what we already know, and likely to create a public relations attack on primary care physicians.

The administration has hired a research firm to employ mystery phone shoppers to call primary care offices with two versions of a script, one a insured patient script and the other a government funded patient script.

The purpose is to measure wait times for new appointments, and to look for discrimination against government-funded patients, particularly Medicaid patients.

The biggest burden will fall on front desk personnel, who are always too busy (I never asked an employee to do what I wouldn't, so I have worked the receptionist chair - gasp).

All this to prove what we already know. ????

ACO Update

Accountable Care Organizations are the heart-and-soul of Obamacare quality and cost control initiatives. All is not healthy.

Ready – Fire – Aim

When the Center for Medicare and Medicare Innovation (CMMI) released the draft regulations for Medicare ACOs on March 31, 2011 the reaction was brutal. CMMI was publicly beaten like a rented mule, even by enthusiastic supporters of the ACO concept.

Criticisms included: 1) the rules are too complex 2) start-up costs will be much higher than CMMI estimates 3) the probably of achieving savings to share is small and 4) the time lines are too short.

The Empire Strikes Back

In May CMMI burst forth with two new models in an attempt to quiet critics (unlikely) and to improve participation.

Advanced Payment ACO

AP-ACOs are designed to share ACO shavings before the savings are created, in effect, an advance for start-up capital. No one has told us yet what happens if the AP-ACO never generates any savings.

Pioneer Model ACOs

CMMI is hoping large physician groups already involved in the Medicare physician group practice demonstration program will start ACOs before the 1/1/2012 start-up date.

CMMI jeopardizes this initiative out of the gate by setting a ridiculous deadline. The deadline has now been extended a slightly less ridiculous deadline of August 19th.

The Pioneer Model is more flexible than the original Medicare SSP-ACO model, and has rules for both regular and “rural” ACOs, but is practically restricted to existing integrated delivery systems capable of moving very, very quickly.

Physicians Move to Integrate

Story in the Washington Post.. (c) Washington Post Co., 2011

http://www.washingtonpost.com/national/health-science/hospitals-courting-primary-care-doctors/2011/05/31/AGYutAcH_story.html?hpid=z1

Pharm Supply Chain Meltdown

The pharmacy supply chain for many critical medications is melting down, with resulting shortages.

Why? The potential list so far:

1) ultra-cheap generics are no longer profitable to produce
2) an international supply chain does not work smoothly all the time
3) consolidation in the pharmaceuticals industry
4) hyper-regulation from the FDA since 2006 has disrupted the chain with little gain in safety

The hyper-regulation problem, involving both real safety issues and of course increases in paperwork is likely the biggest problem. The biggest problems seem to be in injectibles, including certain cancer and anesthesia drugs, which are being rationed if they can be found at all. Rationing and substitution seem to be the only short term solutions.

Non-compliant patients - what to do?

Ask physicians and nurses about their biggest clinical problems and non-compliant patients will likely be near the top of the list.

And why should we care? Because non-compliant patients are huge cost drivers.

Ezekiel Emanuel (MD, PhD, NIH) estimates that one-third of U.S. health care costs are driven by diabetes, and we know a lot about controlling diabetes, but it is very dependent on the patient being compliant with diet and medications. We don't do so well on this. Ask a nurse.

Is there something about Americans that make us less compliant than we should be? Is our consumer culture a bad place to promote health? Is there not enough information? Are we stressed into non-compliance?

Whatever the reason, it is very costly for all of us.

Accountable Care "Smackdown" Part III

The feds fight back - Yes We Can!

From modernhealthcare.com today, Berwick interview:

http://www.modernhealthcare.com/article/20110517/NEWS/305179959?AllowView=VW8xUmo5Q21TcWJOb1gzb0tNN3RLZ0h0MWg5SVgra3NZRzROR3l0WWRMZmJVZndHRWxiNUtpQzMyWmV1NW5zWUpibW8=

Accountable Care "Smackdown" Part II

While the feds were developing regulations for Medicare ACOs, both the feds and the American Hospital Association were developing cost numbers for ACO start-ups.

Today the AHA published its preliminary numbers, listing 23 major competencies to form and operate a hospital-based ACO (the AHA has been generally supportive of reform efforts, seeing a grim future).

The AHA costs estimates ranged from 600% and 1400% higher than the DHHS-CMS estimates. Both estimates are preliminary, but that is a huge difference. In my opinion (without deep analysis) the federal estimates have the substance of cotton candy.

On the list of 23 competencies, some were for formation only but most for formation and operations (my own list was 13 major competencies for on-going operations). The ACO is a very complex business model.

If ACOs do not fly, the major objectives of PPACA (Obamacare) will be difficult if not impossible to achieve.

Accountable Care "Smackdown"

The American Medical Group Association represents about 400 very large and sophisticated multi-specialty physicians groups, such as the Cleveland Clinic group and Intermountain (Utah) group.

The Obama administration had counted on these groups to be the first to create Accountable Care Organizations (ACOs), starting with Medicare ACOs in 2012 and then moving to full service ACOs. These groups were more likely to have the resources necessary to start an ACO.

On Wednesday the group announced probably 90% of its members would not participate, because the draft regulations issued March 31st were too prescriptive, too operationally complex, the move to risk sharing is too quick, the gatekeeper and risk management capabilities requirements too much, and the time lines too short. The AMGA consensus is the chance of success is close to zero, so why waste resources.

If the big 400 cannot chew through this and come up with a workable plan, neither will other physician groups. Based on our recent conference attendance many provider organizations are taking the slow down approach.

It appears today only very large very integrated systems owning all of the necessary providers will be in the first wave. This could change for the better, but we doubt it. This could change for the worse though.

Not enough ACOs, no significant cost savings with quality improvement, no deficit improvement, train wreck.

The Wave of the Future? ACOs?

Having recently plowed through about hundreds of pages on Accountable Care Organizations (ACOs) and Integrated Delivery Systems (IDSs), we should know how to define an ACO.

But not exactly.

This is critical because the Obama administration expects to garner huge savings from providers working through ACOs, beginning for Medicare in 2012 (building such systems in less than 9 months is going to be a Herculean task)..

The best formal definition we have seen to date, and it is very general, is the CMS definition for Medicare ACOs, and I quote:

Q: What is an "accountable care organization."

A: An Accountable Care Organization, also called an "ACO" for short, is an organization of health care providers that agrees to be accountable for the quality, cost and overall care of [Medicare] beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it (ACO).

It is a start, barely. The ACOs are supposed to be in place 1/1/2012. Administrative regulations were issued in November 2010 and the public comment period ended recently.

In a recent speech DHHS Sec. Berwick offered these "flag and apple pie" characteristics, still very general:

• the patient and family will be at the center;
• teamwork will now become “paramount;”
• respect resources and reduce waste;
• reinvest where investment counts;
• measure and manage outcomes partially through electronic health records; and
• establish a solid health care workforce foundation

If ACOs are to dominate the health care arena, we should probably know how to define an ACO.

Social Media and Employee Speech

The National Labor Relations Board (NLRB) forced a settlement on American Medical Response of Connecticut Inc. after AMR fired an employee (and Teamsters member) who went home from work and profanely blasted her supervisor as being mentally ill on Facebook. Other employees posted responses supporting the employee.

The law protects the free discussion of working terms and conditions, and concerted activity, even in a crude and lewd manner in a public Internet space.

AMR agreed to loosen its Internet policies and a confidential settlement was reached with the former employee.

Since the employee posted from her home computer the issue of social media use on the job was not addressed, but it is another thorny problem.

In reviewing multiple news reports, various attorneys weighed in on the impacts of this ruling . It is likely we will need more cases to get a better definition of the boundaries, and there is no indication the ruling contradicts various laws protecting patient and customer privacy, intellectual property or prohibiting the dissemination of insider information. No indication how this might mesh with slander and defamation laws.

The NLRB announced the results of its settlement - on its Facebook page - of course.

To Integrate or Not to Integrate

The Obama administrative, and especially the Department of Health and Human Services, is pushing the notion of accountable care organizations (ACOs) and similar innovative integration strategies to improve the cost-benefit ratio of health care services. This is integral to PPACA ("Obamacare.")

ACOs and other integrated provider networks are to provide 1) better coordination of care and 2) lower cost, perhaps through a bundled payment system. The exact form of these organizations is still evolving.

http://en.wikipedia.org/wiki/Accountable_care_organization

The Federal Trade Commission appears to be preparing to hammer physicians and hospitals under the assumption ACOs and the like are anti-competitive. This is consistent with pre-PPACA enforcement policies. Reports and lawyer gossip say there is a tug-of-war between the two agencies, with the Justice Department being more sympathetic to the integration.

To be fair, the FTC is supposed to enforce the laws on the books, perhaps we need some clarification from Congress?

A little clarity would speed the integration and further the intent of PPACA, IMHO.

Structuring Accountable Care Organizations (ACOs)

The success of PPACA (Obamacare) cost control depends heavily on innovative delivery systems such as ACOs.

With the health care industry there is lot of chatter and lots of thinking about how these innovations can be achieved.

One problem though. Over the past couple of decades the federal government (Congress, FTC, Justice) have been concerned about anti-competitive actions. The Stark legislation (I, II, III) and antikickback statutes add to the mix (being a health care transaction lawyer has been and will be very lucrative).

There is much concern about innovating organizations into trouble, and the possible considerable costs if all parties in a transactions have to buy legal assurance each step of the way.

Suggested solutions include "safe harbor" rules (a big help with Stark) or perhaps an omnibus pre-screening mechanism.

Innovation can be very complicated.

Future reading: Modern Healthcare and other health care sources

Health Care House of Horrors

This is almost too difficult to read.

(c) Philadelphia Inquirer

Additional details can be found via Google.


1/11

PPACA Phase-ins

Numerous PPACA changes became effective for insurance plan years starting after 9/23/10 (for most patients this would be a plan year beginning January 1). Many changes are related to insurance coverage, including:

• coverage extends to dependents up to age 26

• certain preventive and immunization services will be covered with no patient cost sharing

• lifetime dollar limits will be removed from benefit plans

• pre-existing condition exclusions and waiting periods are eliminated for patients under 19 (older patients phase in later)

• retroactive cancellation will be only in cases of fraud or failure to pay

Other changes:

• increases in penalties for misusing health savings account funds

• changes in flexible savings accounts (FSAs)

Much of this will increase insurance premiums in the short run, and employers are passing much of the cost down the ladders to employees.

C.L.A.S.S. commentary

The C.L.A.S.S. long-term care financing program in the PPACA has been under the radar, but eventually we will need to look at the phase-in and the potential benefits.


Commentary


1/11

Happy New Year and buckle your seat belt

This may be the most interesting year for health care in a long long time.