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In Brief: New Accountable Care Organization (ACO) Regulations

ACO regulations and related federal issuances hit the street last Thursday, after several months of waiting — from CMS, OIG, FTC, DOJ and IRS.  They cover the waterfront, ranging from the central regulation defining the structure and workings of the ACO, to  limited Stark self-referral ban and anti-kickback statute waivers in the fraud and abuse arena, to new frameworks for antitrust analysis, to rules governing joint ventures involving taxable and tax-exempt organizations.

I had the opportunity to discuss the regs the day after they were issued on a special edition of the Blog Talk Radio show, ACO Watch, hosted by Gregg Masters (@2healthguru).  Gregg’s guests included Mark Browne (@consultdoc), Vince Kuraitis (@VinceKuraitis), Jaan Sidorov (@DisMgtCareBlog) and yours truly (@healthblawg).  We are geographically diverse, and bring a variety of perspectives to the table.  I invite you have a listen — we enjoyed the opportunity to discuss the rules, we all learned from each other, and we hope you enjoy the conversation as well.  (It runs about 90 minutes.)

Update 4/5/2011: For a collection of ACO analyses curated by Anita Samarth see: http://bit.ly/ACO-Analyses.

Here are a few points to consider as part of a first look at the ACO rules:

1.    The rules were worth the wait.  There are a lot of moving parts to coordinate, and the multi-agency effort really came together.  The CMS rule also retains a fair amount of flexibility.  Some requirements are very specific, but others much less so.  (For one example of specific guidelines, take a look at the eight-part definition of patient-centeredness; an  organization must satisfy all eight in order to be an ACO.  Other requirements have no detail at all, and CMS will look to applicants to explain how they meet the requirements, without giving any hints.)

2.    This is the Frankenstein regulation:  A Medicare beneficiary must sit on the board of the ACO, CMS must approve all marketing materials before they are used ….  These requirements may be traced back to origins in CMS demonstration project and Medicare Advantage policies, respectively, and illustrate the way in which CMS took a short statute and really put some meat on the bones.  Some may balk at the weight of the requirements limiting the options of an ACO.

3.    CMS has bootstrapped a law aimed at ACOs serving at least 5,000 Medicare beneficiaries each into a system of rules that effectively requires that commercial business be handled in an ACO-like manner.  This, among other infrastructure requirements (e.g., 50% of ACO docs must be meaningful users of EHRs), leads to the conclusion that there will be relatively few ACOs, at least initially.  CMS estimates 75-150 nationwide.  There are, of course, many unanswered questions about what a commercial ACO would look like.  One model I am familiar with — here in the People’s Republic of Massachusetts — is the AQC, or Alternative Quality Contract offered by Blue Cross Blue Shield of Massachusetts to providers enrolled in its HMO Blue product.  One question is whether a slightly different financial model could apply to the commercial side of the house.  One model worth a close look is Jeff Goldsmith’s proposed ACO model, which would treat primary care, emergency and diagnostic care, and episodes of specialty care in three distinct ways.

In brief, Goldsmith recommends risk-adjusted capitation payments for primary care, fee-for-service payments for emergency care and diagnostic physician visits, and bundled severity-adjusted payments for episodes of specialty care.  Primary care would be provided through a patient-centered medical home model, which would likely have a collateral effect of reducing the total volume of emergency care and diagnostic physician visits.  Specialty care would be provided through “specialty care marts,” ideally more than one per specialty per market to maintain a little healthy competition.

A quick explanation of this approach to an intensivist over the weekend elicited a favorable response.

4.    Also in the bootstrapping department, CMS has shifted the ACO from a “shared savings” approach to having ACOs share risk as well as the upside.  Of course, this makes a lot of sense; a number of commentators, including the HealthBlawger, had lamented the fact that risk sharing was left out of the statute.  CMS has used its general waiver and demo authority under the ACA to move the ACO into risk sharing.  The ACO may choose: share risk from day one, and enjoy a potentially higher percentage of the upside, or defer the risk sharing to year three.

5.    The retrospective nature of patient attribution and savings calculations mean that each ACO must treat every Medicare fee-for-service patient as if he or she is “theirs.”  Patients have the right to decide whether they want their data shared with an ACO; if enough patients are spooked by health care data privacy and security issues, fewer and fewer will authorize the sharing from CMS to the ACO, and the ACO will have to drive by feel — or base its management of Medicare beneficiaries on its management of its general patient population.

6.    Organizations that dominate their local markets may be the most successful as ACOs, but they may face the most involved antitrust review at the hands of the FTC/DOJ.

7.    Scoring on 65 quality metrics in 5 domains will help determine the amount of any shared savings to be paid to an ACO.  One domain, patient experience of care, links up nicely with the patient-centeredness threshhold requirement noted above.  (For private sector attention to patient experience, see what the Leapfrog Group is doing in this domain, using some of the same measures.)  While some may bristle at the number of metrics, it is worth noting that these metrics are all drawn from existing sets of measures.

8.    All in all, the regulations represent the first stage of realizing the ACO vision expressed by Don Berwick last fall: there is a field open to experimentation (albeit a field likely limited to large networks of significant means that can underwrite the up-front infrastructure costs), and the ACO rules sketched out in the statute and further delineated in the regulations will enable CMS to incentivize the provider community to help achieve the triple aim of better care for individuals, better health for populations and reduced per-capita costs.

David Harlow
The Harlow Group LLC
Health Care Law and Consulting

*This blog post was originally published at HealthBlawg :: David Harlow's Health Care Law Blog*

Wireless Hacking Of Medical Implants: A Call For Regulation

Researchers from the Medical Device Safety Institute at Beth Israel Deaconess Medical Center in Boston and the Department of Computer Science and Engineering at the University of Washington in Seattle have published an article in the latest New England Journal of Medicine suggesting technological and regulatory actions that they hope will increase the security and privacy of implantable medical devices.

As has been reported earlier, implantable pacemakers, defibrillators, and similar devices are subject to wireless hacking that may influence their functionality. Although a lip-smacking target for devious hackers, an actual incident where a person’s implant has been interfered with is yet to be reported.

NEJM: Improving the Security and Privacy of Implantable Medical Devices…

Flashback: Implant Hacking Possible, Not Probable…Yet

*This blog post was originally published at Medgadget*

The Ban On Drug Company Gifts To Physicians, Captured In A Photograph

Select states have taken a hard line against doctors accepting any type of gifts from drug companies.

And that includes food of any kind, which makes for some awkward moments at national physician conventions.

So, during this week’s ACEP Scientific Assembly in Boston, WhiteCoat snapped a picture of this notice, which borders on farcical:

drug company gifts

Read more »

*This blog post was originally published at KevinMD.com*

Attention Health Policy Makers: How To Win Docs And Influence Patients

carnegie_smallPretty much everyone agrees that we need to improve the quality of healthcare delivered to patients. We’ve all heard the frightening statistics from the Institute of Medicine about medical error rates – that as many as 98,000 patients die each year as a result of them – and we also know that the US spends about 33% more than most industrialized country on healthcare, without substantial improvements in outcomes.

However, a large number of quality improvement initiatives rely on additional rules, regulations, and penalties to inspire change (for example, decreasing Medicare payments to hospitals with higher readmission rates, and decreasing provider compensation based on quality indicators). Not only am I skeptical about this stick vs. carrot strategy, but I think it will further demoralize providers, pit key stakeholders against one another, and cause people to spend their energy figuring out how to game the system than do the right thing for patients.

There is a carrot approach that could theoretically result in a $757 billion savings/year that has not been fully explored – and I suggest that we take a look at it before we “release the hounds” on hospitals and providers in an attempt to improve healthcare quality.

I attended the Senate Finance Committee’s hearing on budget options for health care reform on February 25th. One of the potential areas of substantial cost savings identified by the Congressional Budget Office (CBO) is non evidence-based variations in practice patterns. In fact, at the recent Medicare Policy Summit, CBO staff identified this problem as one of the top three causes of rising healthcare costs. Just take a look at this map of variations of healthcare spending to get a feel for the local practice cultures that influence treatment choices and prices for those treatments. There seems to be no organizing principle at all.

Senator Baucus (Chairman of the Senate Finance Committee) appeared genuinely distressed about this situation and was unclear about the best way to incentivize (or penalize) doctors to make their care decisions more uniformly evidence-based. In my opinion, a “top down” approach will likely be received with mistrust and disgruntlement on the part of physicians. What the Senator needs to know is that there is a bottom up approach already in place that could provide a real win-win here.

Some 340 thousand physicians have access to a fully peer-reviewed, regularly updated decision-support tool (called “UpToDate“) online and on their PDAs. This virtual treatment guide has 3900 contributing authors and editors, and 120 million page views per year. The goal of the tool is to make specific recommendations for patient care based on the best available evidence. The content is monetized 100% through subscriptions – meaning there is no industry influence in the guidelines adopted. Science is carefully analyzed by the very top leaders in their respective fields, and care consensuses are reached – and updated as frequently as new evidence requires it.

Not only has this tool developed “cult status” among physicians – but some confess to being addicted to it, unwilling to practice medicine without it at their side for reference purposes. The brand is universally recognized for its quality and clinical excellence and is subscribed to by 88% of academic medical centers.

In addition, a recent study published in the International Journal of Medical Informatics found that there was a “dose response” relationship between use of the decision support tool and quality indicators, meaning that the more pages of the database that were accessed by physicians at participating hospitals, the better the patient outcomes (lower complication rates and better safety compliance), and shorter the lengths of stay.

So, we already have an online, evidence-based treatment support guide that many physicians know and respect. If improved quality measures are our goal, why not incentivize hospitals and providers to use UpToDate more regularly? A public-private partnership like this (where the government subsidizes subscriptions for hospitals, channels comparative clinical effectiveness research findings to UpToDate staff, and perhaps offers Medicare bonuses to hospitals and providers for UpToDate page views) could single handedly ensure that all clinicians are operating out of the same playbook (one that was created by a team of unbiased scientists in reviewing all available research). I believe that this might be the easiest, most palatable way to target the problem of inconsistent practice styles on a national level. And as Senator Baucus has noted – the potential savings associated with having all providers on the same practice “page” is on the order of $757 billion. And that’s real money.

I highly recommend a bottom up approach, not top down. That’s how you win docs and influence patients.

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