The idea is at once simple and profound: An entirely new health-care provider, given incentives by the Medicare Shared Savings Program to defragment health-care delivery, improve quality and patients’ health, and reduce costs—thereby preserving Medicare and fee-for-service reimbursement. It’s the much-discussed but little-understood accountable-care organization (ACO), due to begin operating in January 2012.
This grand (and seemingly impossible) ambition has led some to call the ACO a unicorn. With the arrival of proposed ACO regulations on March 31, though, the concept took a giant step toward clarity. Physicians, hospitals, and payors are poring over the proposed rules and related regulatory statements to divine whether there is a place for them in this universe.
In creating the ACO, the Patient Protection and Affordable Care Act (PPACA) also authorized waiving certain laws governing fraud and abuse to make ACOs work. Consequently, statements from the US Federal Trade Commission (FTC) and the US Department of Justice (DOJ) on antitrust enforcement policy—and from the OIG and CMS on waiver designs that would relax antitrust and self-referral regulations—accompanied the rules.
Thomas Hoffman, JD, CAE, associate general counsel for the ACR®, is now (with his colleagues) knee deep in the proposed regulations and related statements, preparing a response before the June 6 deadline. He acknowledges that his team has never encountered a document as challenging and open ended as this proposal, and that the role of radiology in the ACO—as well as how it will share in the risks and rewards—is still unclear. Many policy wonks, meanwhile, predict that interest will be limited.
The Peanut Gallery
Experts’ initial reactions to the proposed regulations ranged from highly critical to favorable (with caveats). The landmines can be categorized as the potential anticompetitive effects of encouraging consolidation (and the resulting upward pressure on costs); organizational requirements so onerous as to prevent participation, particularly by physician-led ACOs; requirements even more restrictive than those prescribed by the PPACA; and retrospective attribution of patients. This is intended to prevent imposing any restrictions on patient movement, but it means that an ACO will find out only at the end of three years the identity of the patients for which it was responsible.
The DOJ and the FTC plan to approach the issue of anticompetitive effects by invoking three levels of antitrust scrutiny, based on an ACO’s primary service area (PSA) share: ACOs with PSA shares of 30% or less will fall into a safety zone; ACOs with more than a 50% PSA share will require formal antitrust review by the agencies; and ACOs with PSA shares of 31% to 49% may voluntarily seek review when they apply to become ACOs.
The view of Joe Miller, general counsel of America’s Health Insurance Plans and a former assistant chief in the Antitrust Division of the DOJ, is that the screens are set too low—and that in encouraging consolidation, the policy does not do enough to discourage anticompetitive effects. He predicts that Medicare savings through ACOs would be unlikely to outweigh the cost increases that could be caused by reduced competition.
Ron Klar, longtime consultant to private-sector health plans and chief of health-systems innovation and performance for an academic medical practice, notes that by some estimates, an ACO’s startup expenses and first-year operating costs could exceed $1.7 million—a steep price for a program that offers a three-year commitment and no defined patient base.
The ACO proposal’s poison pill is the decision to assign patients based on their use of primary-care services provided only by primary-care physicians. Klar says that physicians working outside primary care provide 60% of all primary-care services to Medicare beneficiaries, and some patients with chronic conditions receive most of their primary care from specialists. The assignment model used in pre-ACO pilot projects, he says, included primary-care services provided by any physician.
Steven M. Lieberman’s assessment, by virtue of his work as a visiting scholar at the Brookings Institution’s Engelberg Center for Health Care Reform (see page 12), carries great weight. He believes that the proposed regulations will stifle—if not halt completely—the launch of the ACO as a new health-care provider.
Room at the Table
After a tremendous investment of time, expertise,