Preparing for ACOs

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Nearly every radiology department or practice will be affected by accountable-care organizations (ACOs)—because even if it chooses not to become part of one or more ACOs, it will probably be competing with them. Since some types of ACOs will be granted the ability to sidestep current price-fixing and self-referral restrictions, according to proposed ACO antitrust regulations¹ released on April 19, 2011, the competition between ACO participants and nonaligned groups could become intense. ACOs are permitted to serve commercially insured patients as well as Medicare/Medicaid enrollees (under the same loosened self-referral restrictions), so they are likely to be competing, sooner or later, for most of the imaging volume in any area.

In “Building Regulatory and Operational Flexibility Into Accountable Care Organizations and ‘Shared Savings,’”² published in Health Affairs, Steven M. Lieberman and John M. Bertko predicted much of what the March 31 proposed rule³ for ACOs and the April 19 antitrust proposal¹ would contain. Lieberman is president of Lieberman Consulting Inc (Bethesda, Maryland) and Bertko is a senior fellow at the LMI Center for Health Reform (McLean, Virginia).

Both authors are visiting scholars at the Brookings Institution’s Engelberg Center for Health Care Reform (Washington, DC). They are working on a collaboration between the center and the Dartmouth Institute for Health Policy & Clinical Practice (Lebanon, New Hampshire) to develop workable models for ACOs.

They write, “ACOs have the potential to lower costs, improve the quality of care, facilitate delivery-system reform, and promote innovation in health care.” Those hopes first led to the creation of ACOs in 2010’s Patient Protection and Affordable Care Act (PPACA).

In January 2012, ACOs can begin three years of participation in Medicare’s Shared Savings Program, which is expected to return bonuses of $800 million during that period to ACOs that save CMS money. ACOs that cost Medicare more than it expects to pay could be required to return $40 million to CMS, however.

In return for fee-for-service payment, ACOs must provide comprehensive care to at least 5,000 Medicare enrollees, either by incorporating all necessary services in their organizations or by paying for non-ACO services. Enrollees must be free to choose providers, but ACOs will pay those providers, even if they are outside the ACO. CMS will assign Medicare enrollees to the ACOs to which their primary-care providers belong, and ACOs will have no ability to reject any Medicare beneficiary (but enrollees can reject an ACO by changing primary-care providers).

ACOs that meet predetermined quality standards will be eligible for bonuses of up to 60% of Medicare savings if they are willing to risk repaying CMS 10% of its predicted cost of care, if they fail to save Medicare any money. If they are unwilling to take that risk for the program’s first two years, they can still qualify for bonuses of up to 50% (but during the program’s third year, they will have to return up to 7.5% of excess costs of care to CMS).

ACOs must also meet CMS criteria for organizational, legal, and management structure, and they are required to provide cost and quality data (and have the necessary information systems in place). Comments on the antitrust proposal and the ACO proposal will be accepted until May 31 and June 6, respectively.

Radiology’s Prospects

Because ACOs will be paying for the services of specialists (including radiologists), many ACOs will encourage radiology departments and groups to become affiliated with them—but ACOs are not allowed to create exclusive arrangements with specialists, so radiology groups can expect to work with multiple ACOs, instead of being tied to one (as some had previously planned).

The effect of ACOs on imaging volume is difficult to predict. Many ACOs will probably attempt to limit costs by reducing utilization of expensive services such as advanced imaging, but others might increase imaging volume, particularly for screening exams, in an attempt to improve documented quality of care (and reduce future costs of care through earlier diagnosis). Imaging providers might be wise to ensure that ACOs forming in their areas are fully aware of what they can offer, especially since the proposed relaxation of self-referral prohibitions1 would make in-office imaging outside radiology more attractive to some ACOs.

Providers participating in ACOs are not allowed to restrict,