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, through their contracts with commercial insurers, the ability of those payors to steer patients to their chosen providers—typically, those that charge least for their services. Steering patients to the lowest-cost providers is considered, under the PPACA, to be an important means of reducing the overall cost of care,1 and one obvious result is that fewer imaging providers will be able to avoid making their charges public. Flexibility and Innovation The PPACA section creating ACOs takes, as its premise, the idea that innovation can produce the reductions in cost and improvements in quality that are among the primary goals of health-care reform. Remaining flexible enough to innovate (and to keep changing as health-care delivery evolves) will be vital to creating beneficial ACO models at the federal level, but ACO participants also will be called upon to exhibit the same ongoing flexibility, according to Lieberman and Bertko. They write, “ACOs are designed to occupy a middle ground between providers who are paid on a fee-for-service basis and managed-care plans that are paid by capitation.” Although the proposed regulation3 maintains a fee-for-service model initially, the bonuses that can be earned through cost control bring the ACO beyond the status quo, and participants planning to earn those bonuses will be unlikely to do so without remaining open to new structures, alliances, and methods. “Especially if a newly formed ACO includes only primary-care physicians, some specialty physicians, and perhaps a community hospital, patients will receive a substantial amount of care from providers outside of the organization,” Lieberman and Bertko write. “Regardless of how many services are delivered by outside providers, the organization remains accountable for the cost and quality of all services received by the patients assigned to it.” Existing large, highly integrated delivery systems (such as Intermountain Health Care in Salt Lake City, Utah) might not need to change appreciably. As Lieberman and Bertko write, such systems “already have highly developed infrastructure and leadership that allow them to analyze patient, clinical, and claims data; manage use; and improve the quality of clinical processes and other types of care.” Their existing providers, they add, might already by able to provide nearly all of the care required by the patients assigned to an ACO. Smaller, less integrated providers will need to make more changes, and these will go beyond structure. Cultivating a culture that values innovation and flexibility—both of which are uncommon in many health-care organizations—will be important, too. “In some geographic areas, an important part of provider culture is working together in a system, regardless of its precise legal organization. In other areas, many providers operate as essentially stand-alone, independent practitioners,” Lieberman and Bertko write. Bringing those independent providers together will call for changes in outlook. Many will need time to adjust to the idea of working with their former competitors as part of a larger system, the authors note. Some will need to buy (or enter contracts to obtain) the services that they cannot now provide and do not want to begin providing. All will need to adjust to a greater need to measure and improve quality of care and to control costs if they are to be successful ACO participants. Expectations Lieberman and Bertko make a cautious prediction of success for the Shared Savings Program and ACOs, noting that both Medicare savings and ACO bonuses are probable, based on their pilot-program experience. Much refinement and revision will be required, however, to ensure optimal results, and constant monitoring of new developments and models will be required. They write, “CMS must be on guard against strategies that would effectively subvert the goals of accountable care, which could occur if a dominant hospital or specialty physician group organized an entity for the purpose of controlling referral patterns and enhancing revenues.” They add that some patience will be needed in assessing the validity of the ACO model—but providers intending to become part of it should be preparing now. “Although some organizations are already in operation, most have to make plans, train leaders, establish infrastructure, and develop strategies to improve patient care,” they write. “Some organizations may need two to five years to prepare for participation in accountable care. CMS needs to accommodate different levels of preparedness around the country.”