Health care costs constitute approximately 18 percent of the United States GDP, with the Congressional Budget Office projecting that such percentage will rise to 25 percent by 2025.
Data further suggest quality care has not resulted from these higher expenditures. A study by The Commonwealth Fund shows that the U.S. health care system fares very poorly on 37 quality measures when compared to other industrialized countries.
The health care industry has been focused on Accountable Care Organizations (ACOs) as a way to address these challenges.
In an ACO, physicians are held “accountable” for the health care delivered. With ACOs, instead of paying for more care and more procedures, providers are paid based on delivery of better care and better outcomes. Under ACOs the incentives in the health care system encourage coordination of care. Coordinated care with a shared electronic medical record and the availability of evidence-based protocols, allows providers to avoid duplicative tests and fragmented care. Wellness and preventative medicine are encouraged. Over time, the health care delivery and payment systems would be transformed.
The larger integrated delivery systems, including those in Wisconsin, have for several years been moving toward care coordination and adopting accountable care-like processes. Comprehensive health reform, known as the Affordable Care Act (the Act), required implementation of a Medicare Shared Savings Program (MSSP) by Jan. 1, 2012 utilizing ACOs. This requirement has served as a catalyst for many health care providers, led by the integrated delivery systems, to speed up their implementation of ACOs. Many providers are poised for ACOs.
CMS, which oversees the Medicare Program, issued 539 pages of proposed regulations implementing ACOs and the MSSP in March of 2011. The regulations have not received ringing endorsements. One senior hospital association leader referred to these regulations as “counterproductive and asinine.”
Others have criticized the regulations as too long, too onerous, too costly, too uncertain, and with too little return. The proposed waivers of applicable laws to make participation in the MSSP less legally risky have been viewed as insufficient.
While most providers have indicated they will not participate in the MSSP, some providers, hoping for some adjustments as the regulations are finalized, have expressed a desire to participate.
The apparent difficulties with the proposed regulations do not mean that ACOs will disappear. Integrated providers, recognizing that health care cost increases are not sustainable, are actively pursuing ACOs outside of the MSSP.
Among the various forms of ACOs that are moving forward, are:
- ACO Pioneer Program – Recognizing that the MSSP was not well received, CMS has announced an ACO Pioneer Program for organizations who have been focused on care coordination for some time. CMS is seeking 30 organizations to participate. Under the Pioneer ACO Program, the reimbursement transfers to capitation after the initial two years. While the financial return can be higher for an ACO, providers will assume significant risk with capitation. The requirements are similar to those in the MSSP, but there is more flexibility built in.
- Center for Medicare and Medicaid Innovation (CMMI) – The Act created the CMMI and funded it with $10 Billion to be spent over nine years. CMMI has invited applications for programs that test alternative delivery models, that incorporate innovative payment arrangements, that promote coordinated care, and that will share best practice successes. Approved programs are expected to generate Medicare savings, transition away from fee-for-service medicine and have escalating levels of provider accountability. We have clients preparing applications for program grants from CMMI.
- Commercial Market ACOs – Providers are developing ACOs for use in commercial markets. Providers will be paid more if they deliver improved care while keeping the cost of care for a population of patients below the historic cost trend. These programs will be offered through managed care companies or directly to self-funded employers.
- Participation in Demonstration Projects – The Act also created numerous demonstration projects which test accountable care. Among these projects are:
- A medical home program for Medicaid enrollees with chronic conditions (designed to bring a team approach to care delivery with incentives for better care);
- A pediatric Medicaid ACO project (where pediatric providers can receive incentive payments for delivering quality care at less than expected cost); and
- A bundled payment demonstration program (in which one fee is paid for all the care provided by all providers for the period from three days prior to a hospitalization until 30 days after the hospitalization).
Despite the challenges CMS has had in developing the Medicare ACO program, the momentum behind ACOs will mean new care delivery programs embracing these organizations will be tested as a way to improve our health care system.
