Liberalized Regulation Expected to Enhance Interest in Accountable Care
November 30 2011
On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS) released its final rule governing the Medicare Shared Savings Program (MSSP) for Accountable Care Organizations (ACOs). The final rule features significant changes made in response to over 1,320 comments the agency received following the release of the proposed rule published on March 31, 2011. The final rule is expected to spur heightened overall interest in the transition from traditional Medicare fee-for-service to models of accountable care.
Two key areas of controversy arising from the proposed rule had been the mandatory ACO antitrust screening provision and the number of performance measures upon which a potential ACO would be assessed. In the proposed rule, ACOs were required to seek antitrust review from the Department of Justice and the Federal Trade Commission. The final rule has done away with this requirement and as an alternative, offers a voluntary, expedited 90-day review for newly formed ACOs seeking additional antitrust guidance. The final rules also requires that potential ACOs be evaluated on 33 performance measures in four domains, as opposed to the more stringent 65 separate performance measures in five domains that appeared in the proposed rule.
Initial reactions from physicians and hospitals have been positive. Both the American Hospital Association and American Medical Association (AMA) have issued supportive comments. Peter Carmel, president of the AMA noted, “The AMA is very pleased that the Federal Trade Commission and Department of Justice has made changes to their antitrust statement on Medicare ACOs, including removing the requirement for mandatory review. These important changes will significantly lower the administrative burden and cost for potential ACOs to comply with the antitrust rules.” The American Academy of Family Physicians issued statements acknowledging that the scale back on quality measures would allow small and medium practices to better transition into ACOs.
Reactions from health plans and the employer community have been less positive, with concerns centering on the final rule ceding too much market power to provider organizations and potential compromise to quality of care. James Klein, president of the American Benefits Council commented, “We are deeply disappointed that the final ACOs rules…no longer call for up-front antitrust review…success should not be measured by the number of ACOs selected in the first year of the program but rather, on the program’s ability to improve care, achieve savings and maintain healthy competition in the marketplace.”
Another key modification is in the financial terms of the Shared Savings Program. Under the proposed rule, ACOs could choose from two tracks requiring a 3-year agreement. Track 1 consisted of 2 years of modest one-sided gain-sharing in which ACOs shared savings but not losses followed by a mandatory transition into a two-sided model of shared savings and losses. Track 2, as initially proposed, consisted of 3 years in which ACOs operated under a two-sided model of shared savings and losses.
The final rule removes the requirement of eventual two-sided risk from the first track. In addition, whereas the proposed role initially allowed shared-savings after affording Medicare savings of 2%, the final rule requires that providers share on the first dollar once a minimum savings threshold has been reached.
Other modifications present in the final rule also expected to facilitate teaching hospital, critical access hospital, and small practice participation in ACOs. One change that has drawn particular attention is the decision to waive the initial requirement that at least 50% of all primary care physicians in the ACO be considered ‘meaningful users’ of electronic health records. This decision seems to be at odds with the HITECH Act provisions of the Recovery Act, which had aimed to promote broader adoption of health information technology. The change is unlikely to have an effect on adoption of electronic health records, as predictive analytics based on electronic health information will be a key to the success of efforts to manage population health and costs.
On balance, the liberalization of the regulation governing the Medicare Shared Savings program is expected to spur greater adoption of public and private provider risk contracting models. Whether these new models will deliver on their intended result—higher quality, better coordinated and lower cost care remains to be seen—but industry anticipation is higher than before that they will.
Author(s): Sachin H. Jain, MD, MBA