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    Is an ACO for you?

    PCPs will be at the core of the Medicare organizations, but make sure joining one will be worth your time

    • Understand how you will be compensated when a hospital, group practice, or integrated delivery network presents you with an ACO provider agreement.
    • In the one-sided model, an ACO doesn't risk losing money if it overspends, but receives a smaller savings incentive for hitting its savings target. In the two-sided model, an ACO risks losing money if it spends more than the Medicare-determined limit.
    • The ACO's ultimate goal is cost reduction, but not at the expense of quality.

    Chances are, you haven't been contacted yet to join a Medicare accountable care organization (ACO).

    The final rule for the Centers for Medicare and Medicaid Services' (CMS) Accountable Care Organization and Shared Savings Program was published in November in the Federal Register. The guidelines explain, in part, how these ACOs will receive financial bonuses from CMS for reducing healthcare costs while maintaining numerous quality standards. The final rule, however, included significant changes from the proposed guidelines.

    Due to the complexity and length of the application, few ACOs were expected to complete it by the April 1 or July 1 deadlines. CMS estimates that 50 to 270 ACOs will participate in the program, which ends after December 31, 2015.

    So before you consider what will happen when you join an ACO, perhaps you should first decide whether you should one join at all.

    That observation was one of several discussed at the National Society of Certified Healthcare Business Consultants 2011 annual meeting in Cincinnati, Ohio. Although the conference took place before release of the final rule, the advisers shared some insights into ACOs that haven't changed since the proposed rule.

    Perhaps the most important lesson the consultants agreed on was that physicians need to understand how they will be compensated when any hospital, group practice, or integrated delivery network (IDN) presents them with an ACO provider agreement (see "Four questions to ask before joining").

    "The government made a very deliberate intent to say, 'We do not want to get involved in the arguments of doctors over money anymore, so we are going to say, here is our budget,' " said H. Christopher Zaenger, CHBC, of Barrington, Illinois-based Z Management Group Ltd. during the ACO roundtable discussion. "The government has said, 'We are going to pay you the money, and the doctors will figure out how to divvy it up,' " added Zaenger, an editorial consultant to Medical Economics. Medical Economics Editor-in-Chief Lois A. Bowers, MA, moderated the discussion.

    In this article, we will review other Medicare ACO details talked about during the roundtable discussion and how you can decide whether joining an organization is right for you and your practice.


    "Many...doctors who are in small private practice cannot afford...to pull this off. So the hospitals will be the ones to really start this up." —Mark Scroggins, MSBA, CPA, CHBC

    ACO startup cost estimates vary from $1.2 million to $1.8 million, according to Mark Scroggins, MSBA, CPA, CHBC, a business adviser with Scroggins & Associates in Cincinnati, Ohio.

    "Many ... doctors who are in small private practice cannot afford to coalesce with other private practices to pull this off," said Scroggins, who also is an editorial consultant to Medical Economics. "So the hospitals will be the ones to really start this up."

    In the proposed rule, primary care physicians (PCPs) could join only one ACO, but specialists could join as many as they wanted. The final rule nixed that limitation while also permitting PCPs who don't practice with an electronic health record (EHR) system to join an ACO. Physicians who have achieved meaningful use of an EHR, however, will receive a highly weighted quality measure, according to the final rule.

    Quality measures also were loosened from a required 65 in the proposed rule to 33. Although reduced, the numerous quality measures favor large hospital systems and IDNs who have internal quality guidelines established already for their employed or affiliated physicians.

    "There is no reason for...physicians to be scared of ACOs, because it is business as usual." —Reed Tinsley, CPA, CVA

    "We are littered in Houston with small practices," said consultant Reed Tinsley, CPA, CVA. "I do not see this ACO board coming to a bunch of cowboys telling them how to practice medicine, but to make this successful, that is exactly what they are going to have to do."


    As in the proposed rule, CMS requires in the final rule that the ACO meet a minimum savings rate (MSR) to receive the financial incentive in the shared savings program. Savings are defined as occurring when an ACO's average per capita Medicare expenditures are less than a CMS-established benchmark. Unlike the proposed rule, the ACO can share in the savings from the first dollar after the 2% MSR is achieved.

    The program still has two risk models in the final rule. In the one-sided model, the ACO doesn't risk losing any money if it overspends but receives a smaller savings incentive if it hits its MSR. In the two-sided model, the ACO risks losing money if it spends more than the Medicare-determined limit.

    Although the models have changed since the proposed rule, advisers at the conference predicted that nearly all ACOs would chose the model with the least risk.

    "I cannot imagine anybody trying to do the two-sided model unless they are a truly, truly, truly integrated group; that includes a hospital," Tinsley said.

    CMS estimates that under the final rule the first 50 to 270 ACOs will be able to reduce costs by $0 to $940 million from 2012 to 2015 and the agency will award $890 million to $1.9 billion in shared savings incentives during that time.


    Just as with EHRs, doctors are not required to change their practices and join an ACO because the government is offering the chance to earn more money. Physicians need to consider whether the disruption will be worth the potential extra funds.

    "There is no reason for...physicians to be scared of ACOs, because it is business as usual," Tinsley said. "No one is going to steal their patients from them. They can still bill and collect from CMS and from the Medicare beneficiary, so nothing changes."

    CMS imposed ACO marketing restrictions in the final rule, similar to the proposed rule, that require CMS to approve materials and to include specific messages prescribed by the agency. Marketing determined to be "inaccurate or misleading" will be prohibited.

    Advisers predicted that patients covered by Medicare won't be influenced by ACOs or marketing efforts as long as they can continue to choose their physicians.

    "I do not see a lot of movement in the primary care section," Tinsley said. "I see it, obviously, more in the specialist section. Medicare patients are pretty loyal to their primary care doctors."

    In the proposed rule, patients were assigned to an ACO after the ACO reported spending and quality to CMS. The final rule reversed that requirement so ACOs would know which patients are enrolled in the organization on a quarterly basis.


    "We are looking at the quality-of-life issues for our doctors as we are talking about how their pocketbooks are bleeding." —Kathryn I. Moghadas, RNC, CLRM, ICHBC, CPA

    The ultimate goal of the ACO is to reduce costs, but not at the expense of quality. Improving patient outcomes is a physician benefit, too, said Kathryn I. Moghadas, RN, CLRM, CHCC, CHBC, CPC, president of Associated Healthcare Advisers Inc. in Fern Park, Florida.

    "[Physicians] get burned out seeing the patients coming back time and time again who have not lost weight, who have not reduced their cholesterol, who have not gotten their hypertension under control," she said. "They are frustrated about this, and so on one hand, we are looking at the quality-of-life issues for our doctors as we are talking about how their pocketbooks are bleeding."

    Moghadas said it is unlikely that PCPs will make much more money by joining an ACO, at least in the first 3-year program. Based on earlier outcome successes from ACO-like organizations around the country, however, doctors will see a change in their patients.

    "What you are going to have is patients getting fewer prescriptions, not needing as much medication," she said. "You are going to have [their care] managed much better because they are not given this pill to get rid of the effects of this pill, which is the side effects of this pill, which is what we see right now."

    Tinsley questioned how ACOs will be able to encourage their higher-cost physicians to adhere to less expensive protocols if both methods have evidence supporting their effectiveness.

    "I was in a room with 20 internists, and I said, 'Tell me how you treat diabetes,' " Tinsley said. "How many different answers did I get? Twenty. What is going to be the pushback on that conversation? 'Do not tell me how to practice medicine.' "

    ACOs will require more than just office-based practice changes, Moghadas said. Hospitals will have to enhance staffs to keep ACO-assigned patients out of emergency departments.

    "Sixty percent of the hospitals, their case management services are not available after hours or on weekends," she said. "Now, interestingly enough, the highest concentrations of inappropriate admissions occur when? After hours and on weekends."

    Although the business consultants were skeptical about many provisions, one aspect on which they could all agree is that the ACO and shared savings programs are really refurbished methods for solving perennial healthcare problems: improving patient outcomes and reducing waste. They know that these solutions are not the first, and they certainly won't be the last.

    "It is going to evolve," Moghadas told the roundtable audience. "Maybe, hopefully, in all of our lifetimes, but the younger consultants in this room, definitely in your lifetime. You are going to be seeing this evolve to the place it is going to be."



    CLUES from PCMHs

    "Care coordination means you are not now, as a physician, just a primary care giver, but you are our primary care manager." —H. Christopher Zaenger, CHBC

    Patient-Centered Medical Homes (PCMHs) are the core of the accountable care organization (ACO) concept. A PCMH is a small window into what the ACO ultimately will be, says H. Christopher Zaenger, CHBC, of Z Management Group Ltd., based in Barrington, Illinois.

    ACOs are designed to reduce healthcare costs through better care coordination. PCMHs were created, in part, to track that care, but without hospitals or specialists as contracted partners as in an ACO. If a doctor is not comfortable with the requirements of a PCMH, then an ACO is likely not going to be acceptable, either, says Zaenger, a Medical Economics editorial consultant.

    "Care coordination means you are not now, as a physician, just a primary care giver, but you are our primary care manager," says Zaenger, who described how to create a PCMH at the National Society of Certified Health Care Business Consultants 2011 annual meeting. "If you have a doctor who said, 'I do not triage. I do not believe in triage,' [then he or she is] probably not going to be a good fit for this kind of a model."

    ACOs, which mostly likely will be launched as an independent subsidiary of a large hospital system or integrated delivery network, would track care but would rely on PCMH members for Medicare patient usage data.

    Creating a PCMH costs a practice $100,000 to $200,000, according to Zaenger, who bases the figure on data from national PCMH demonstration projects. At the end of 2010, approximately 1,500 practices nationwide had been recognized as PCMHs by the National Center for Quality Assurance, which developed PCMH criteria used by commercial and government payers.



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