Senators Question CMS Rules for ACOs

Some Senators want the rules for Accountable Care Organizations (ACOs) rewritten to increase their acceptance by providers. “An ACO model that can increase provider coordination and patient accountability would be a step in the right direction compared to today’s fragmented delivery system,” wrote the senators, led by Mike Enzi (R-WY) to Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Donald Berwick. “However, it is increasingly clear that this proposed rule misses the target.”

According to the Senators, the ACO rules have misaligned incentives and accountability, as well as an unclear return on investment for physicians and other providers. The Senators highlighted healthcare providers who have raised concerns about the ACO rules, including the American Hospital Association, which released a study that estimated six to 14 times higher start-up costs for the new entities than estimated by CMS.

The AHA study determined that the costs of elements to successfully manage the care of a defined population is considerably higher – $11.6 to $26.1 million – than the $1.8 million estimated by CMS in its proposed rule for start-up and one year of operations. “CMS’ estimate falls short of the mark,” said Rich Umbdenstock, president and CEO of the AHA. “The shared savings rate with ACOs should be adjusted to reflect these costs in order to encourage and enable participation in this important program.” Specific areas of concern include network development and management , care coordination, quality improvement and utilization management ; clinical information systems; and data analytics.

In addition to Enzi, the letter was signed by Tom Coburn (R-OK); Jon Kyl R-AZ); Mike Crapo (R-ID); John Cornyn (R-TX); Pat Roberts (R-KS); and Richard Burr (R-NC).  According to Coburn, who is also a physician, “The letter I signed today echoes the reservations of health professionals who have expressed deep concerns about the well-intended, but ultimately unworkable, ACO regulations recently proposed by the administration. It is certainly my hope that the administration will not misread this letter as partisan, but will work to address the underlying problems of misaligned incentives and regulatory uncertainty that have elicited such concern by a range of health care institutions and providers. If the administration withdraws the regulation, they will find strong bipartisan support among Congress and stakeholders to craft a proposal that encourages broad participation in innovative models to achieve lower costs and better care.”

Berwick and CMS officials believe that organizations that participated in demonstration projects will back the rules because the results showed that Medicare saved more than $38 million in the years of the pilot program; the medical groups that participated got performance payments from the feds totaling more than $31 million. Among the participants are some of the nation’s most prestigious medical systems, including The Mayo Clinic, The Cleveland Clinic and the Geisinger Health System in western Pennsylvania.

Part of the problem, according to The Hill, is that budgetary concerns were the elephant in the room when the Obama administration wrote the proposed ACO rule. This resulted in regulations requiring stringent quality improvements that offered no upfront funding for hospitals to change their procedures. According to regulators, the proposed regulation is open for public comment and can be fine-tuned. CMS recently unveiled new tools to help hospitals start care coordination efforts, for example, by giving them the money they’re supposed to save Medicare through more efficient patient care.

According to the letter, “We have been struck by the increasingly diverse chorus of concerns many of our nation’s leading health care institutions have raised in recent days. The concerns…from some of our nation’s most knowledgeable and innovative health care providers are clear. Incentives and accountability are misaligned. Detailed requirements are complex and return on investment is uncertain.”

Although the Senators complimented the work put into the ACO rules draft, the letter said that feedback received from providers around the country brought the Senators to the conclusion that the proposed ACO regulation will not fulfill its purpose.

Another perspective is offered by Robert Tennant, a managing associate with Health Directions, who says that “I’d like to offer another point of view. Certainly, for most healthcare organizations, transitioning to an ACO will create short-term expense and disruption. At Health Directions, we are finding that healthcare organizations are not dismissing ACOs outright, but they are first asking: What do we stand to gain? In some cases the answer may be either not clear or not favorable. Regardless, there is a potential upside if the focus remains on increasing quality and efficiency of care delivery. As we weigh the future of ACOs, let’s not throw the baby out with the bathwater. The point of discussion needs to shift from whether or not to become a formally organized ACO down the road toward a more focused evaluation of which ACO-type elements are worth adopting now. A commitment to achieving meaningful use with an electronic health record (EHR) is a step in that direction, as is participating in a quality-driven pay for performance program. Both have short-term, well-defined financial rewards attached to them and both will likely increase quality of care. The key is for healthcare organizations to remain focused on the underlying thought behind ACOs — improving care and reducing costs. And that really is worth getting excited about.”

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