With more than four million Medicare fee-for-service beneficiaries expected to receive medical care through accountable care organizations beginning in 2012, hospitals and physicians are aligning to provide the coordinated care that could eventually entitle them to federal financial incentives.
A briefing paper from the actuarial and consulting firm Milliman, however, suggests that becoming an integrated delivery system, partnering with a health plan and focusing on the Medicare Advantage market may make more sense.
"I always advise my clients not to take risk for things they can't control," explains Rob Parke, Milliman's lead researcher on the project. ACOs, he says, as designed by the Center for Medicaid & Medicare Services, carry significant financial risk because CMS will share only aggregate data about beneficiaries. An ACO can request individual data, but the patient can decide not to allow CMS to release the information. "Providers could be financially responsible in terms of incentives for a patient they know nothing about."
Parke suggests that the system CMS will use to benchmark quality and performance standards will favor inefficient ACOs because the improvement bar will be set lower. "If you have been doing well you will have to work much harder to show improve than someone who hasn't been doing quite as well."
He noted that The Everett Clinic, which has participated in demonstration projects for Medicare ACOs since 2005, has decided not to seek certification as an ACO under the Affordable Care Act. Instead the Washington State clinic will move its patients out of traditional Medicare and into the Medicare Advantage managed care program. "They just aren't seeing the financial rewards for taking better care of their patients," explains Parke.
A simpler organization structure is among the chief advantages of an integrated delivery system partnering providers with health plans. The rules aren't final, but ACOs will need to be a legal entity of some sort and agree to participate in the program for three years. Also, there are some legal challenges to overcome so the ACO can allocate start-up costs between the hospital and physicians. Physicians will need to have at least 5,000 Medicare fee-for-service patients.
According to the brief, there are fewer legal impediments to sharing expenses and allocating financial risk when a health plan is the intermediary between providers and beneficiaries. As part of a partnership, the health plan can provide the administrative and financial support necessary for the startup.
Parke says a health plan could require members to comply with care coordination and case management to improve their health and help reduce costs. According to the proposed CMS rules, patients in ACOs can opt out of care coordination by refusing to share their personal medical information with all of the providers. But, they will still be counted as part of the ACO and thus will affect the quality points earned for financial incentives.
Why would a health plan want to be in a partnership? Parke says there is growing acceptance that integrated delivery systems are more cost effective and will allow a health plan to have more competitive premium rates.
Also, once the partnership is up and running, the health plan can delegate some of the administrative functions to the integrated delivery system. That will make it easier for the health plan to meets its surplus and profit goals under the Affordable Care Act.
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Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
