CMS Listening, Trying with Adjustments to ACO Rules

Scores of well-respected health systems have complained that accountable care organization regulations are too stringent, too restrictive, and above all, too risky to consider participating at this point. That’s because they require substantial investment in capital and labor without a guarantee of a return on that investment.

Even given the declining future of a fee-for-service reimbursement structure, CEOs have concluded that it’s more predictable to stick with what you know, given the alternative, than to jump aboard the Medicare ACO train before it’s really ready to leave the station.

At least CMS is listening. Already, after only a month and a half of carping—both in public forums like HealthLeaders as well as, presumably, in private conversations with CMS movers and shakers like CMS head Don Berwick—hospital and health system leaders have already pushed the agency to at least partially change the requirements of participating in a Medicare ACO.

This week, CMS unveiled a new three-track process to win adherents, and ultimately, it hopes, broad participation in the program. One track consists of three-day learning sessions to be staged in four sessions around the country.

I encourage you to look at my colleague Cheryl Clark’s fine analysisof the changes that are being made in the rules. From her excellent work in getting candid responses from hospital and health system leaders, it looks as though even the changes announced this week might not be enough.

This kind of carping from major health system leaders only underscores the huge difficulty --some might say impossibility -- of attempting to create a one-size-fits-all solution to the challenge of high healthcare costs and associated poor quality in a cottage industry such as healthcare.

However, commercial solutions are far from enough. For one, many of them seem to rely heavily on the idea that shifting more of the costs for care to the individual employee will help bring down healthcare costs. My answer is that yes, it probably will, but it’s too late, with the astronomical costs of basic healthcare, to count on the public to force down prices and improve quality simply because they have to pay for it.

Never mind the fact that even people with a commitment to good health will put off seeing their doctor because it’s too expensive. It’s like those dealer-funded oil changes that come with the purchase of a new car. If oil changes cost several hundred dollars instead of $30 or so after the dealer incentive runs out, do you think lots of people would stretch their oil to the breaking point? They would, and they will with healthcare too.

But before I get too far off track, the good news is that CMS seems willing to adjust, and so do providers, who are certainly interested in finding different ways to improve reimbursement for the good work they do. 

Sure, CMS must deal with different challenges than private businesses in negotiating solutions that will be different enough to entice providers to participate -- from the physician office level to the multi-hospital health system. In this case, CMS could learn a valuable lesson from commercial insurers: It takes a variety of possible solutions requiring constant -- or at least regular-- adjustments, to achieve the goal of lowering costs and improving quality.

WEBCAST: Effective ACO & Clinical Integration Strategies
When: June 7, 2011 at 1:00 PM ET
Go beyond the ACO regs furor to uncover commercial and Medicare alternatives for your ACO strategy. Taking the time to evaluate your opportunities and position yourself appropriately will pay off for the next generation of clinical integration. Join healthLeaders Media for a 90-minute webcast including Q&A with leading experts savvy on the legal and business operation of ACOs in commercial markets and CMS programs other than Medicare Shared Savings (MSSP).