Roundup: ACO Proposed Rules Fuel Uncertainty

The pacing, the toe tapping, and the finger drumming ended last week for an anxious and expectant healthcare industry when the federal government – two months overdue – finally delivered its much anticipated 429-page proposed guidelines for accountable care organizations.

And even though the ACO program is voluntary and will be limited to only about five million Medicare beneficiaries when it opens on Jan. 1, 2012, there remains a sense among supporters and detractors that there is no going back – that no matter what happens during the ensuing public comment period, the healthcare world has changed forever.

When the proposed guidelines were released last Thursday, Health and Human Services Secretary Kathleen Sebelius boldly stated that ACOs will put patients and their doctors “in control” of their own healthcare. “For too long, it has been too difficult for healthcare providers to work together to coordinate and improve the care their patients receive,” Sebelius said, in the HHS media presentation. “That has real consequences: patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes. Accountable care organizations will improve coordination and communication among doctors and hospitals, improve the quality of the care their patients receive, and help lower costs.”

The major healthcare lobbying groups offered noncommittal – and possibly prefabricated – immediate reactions to the guidelines – saying just enough to appease befuddled journalists asking fuzzy questions about a concept that many clearly do not yet understand, and careful enough to avoid aggravating the federal policyholders they’ll attempt to sway during the coming public comment period, but also reasserting their longstanding concerns about the impact of ACOs on their corner of the healthcare market.

 “This is an historic effort among government agencies to achieve the goal of better coordinated care," said Linda Fishman, senior vice president for Policy at the American Hospital Association, in a statement issued soon after the guidelines were made public. “However, it does not go nearly far enough to eliminate the barriers to clinical integration among caregivers.”

From the payer perspective, America’s Health Insurance Plans President and CEO Karen Ignagni also expressed concerns about antitrust provisions needed to protect insurers from “the trend of provider consolidation that drives up medical prices and result in additional cost-shifting to families and employers with private coverage.”

As for providers, before they can begin to create ACOs, they have to realize who such entities are accountable to. "The accountability is not unilateral; it's trilateral, for the management of care across locations and time," Tom Enders, managing director of CSC's Health Sector Group in New York told HealthLeaders Media last fall. Then they must decide whether the potential cost savings worth the effort to establish an ACO.

Among the potential pitfalls recognized by the federal government are the legitimate antitrust concerns from payers and providers. So the feds piggybacked onto the ACO guidelines a separate proposal calling for expedited antitrust reviews and designated antitrust "safety zones" for some ACOs. “The Administration has led an unprecedented, collaborative effort among all of the agencies responsible for developing guidance for ACOs," said Federal Trade Commission Chairman Jon Leibowitz. "This guidance will help ensure that ACOs meet their goals of improving quality and lowering costs while minimizing the regulatory burden on healthcare providers."

Paul Keckley, executive director of the Deloitte Center for Health Solutions, said he was impressed by the federal government’s “deliberate process” of crafting guidelines for an extremely complex proposal that has the potential to revolutionize healthcare delivery and outcomes. “The amount of effort they built into calibrating the quality metrics, the indices of the five domains, the waivers, the safety zones, the antitrust issues. They were pretty thoughtful about balancing all of those moving parts of what is a pretty complicated concept," he told HealthLeaders Media.

"I read carefully the discussion of antitrust safety zones, how primary service areas are defined, the 30% threshold," he said. "The language in the guidance suggests that they have been very thoughtful about waivers and antitrust. And, they have maybe been cautious thinking about what will happen if commercial health plans piggyback the ACOs and use them as their contracting organizations. Does that consolidate power? Does it create cartels? I was impressed by the granularity of the language in that section."

Keckley said the overarching theme from the government is the emphasis on physician-hospital alignment. “You have value-based purchasing, and episode-based payments and avoidable readmissions, and the medical home, the ACO, physician quality reporting initiative and the physician self-referral language and you step back and see they are compelled by the vision of integrated systems," he says. "That to me is the big cake here."

And, like any sweeping government program, ACOs come with their own language. Soon, healthcare wonks and consultants who last week couldn’t tell a “Safety Zone” from a “Primary Service Area” will be tossing out eye-crossers like “Precompetitive,” “Retrospective Assignment,” “Dominant Provider Limitation,” and “Group Practice Reporting Option” (which will undoubtedly morph into the catchy GPRO) in dozens of forums, webcasts, seminars, and retreats from coast to coast. That’s the first thing you do when you’re in a new culture -- you learn the language.

One thing is clear—technology will play a huge role. "Clearly, health IT is the backbone, the enabler to an ACO," says Warren Skea, PhD, director, health industries advisory practice at PricewaterhouseCoopers, which sponsored HealthLeaders Media's Breakthrough's report, The Bridge to Accountable Care Organizations.

Welcome to the new world of ACOs.