Health Management Associates announced on Friday that it has entered into a definitive agreement to acquire the assets of Mercy Health Partners-Tennessee from Catholic Health Partners. The$525 million deal is expected to close by Oct. 1.
HMA will acquire or lease all seven of MHP's hospitals. The deal includes substantially all of Mercy's ancillary healthcare operations in the Knoxville, TN area that are associated with the operations of the seven hospitals, as well the campus of the former Riverside Hospital.
The lease for at least one of the hospitals, St. Mary's Medical Center of Scott County in Oneida, will expire in May 2012. According to a report from WBIR TV in Knoxville, two companies are in the running for that lease ? Pioneer Health Services in Magee, MS and Downy Enterprises LLC of Cookeville, TN.
HMA and Catholic Health Partners began negotiations for the health system in May. Mercy Health Partners-Tennessee has annual net revenue of approximately $600 million, according to HMA. Catholic Health Partners is exiting the Tennessee market.
Naples, Fla.-based HMA already owns four hospitals and a surgical center near Nashville. The for-profit company operates 66 hospitals in 15 states, including Alabama, Florida, Texas, Washington and West Virginia.
In a press statement Jeffrey A. Ashin, president and CEO of Mercy Health Partners, said "Through Health Management, our hospitals will be able to invest in their facilities and new technologies, and provide the training needed to ensure Mercy continues to provide the best, most current care available in our communities. For these, and many other reasons, I strongly believe that Health Management Associates is the perfect match for Mercy Health Partners."
The sale means the health system will no longer have an official Catholic affiliation. A name change is also expected for the health system.
In May Catholic Health Partners sold its Pennsylvania hospitals. It still own hospitals in Kentucky and Ohio.
The specter of accountable care looms large in the minds of medical practice managers.
Getting ready for new reimbursement models (such as ACOs) that will mean more financial risk for their physician practices tops the list of the most considerable or extreme challenges practice managers face, a survey from the Medical Group Management Association shows.
Medical practice managers, who work behind the scenes at physician offices handling everything from human resources and business operations to patient care systems and quality management, were asked to rank 44 challenges on a five-point scale for MGMA’s fourth annual Medical Practice Today: What Members Have to Say report.
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Operational issues dominate the top five spots while financial, compensation, and recruitment issues round out the top 10:
1.Preparing for reimbursement models that place a greater share of financial risk on the practice
2.Participating in the CMS EHR Meaningful Use incentive program
3.Dealing with rising operating costs
4.Selecting and implementing a new EHR system
5.Implementing and/or optimizing an accountable care organization
6.Managing finances with the uncertainty of Medicare reimbursement rates
7.Modifying physician compensation formulas to more heavily emphasize quality measures
8.Recruiting physicians
9.Negotiating contracts with payers
10. Maintaining physician compensation levels
Several of the challenges at the top of the list this year reflect efforts to implement healthcare reform. Preparing for new reimbursement models grabbed the top spot in the very first year that it appeared in the survey. Implementing an ACO and modifying physician compensation formulas to account for quality measures weren’t mentioned before this year’s survey.
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Liz Johnson, spokesperson for MGMA, explained that the leading challenges reflect the “top-of- mind thinking” by the practice managers. She noted that HIPAA is still a challenge but “it’s not something they think about every day.”
The survey found that the top challenge could differ depending on the practice specialty:
Cardiology practices ranked managing finances with the uncertainty of Medicare reimbursement rates at their biggest challenge.
Family practices and multispecialty with primary and specialty care practices placed preparing for reimbursement models that place a greater share of financial risk on the practice at the top of their challenge list.
Orthopedic surgery practices named implementing and/or optimizing an ACO as their number one challenge.
OB/GYN practices tapped modifying the physician compensation formula to more heavily emphasize quality measures as their top challenge.
The web-based survey was conducted in January and attracted 1,190 responses.
Community Health Systems has executed a definitive agreement to sell two of its five Oklahoma hospitals to a subsidiary of Nashville-based Ardent Health Services.
The 180-bed SouthCrest Hospital in Tulsa and the 89-bed Claremore Regional Hospital in Claremore were are being sold to Tulsa-based Hillcrest HealthCare System. Privately held Ardent initiated the deal as part of an expansion of its four-hospital Hillcrest system.
When the transaction is complete, Hillcrest will comprise six hospitals with about 1,200 licensed beds and 1,100 physicians. The deal will add more than 1,100 employees to the HHS fold, bringing the health system to about 5,000 employees.
The acquisition is expected to increase Ardent's market strength in the southern part of Tulsa County.
Ardent Health Services acquired Hillcrest HealthCare System in 2004 and has invested more than $262 million in facilities and equipment since then. In a telephone conversation, Kevin Gwin, vice president of communications for Ardent, said once the acquisition receives regulatory approval and is finalized, a transition plan will be put in place to review how hospital services might change. He declined to comment on any future acquisitions planned by Ardent that might involve Community Health Systems or others.
Ardent Health Services includes a multi-specialty physician group, a 220,000 member health plan, a medical lab and retail pharmacies. It owns two health systems, Lovelace Health System in Albuquerque, and Hillcrest HealthCare System in Tulsa. The acquisition will bring to 10 the number of hospitals owned by Ardent subsidiaries.
Franklin, TN-based Community Health Systems acquired SouthCrest Hospital and Claremore Regional Hospital as part of its 2007 acquisition of Triad Hospitals. CHS currently owns, leases or operates 133 hospitals in 29 states with 19,500 licensed beds. It still owns three hospitals in Oklahoma: Deaconess Hospital in Oklahoma City, Ponca City Medical Center, and Woodward Regional Hospital in Woodward.
Efforts to reach CHS for comment were unsuccessful Wednesday.
CHS is embroiled in several lawsuits. One involves allegations that it overbilled Medicareby as much as $377 million. Those charges, levied by rival Tenet Healthcare in April, followed CHS's failed efforts to acquire Tenet. CHS denies the allegations.
In May, CHS disclosed in an SEC filing that it had been subpoenaed by two federal agencies, the SEC, and the Department of Health and Human Services Office of Inspector General in Houston.
And on Monday, a Minnesota pension fund filed a suit in U.S. District Court charging that CHS "wrongly inflated its financial performance." The pension fund is seeking damages in connection with its stock purchases.
In a legal victory for the Obama administration, a federal appellate court has upheld a lower court finding that Congress has the power to require that individuals purchase healthcare insurance.
The United States Court of Appeals for the Sixth Circuit in Cincinnati has affirmed the ruling by the U.S District Court for the Eastern District of Michigan in Detroit that "the minimum coverage provision is a valid exercise of legislative power by Congress under the Commerce Clause."
The court case stems from a Michigan lawsuit challenging the individual mandate section of the federal Patient Protection and Affordable Care Act. The challenge was filed by four Michigan residents and the Thomas More Law Center, a conservative public interest law firm based in Ann Arbor.
The plaintiffs had asked the district court to declare that Congress lacked authority to pass the minimum coverage provision and that the penalty for not purchasing healthcare coverage be declared an unconstitutional tax. The district denied plaintiffs' motion for a preliminary injunction and they appealed.
The appeal was argued on June 1, 2011. In the 64-page ruling released Wednesday the Appeals Court rules that Congress has the authority to require health insurance and with that ruling it declines to address whether the penalty is a permissible tax.
Among the key statements:
"Thomas More argues that the minimum coverage provision exceeds Congress's power under the Commerce Clause because it regulates inactivity. However, the text of the Commerce Clause does not acknowledge a constitutional distinction between activity and inactivity, and neither does the Supreme Court. Furthermore, far from regulating inactivity, the provision regulates active participation in the healthcare market."
"Congress had a rational basis for concluding that leaving those individuals who self-insure for the cost of healthcare outside federal control would undercut its overlying economic regulatory scheme. Congress found that without the minimum coverage provision, the guaranteed issue and community rating provisions would increase existing incentives for individuals to delay purchasing health insurance until they need care."
"Congress had a rational basis for concluding that the minimum coverage requirement is essential to its broader reforms to the national markets in healthcare delivery and health insurance. Therefore the minimum coverage provision is a valid exercise of Commerce Clause power.
According to the New York Times, the ruling "is the first of three opinions to be delivered by separate courts of appeal that heard arguments in the healthcare litigation in May and June. Opinions are expected soon from panels in both the Fourth Circuit in Richmond, Va. And the Eleventh Circuit in Atlanta."
At least one of the cases is expected to be heard by the U.S. Supreme Court during its next term, which begins in October.
The ruling is viewed as an important win for the Obama administration especially since the three-judge panel was comprised of two Republican appointees and one Democratic appointee.
A statement posted on the website of the Department of Justice, which is defending the law says: "We welcome the Sixth Circuit's ruling today dismissing this challenge to the Affordable Care Act and its finding that Congress acted within its authority in passing this landmark health care reform law. We will continue to vigorously defend the health care reform statute in any litigation challenging it. Throughout history, there have been similar challenges to other landmark legislation such as the Social Security Act, the Civil Rights Act, and the Voting Rights Act, and all of those challenges failed. We believe these challenges to health reform will also fail."
Everyone seems to agree that perfect model for an accountable care organization doesn't exist, at least not yet. Industry executives I have spoken to are of the opinion that ACOs will probably be in transition over the next decade as providers test a variety of models to find that sweet spot where quality and cost effectiveness intersect.
In the meantime, they are, for the most part, none too thrilled with the Feds' proposed rules on ACOs.
Still there are certain core competencies – the must haves – that ACOs will need to incorporate into their organizations to ensure that the Centers for Medicare & Medicaid Services administrator Don Berwick's three-part aim is achieved – better care, better health, and lower costs.
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Speaking Monday at the National ACO Summit, ACO representatives from advocacy groups, business associations, CMS and health plans revealed the strategies that they believe will separate the successful ACOs from the just so-so ACOs. The overarching theme was that transparency – whether you're talking about incentive payments or clinical leadership – will play an important role in how employers, patients and providers view the ACO.
1.Patient Involvement "If the ACO is to improve care then the patient has to be involved," stated Debra Ness who is the president of the National Partnership for Women and Children, an advocacy group. Ness suggested that patients should be involved at the beginning of any ACO development to help design the actual model of care. She would even like to see patient participation in the governance of ACOs.
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Ness notes that there is a lot of talk about patient-centered care but right now the system lacks the full transparency that will build trust among patients. She said patient involvement is lacking at the local level but that at the national level there are very active groups that are helping shape national ACO policies.
2. Employer Engagement "Employers are interested in raising the healthcare bar," said David Lansky, president and CEO of the Pacific Business Group on Health."They are interested in accountability, performance and transforming care." He said ACOs need to demonstrate their value to employers, who want to see quality data that helps them understand how the providers in the ACO are performing. "They want to know how the ACO will drive healthcare improvement for their employees and how savings will be achieved." Lansky added that employers want greater transparency around community pricing, total cost of care information and internal cost data that gives employers the opportunity to access if ACO cost savings are "being achieved at the expense of payers."
3. Physician Buy-in
"I personally don't think you can change physician behavior without developing downside risk for the ACO organization but not at the individual physician level," said Bob Margolis, M.D., managing partner and CEO for Healthcare Partners, a Torrance, Calif.-based medical group. He explained that he is a strong believer that "we can't incentivize individual physicians with downside risk."
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Margolis thinks ACOs needs to have in place the structure and financial oversight to really manage downside risk before trying to implement too much on the individual level. "I don't think you're going to see the physicians shift from fee for service, volume-based medicine to care coordination without the entire ACO being held responsible."
4. High Member Volume
Proposed government regulations call for ACOs to have 5,000 members. Margolis doesn't think that 5,000 members is a sufficient base for an ACO to achieve team-based care that it is coordinated among multiple providers. He believes that to be successful, an ACO needs a strong primary care base, so double or triple that number is necessary before systems of care can be cost-effectively developed and infrastructure costs can be easily shared.
5. Knowledge of True Costs "I'm always surprised by organizations that don't know what it costs for them to provide care to their members. That will be fundamental for an ACO," said Jon Blum, deputy administrator and director of the Center for Medicare at CMS. To help, Medicare will be sharing its Part A, B and D claims data with organizations selected for the ACO program to help them develop a more accurate look at their true costs.
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Blum said cost data is key to developing care models that will really reduce healthcare costs. He added that no one wants to see ACOs reduce costs by skimping on care or endangering the financial stability of the ACO itself.
A Pittsburgh-based health plan says it will acquire a struggling Pittsburgh-based health system in a move that could have a significant impact on the western Pennsylvania healthcare market.
While a definitive agreement is still being developed, Highmark is expected to commit $475 million over four years to WPAHS. That includes an immediate $50 million grant to be used for infrastructure improvements to West Penn Hospital in Bloomfield and Forbes Regional Hospital in Monroeville. In addition, Highmark is expected to contribute $75 million to fund scholarships of students attending medical schools affiliated with WPAHS, and to support other education programs for health professionals.
The acquisition could challenge the dominance of the University of Pittsburgh Medical Center in the Pittsburgh-area market. UPMC has been in a protracted contracting dispute with Highmark. Unless it is renewed, the current contract between Highmark and UPMC will end on June 30, 2012, but members will still be able to access UPMC hospital services through mid-year 2013.
In making the announcement, Kenneth R. Melani, M.D., Highmark's president and CEO, said the acquisition is the first step in a provider strategy that includes a network of independent community hospitals, an alignment of physicians and outpatient services.
The announcement ends months of speculation surrounding the future of the financially ailing not-for-profit WPAHS, which posted a $38.4 million operating loss in FY 2009 and $49 million loss through the first nine months of FY 2011.
The health system, which employs 13,000, includes five hospitals that admit about 79,000 patients annually, and a physician group. It has a deal with Temple University School of Medicine in Philadelphia to open a four-year medical school in Pittsburgh.
Highmark is an independent licensee of the Blue Cross and Blue Shield Association. It serves 4.8 million members in Pennsylvania and West Virginia.
The deal with WPAHS must still receive approval from state and federal agencies, including the federal Department of Justice. Officials hope the acquisition will be fast-tracked and completed within six months.
During his comments at the announcement, David L. McClenahan, West Penn Allegheny's chairman said that without the acquisition the health system was looking at shutting down West Penn Hospital by September of this year.
McClenahan said the hospital system had been looking for a partner for some time and that although there were for-profit suitors, the system "takes it non-profit mission seriously and preferred to remain a nonprofit."
He said the board was attracted to Highmark because it is a nonprofit and its mission and values match the hospital system's. He added, "Highmark is well-capitalized, it's local, like us, and it understands the western Pennsylvania insurance market."
While terming the acquisition as a "win for everyone," both sides were cautious regarding future job losses. Melani said no decisions would be made until company officials look at the health system's efficiencies and resources. It was announced, however, that WPAHS president and CEO, Chris Olivia, M.D., left that position effective Monday. He will consult with Highmark.
In December Olivia voiced his concern about the potential lack of competition healthcare in the region under the specter of consolidation. "To not have a second health system in a city this size, Pittsburgh will descend into the Dark Ages of monopolization from which it will not emerge for a long, long time," he told the Pittsburgh Tribune Review.
Dianne Dismukes will replace Olivia. She was previously executive vice president for hospital operations at the health system.
Although Cleveland Clinic was rumored to be in-line to manage the health system for Highmark, it is not part of the acquisition. In a telephone conversation a Highmark spokesperson said that "although Highmark has been in discussions about partnering opportunities with Cleveland Clinic, it is not part of this arrangement."
UnitedHealth Group will pay a $1 million fine related to allegations that it violated restrictions placed on its 2008 acquisition of Sierra Health Services, the Nevada attorney general has announced.
Because of competitive concerns, UnitedHealth was permitted to acquire Las Vegas-based Sierra provided that it didn't acquire Fiserve Nevada, which administered the healthcare benefits of many Nevada firms.
However, that same year UnitedHealth acquired the parent company, Fiserve Health, including Fiserve Nevada and its third party administration business.
"UnitedHealth Group was permitted to acquire its local competitor Sierra," explained Catherine Cortez Masto, the state attorney general, in a press statement. "But the United/Sierra transaction was subject to many strict conditions. One condition was that United could not acquire another local company, Fiserv Nevada, given our competitive concerns in 2008.
The Nevada Attorney General required assurance that UnitedHealth Group would not acquire or merge with Fiserv Nevada, and placed additional restrictions on joint venture activity, which were reflected in the final approval of UnitedHealth's acquisition of the Sierra Health Services.
"Based on investigating United's compliance with this condition, we have concluded United failed to deliver on its promises to us regarding Fiserv Nevada," said Masto.
According to the Nevada attorneys general office on Friday, UnitedHealth Group engaged in the following conduct which allegedly violated the court-approved judgment of its acquisition of Sierra Health Services:
In 2008, United acquired, through a series of assignments, all but one of Fiserv Nevada's active customers and exerted near total control on all of these customers before the assignments occurred, which confused Fiserv Nevada's customers;
United acquired or controlled all of Fiserv Nevada's employees;
United acquired virtually all of Fiserv Nevada's other assets, including Fiserv Nevada's office space, equipment, and data;
As a result of these efforts, Fiserv Nevada ceased to do business, as demonstrated by Fiserv Nevada surrendering its license to perform third party administration of insurance in Nevada.
Masto said that "although United denies it acquired Fiserv Nevada as prohibited by the judgment, we feel its actions as reflected in internal company documents demonstrate a violation. We are also seeking court approval for Judgment amendments to tighten up its monitoring mechanisms and hence deter possible future non-compliance."
In addition to paying the $1 million fine, UnitedHealth Group agreed to these provisions:
The fine's proceeds shall be provided to Nevada agencies or charitable organizations dedicated to improving the quality of or access to healthcare in Nevada;
Payment of attorneys' fees and costs related to investigating the Fiserv Nevada activity (approximately $125,000 as of December 2010);
Notification of proposed acquisitions by UnitedHealth Group which significantly involve Nevada healthcare markets; and
Modifications of UnitedHealth Group's internal policies to protect the confidential data belonging to its Nevada-based customers previously with Fiserv Nevada, of which non-compliance can be deemed a judgment violation.
On Monday UnitedHealth Group issued this statement saying it was "pleased" the matter was resolved. "While we disagree with the allegations because UnitedHealth Group did not acquire an interest in, or engage in a joint venture with Fiserv Nevada, we felt it was important to reach a mutual agreement on this issue so we can move forward with our positive working relationship with the Nevada Attorney General's Office and continue to focus our efforts on providing quality service to our Nevada customers."
Look for the Office of the National Coordinator to release by next year all of the final rules for Stage 2 of meaningful use.
Farzad Mostashari, MD, the National Coordinator for Health IT, explained Monday that his office is busy reviewing information from the Health IT Policy Committee, which in early June recommended delaying for a year, until 2014, Stage 2 of the meaningful use program for those providers that comply with Stage 1 criteria in 2011.
Mostashari made his comments at the National Health IT and Delivery System Transformation Summit in Washington, D.C.
For providers, meaningful use means using certified electronic health record technology in ways that improve the quality, safety, and effectiveness of patient-centered care.
Without being specific, Mostashari said that while the final rules will pull from the policy committee recommendations, "they will not be identical," although "a lot of deference will be given to the committee."
Mostashari challenged the audience to not think of meaningful use as a random bureaucratic checklist of hoops to jump through, but rather "the roadmap for delivering higher quality healthcare." He said the mindset is shifting from seeing meaningful use as a distraction from providing quality patient care to the "way to get there."
Mostashari clicked off a list of leading IT growth indicators:
EHR adoption by primary care physicians. After 20 years the rate of adoption of electronic health records by primary care physicians was 20%. In 2009-2010 it was 30% and the rate of adoption might be 40% by the end of 2011 and at 50% within two years.
EHR adoption by hospitals. A couple of years ago 10% of hospitals had a basic EHR system in place. Now surveys indicate that more than 86% of hospital CIOs intend to apply for meaningful use, with 60% expected to apply in the next couple of years.
Providers registering for the meaning use program. Five thousand to 10,000 providers each month register for the meaningful use program.
Providers registering for regional extension centers. Each month 6,000 small provider practices sign up for help at the extension c enters to learn how they can become meaningful users.
During a question and answer period Mostashari was asked if patient care was headed toward something that "won't work in the end." The questioner noted that "we are basing all of this on the assumption that you can take pieces of information from all these different records, from all these different doctors who have all these different views of the patients and put them together. That might work with an MRI but what about allergies and medications that are patient-specific and can change overtime? It's going to be difficult to weave this all together unless we put it all in the hands of our patients."
Mostashari replied that the questioner's "concern that we going on a path that will be difficult to retreat from is really important. But what are the options? We can do nothing or we can make our best guess at what is the right thing to do. Another option is to make your best guess but recognize that you are probably wrong and try to build in a way that's sensible enough but not overly specific so it can move us forward and yet accommodate a variety of future scenarios."
He offered the health information exchange as an example of something that needs to accommodate what can be done in the future, including personal health records and community health records. "We should take a few steps and see where we are then take a few more steps and re-assess our position. We shouldn't box ourselves into one system."
In closing, Mostashari asked the audience to hold the federal government accountable to make sure it was as "coordinated, as aligned, and as effective as we need to be."
Community Health Systems, already fighting legal battles on several fronts including subpoenas from two federal oversight agencies, is facing another federal class action and securities fraud suit.
This time, it's the Minneapolis Firefighters' Relief Association that has filed the suit in the U. S District Court of Middle Tennessee in Nashville.
The plaintiff's attorney, Karen Hanson Riebel with Lockridge Grindal Nauen PLLP in Minneapolis, made the filed court documents available to HealthLeaders Media on Friday.
The shareholder suit alleges that the Franklin, TN-based CHS "failed to disclose or recklessly disregarded" that its financial performance was driven by "the improper and undisclosed practice of systematically admitting patients into Community Health Systems' hospitals despite no clinical need."
According to the suit, CHS "artificially increased inpatient admissions for the purpose of receiving substantially higher and unwarranted payments from Medicare and other sources that wrongly inflated its financial performance."
As a result, CHS's common stock traded at "artificially inflated prices" during the almost five-year class period (July 26, 2006 through April 11, 2011) reaching a high of $44.50 on July 18, 2007.
CHS has not issued a public statement is response to the suit and was unavailable for comment Friday.
This latest suit is based in part on the suit Tenet Healthcare filed in April 2011 alleging thatCHS overbilled Medicare by as much as $377 million between 2006 and 2009. Tenet said it discovered the overbillings as part of the due diligence undertaken during Community Health Systems' hostile takeover attempt of the Dallas-based hospital system.
At that time a Tenet spokesperson said the complaint was filed "because our due diligence revealed that Community Health has been systematically overbilling Medicare and likely other payers by causing patients to be admitted to its hospitals when industry practice is to treat them in outpatient observation status."
In its suit, Tenet alleges that "CHS' strategy of driving up admissions and driving down observations is unsustainable. It depends on a continuing pipeline of acquisitions of hospitals with normal observation rates that can be driven down." Tenet said its research showed that after CHS acquired Triad in 2007 that Triad's observation rate dropped 52%.
The Minneapolis Firefighters' Relief Association is seeking damages in connection with its stock purchases.
The suit includes CHS president and CEO Wayne T. Smith, CFO W. Larry Cash and vice president and corporate controller Thomas M. Buford, who, the suit alleges, "lacked a basis for their positive statements about the company, its prospects and growth."
According to legal documents, the three officers each sold stock shares during the class period (July 26, 2006 through April 11, 2011) when the suit alleges the stock value was artificially inflated. Net proceeds of those sales totaled more than $37 million.
Plaintiff's attorney was unavailable for comment for comment Friday.
The Tenet suit places the cost of the potential monetary penalties and other exposures for CHS at more than $1 billion. In response to that suit CHS said "Tenet's allegations are completely without merit."
On the heels of the announcement of the Tenet suit, Community Health Systems' common stock dropped from a closing price of $40.30 per share on April 8 to close at $25.89 per share on April 11, 2011. On June 24, the stocked closed at $25.47 share in New York Stock Exchange trading.
Donald Berwick, MD, traveled to Minneapolis this week to deliver a combination pep talk and plea for participation to the physicians and healthcare executives gathered for first accelerated development learning session on accountable care organizations.
The administrator for the Centers for Medicare & Medicare Services said the agency intends to "issue an invitation to organizations that really want to create far better patient care, and who will do that by redesigning systems, investing in coordination, and becoming more patient-centered than they have ever been before. And, we want to invite organizations interested in making those changes now, not at some distant, vague time in the future. We need them now."
It's no secret that through public comments hospitals and other provider groups objected so strenuously to the risk and capital outlay requirements in the first incarnation of ACOs that CMS reengineered the program to acknowledge the preparation necessary to fully engage as an ACO.
Webcast: Creating an ACO Marketing Language: July 27, 2011, Register today.
The accelerated learning sessions are part of the CMS marketing effort to entice ACO participation. The goal of the sessions is to help potential ACO members to identify organization-specific goals to improve care delivery, improve health and reduce costs, and to develop an action plan for establishing essential ACO functions.
"We know that different organizations are at different stages in their ability to move toward an ACO model. We want to try to meet you where you are. Our hope is to offer models of participation to encourage organizations across the spectrum of readiness," said Berwick.
In his speech Berwick likened the levels of ACO -readiness to the rating difficulty for ski slopes: green circle (learners), blue square (intermediates) and black diamond (pioneer).
He described the green circle as beginners without existing systems for quality improvement or data collection, and little experience in coordinating care. He said this group wants to "get involved, but they're unsure about exactly how to move forward. Can they take the risk?"
Berwick explained that the blue square has "some of the pieces in place for being ACOs... they've made enough progress in coordinating and improving care …and they are able to take on some risk for savings and losses, but not a ton yet."
He said the pioneers are already good models of ACOs with the "people and programs already in place…to coordinate care; they already use electronic health records; they have a track record in quality improvement; and they have some type of shared governance, supporting cooperation."
Webcast: Creating an ACO Marketing Language: July 27, 2011, Register today.
Berwick touched briefly on the status of the final ACO rules and regulations saying only that "we received over 1,200 comments on the proposed rule and we are now reviewing them carefully, so that we can make the final rule better."
He said CMS doesn't know how many ACOs will exist but he is hopeful that "we will produce a final rule that, we hope, will attract many."
Still he didn't sugarcoat expectations. "Everyone that joins needs authentically to be part of the search for better, more sustainable health care in America. We are on an expedition, and, if you stand still, you won't be on it."