Going to the Mat for Capitated Pioneer ACOs
GHG is leading an effort with several of our clients to bring real-world capitation to the Pioneer ACO Demonstration. We've had several meetings with CMS to advance the idea, which AIS details in their story in Health Reform Week out last week.
Featured Health Business Daily Story, July 13, 2011
Potential ACO Sponsors Warn CMS They Need Payment, Other Changes on ‘Pioneer' Reprinted from AIS's HEALTH REFORM WEEK, the nation's leading publication on the business implications of the massive changes for the health industry mandated by reform.
By Judy Packer Tursman, Contributing Editor
July 4, 2011Volume 2Issue 23
In what one Medicare-industry consultant describes as a last-ditch effort, several potential sponsors of Medicare accountable care organizations met with CMS the week of June 27 to hash out differences on payment and other basics of CMS's proposed "Pioneer model" initiative for experienced ACO entities. The consultant, John Gorman, CEO of Gorman Health Group, LLC, insists that these potential sponsors won't participate unless they find common ground with CMS on what they consider to be a financially viable business model.
But another consultant tells HRW he knows of nearly 20 entities planning to apply by the Aug. 19 deadline for the Pioneer program, which is capped at 30 participants. Even this other consultant, however, says that unless CMS makes major revisions to controversial draft regulations for the Medicare Shared Savings Program (MSSP), on which the Pioneer program is based, many applicants might apply now and flee later.
While it won't be known for months how many organizations will participate in Medicare ACOs, one thing is clear: Of 1,200 comments submitted to CMS by the June 6 deadline, many are harshly critical of CMS's notice of proposed rulemaking on MSSP published April 7 in the Federal Register (HRW 4/11/11, p. 1). Under CMS's proposal, entities setting up Medicare ACOs would continue to receive Medicare fee-for-service payments and qualify for additional payments by meeting quality and savings requirements. Stakeholders' reaction to CMS's Pioneer ACO program is also largely unfavorable thus far, industry consultants tell HRW.
‘Pioneer' ACO Program Hits Snags
The timetable is short: The Pioneer program is expected to begin this fall, and MSSP is set to launch Jan. 1, 2012. But only 17% of 140 hospitals and health systems and 10% of payer organizations responding to a survey by consulting firm KPMG LLP released June 28 said they intend to be "first-wave players" in MSSP and expect to file with CMS in time for Jan. 1 implementation. (The survey didn't specifically ask about the Pioneer program since KPMG's webcasts focused on MSSP and ACOs in general.)
While the findings were drawn from participants in three ACO webinars run by KPMG this spring, Joe Kuehn, a partner in KPMG's health care advisory practice, says the results are indicative of what the firm is hearing from its broad array of clients. "I'm not hearing a lot of interest at all in the MSSP," he tells HRW. "I've heard from CEOs saying it was dead on arrival [because of antitrust issues, the challenge of physician buy-in and the like]….We're not hearing of anyone who's ready to run." However, he says organizations seem to want to be "accountable care ‘capable.' They want to have the operational components and structures in place to focus on specific populations to bring about improved care at a reduced cost, and they are seeking ways to clinically integrate with their physicians and other potential partners, but they aren't there yet," he tells HRW.
KPMG estimates it could take up to 24 months to develop an ACO infrastructure from scratch, and Kuehn says the short application/implementation timeline may lead some stakeholders to think MSSP — not just Pioneer — was designed, at least initially, for experienced entities.
Attorney Bruce Merlin Fried, a partner in the Washington, D.C., office of law firm SNR Denton US LLP, says MSSP "is not an any-willing-ACO program," and was intended from its statutory inception to require a certain level of skill and commitment that not all providers can meet. CMS's apparent target, as indicated in the draft MSSP regulations, is to get 75 to 150 Medicare ACOs into the program. If the final regulations end up being the same as what was proposed, "it will be a much smaller number," he says, but if MSSP is designed "so policy objectives are in sync with the business realities of running [an ACO], then there should be a good uptick."
Fried said June 28 that spring 2012 is a realistic start date for MSSP. Final regulations "hopefully" will be issued in the early fall, he says, followed by an application process, organizations' decisions on whether to participate, and then CMS's review of applications. He notes that CMS's draft rule offers an optional later start date of July 1, 2012, in recognition that it could take more time for organizations to launch Medicare ACOs.
CMS Is Said to Be ‘Working Through' Issues
Does CMS "understand the MSSP regulations did not engender the enthusiastic response they were looking for? They get that message very clearly," Fried says. Yet he says CMS is holding regular Monday meetings "with senior decision-makers, and they're methodically working through the issues."
Consultant Gorman, who, like Fried, is a former official at HCFA (the predecessor agency to CMS), told HRW June 27 that his firm and several clients are talking to Richard Gilfillan, M.D., who directs CMS's Center for Medicare Innovation, and his staff about operational issues related to the Pioneer program. According to Gorman, CMS says it cannot administer capitated ACO payments for at least the first two years of the program, but his clients — "very sophisticated organizations that are familiar with capitation or have their own Medicare Advantage plans" — disagree and are seeking revisions. Unless this occurs, CMS "could lose marquee players," he says. "If it [i.e., Pioneer] doesn't have some capitation to it, these organizations will pursue commercial and Medicaid opportunities instead."
Fried responds that he, too, has clients that are "marquee players who say they realize [Pioneer] isn't perfect, but they will pursue this." Indeed, he says CMS will get "substantially more than 30 applications for Pioneer contracts. I'm aware of almost 20." That includes four to seven of his clients, he adds, "but people are still deciding." Plus, Fried says another consultant's firm is handling Pioneer applications for 11 Midwestern entities.
Struggling Over Claims
Gorman notes that CMS has regulations to govern how Medicare Advantage (MA) plans pay claims, and how the Medicare Administrative Contractors (i.e., MACs, which used to be called fiscal intermediaries) pay claims. However, he tells HRW: "They don't have regs for ACOs to pay claims, and they want all of the provider and beneficiary protections to be in place before the program goes live, but that could take months."
Gorman says his firm, in a June 27 meeting with CMS, described a model "in which a capitated ACO pays claims it gets from its participating providers, the MACs pay all claims they get from any Medicare provider, and the ACO reconciles and pays CMS on a monthly basis for all claims paid by MACs for services that are covered under the capitated services."
He explains that CMS already has figured out how to send ACOs claim dumps each month, and the claim reports will provide the ACO with the data it needs to do the reconciliation. "The beauty of having the ACO do the reconciliations is that CMS doesn't have to change anything that the MACs do, and the nonparticipating provider claims all get paid under the current MAC regulatory structure," he says, adding that the model could be strengthened if the claims payments are managed by a current MA plan or delegated agent that already is meeting CMS regulations.
"This is a new idea for them, and to CMS's credit, they're open to it and are thinking it through. We have our fingers crossed," Gorman says. He terms this a major issue for ACOs that see capitation with performance metrics "as the best financial fit."
Gorman describes the Pioneer program's application as "a monster," and says interested organizations need answers soon — by early July — in order to get the application completed in time. He asserts that CMS "has a lot of work to do in the next couple weeks to get a couple dozen participants" for Pioneer. Moreover, he contends that "at the moment, unless they come out with a dramatically revised [final] regulation, the MSSP…is dead."
At a national ACO conference held June 27-28 in Washington, both HHS Sec. Kathleen Sebelius and CMS Center for Medicare Director Jonathan Blum "alluded to the fact that they had heard from the community, carefully digested the 1,200 comments submitted, and the implications were they were looking at significant adjustments to address concerns," Fried says. He notes Blum suggested there would continue to be a substantial number of quality measurements for Medicare ACOs; 65 measures are listed in the draft rule. Fried says that CMS left itself "a good deal of wiggle room" with respect to this and other matters in the draft rule.
CMS isn't developing the ACO regulations in a vacuum, Fried points out. He says a big question is to what degree the Office of Management and Budget (OMB) recognizes that achieved savings must be shared with ACOs to make Medicare ACOs a viable business proposition. "The 70-80 [% provider share] split in Pioneer is a more realistic split than the 50-60 split in MSSP," he says. "CMS does not control OMB, but I've got to presume OMB will recognize that while the government wants as much savings as possible, the government runs the risk of killing the program."
The State of Play on Medicare ACOs
GHG and our longtime client North Texas Specialty Physicians were featured in a terrific piece by Harris Myer in this month's Health Affairs. We're continuing to work closely with the CMS Innovation Center to bring some real-world sensibility to capitated Pioneer ACOs.
The biggest hurdle so far: bureaucratic inertia around claims payment by ACOs. CMS doesn't want to disrupt claims processing by carriers and fiscal intermediaries, and doesn't have time to promulgate regulations on claims being paid by capitated ACOs. We're continuing to engage on the subject and hope to have a breakthrough soon with applications for the Pioneer Demonstration due on August 19.
If CMS can keep up with real-world practices for sophisticated providers already participating as ACOs, I think they'll have robust participation in the Demo, including 6-8 GHG clients; if they don't I fear providers will opt for more concrete opportunities in Medicaid and the commercial sector, and Medicare will be left in the dust as ACOs move forward elsewhere. It would be a tremendous missed opportunity: there is operational precedent for how capitated ACOs can work in the Health Care Prepayment Plan (HCPP) and Medicare Cost Contract programs. CMS just needs to get out of its own way and ACOs could thrive in Medicare.
ACOs Won't Work? What Really Matters When Discussing the Next Steps in Health Reform
It is interesting that most conversations about healthcare reform either start out or turn very quickly to a discussion of the financial ramifications/barriers/challenges—place whatever moniker you will on it but the conversational road leads most often to the topic of how to best finance healthcare or how much to cut the cost of healthcare.
Lost in all the discussion is the fundamental truth that we pay more, achieve less results, and increasingly experience limited access, ( for many different reasons that I will explore another time) than most of the industrialized nations we compete with on the economic world stage.
We are quick to point out our advances in medical technology, pharmaceutical options and treatment breakthroughs but happily ignore that many people forgo regular checkups or skip medications because they can't afford the cost. We disparage government funded healthcare in other nations as socialistic but ignore that the citizens of those nations have a quality of life as measured in longevity and overall health that is better than our own in many areas.
And consistent with our historical approach to healthcare, we immediately attack the concept of providing the right healthcare at the right time in the right setting for the right cost as unrealistic, as impossible to implement, as something that would negatively impact the current revenue stream generated to the healthcare stakeholders that rely on the current system for collective and individual gain. In a recent blog post, Bob Laszewski noted that ACOs will "only work if the provider gets paid less for the same patient population ... Only in the policy wonk netherland does that compute."
Accountable Care Organizations, appropriately implemented, have the potential to positively impact certain aspects of how healthcare is currently delivered. Fundamentally an ACO enterprise is all about providing coordinated, cost effective care in the most appropriate setting: call it Accountable Care, name it an integrated service delivery approach, refer to it as patient-centered medical care, or whatever moniker one wishes to ascribe. What is important is the recognition that the approach to the delivery of healthcare, the pricing of that care and the expected outcomes of that care requires fundamental change. It requires us to rethink our values and expectations and reengineer the current clinical, financial and education systems.
Is that a complex undertaking many years in the making? Absolutely! Is it a responsibility that we as a nation can afford to ignore? Only at our peril. Think of it this way: Every day approximately 3,500 people age into the Medicare system. Following behind are several generations of individuals whose use/utilization of the healthcare system has already been charted by virtue of life style and abandon with respect to individual responsibility for wellness.
Who is going to shoulder the burden of providing proper healthcare to these individuals? And who is going to pay the price?And what type of healthcare can we expect five, ten, fifteen, twenty, or twenty five years from now?
There is no ready answer and no magic solution. However, I am reminded of an old commercial regarding the advisability of ongoing maintenance vs. crisis maintenance. The message? — you can pay me a certain amount now or you can pay me a whole lot more later. Seems to apply to healthcare ... don't you think?
ACO's are not the panacea for solving what is wrong with healthcare. The ACO nomenclature may disappear soon or the concept may be modified beyond recognition. That is not really the point. The point is that we recognize that the current approach is unsustainable and that the moment calls for creativity, experimentation and faith. We have no option but to find a new approach to the delivery and financing of access to healthcare services. ACO's can be a tool in that effort to creating a workable solution. Every problem has a solution. We just need to look in the right place, apply common sense and set aside our own vested interests. We might surprise ourselves with the results.
Now if we could just……….
ACO Principles Worth Fighting For
Much has been and continues to be said about the shortcomings of the CMS regulations/requirements associated with the CMS Accountable CARE Organization initiatives. The WSJ recently posted an article claiming that "the draft rule is so awful that even the models for it say they won't participate."
It's true: many of the regulations proffered to date are cumbersome and disproportionately focused on the financial and compliance aspects of the program. Nonetheless, the philosophical underpinnings of the ACO program, the triple aim of better access, better quality and more cost effective care, are principles worth fighting for when it comes to the delivery of healthcare to our healthcare consumers, Medicare or otherwise.
The deficiencies of the ACO regulations notwithstanding, CMS/CMMI has challenged interested healthcare organizations to propose innovative alternatives to what has been proposed. We at Gorman Health Group embrace that challenge and will continue to participate with CMS and interested healthcare organizations in creating an ACO approach which passes the test of providing the right care, at the right time, in the right setting, and at the right price. We invite you to come join us.
Accountable Care Organizations (ACOs) for Duals
At the June 3 Alliance for Health Reform meeting on Dually Eligible Beneficiaries (i.e. beneficiaries who have Medicare and Medicaid benefits), the discussion focused on how to address the needs of the most complex, costly and frail beneficiaries. Currently only 100,000 of 9 million duals are in integrated systems. The incentives in Medicare and Medicaid clearly reward shifting care and costs to the other program, e.g. if a beneficiary is shifted to a hospital from nursing home, Medicare will pick up the cost or if a beneficiary is shifted to a nursing home from a community setting, Medicaid will pick up the costs.
While the integrated Medicare and Medicaid funding and benefits in the PACE program is a gold standard for the dual population, this program remains small and is currently serving only 22,000 beneficiaries. Multi-payer ACOs offer an alternative that could better serve a broader segment of the dual population. ACOs are patient centered and offer a structure to coordinate Medicare and Medicaid benefits and funding streams. By focusing on shared savings from better care and integrated care, dual ACOs could avoid the cost shifting incentives in the current programs. Partial or full capitation from Medicare and Medicaid would facilitate the ability of ACOs to make the best use of federal and state funds in the most appropriate setting. Minnesota is embarking on an ACO model for its Medicaid program and a number of the Integrated Delivery Systems in Minnesota are pursuing a Medicare Pioneer ACO demonstration. While the Minnesota ACOs will not be specialized dual ACOs, they will have duals assigned to their providers and there will be an opportunity to see how flexible the ACO model can be in serving this vulnerable population. CMS has funded 15 states to develop fully integrated dual programs and states should consider the ACO model as part of their designs.
The State of Play on Medicare ACOs
The comment period for the Medicare Accountable Care Organization (ACO) Notice of Proposed Rulemaking closed yesterday, June 6. In the last two months CMS has taken a beating from virtually every corner on the draft regulation as being overly burdensome.
Dozens of groups, including the American Hospital Association (AHA), American Medical Association (AMA) and America's Health Insurance Plans (AHIP), submitted their comments on the proposal. High-profile Physician Group Practices (PGPs) such as the Cleveland Clinic and Mayo Clinic have said they are unlikely to participate in the Medicare ACO initiative.
AHA fears high implementation costs and excessive quality requirements will prevent hospitals from forming ACOs. AHA believes it will cost a 200-bed hospital with 80 primary care physicians and 250 specialists $11.6M to launch a Medicare ACO; a 1,200-bed, 5-hospital system with 250 primary care physicians and 500 specialists is expected to run $26.1M.
Battle lines were drawn on antitrust issues in comments from AMA and AHIP, which offered diametrically-opposed recommendations.
We believe CMS will listen to entreaties to reduce the quality reporting burden and will help provide improved cash flow for ACOs (we hope through partial capitation and getting rid of the 25% withhold) and possibly increase the share of savings that ACOs can keep, to encourage adoption. But given the huge volume of comments and political sensitivities in Congress on ACOs, we think it will be toward year-end before a final regulation is issued.
The "Pioneer ACO" Demonstration is scheduled to begin this fall, with applications due to CMS July 18 and a full program launch January 1st. We are seeing moderate interest among marquee providers — especially those with their own Medicare Advantage plans -- in participating in the Pioneer ACO Demonstration and believe chances are good that CMS will fill its 30 slots for these "ready to launch" ACOs if the agency listens to industry input on partial capitation arrangements in the coming weeks.