Insights

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."

by GHG Advisors