Posts Tagged ACOs. health care reform

Some Additional Thoughts on ACOs

ACOs are coming to a health care market near you. About the only real difference I can see between the ACO model and the ‘managed care model’ is that health plans (or Medicare or Medicaid) will be using incentive payments to promote cost-effective care, rather than (or in addition to) capitation payments as a risk sharing (or risk transferring) strategy. These incentive payments will include aggregate payments negotiated between the ACO and the payers, and incentive payments to individual providers within the ACO that are eligible to receive these incentive bonuses. This may seem like a new approach, but it is really not much different than the ‘risk pools’ that plans once used to incentivize medical groups and IPAs to hold down costs. I guess that everyone assumes that this risk-sharing concept has a better chance to work now that all these sophisticated tools like EMRs and chronic disease management advocates are around to help coordinate care.  Some folks might argue that ACO incentives are about promoting effective care, but trust me, the emphasis is likely to be on COST first, and effective, second.

ACOs are not just meant to exist under the Medicare program, so it is likely that many of the payment methodologies and organizational entities (like IPAs, medical groups, PHOs, and integrated health systems like Kaiser) are going to get into the ACO game on the commercial side as well as the government payer side. Consequently, there might be an opportunity here to rewrite, at the federal and especially the state level, the rules under which commercial and government sponsored managed care has been operating for the last few decades. If you have the chance to influence the way ACOs will operate, and the rules they must follow, in your State, or at the federal level, you might consider promoting some of the following suggestions, which are born of many hard lessons learned from the most abusive and inappropriate practices of managed care plans and provider groups around the country (and especially in California, where managed care took root many years ago).

• A managed care model that limits the percent or number of physicians who have equity ownership of the organization is likely to promote both practice and payment policies that preferentially derive benefits for the equity holders rather than for the providers and their patients. Also, it is easier to get physicians ‘on board the bus’ if they all have an equal stake in the success of the organization. ACOs should have broad, and preferably equal, equity participation among all participating physician providers.

• Physician leadership in ACOs should continue to provide clinical services so that they experience the impact of the clinical practice policies they develop and promote.

• When developing payment policies for different physician specialties and roles in the ACO or Foundation model, consideration should be given to whether the physicians are obligated to take on the care of the under- and uninsured as a part of their practice, and these obligations should be considered part of the practice overhead of these physicians, relative to the physicians in the ACO who can and do decline to take on these responsibilities in their practice.

• Foundations and ACOs that are initiated by, or intimately tied to, hospitals have often and particularly used coercive tactics in negotiating contracts with hospital-based providers. Coercive contracting must be countered by strict rules regarding the development of fair market discount and other payment arrangements with hospital based providers, especially those whose ability to decline participation in caring for ACO patients is limited by EMTALA or by virtue of at-risk departmental staffing contracts with hospitals.

• Carve-outs and selective enrollment and dis-enrollment policies must be strictly limited in order to ensure that ACOs and Foundations do not game government sponsored capitation programs.

• Primary care centered ACOs should not be responsible for the payment of the claims of non-contracted non-elective services, as this will encourage these ACOs to inappropriately pay claims rather than manage patient care as a means of reducing costs and increasing profits.

• ACOs that take on claims payment responsibilities for all professional services should be required to contract for non-elective as well as elective specialty care services, so that the ACO does not have to rely on the EMTALA obligation of ED on-call specialists for non-elective and after-hours care.

• ACOs should not be delegated the responsibility by a health plan for paying the commercial claims of non-participating providers: this should be the responsibility of the health plan, with cap deductions or risk pool arrangements to ensure that the ACO does not over-utilize non-par provider services.

• If an ACO becomes financially insolvent, the health plan should be responsible for unpaid commercial ACO-delegated claims, under the concept of negligent delegation.

• ACOs should be accountable to their community, and not just to their assigned patients.

• ACO administrative overhead should be counted against the 85% mandatory health plan medical loss ratio requirements under health reform.

• If an ACO does not have a nurse-advice line or similar mechanism for assisting patients in deciding whether or when to use emergency department services, it should not be allowed to retroactively deny coverage for emergency department services based on the prudent layperson standard.

• Hospitals that participate in, contract with, or develop ACOs should be required to collect data on hospital inpatient and outpatient care services and outcomes that can be accessed and reported by ACO providers in order to meet performance and reporting benchmarks.

Courtesy of a recommendation from a friend, Dr. Joel Stettner, let me also suggest you view the following video, which is very funny, and sadly all too accurate:

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