A primary concern among hospital leaders and physicians looking to form accountable care organizations is what exactly they will require. HHS is expected to soon release draft regulations for ACOs, which will provide additional direction on the creation of these entities. However, even with these regulations, leaders will likely remain uncertain about what specific processes and methods cause success versus failure.
People respond in various ways to this lack of information. Some physicians and hospitals have aggressively pursued partnerships in anticipation of future rules; some have explored various options without formally merging; and others are maintaining the status quo until details are released. Whatever the approach, education is essential for creating ACOs, says Wayne J. Miller, healthcare law attorney at Compliance Law Group.
Mr. Miller says there are physicians who "appear to be panicking" and started creating entities and pursuing affiliations or practice buyouts "almost as a knee jerk reaction."
This panic is caused in part by rumors and in part by misinterpretation, says Mr. Miller.
"The idea has been that you've got to affiliate — if you're a doctor with a hospital, [if you're a] hospital with a doctor — or you're going to be cut out of Medicare business, which leads to the behavior of just finding a partner and creating a group even though the players may not be ready for what an accountable care organization is requiring," he says.
Education is key
Mr. Miller advises instead that all parties involved educate themselves on the necessary components for forming an ACO using the information already known and by studying ACO pilot programs.
"We're helping clients prepare the best they can with that minimum information," Mr. Miller says.
The "minimum information" includes the requirement that each serve at least 5,000 Medicare fee-for-service patients. Using that information, Mr. Miller explains, hospitals know that they will need enough primary care physicians in an ACO to meet the 5,000 patient baseline.
He says, "If you're starting with a bunch of specialists, or just a hospital, that's not necessarily going to be sufficient; you first need the buy-in of primary care doctors, and maybe even have primary care doctors be the core owners or drivers of creating [the ACO]."
Successful ACOs will likely need to provide care for many more beneficiaries, says Mr. Miller. He also notes that an ACO is not intended to just be "rebranded" managed care. The law requires the organization to be patient-centered and provide highly coordinated physician, hospital and other healthcare.
Pilot ACOs
Pilot programs provide useful insight into how successful ACOs operate. Mr. Miller says that when deciding whether to represent a group considering developing an ACO, he evaluates how closely the proposed organization resembles successful pilots and how well the group participants understand how pilot ACOs have worked.
Blue Shield of California, Catholic Healthcare West and San Ramon, Calif.-based Hill Physicians formed an ACO in 2009 to serve members of the California Public Employees' Retirement System. According to Hill Physicians, the ACO prevented premium increases, reduced hospital readmissions by 22 percent and produced $20 million in savings.
Last week, these three organizations partnered with three additional healthcare providers to create two ACOs, further suggesting that their first ACO program was successful. Brown and Toland Physicians Group, California Pacific Medical Center and University of California, San Francisco have joined Blue Shield, CHW and Hill Physicians to serve employees, dependents and retirees who are HMO members of the San Francisco Health Service System. This ACO model is particularly important because it is the only one in northern California to include an academic medical center, according to Hill Physicians; its results will inform future ACOs that partner with universities.
Challenges
In addition to federal and state antitrust concerns associated with independent providers forming integrated ACO organizations (an issue which is expected to be addressed in the forthcoming rules), another hurdle faced in certain states like California is the prohibition on corporate practice of medicine. Under these laws, a hospital could not employ physicians to form an ACO under the hospital's banner. Instead, a hospital may have to create a nonprofit "medical foundation" of physicians that are affiliated with, but not employed by, the hospital.
Because of this law, California and other affected states will have to approach ACOs slightly differently than others, according to Mr. Miller. He says that in states that allow hospitals to employ physicians, the hospital is most likely going to initiate and drive the development of an ACO, whereas in California and other states that prohibit corporate practice of medicine, physicians, medical groups and foundations may be the drivers.
Knowing and understanding the different laws regarding the employment of physicians is thus essential for hospital leaders planning to form ACOs.
A universal challenge, however, is attracting physicians who are willing to limit some of their independence to align with the hospital, according to Mr. Miller.
"Tell them how important it is to be part of a bigger picture," he suggests.
Physicians may not need to sacrifice their independence yet, however, Mr. Miller adds.
He says, "While they may become important, I don't think [ACOs] are going to be the only way that Medicare providers are going to access beneficiaries for the foreseeable future, so there is still room for independent practices and groups."
Learn more about Compliance Law Group.
People respond in various ways to this lack of information. Some physicians and hospitals have aggressively pursued partnerships in anticipation of future rules; some have explored various options without formally merging; and others are maintaining the status quo until details are released. Whatever the approach, education is essential for creating ACOs, says Wayne J. Miller, healthcare law attorney at Compliance Law Group.
Mr. Miller says there are physicians who "appear to be panicking" and started creating entities and pursuing affiliations or practice buyouts "almost as a knee jerk reaction."
This panic is caused in part by rumors and in part by misinterpretation, says Mr. Miller.
"The idea has been that you've got to affiliate — if you're a doctor with a hospital, [if you're a] hospital with a doctor — or you're going to be cut out of Medicare business, which leads to the behavior of just finding a partner and creating a group even though the players may not be ready for what an accountable care organization is requiring," he says.
Education is key
Mr. Miller advises instead that all parties involved educate themselves on the necessary components for forming an ACO using the information already known and by studying ACO pilot programs.
"We're helping clients prepare the best they can with that minimum information," Mr. Miller says.
The "minimum information" includes the requirement that each serve at least 5,000 Medicare fee-for-service patients. Using that information, Mr. Miller explains, hospitals know that they will need enough primary care physicians in an ACO to meet the 5,000 patient baseline.
He says, "If you're starting with a bunch of specialists, or just a hospital, that's not necessarily going to be sufficient; you first need the buy-in of primary care doctors, and maybe even have primary care doctors be the core owners or drivers of creating [the ACO]."
Successful ACOs will likely need to provide care for many more beneficiaries, says Mr. Miller. He also notes that an ACO is not intended to just be "rebranded" managed care. The law requires the organization to be patient-centered and provide highly coordinated physician, hospital and other healthcare.
Pilot ACOs
Pilot programs provide useful insight into how successful ACOs operate. Mr. Miller says that when deciding whether to represent a group considering developing an ACO, he evaluates how closely the proposed organization resembles successful pilots and how well the group participants understand how pilot ACOs have worked.
Blue Shield of California, Catholic Healthcare West and San Ramon, Calif.-based Hill Physicians formed an ACO in 2009 to serve members of the California Public Employees' Retirement System. According to Hill Physicians, the ACO prevented premium increases, reduced hospital readmissions by 22 percent and produced $20 million in savings.
Last week, these three organizations partnered with three additional healthcare providers to create two ACOs, further suggesting that their first ACO program was successful. Brown and Toland Physicians Group, California Pacific Medical Center and University of California, San Francisco have joined Blue Shield, CHW and Hill Physicians to serve employees, dependents and retirees who are HMO members of the San Francisco Health Service System. This ACO model is particularly important because it is the only one in northern California to include an academic medical center, according to Hill Physicians; its results will inform future ACOs that partner with universities.
Challenges
In addition to federal and state antitrust concerns associated with independent providers forming integrated ACO organizations (an issue which is expected to be addressed in the forthcoming rules), another hurdle faced in certain states like California is the prohibition on corporate practice of medicine. Under these laws, a hospital could not employ physicians to form an ACO under the hospital's banner. Instead, a hospital may have to create a nonprofit "medical foundation" of physicians that are affiliated with, but not employed by, the hospital.
Because of this law, California and other affected states will have to approach ACOs slightly differently than others, according to Mr. Miller. He says that in states that allow hospitals to employ physicians, the hospital is most likely going to initiate and drive the development of an ACO, whereas in California and other states that prohibit corporate practice of medicine, physicians, medical groups and foundations may be the drivers.
Knowing and understanding the different laws regarding the employment of physicians is thus essential for hospital leaders planning to form ACOs.
A universal challenge, however, is attracting physicians who are willing to limit some of their independence to align with the hospital, according to Mr. Miller.
"Tell them how important it is to be part of a bigger picture," he suggests.
Physicians may not need to sacrifice their independence yet, however, Mr. Miller adds.
He says, "While they may become important, I don't think [ACOs] are going to be the only way that Medicare providers are going to access beneficiaries for the foreseeable future, so there is still room for independent practices and groups."
Learn more about Compliance Law Group.