Perhaps the most hotly debated of these change concepts were accountable care organizations. It’s no secret that the proposed rule for the Medicare Shared Savings Program was met with widespread outcry. From provider groups who called the rules too burdensome, to insurers who thought them too open ended from a legal perspective, many declared the ACO concept dead on arrival.
What a difference a few months make. Clearly hearing the objections, CMS’s final shared savings rule released on Oct. 20 has been significantly improved. In fact, the final regulations will allow for a range of creative interventions that are designed to achieve greater clinical integration and collaboration among physicians, hospitals and other care providers, and foster alignment of accountable care principles across public and private payors.
The end result will be better, safer and more convenient care delivered at a lower cost for the benefit of healthcare consumers nationwide.
What CMS got right
Perhaps the most significant improvements over the proposed rule, CMS has allowed for more approaches to risk and improved financial return under shared savings. Requiring risk and limiting returns had a chilling effect in the market, with organizations weighing the investment costs of creating an ACO against future uncertainty. It’s no surprise that many providers made public pronouncements stating that the proposed structure required too much for too little potential gain, and opting to forego the program. In fact, a Premier analysis found that hospitals would be significant financial losers under the proposed shared savings program.
In the final rule, CMS took a more balanced approach, including a no-risk participation option, and allowing first dollar savings once the minimum savings rate is achieved. These two changes will provide an enhanced business case for organizations to enter the program, particularly in the early years when providers are still developing and testing effective strategies for coordinated, cost-effective care.
Another important concept that CMS embraced in the final rule is flexibility. In its initial pass at the regulations, CMS assumed that the typical dynamics in healthcare were at play — that CMS leads and everyone else follows. The results were excessively prescriptive conditions of participation. What CMS forgot is that it’s not the only game in town when it comes to accountable care. Indeed, the private sector is arguably more advanced in this area, and a number of health systems have shared savings agreements in place with commercial payors, unions, employers, their own health plans, etc.
The key for CMS was not to dictate terms, but to recognize what’s already working, set boundaries for what will not be allowed and let providers figure out the best way to create compliant systems. In this way, providers will be able to build their infrastructure once, and still satisfy multiple flavors of accountable care across payors.
We can see these improvements at work in two key provisions of final rule. The first area concerns measures. While measures are the key to assessing performance and evaluating improvements over time, population health measures are new, and few providers have experience with them.
Given that the measurement requirement for ACOs is a significant undertaking, and one that should not be discounted due the need for sophisticated informatics capabilities, CMS’s initial proposal of 65 measures was far too much for many organizations to take on at once. In the final rule, CMS has taken an appropriate step in phasing in the number of quality measures in the shared savings program to start with 33, and add further measures in over time. This will give providers adequate time to demonstrate capacity to improve care and health of their ACO population.
Similarly, CMS wisely opted to waive its initial requirement that at least 50 percent of all primary care physicians in the ACO be meaningful users of electronic health records in order to participate. While EHR will be foundational and needed to deliver accountable care, setting a 50 percent implementation bar was excessive given where current deployment efforts stand today. Moreover, existing penalties associated with an inability to meet meaningful use requirements should provide the appropriate incentives on their own.
What still needs work
Despite all the improvements made, the rule is not perfect. For instance, for all CMS’s efforts toward flexibility, they continue to take a micromanagement approach to beneficiary protections, as well as the ACO’s governance structure.
For example, although CMS says it will allow for more approaches to be tested in terms of management and governance, the agency still requires that three-quarters of all ACO provider entities have board representation, and that a Medicare beneficiary be included as a director. While this is an improvement over the proposed rule, which required representation for 100 percent of provider entities, many burgeoning ACOs have already established their leadership structures to win private contracts. Some of those providers may be willing to revisit their board structure to come into compliance with CMS regulations. Still others may believe that the CMS structure brings too many competing interests to the table, which could slow decision making and compromise agile shifts in strategy, making the shared savings program less attractive.
While providers and payors alike want to preserve beneficiary choice and options in terms of their care, CMS also erred too far on the side of protectionism. Unchanged from the proposed rule are provisions that allow beneficiaries to participate in the ACO, but opt out of sharing their health and claims data with ACOs. Without access to beneficiary data, ACOs will be hamstrung in efforts to target interventions that are essential to improve care quality, provide convenient choices and enhance overall compliance with recommended care. CMS’s rigidity around beneficiary data could have the unintended consequence of limiting necessary services that would enhance compliance with treatment plans, and compromise the ACO’s ability to achieve the goals of better health, better healthcare and reduced expenses.
The bottom line
Compared to the proposed rule, we’ve come a long way forward, and CMS has made important philosophical changes to the shared savings program. But the rule is not perfect, and may still be unacceptable for provider groups that may lack the sophistication needed to transform their delivery system or the will to make some of CMS’s recommended changes. Ultimately decisions to participate will vary by community and will be determined based on resources, patient mix, economics and other factors largely beyond CMS’s control. However, the important thing to focus on is that CMS has dramatically modified its hard-line stance both to risk and reward, signaling a willingness to be flexible and an understanding of the business of healthcare, rather than a myopic drive to recoup as much savings as possible.
The end result is a final rule that will encourage more providers to consider applying, which could achieve greater than expected near- to intermediate-term savings for public payors and taxpayers.
Mr. Champion is Senior Vice President of Premier Performance Partners, part of the Premier healthcare alliance.
More Articles on ACOs:
ACO Final Rule Modifies Risk Adjustment, But Concerns Remain
8 Things to Know About the ACO Final Rule
ACO Final Rule Released
