The Accountable Care Organization Idea Francis J. Crosson, M.D. The Permanente Medical Group The Forum November 13, 2011

2 Accountable Care Organizations (ACOs) Definition ACOs in health care reform legislation Issues/barriers regarding ACO formation Hope? Or fear and loathing?

3 ACOs- One Definition “ The defining characteristic of an ACO is that a set of physicians and hospitals accept joint responsibility for the quality of care and the cost of care received by the ACO’s panel of patients” MedPAC Report to the Congress, June, 2009

Potential Value of ACOs to Physicians and Patients Unified medical records Improved care coordination across physicians, settings and time More systematic care data for quality improvement Opportunity for physicians to accept responsibility for and manage the full “health care dollar” 4

5 Issues with the Term “ACO” Often synonymous only with the Shared Savings section of the ACA There are really three different ACO “fields of play” Will the public and the media like “ACO” any more than they liked “HMO”?

6 ACOs in the ACA Medicare was directed to lead this idea ACA, Sec. 3022, Medicare Shared Savings Program ACA, Sec. 3021, Medicare/Medicaid Innovation Center

7 Medicare Shared Savings Program Effective January 1, 2012 Based on the Medicare Group Practice Demonstration ACOs paid for Part A+B services by FFS, plus any “shared savings” (or losses) against a benchmark Some regulatory relief Beneficiaries retain “freedom of choice” CMS draft “rule” was very controversial; final rule (10/20/11) seems to be more accepted

A Few of the Final Rule Changes Upside-only option for three years First dollar sharing if threshold exceeded Lower quality measure hurdles Preliminary assignment plus quarterly attribution Specialist primary care services counted Lower EMR hurdle More anti-trust and regulatory relief 8

9 Center for Medicare/Medicaid Innovation (CMMI) Became effective January 1, 2011 Broad authority for CMS to innovate in delivery system structure and payment methods – Dr. Richard Gilfillan Not required to be budget neutral Secretary can extend scope and length, waive some rules Allocation of $10 Billion/10 years CMMI as now proposed the “Pioneer ACO model”

The Pioneer ACO Model Designed for large existing groups Option for prospective attribution “Affirmative attestation” for beneficiaries Requires multi-payer arrangements for “outcome-based payments” Potential for coordination with Part D plans 10

11 Key ACO Design Elements – Options How is the population served established? What payment/incentive designs are most likely to be successful? Is there a role for health plans? Should hospitals be part of ACOs? Who will lead: physicians or hospitals?

12 Barriers to ACOs/Integration Knowledge and skills needed to be successful Inadequacy of payment incentives and up-front costs FTC/CMD/Stark laws and regulations Payer concerns about provider market power Physician/hospital cultural and governance issues

The Shared Savings Program model may or may not gain widespread acceptance; there are still concerns with the rule The work of CMMI may be more important in the end because of more flexibility Commercial ACO development is proceeding much faster, and may have the most profound impact on physicians and patients Will the ACO Model Succeed?

Are ACOs “Good” or “Bad” for Physicians and Patients It depends upon who organizes and runs them, and It depends upon whether there is a better set of alternatives to solve the nation’s problems and preserve sustainable professional environments for physicians to work and thrive in 14

15 The Work Going Forward Physician leaders and physician organizations should help all interested physicians to develop realistic, effective and ethical ACO models The whole physician community must take the lead in determining the nature of physician-hospital integration in the future

16 If the ACO idea fails……….. what comes next? Because……………..

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