Prominent national health associations publish tough criticisms of the new final ACO rule

Pathologists and clinical laboratory managers have a ringside seat as the fight to introduce Accountable Care Organizations (ACO) gets underway. On one side is the federal government, represented by the Department of Health and Human Services (HHS). On the other side are a number of the nation’s most important healthcare organizations.

It is a fight that is heating up. The latest round came just weeks ago, when, on Tuesday, May 17, 2011, HHS unveiled its plan to accelerate the creation of Accountable Care Organizations (ACO) in this country, including publishing the final rule. It took just days for criticism from major healthcare organizations to fill the new reports.

For its part, HHS believes the new ACO model will save Medicare as much as $430 million over three years. However, many healthcare organizations publicly state that this ACO model contains more risks than rewards. They believe it places an unmanageable reporting burden on the hospitals and physicians that participate in the ACO.

Healthcare Organizations Criticize HHS’ new ACO Model Final Rule

Take the American Medical Group Association (AMGA), for example. Executives representing this influential association expressed their membership’s concern about the ACO proposal. In a letter to Donald Berwick, M.D., Administrator for the Centers for Medicare and Medicaid Services (CMS), the AMGA officials wrote that “In an AMGA survey of its membership, 93% of respondents stated that they would not participate in the ACO program unless the requirements in the final rule reflect major modifications to the proposals.”

Following publication by the Department of Health Services (HHS) of the final rule for Accountable Care Organizations (ACO), Donald M. Berwick, head of the Centers for Medicare and Medicaid Services (CMS) strongly defended the final rule in response to criticisms from several of the nation’s most prominent healthcare associations. (Photo sourced from Kaiser Health News.)

The AMGA letter continued, “Our membership’s concerns were many and focused on issues such as the risk sharing requirement, static risk adjustment, retrospective attribution, quality measurement requirements, the minimum savings requirements and others.

“Without substantial changes in the Final Rule, we fear that very few providers will enroll as ACOs, and that CMS and the provider community will miss the best opportunity to inject value and accountability into the delivery system.”

Also critical of the final rule for ACOs was the College of Healthcare Information Management Executives (CHIME). Its officials wrote a similar letter to Berwick, declaring that “further policy examination is needed in several key areas. Specifically, proposals regarding data sharing provisions, meaningful use (MU) alignment, and assumptions about health information exchange (HIE) capacities have the potential to undermine CMS goals and ACO effectiveness.”

Both CHIME and the AMGA provided specific recommendations in detail as to how the CMS ACO model should be modified.

Berwick Remains Optimistic and CMS Stands By its Plan

Predictably, Berwick’s response to the provider groups’ concerns was somewhat more optimistic. In a news conference he said that their concerns were “nothing we didn’t anticipate” and that the new ACO model is an “exciting new option.”

“Over and over again, we have seen that improving how care is delivered to patients is key to reducing the growth in healthcare spending,” Berwick said in the CMS press release. “When we improve the coordination of care between providers, reduce duplication of services, and avoid medical errors, we can get better outcomes for patients at less cost. The Affordable Care Act has given us the tools to achieve these goals.”

But Michael Millenson, President, Health Quality Advisors LLC, said the new CMS ACO model is “a step backwards,” and that it puts smaller healthcare organizations on a separate track from larger organizations.

Millenson observed that the new ACO model rewards organizations that assume greater financial risk in an effort to jumpstart larger organizations into forming working ACOs. CMS designed the new ACO model as three separate initiatives, stated Millenson:

  1. “First, the Center for Medicare and Medicaid Innovation (Innovation Center) will support a new ACO model that will be available to providers this summer—the Pioneer ACO Model, which is designed for advanced organizations ready to participate in shared savings. It is projected to save Medicare up to $430 million over three years by better coordinating patient care.
  2. “Second, the Innovation Center is seeking comment on the idea of an Advance Payment ACO Model that would provide additional up-front funding to providers to support the formation of new ACOs.
  3. “Third, provider groups interested in learning more about how to coordinate patient care through ACOs can attend free new Accelerated Development Learning Sessions. These initiatives are part of a broader effort by the Obama Administration, made possible by the Affordable Care Act, to improve care and lower costs.”

Dark Daily predicts that implementation of ACOs will be one of the single most disruptive reforms contained in the ObamaCare bill that became law in 2010. This disruption has the potential to erode the financial integrity of the nation’s clinical laboratories and anatomic pathology groups, since ACOs are the spear point of change in how the Medicare program intends to reimburse providers.

Of course, it will take several more years before the actual consequences of these healthcare reforms can be fully understood. That is one reason why pathologists and clinical laboratory administrators should keep a close watch on the debate now swirling around the topic of ACOs, risk-sharing, and reimbursement. It will be essential for every medical laboratory to have the right strategy for how to serve the ACOs in its community.

In the meantime, there will be plenty of tussles as hospitals, physicians, and other providers advocate their suggested improvements to Medicare officials. So, publication of the final ACO rule is only round one in what may be a lengthy fight.

—Michael McBride

Related Information:

Administration Offers New Path for ACOs (Kaiser Health News)

Affordable Care Act Gives Providers New Options to Better Coordinate Health Care (CMS Press Release)

AMGA Letter to Donald Berwick, M.D., CMS Administrator

CHIME Letter to Donald Berwick, M.D., CMS Administrator

Fact Sheet on new ACO Model (Federal Registry)

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