Accountable Care Organizations

Does Payment Reform Save Money? Comments on the Attorney General’s Report

Posted in Accountable Care Organizations, Capitation, Global Payments, Payment Reform on June 24th, 2011 by MMS – Comments Off on Does Payment Reform Save Money? Comments on the Attorney General’s Report

By Lynda Young, MD, MMS President

Attorney General Coakley’s new study this week on health care costs and payment reform has been generating a lot of discussion. Here are some thoughts from our corner.

We think it’s too early to declare payment reform a failure from a cost-cutting perspective. You can’t measure its effectiveness after just one year. Five years is a far more reasonable time frame to declare victory or defeat.

Further, the implied threat of more top-down rate regulation greatly concerns us. It hasn’t worked in the long run, because players always find a way around the rules and the unintended consequences are too great.

But we don’t want to be entirely negative. We applaud the attorney general’s observation that a variety of organization models can be effective, and that both physician-based and hospital-based groups can get the job done.

But perhaps the most important part of the report discusses risk management and risk adjustment.

As the attorney general noted, most physician groups are ill-equipped to handle significant financial risk today. To do so in the future, we will need much better data than we currently have. We will need a clear picture of who is in our practice group, their utilization patterns, and what they do when they seek care outside our group. Without this, it will be impossible to monitor our own efficiency or quality.

We also need good electronic health record systems that can communicate with physicians outside our practice. By and large, this is not possible today. Imagine how limited your cell phone would be if you couldn’t call someone who’s using a different cell phone provider. That’s pretty much what most EHR users face today.

We also need to ensure that physicians can stay in small practices if they want to, while enjoying the benefits of aligning with larger networks. To remain viable, most physicians will need to share IT costs, reinsurance costs, contracting expertise, and clinical information, while maintaining some measure of independence. Many patients would prefer that too.

The payment reform initiative has a laudable but challenging goal – to make care more affordable while fostering quality and innovation. We haven’t been able to do it yet, but if anyone can do it, it’s this health care community in Massachusetts.

Let’s keep trying.

Dr. Young is a pediatrician based in Worcester, Mass.

Risk Adjustment and Payment Reform: A New Webinar

Posted in Accountable Care Organizations, Global Payments, Health Policy, Payment Reform, webinar on June 15th, 2011 by MMS – Comments Off on Risk Adjustment and Payment Reform: A New Webinar

Every study of accountable care organizations recognizes that proper risk adjustment tools are critical to their success.

Without adjustments for case-mix severity and other issues, providers’ cost and quality measures can be simply wrong. For example, hospitals and physicians who treat a high number of seriously or chronically ill patients would unfairly have inappropriate funding, simply because they treat more people who are sick.

Last month, our House of Delegates declared that “proper risk adjustment” is an essential component of payment reform.

In order to take on a bundled, global payment or other related payment models, funding must be adequate, and adequate risk adjustment for patient panel sickness, socioeconomic status, and other factors is needed. Current risk adjustment tools have limitations, and payers must include physician input as tools evolve and provide enough flexibility regarding resources in order to ensure responsible approaches are implemented. In addition, ACOs and like entities must have the infrastructure in place and individuals with the skills to understand and manage risk.

On June 23, the MMS is hosting an important webinar on risk adjustment. It will cover why risk adjustment is important to your practice, its importance in the context of ACOs, global capitation, and medical home models. The webinar will also focus on a detailed description of the risk scoring and funds allocation processes.

The webinar content is particularly relevant to provider organizations that are about to enter into global payments, are already in such a program, or considering the creation of an ACO.

Click here for more information or to register.

MMS Calls for Changes in Medicare ACO Regulations

Posted in Accountable Care Organizations, Global Payments, Medicare, Payment Reform on June 6th, 2011 by MMS – Comments Off on MMS Calls for Changes in Medicare ACO Regulations

Today, the MMS submitted 20 pages of comments on the federal government’s proposed regulations for Medicare accountable care organizations (ACOs). Our comments were based on the principles for health care reform approved by our House of Delegates last month.

Our comments include:

  • Physician leadership, from both primary care and specialty care physicians, for the implementation of any new delivery system, including ACOs.
  • Medicare patients must have the freedom to choose their physician and ACO. The regulation proposes to assign patients based on where they have received most of their care in the recent past.
  • The 65 proposed quality measures are excessive and flawed, and will discourage many small practices from participating in a Medicare ACO. We stated that it’s “unnecessarily punitive” to require that practices meet every measure to qualify for the “shared savings” distributions at year’s end, particularly since many of the measures are hospital-based. We also believe the measures are inadequate for practices with a large number of senior patients.
  • The proposed financial withhold of 25% is too high and will hinder small practices from investing in IT and other infrastructure improvements. Financial withholds are funds set aside during the year to serve as an incentive to meet financial or quality benchmarks.

Last week, in similar comments, the American Medical Association recommended substantial changes in the regulations. Separately, leaders of the Mayo Clinic, Cleveland Clinic, Geisinger Health System and Intermountain Health criticized the regulations. One official at Mayo said, “There’d have to be substantial revisions for us to participate.”

Health Reform Principles Stress Balance Between Patient Choice and Economic Reality

Posted in Accountable Care Organizations, Annual Meeting 2011, Defensive medicine, Global Payments, Health Policy, Health Reform, Malpractice, medical liability reform, Payment Reform on May 22nd, 2011 by MMS – Comments Off on Health Reform Principles Stress Balance Between Patient Choice and Economic Reality

Spirited debate at the MMS House of Delegates Saturday led to the adoption of 18 principles on health care reform that the Society plans to share with local and national legislators.

The principle that dominated deliberations asserted that “health care reform must enable patient choice in access to physicians, hospitals, and other services while recognizing economic reality.”

Among the other principles adopted were the following:

  • Physicians must lead reform, keeping clinical decision-making in the hands of doctors and patients.
  • Reform must be flexible enough to account for different practice types and their variable readiness to change.
  • Fee-for-service payment should have a role in any system.
  • Physicians will need infrastructure support, especially for IT and hiring physician extenders.
  • Risk adjustment methods must incorporate physician input and account for illness burden and socioeconomic status of patients.
  • Transparency throughout the whole process is essential.
  • Patient education and accountability must be enhanced.
  • Professional liability and antitrust reform are crucial underpinnings to reform.

The complete principles are available at

Complete Annual Meeting coverage is available at

JudyAnn Bigby Talks to MMS About Payment Reform and ACOs

Posted in Accountable Care Organizations, Annual Meeting 2011, Health Reform, Payment Reform, Videos on May 19th, 2011 by MMS – Comments Off on JudyAnn Bigby Talks to MMS About Payment Reform and ACOs

Massachusetts Health and Human Services Secretary Dr. JudyAnn Bigby offered a little something for everyone at this morning’s opening session of the MMS House of Delegates.

After emphatically defending the state’s record on health reform, Dr. Bigby told the delegates that she agrees with the MMS payment reform principle that “one size doesn’t fit all.” Bigby also delighted some in the audience when she said, “We don’t believe that hospitals should be the center of the universe for ACOs. … We envision a wide range, a diversity of integrated providers.”

She also strongly criticized the proposed federal rules for Medicare ACOs. “We have a challenge getting the federal government to understand if they put out those types of regulations and those types of restrictions … it’s going to hamstring us all in being innovative and being able to create entities in Massachusetts that represent much more diverse entities that they envision.”

Dr. Bigby also said the state will soon invite providers to suggest how the state should design payment models that support the delivery of integrated care. She said the feedback will help the state design demonstration projects for different payment models.

Feds Propose New Anti-Trust Policy on ACOs, and Cut Them Some Slack

Posted in Accountable Care Organizations, Payment Reform on April 4th, 2011 by MMS – Comments Off on Feds Propose New Anti-Trust Policy on ACOs, and Cut Them Some Slack

The federal government’s 400 pages of proposed rules for accountable care organizations last week attracted a lot of attention.

But on the same day, the Department of Justice and the Federal Trade Commission jointly proposed a policy on ACOs that may end up being just as significant.

The policy is about anti-trust law. For ACO advocates, this has always been a big worry – would the anti-trust lawyers cut ACOs any slack? The short answer: Yes, but not absolutely.

The agencies propose that ACOs by definition don’t violate anti-trust laws. Providers in ACOs could even  forge pricing agreements if they are clinically and financially integrated, and meet other conditions.

The policy proposes to use market share as a major factor in determining whether an ACO will go under the government’s anti-trust microscope.

In short:

  • A proposed ACO with less than a 30% market share in its primary service area will be in an “anti-trust safety zone,” and is “highly unlikely to raise significant anti-trust concerns.” The agencies said they will not challenge the formation of these ACOs “absent extraordinary circumstances.”
  • A proposed ACO with more than a 50% market share will definitely trigger a mandatory review to determine its anti-competitive potential. The burden of proof seems to lie with these large ACOs, and this burden seems to be quite substantial.
  • A proposed ACO with a market share between 30% and 50% is in a gray area, and may trigger a review if “it appears that an ACO’s formation or conduct may be anticompetitive.” Helpfully, the document lists five types of conduct to avoid that would “reduce significantly the likelihood of an ant-trust investigation.” The agencies seem to be giving themselves a lot of discretion in this scenario.

(The proposal goes into a lot of detail about how to define an ACO’s primary service area and calculate its market share.)

Clearly, the DOJ and FTC are trying to balance two values. They acknowledge that ACOs could improve quality and reduce costs, but they’re still quite worried about the potential of ACOs to stifle competition, reduce quality and increase prices.

Remember, like the CMS regulations, these are proposals. Public comments on the anti-trust policy are due to the DOJ and FTC by May 31.

Download the notice here. (.pdf, 20 pages)

CMS Issues Proposed Rules on ACOs

Posted in Accountable Care Organizations, Payment Reform on March 31st, 2011 by MMS – Comments Off on CMS Issues Proposed Rules on ACOs

A quick overview of some major points:

  • Two models: Shared savings (modest upside gains, and little or no downside financial risk to providers) and a more robust risk-sharing with greater upside gains, and more downside risk too.
  • ACO incentives are tied to several quality standards, especially around shared decision-making, care coordination and preventive health measures. Many are similar to the measures for EHRs and meaningful use.
  • ACOs will not limit patient choice
  • Flexibility in structure: Can be physician-led, hospital-led, or one of many other possibilities

Here is the complete proposed rule . (.pdf, 429 pages)

CMS administrator Don Berwick outlined the principles guiding the proposal in an essay published this morning by the New England Journal of Medicine.

In a national conference call an hour after releasing the regulations, Berwick said the main goal in the regulations is to address the fragmentation of care.

The AMA’s initial comment said in part, “ACOs offer great promise for improving care coordination and quality while reducing cost, but only if all physicians who wish to are able to lead and participate in them. For this to happen, significant barriers must be addressed, including the large capital requirements to fund an ACO and to make required changes to an individual physician’s practice, existing antitrust rules and conflicting federal policies.”

Like most rules, there’s a comment period, which ends June 6. We’ll be working with our internal committees and external stakeholders to develop our own comments, consistent with our established principles on payment and delivery system reform.

Health Policy Alert: Federal ACO Regulations Expected Tomorrow

Posted in Accountable Care Organizations, Payment Reform on March 30th, 2011 by MMS – Comments Off on Health Policy Alert: Federal ACO Regulations Expected Tomorrow

It’s not often that the release of federal regulations gets much advance press, but this time it’s different.

The Centers for Medicare and Medicaid Services is expected to release its its proposed rules for accountable care organizations tomorrow. Politico initially reported that the rules would be 1,000 pages long, but backtracked on that prediction a little later.

This is important for several reasons:

  • ACOs are the hottest conversation piece in health care policy right now: Some believe ACOs are the magic pill that will control costs AND improve quality.
  • Many provider groups want them, but many others fear them.
  • People in the Massachusetts system is watching to see if these regulations will match or contradict what Governor Patrick proposed last month.

We’ll do our best to analyze the rules and provide commentary as soon as possible.

Stay tuned.

Many provider groups want them, while many others fear them.

Payment Reform: Difficult Road Ahead

Posted in Accountable Care Organizations, Payment Reform on February 14th, 2011 by MMS – Comments Off on Payment Reform: Difficult Road Ahead

Photo by Mani Babbar via flickr.comA white paper by Meredith Rosenthal of the Harvard School of Public Health released today emphasizes how difficult it will be for health care providers and health plans to implement payment reform. “Almost surely the proposals will call for a significant departure from the status quo,” she wrote.

The white paper reviews the five presentations at the MMS’ summit on payment reform, held in October, which we co-sponsored with the Commonwealth Fund.

Dr. Rosenthal wrote, “One recurrent theme of the day was the need for flexibility and a multiplicity of both payment and organizational solutions. Locally tailored models of payment and delivery will be required not only to address underlying differences among communities but also to provide an opportunity to engage physicians and other providers as partners in developing local reform solutions.

She added, “This latter point picks up on the second major theme of the day: new methods of respectfully engaging physicians and other providers in the work of cost control and quality improvement are needed.

“It will be critical to approach both the design and implementation of reform with a process that is transparent and encourages trust. If audience reactions are any indication, payers and policy makers have work to do to overcome the current failure of trust and skepticism about the goals and means of payment reform.”

The full report is available for download here. (.pdf, 12 pages, 103 kb)

AMA Releases Comprehensive Physicians’ How-To Guide on ACOs

Posted in Accountable Care Organizations, Electronic health records, Electronic Medical Records, Global Payments, Payment Reform on January 10th, 2011 by MMS – Comments Off on AMA Releases Comprehensive Physicians’ How-To Guide on ACOs

Photo by MyTudut via FlickrThe American Medical Association has released one of the most comprehensive resources produced so far to help physicians evaluate their options for practice integration, accountable care organizations, and other issues, following the passage of federal health reform last year.

The resource may also be helpful to Massachusetts physicians who are thinking about what statewide payment reform and ACOs could mean to them.

Here are some of the topics:

  • ACO governance issues
  • Partnering with hospitals
  • Partnering with health plans
  • CO-OPs and accountable care
  • Electronic health records and federal incentive payments
  • Managing anti-trust risk

The document is available from the AMA at no cost.

Download the document here. (.pdf, 112 pages, 781 kb)