They won't all get everything they want. In a raft of recent comment letters sprinkled with recommendations and a few warnings, pretty much any party with a stake in healthcare delivery or an opinion about it has now weighed in on options that face the CMS as it devises regulations for Medicare accountable care organizations.
The CMS is expected to deliver a proposed rule in the first weeks of 2011.
The Patient Protection and Affordable Care Act calls for Medicare to pay bonuses to such organizations beginning in 2012. But the law says little, beyond a basic framework, about how the program would operate.
The letters underscored practical and legal challenges already widely debated among policymakers and organizations hoping to launch such networks.
But the comments—coming from major insurers, health systems, medical device makers, pharmacies, retail clinics, employers, senior advocacy groups, state agencies, associations and medical groups—also highlighted dividing lines among industry players as regulators search for ways to overhaul payment from one of the nation's largest payers.
The response underscores mounting interest in payment models that might slow the rise healthcare costs as more households are unable to afford care, employers are strained and the federal deficit swells. But some health policy experts caution the accountable care model has yet to be proven, a warning perhaps supported by the letters' calls for experimentation and sometimes conflicting proposals for how regulators should proceed.
“I would like to see the ability to evaluate, to cancel or to admit we made a mistake if it doesn't work out,” said Mark Pauly, a health economist and professor at the University of Pennsylvania Wharton School.
As his agency attempts to assemble the nuts and bolts, CMS Administrator Donald Berwick in public remains focused on the big-picture promise of ACOs and the opportunity for each alliance to go its own way. Much will depend on the resources, providers, history and geography of local communities, he said during a speech last week at the Commonwealth Club in San Francisco.
“I think we are going to see a rebirth of organizations able to make care a journey and not a fragmentation,” Berwick said. “Organizations that will have memories about patients, not amnesia.”
And as he has before, Berwick warned there will be two camps in response to the changes under the reform law. One will be “authentic, they will be the real partners on a great national expedition.” The others, he said, will use the new terms, such as ACOs, but “they will become cloaks of the status quo.”
Some of the commenters argued that hospitals and doctors in accountable care groups should be at risk to lose money as well as earn bonuses for quality and savings achieved, as proposed in the law. Yet others said they feared such a mechanism could burden providers with financial risks akin to insurers, even while acknowledging that quality and savings bonuses may be too cumbersome an incentive to get results and endorsing rules that test multiple payment models.
Insurers, meanwhile, fear accountable care networks will create unregulated competition for health plans, as well as allow hospitals and doctors to consolidate and gain leverage to raise prices.
Under the Affordable Care Act, doctors and hospitals that qualify as Medicare ACOs must reach quality and cost-control targets to receive a bonus based on how much they curb Medicare spending for a group of at least 5,000 seniors.
The law also allows the CMS to consider other, more aggressive incentives that combine bonuses with risks, such as partial capitation or global payments, that leave providers on the hook for costs should they fall short of targets.
Pauly was among 10 health policy and economics experts to draft recommendations by the Brookings Institution for ways to slow health spending. The group—included former CMS Administrator Mark McClellan, an advocate for accountable care groups.
Networks have not “proved to do more good than harm yet, and we need to proceed more deliberately,” Pauly said.
Among his concerns: The networks may stifle competition.
Indeed, clarifying the antitrust landscape has been high on the list of priorities for hospitals, doctors and insurers, though providers and payers are divided on the issue.
Insurers challenged calls from hospitals and doctors for exemptions from antitrust and fraud and abuse laws. The American Medical Association and American College of Physicians said networks need explicit legal exceptions, and the Federation of American Hospitals and American Hospital Association have put forward proposals to create greater regulatory leeway for accountable care groups.
Consolidation under the new networks could reduce competition and allow providers to raise prices, America's Health Insurance Plans, a trade group representing the nation's largest insurers, said in its letter to CMS. AHIP urged the CMS to “consider carefully” any legal antitrust exemptions. Also, those with market share that exceeds a certain level should be banned from Medicare's accountable care organization, the letter said.
Letters also diverged widely on whether and how the government should provide capital financing.
Blue Cross and Blue Shield of Minnesota suggested a revolving loan fund for ACO capital costs—to be paid off with future bonus payments—using financing from the Center for Medicare and Medicaid Innovation.
Some health systems also recommended loans against future savings bonuses, including SSM Health Care, a 14-hospital Catholic system based in St. Louis, and Trinity Health, which said upfront funding could be a “down payment” against payouts.
AHIP similarly recommended that the CMS reduce bonuses to offset any upfront financing.
Others, such as the Mayo Clinic, called for direct grants, while the American Academy of Pediatrics suggested federal incentives for private venture capital firms to invest in small or mid-sized group practices.
But insurer WellPoint argued that most accountable care networks should fund their own start-up costs by curbing wasteful spending. “Currently, in the commercial world, there is not new money for these initiatives,” the insurer said. Any upfront funding from CMS should be limited to solo doctors or small independent medical groups, WellPoint said.
And the AHA warned that without a clear and immediate financial incentive, providers may balk at spending the resources to form an ACO and get it off the ground.
“Too large a hurdle to share in savings to support those investments is a sure and quick means to discourage participation in the program,” the AHA said in its letter.
Medicare should relax criteria for calculating any savings bonus and show “significant restraint” as regulators set the threshold at which savings count toward bonus payouts, the AHA said. Under the health reform law, savings must exceed a threshold that accounts for random annual variation in health spending.
Many commenters, meanwhile, said bonuses fundamentally don't go far enough and urged CMS to be flexible with payment models and test multiple options.
Richard Morrison, president of the Adventist Health Policy Association, which includes 67 hospitals in five health systems, said payments should provide flexibility to address healthcare needs tailored to each community. That extends beyond hospitals and doctors to home care and support services, such as home-delivered meals.
“We're very concerned that there's a predetermined model in people's mind that an ACO is a health maintenance organization writ large,” he said.
Donald Crane, president and CEO of the California Association of Physician Groups, said payment models such as capitation are used widely among the state's multispecialty medical groups and independent practice association. “The shared savings program is of modest appeal to us,” Crane said in an interview. “It would be a step backward.”
The association urged CMS to include partial capitation in the upcoming regulations or for the Center for Medicare and Medicaid Innovation to quickly do so.
“Don't make us wait while the others catch up,” Crane said. He argued a swift test of payment models is necessary as healthcare costs continue to rise. “Congress will lose patience. The nation will lose patience,” he said. “Who knows what will come next.”
The AMA also urged the CMS to broaden its approach. Straightforward bonuses “alone do not represent true payment reform; they are merely another form of a pay-for-performance bonus on top of a fundamentally broken payment system,” the association said in its letter.
Medicare should adopt at least three payment models, such as partial capitation or a medical home payment, in addition to the performance bonus outlined in the reform law, the AMA said.
“For the majority of physicians in small practices, the shared savings model does not provide any resources to invest in necessary infrastructure with the potential to generate shared savings,” Cecil Wilson, president of the Chicago-based association, said in a written statement.
The Medicare Payment Advisory Commission, a panel that advises Congress on Medicare issues, told the CMS that hospitals and doctors should face some financial risk along with potential rewards.
MedPAC argued in its comment letter that the bonus payments to ACOs may be too weak to motivate hospitals and doctors.
More effective, the advisory group said, would be “two-sided” incentives under which cost-control efforts count toward avoiding potential losses, as well as toward earning a possible bonus. “Over time, the two-sided risk model should become the dominant or the only model available,” MedPAC urged.
Adding financial risk, however, also comes with its own potential hazards for patients, warned Robert Berenson, an institute fellow with the Urban Institute. Berenson is vice chairman MedPAC but stressed that he spoke for himself and not the commission.
Berenson argued in an interview that quality measures, as proposed, won't be enough to ensure that financial incentives to curb spending don't compromise patient care. “Others think performance is all we need to know,” said Berenson. — With Rebecca Vesely
