But healthcare industry participants differed on whether the regulations would encourage or discourage widespread provider participation in ACOs. Chip Kahn, president of the Federation of American Hospitals, told Modern Healthcare the proposed rules would not make participation easy. The regulations “are extremely complex and clearly would require significant upfront costs, as well as accepting an additional risk and regulatory burden,” he said.
In contrast, Gruen, of PRTM Management Consultants, said he was “surprised at how wide open” the regulations are, in terms of encouraging provider participation. “CMS probably calculated that it is more important to keep momentum than worrying about some of these failing” due to lack of previous provider experience with such models, he said.
Potential participants that healthcare experts did not anticipate prior to the regulations' release are insurers. The regulations do not specifically allow insurers to participate in or operate ACOs, but the regulations give the secretary the option of including “other groups” she deems appropriate. “Payers have all of the patient data right now,” said Robert Reilly, general manager of the consultancy Performance Solutions Americas at GE Healthcare. “If you have all of the data then you don't need the insurers, but most” providers don't have that.
In addition to the detailed patient data that insurers possess, they also have the available funds to implement the “significant investment” the regulations would require for complex patient-data collection, sharing and calculation that determines whether the ACO is meeting its quality and spending goals, he said. “Unfortunately, hospitals generally don't know what happens outside their four walls,” Reilly said. “So you're going to have to see bigger entities” in ACOs.
For their part, insurers' representatives said the regulations left them concerned that ACOs could accelerate the trend of provider consolidation. That trend drives up medical prices and results in “additional cost-shifting to families and employers with private coverage,” Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a written statement after the regulations' release.
Among the factors that could determine provider participation in ACOs is the speed with which they are deployed. The law requires the first round of ACOs to launch at the beginning of 2012, but delays in the issuance of the proposed regulations have put that time frame in question. Although administration officials have not provided an estimated time frame for final regulations, regulators would need to issue them soon after the 60-day public comment period for the proposed regulations. Such quick action is needed to give providers enough time to work through an expected complex application process before the end of the year, according to Gruen. “The timing on all of this is going to be tight,” he said.
Linda Fishman, senior vice president for policy at the American Hospital Association, said the organization will look closely at the basic structure of the quality benchmarks. “We think some of those may be difficult to reach.”
Fishman also said the AHA would examine the related guidance issued by HHS' inspector general's office, antitrust authorities and the IRS, to see if it's sufficient to encourage participation in ACOs (See related story).
As providers pore over the ACO rule and submit their comments to the CMS, Deloitte's Keckley said it is important to consider these organizations within the larger context of aligning physicians and hospitals and shifting from volume to outcomes.
Attorney Klatsky echoed that assessment, and said he is hopeful that the ACO model will take off. “The concept of accountable care,” he said, “whether it's couched in ACOs, value-based purchasing, bundled payments—is here to stay.”