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ACO Group Looks to Congress for Changes in Program Rules

By Kerry Young, CQ Roll Call

June 10, 2015 -- Health professionals intend to ask Congress to change some of the rules for Medicare's accountable care organization (ACO) program, which is considered a key tool for shifting the agency away from a fee-for-service approach to payments based more on coordinated care, said the head of a trade group that represents the industry.

Clif Gaus, president and chief executive officer of the National Association of ACOs, or NAACOS, said the Centers for Medicare and Medicaid Services (CMS) should allow waivers for telehealth services and direct admissions to skilled nursing centers without requiring a previous three-day hospital stay for organizations participating in the Track 1 version of the program.

"These are things we will be advocating for on the legislative side," Gaus said in a recent interview with CQ HealthBeat.

NAACOS is among the groups that have said CMS didn't go far enough with a new set of changes announced last week for the Medicare shared savings plan and ACO model. Gaus also said that groups supporting the ACOs were disappointed that CMS has not changed rules on Track 1 ACOs, so they get a clear picture prospectively about the pool of patients for which they will be accountable and measured on. There's still just a retrospective assignment option, he said.

In the new final rule, CMS did allow for organizations to continue to participate in the Track 1 version, which allows hospitals and physician groups to potentially benefit from savings seen through more coordinated care of patients. Track 2 and the newly created Track 3 offer added incentives for participation but also require that the hospitals and practices involved be willing to accept some financial risk. CMS, for example, allowed waivers of the three-day stay rule for skilled nursing facility case for people prospectively assigned to organizations participating in Track 3.

The American Hospital Association praised CMS for allowing extended participation in the Track 1 program, but urged the agency to offer more flexibility on matters such as telehealth to make the program more attractive to new and current participants.

The Medicare shared savings program is one of the main tools that CMS is using to try to change the delivery of health in the United States. More than 400 organizations participate, providing care to more than 7 million people enrolled in Medicare. That's a population bigger than most U.S. states.

CMS estimates that at least 90 percent of the groups acting as ACOs will renew participation under the revised rules, mostly through the Track 1 option.

In the view of J. Michael McWilliams, an associate professor in the department of health care policy at Harvard Medical School, the new CMS rule was incredibly thoughtful and responsive to the concerns of participating groups, but also showed that there is more challenging work ahead.

Among the most pressing issues is the benchmark used to judge whether an ACO is saving Medicare money, McWilliams wrote in an email to CQ HealthBeat.

Under the old rule, an ACO that successfully lowered spending in one contract period would be penalized by a lower benchmark, or spending target, in the next, said McWilliams, whose research on ACOs has appeared in Health Affairs and the New England Journal of Medicine.

The new rule weakens the link between an ACO's benchmark and its savings in the prior period, but it does not sever it, he said. CMS has said that it plans this summer to release a proposal on benchmarking and risk adjustment, which will further explore the issue.

Medicare, which covers more than 50 million Americans and spends more than $600 billion a year, is often a leader in setting health policy throughout the nation. With ACOs, though, private insurers, such as UnitedHealth, also have tried out the ACO approach in their own operations. This model and related approaches, such as aggregations of physician practices, have the potential to cause major upheaval in the years ahead in how Americans pay for health care, Minnesota-based United said in a recent regulatory filing.

"Such organizations or groups of physicians may compete directly with us, which could adversely affect our operations," the company said. "In addition, if these providers refuse to contract with us, use their market position to negotiate favorable contracts or place us at a competitive disadvantage, our ability to market products or to be profitable in those areas could be materially and adversely affected."

The ACO model is still in its early days, and both CMS and private payers will be tinkering for years with the rules and different approaches to it, said Stuart Guterman, vice president for Medicare and Cost Control at The Commonwealth Fund.

"This isn't something where in 2017 or 2021 we will have the complete answer," Guterman told CQ HealthBeat in an interview. "This is an ongoing effort."

There's a marked difference between the ACO model and the rapid growth of health maintenance organizations, or HMOs, in the 1990s, he said. The HMO market grew through insurance companies' purchases of physician practices. With ACOs, the doctors and other health professionals are at the helm, he said. Most of them would prefer a model in which the emphasis is on how well their work preserves or restores their patients' health, instead of the current one that rewards them for generating volume, Guterman said.

People have been talking about this for a long time, he said, adding that the ACO experience at CMS is part of the evidence that real changes are in progress.

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