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Groups Support Change in Key Medicare Payment Overhaul Program

By Kerry Young, CQ Roll Call

June 5, 2015 -- Medical groups last week praised Medicare officials for relenting on a demand that physician practices and hospitals accept some financial risk in order to continue participation in a shared savings test program, which is seen as a major driver of broader payment changes in the health system.

In a final rule released last week on the accountable care organization program, the Centers for Medicare and Medicaid Services (CMS) showed a clear desire to bring more doctors and hospitals into the program and retain those who already have chosen to participate. CMS will allow some organizations to continue working under models in which they stand only to gain from achieved savings and will not be forced into arrangements where they would be at risk for losses.

"Maintaining an ACO model that does not require repayment of financial losses will allow many physicians to gain experience analyzing data, improving care coordination and identifying opportunities to improve patient care while reducing spending, which will help prepare them for the implementation of the recent" Medicare payment law (PL 114-10), said Robert Wah, president of the American Medical Association.

Groups including the American Hospital Association and the National Association of ACOs, or NAACOS, also praised the decision regarding the so-called one-sided model, known as Track 1, while criticizing CMS for failing to make other requested changes. Some groups said they wanted to see a voluntary policy for assigning beneficiaries to ACOs. Additional adjustments could have helped make it more attractive for medical offices to advance to the Tracks 2 and 3 of the ACO program, said Clif Gaus, chief executive officer of NAACOS, in a statement.

"I remain skeptical that enough improvements have been made to Track 1 to sustain the growth we have been seeing and am concerned that large numbers of current ACOs are not ready to take on the higher risks" of Tracks 2 and 3, he said.

The health care industry as a whole needs to prepare for an eventual shift from Medicare's fee-for-service model toward one that will look far more like that of insurance companies, with systems used widely to control costs, said Alice Rivlin, a former top federal budget official at a recent event on Medicare at the Brookings Institution, where she is a senior fellow. The Department of Health and Human Services has set a goal of tying 30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as ACOs or bundled payment arrangements by the end of 2016. That goal jumps to 50 percent by the end of 2018.

The ACO program is one of the most developed tools CMS has so far developed for pushing this transition. More than 7 million people enrolled in Medicare are served by organizations participating in the ACO program.

The ACO model reflects the challenge of trying to maintain a more traditional Medicare program while adding in cost containment features. In the rule, CMS stressed how ACOs differ from the insurer-run Medicare Advantage programs, which now serve about 16 million people enrolled in the program. Insurance companies managing Medicare benefits can limit the network of doctors covered. Within the ACO model, people "retain all rights and benefits under traditional Medicare. Medicare [few-for-service] beneficiaries retain the right to see any physician of their choosing," CMS noted in the payment rule. The expected savings are intended to come from better coordination of care, which is thought to prevent some illnesses and cut back on duplicative services.

In the rule, CMS said it is still considering other changes to the ACO program. Among them are what measure to use in weighing whether savings have occurred. The agency is considering a benchmarking methodology based on a blend of each ACO's recent cost experience and cost trends in its region. CMS intends to issue a benchmark rebasing methodology in a rule later in the summer.

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