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CMS Letter on Quality Standards Aims to Keep Pioneer ACOs from Bolting

By John Reichard, CQ HealthBeat Editor

April 24, 2013 -- Pioneer ACOs can fairly be described as being at the leading edge of national efforts to control health spending, but it also can be the bleeding edge, as one ACO insider wryly notes.

That's because these pace-setting organizations are experimenting with team-based care try to reduce their spending—and lately perhaps because of upcoming quality standards they say are too demanding and costly to meet.

A recent letter released by the Centers for Medicare and Medicaid Services (CMS) aims to respond to those concerns, which led all 32 of the organizations to say in a Feb. 25 letter to CMS that they might quit the program.

That would deal a major blow to Obama administration efforts to rein in health spending. The pioneers are thought to be the most advanced providers in coordinating treatment in the fee-for-service system, which still by far accounts for most of the spending in Medicare despite the growing chorus of policy analysts who say it should be replaced.

It's unclear how pioneer accountable care organizations, or ACOs, will respond to the new CMS letter, which also makes clear that the agency intends to hold these more advanced accountable care organizations to higher quality standards than the 200-plus ACOs that are part of the CMS "shared savings" program.

ACOs are affiliations of different types of providers who coordinate treatment services to improve the quality and efficiency of care. Insurers set standards for savings and quality performance which, if met, allows participating providers to receive bonus payments or in some contracts to avoid having payments docked if they fall short.

The Centers for Medicare and Medicaid Innovation at CMS, established under the health law (PL 111-148, PL 111-152), has contracted with 32 ACOs to be "pioneers." The separate shared savings program at CMS involves contracts with other ACOs that, in general, have less experience in care coordination.

ACOs attempt to end the go-your-own-way approach to medicine characteristic of doctors and hospitals in the fee-for-service system in Medicare and commercial insurance.

While the April 23 CMS letter shows flexibility, it's too soon to say whether all of the 32 will stick with the pioneer ACO program. They have until the end of May to decide.

The April 23 reply from CMS suggests that rather than having to comply with "flat percentage" quality benchmarks that caused alarm among the pioneer ACOs, the organizations will be expected to meet quality standards based on the real-world experience of providers.

Those standards address things like provider performance managing the blood pressure of Medicare enrollees or finding out from them if they smoke and are taking steps to quit.

The pioneers said the flat percentages set for things like the percentage of patients screened for colorectal and breast cancer were far higher than "best in class" providers had previously been able to attain and should be more closely tied to the real-world performance of providers thus far.

Richard Gilfillan, director of the innovation center, said in the letter that more recently CMS has received data from 200 organizations allowing "empirical" benchmarks to be used in 2013. The organizations include both pioneer and shared savings ACOs. In other words, the standards would be based more on actual past ACO performance.

An ACO insider said that the pioneer group is, in effect, going to be measured against their own past performance this year to see whether the quality of their care is improving. That's probably better than standards that are impossibly high, but it may not assuage top performers for whom it is difficult to show improvement, the insider said.

CMS said in a statement that "we are not going to delay holding ACOs accountable for these quality measures, but we will speed up the collection and application of data to these important quality metrics to ensure that they are as accurate as possible."

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