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McClellan Unfazed by Storm of Criticism of ACO Proposal

By John Reichard, CQ HealthBeat Editor

Mark McClellan, the former Centers for Medicare and Medicaid Services administrator who is leading a concerted effort to spawn the growth of accountable care organizations, said that he expects Medicare officials to ink the first Medicare ACO contracts next spring.

McClellan said the intense criticism of the ACO regulation proposed by CMS last March only shows how serious doctors, hospitals, and other providers are about creating the new organizations. The health overhaul law (PL 111-148, PL 111-152) envisions these groups as bringing more efficient, team-based care to the traditional Medicare fee-for-service program.

"I think the storm of criticism is an indication of how much it matters" to providers and other organizations, McClellan said of the proposed rule.

Critics have called the proposal unworkable and noted that cutting-edge health systems aren't seeking ACO status. But it would be a mistake to think the ACO program is a clunker and won't go anywhere, McClellan said in a brief interview after launching a two-day ACO "summit" meeting in Washington, D.C.

"The fundamental need for those reforms, ACO reforms, is not going away," he said in his opening remarks.

Health and Human Services officials have said they will launch the Medicare ACO contracting program in January. McClellan says he thinks it actually will be spring of 2012 before the first contracts are signed. CMS must make final its proposed regulation after evaluating some 1,200 comments. Once the rule is finalized, the agency will have to issue "sub-regulatory guidance" to provide health industry officials the application forms and guidance they will need to formally apply, McClellan said.

Applicants will need time to have lawyers review the applications, including for antitrust compliance, he said. And then CMS will need time to scrutinize the applications, he noted.

McClellan said currently there are about 100 ACOs operating now outside of Medicare, up from about 50 a year ago. He may know more about ACO activity than anyone; his Engelberg Center for Health Reform at the Brookings Institution has created a learning network to give organizations access to the many resources they will need to form ACOs.

McClellan expects many more ACOs to get off the ground next year. He is talking about ACOs of all kinds when he makes that prediction—those in the private sector, in Medicaid, and in Medicare.

McClellan said he sees various forms of innovation in the private and public sector feeding off of each other. Thus "medical home" programs to give the chronically ill access to doctor's offices that closely monitor their care will eventually apply for status as ACOs. And ACOs will seek status as medical homes, he said.

HHS officials who spoke at the meeting seemed determined to be upbeat—and grateful to McClellan, a key health official in the Bush administration, for his efforts outside CMS to promote ACOs. There hasn't been much in the way of praise for ACOs lately.

"His leadership in helping to develop this model is really welcome," HHS Secretary Kathleen Sebelius said in the summit's keynote address.

Sebelius acknowledged all the criticism of the proposal but expressed confidence that the final rule would find the right balance between the necessity to make real change in how health care is delivered and the resources organizations can realistically provide to start down that path.

She said attendees could take some encouragement from the five-year Physician Group Practice Demonstration program at CMS. The 10 group practices involved made improvements in the quality of care and six of the 10 group practices generated savings totaling $80 million, she said.

Providers and CMS now know more about ACOs and private payers are experimenting with ACO models, she said. That adds up to growing know-how that will deliver better results from the Medicare ACO contracting program than in the CMS demo, she predicted.

The adoption of information technology that will make it easier to run ACOs is beginning to accelerate, she said. "At some point there will be a tipping point and the market will absolutely take over" in terms of providers having to have IT to compete, she said.

Deputy CMS Administrator Jonathan Blum showed no signs of being defected by the hundreds of critical comments of the proposed ACO reg. He said he was "pleased and heartened" by the comments and the energy they reflected. He said the proposal should engender strong comment because its aim is to change the delivery of treatment in the Medicare program.

Blum also predicted strong participation in a "pioneer ACO" program CMS is launching later this year for a select group of organizations that are ahead of the curve in organizing care and will get started before regular ACO contracting program launches.

But not all the talk from HHS officialdom was necessarily rosy. Sebelius had a bit of a warning too for potential applicants. "Accountable care organizations cannot just be the status quo with a new name," she said.

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