We’re up to 154 Medicare ACOs

Today, the CMS announced that it added another 89 ACOs to the Medicare Shared Savings Program (MSSP).  Including the original 6 Physician Group Practice Transition Demonstration participants, the 32 Pioneer ACO, and the 27 MSSP participants announced in April, that brings the total number to 154, serving more than 2.4 million Medicare beneficiaries.  Beginning this year, new applicants will be accepted only annually.

The new ACOs includes some that serve Michigan:

  • Oakwood Accountable Care Organization, LLC, located in Dearborn, Michigan (with 1,546 physicians and partner hospitals), and
  • Southeast Michigan Accountable Care, Inc., also located in Dearborn, Michigan (comprised of 333 physicians, including group practices and a network of individual practices), and
  • ProMedica  Physician Group (250 physicians in Michigan and Ohio)

Other new Medicare ACOs that are particularly large include:

  • Advocate Health Partners (2,237 physicians in Illinois)
  • Wellstar Health Network, LLC (1,203 physicians in Georgia)
  • Indiana University Health ACO (1,837 physicians)
  • Iowa Health Accountable Care (1,551 physicians),
  • University of Iowa Affiliated Health Providers (1,791 physicians)
  • Maine ACO (1,595 physicians)
  • Essential Health (1,404 physicians in Minnesota, North Dakota and Wisconsin)
  • Balance Accountable Care Network (1,069 physicians in New York City)
  • Mount Sinai Care (2,249 physicians in New York City)
  • University Hospitals Coordinated Care (1,770 physicians in Ohio)

The full list of new ACOs is available here.

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Of 27 new ACOs named by CMS: 93% avoid downside risk, 82% avoid CMS loans, 33% use payer-based infrastructure, and average beneficiaries per physician is 106

Yesterday, CMS announced the first batch of 27 “normal” ACOs under its Medicare Shared Savings Program (MSSP).

I found five things interesting about the list:

  1. 93% were unwilling to accept downside risk.  In the original proposed rule for the MSSP, ACOs would have been forced to accept downside risk.  Presumably, CMS thought that “skin in the game” would be an important motivator for real transformative change, and they wanted to increase the chances that the federal government would be able to achieve a net cost reduction.  But, in response to fierce backlash from providers saying they did not want to accept downside risk, CMS relented and introduced an option allowing providers to avoid taking downside risk in exchange for a smaller upside reward.   When it came time to lay chips on the table, 93% took the safe bet.
  2. Only 18% requested up-front payment.  One of the complaints from the provider community during the design phase of the MSSP was that providers lacked access to the capital needed to create the infrastructure to successfully improve care processes and manage risk — things like healthcare information technology, analytics and care management.  In response, CMS offered an option where ACO applicants could receive some up-front payments that would be repaid out of subsequent rewards.  CMS was offering to finance the investment, but it would be a loan, not a grant.  Only 18% of the first batch of ACOs selected this option.  I suspect this was due to the same risk aversion that led them to accept smaller rewards to avoid downside risk.
  3. 33% used payer-based infrastructure.  If physician organizations are to remain locally-focused, it makes more sense to share infrastructure with others to achieve economies of scale, rather than taking on the cost of creating their own infrastructure.   As I described in a prior post, this can be accomplished through a franchise arrangement.  It can also be accomplished through a management services organization (MSO), as is commonly done by PPOs and medical groups in mature managed care markets.  Or, it can be done by partnering with payers who already have such infrastructure.  Any of these approaches could potentially work, but I’m least enthusiastic about using payers’ infrastructure.  Nevertheless, nine of the 27 new MSSP ACOs are organized as partnerships between local health care providers and Collaborative Health Systems (CHS), a division of Universal American, a publicly-traded for-profit health insurance company that offers a variety of plans including Medicare Advantage plans.  For these 9 ACOs, Collaborative Health Systems will provide a range of care coordination, analytics and reporting, technology and other administrative services.  This is a popular option not only because of the economies of scale, but also because it allows the providers to avoid having to take out a loan, either from CMS or from traditional sources of capital such as banks or the equity markets.
  4. 44% did not note the number of physicians in their press-release blurb.  I hate to read too much into such a factoid.  But, for ACOs to work, the physicians must really be involved.  What does it tell you if the organizers of an ACO, when drafting their little blurb for the CMS press release announcing their selection as one of the first batch of MSSP ACOs, did not think to state the number of physicians involved?
  5. Average beneficiaries per physician is 107.  Of the 13 ACOs that did think to include the number of physicians in their press release blurb, 4 of them had between 100 and 400 beneficiaries per physician, 7 of them had between 31 and 60 beneficiaries per physician, and 2 of them had less then 10 beneficiaries per physician.  If ACOs are to really work, they don’t just need infrastructure, they need “mind share.”  If 5% of your patients are involved in some new program, and if you have not agreed to any downside risk in terms of taking on debts or being on the hook for possible negative rewards, and if the rewards are relatively small even for that 5% of your patients, are you really going to be motivated to radically transform your care processes and change your habitual clinical decision-making practices?

Here’s this list, including the beneficiaries per physician calculations.

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HHS Releases Final ACO Rule

The Department of Health & Human Services (HHS) today released the final rule for accountable care organizations (ACO).

The new rule includes a number of changes designed to make the Medicare Shared Savings Program more palatable for health care providers who had a largely negative response to the draft rule released last March. The changes include the following:

  • Allow providers to choose to participate without any downside financial risk during the initial contract period, rather than requiring all participants to take downside risk during the third year of the contract period
  • Provide up front financial support to physician-owned ACOs to support investments in building ACO capabilities, to be repaid through gain sharing rewards in subsequent years
  • Reduce the up front investment needed by eliminating the requirement for meaningful use of electronic health records
  • Reduce the number of quality measures from 65 to 33
  • Allow providers to choose from a number of available start dates throughout 2012
  • Allow community health centers and rural health clinics to serve as ACOs
  • Prospective identification of the Medicare beneficiaries for whom the ACO will be held accountable, rather than deriving such care relationships after the accountability period
  • Eliminates the mandatory anti-trust review for newly-formed ACOs
  • Puts the burden on the federal government, rather than nascent ACOs, to gather data regarding local market share
The  text of the rule is available here, and the associated final waiver rules are available here.

In my opinion, the elimination of the requirement to accept downside risk is likely to substantially increase the willingness of providers to participate in the program, while simultaneously reducing the likelihood that participation will lead to meaningful transformation of the care process within those participants.  But, given the strong opposition to the draft rule, CMS had little choice but to dilute the requirements to at least get some players to take the field.

 

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