Donald M. Berwick, head of the Centers for Medicare and Medicaid Services speaks at the Military Health System conference in January. (Photo by Military Health via Flickr).
Facing strong criticism of the proposed regulation for accountable care organizations, the Obama administration announced new options Tuesday to lure hesitant doctors and hospitals.
ACOs are a new delivery model created under the health law that offers providers financial incentives to work together to provide high quality care to Medicare beneficiaries while keeping down costs. But hospital and doctor groups are complaining that the proposed regulation creates more financial risks than rewards and imposes onerous reporting requirements. On Monday the American Hospital Association that starting an ACO could cost a hospital $11 million to $26 million in the first year. The proposed regulation put the cost at $1.8 million.
The Department of Health and Human Services 聽a new 鈥淧ioneer鈥� ACO model, which officials promised 鈥渨ill provide a faster path for mature ACOs鈥澛燼nd save Medicare as much as $430 million over three years. The idea is that existing integrated-care organizations such as Geisinger Health System, the Cleveland Clinic and Intermountain Healthcare will be able to launch ACOs as early as this summer. One incentive: the opportunity to pocket more of the expected savings in exchange for taking on greater financial risk. These ACOs also will be able to work with private insurers and eventually Medicaid, the state-federal program for the poor.
For less mature health systems, the Centers for Medicare & Medicaid Services also announced it is considering helping cash-strapped provider groups form ACOs by giving them some of their share of anticipated savings upfront. The agency is requesting comments on the idea by June 17. In a third step, CMS will offer four free 鈥渓earning sessions鈥� for providers interested in finding out more about starting an ACO.
CMS head Dr.聽Donald Berwick said in a news briefing that the complaints from provider groups were 鈥渘othing we didn鈥檛 anticipate鈥� and showed they were engaged in the ACO discussions. The Pioneer program, he said, is another 鈥渆xciting new option.鈥�
Some health care experts say the new program is intended to get some of the major health systems back at the ACO table. The American Medical Group Association, which represents nearly 400 large organizations, last week released a letter warning that more than 90 percent of its members would not participate because of the reporting requirements and financial disincentives. Participants in Medicare鈥檚 Physician Group Practice Demonstration Program, considered an ACO precursor, wrote a letter citing similar concerns.
Dan Mendelson, CEO of the consulting firm Avalere Health, said the Pioneer program is an effort to 鈥渆xpedite the launch of a few ACOs鈥� for political reasons. He said the Obama administration needs to show that 鈥渟omething is happening鈥� by providing successful examples for other provider groups to follow. He added that the innovations are an encouraging sign that CMS is really listening to the health industry after the 鈥渞esounding thud鈥� of the proposed rule.
But Michael Millenson, president of Health Quality Advisors LLC, said Tuesday鈥檚 announcement is a sign that CMS has capitulated to the growing backlash by scaling back the ACO program and 鈥渒icking the can down the road.鈥� Before the proposed ACO rule was released, he said, CMS expected 鈥渁n army of ACOs鈥� ready to march forth and transform health care. But after the rule, the tone in the industry changed. Now, 鈥渋nstead of the army, you have hardly anyone volunteering.鈥�
Rather than rolling out ACOs nationally, Millenson said, CMS is turning the idea into 鈥渁 demo project鈥� that will be limited to only 30 health systems. 鈥淚t鈥檚 a step backwards,鈥� he argued, and creates a bifurcated system in which the major integrated systems will be on a separate track from the smaller groups 鈥渨ho are just dipping their toes in the water.鈥�
But Blair Childs, senior vice president of Premier, an alliance of more than 2,500 hospitals, said the new program is a positive sign 聳 鈥渢he more options people can have, the better.鈥� He said he鈥檚 had many talks with CMS and it鈥檚 clear the agency is listening to concerns. Nonetheless, he said there鈥檚 still 鈥渄issatisfaction with the rule that needs to be addressed.鈥�
It鈥檚 not clear when the final ACO rule will be released. The main program is supposed to launch in January 2012.