Under Construction, under Fire

Article excerpt


Since the Centers for Medicare and Medicaid Services (CMS) asked for comments on the muchanticipated regulations for accountable care organizations (ACOs) in late March, the proposed rules have been under constant attack.

Although medical societies, major clinics, and practice groups around the country have broadly supported the concept of ACOs, they have relentlessly criticized the specifics spelled out in the notice of proposed rulemaking (NPRM).

"The current regulations for ACOs are DOA," says Albert Fisk, MD, chief medical officer of The Everett Clinic in Everett, Washington. 'We were very excited about ACOs, but the regulations are just not workable from our perspective. CMS will have to change them significantly to get leading organizations to participate."

Located just north of Seattle, Washington, The Everett Clinic was one of 10 multispecialty groups that participated in the Physician Group Practice (PGP) Demonstration Program, the ACO prototype initiative that began in 2005. In a joint letter to CMS Administrator Donald M. Berwick, MD, on May 11, the groups said, 'We all have serious reservations about the economics and the complexity of the Medicare Shared Savings Program/ACO NPRM."

These leading clinics are not alone in their concern; 93% of American Medical Group Association (AMGA) members said they would not participate in ACOs under the current proposed rules.

Even so, the news isn't all bad for CMS.

"This is a new effort and there will be some refinement," says Roland Goertz, MD, MBA, FAAFP, president of the American Academy of Family Physicians (AAFP). "We remain convinced that ACOs have a significant opportunity to make healthcare more accountable and focused on value."


The AAFP and American College of Physicians (ACP) recommended several refinements to the structure and governance of ACOs, specifically to help small- to medium- sized practices.

As proposed, five provider groups can form ACOs:

* ACO professionals (physicians, physician assistants, nurse practitioners, and clinical nurse specialists) in group practice arrangements;

* networks of individual practices of ACO professionals;

* hospitals and professionals in joint ventures or partnerships;

* hospitals that employ ACO professionals; and

* certain critical access hospitals.

Significant upfront costs, however, may keep many physician groups from creating ACOs: CMS estimates that the average ACO will spend $1.7 million in startup costs and first-year expenses.

The American Hospital Association (AHA) puts the cost much higher- $11.6 million to $26.1 million-but physician-led ACOs are not likely to be that expensive, says Neil Kirschner, PhD, senior associate for insurer and regulatory affairs, ACP. "The AHA is talking about a truly hospital-based model with a lot of expenses and overhead to cover."

"Smaller practices will still need some help," Kirschner adds. "They need upfront money, because they don't have capital. They also need to have fewer requirements to become an ACO," he says. Those requirements include rigorous tests of financial solvency that would present significant challenges to many small- to medium-sized practices.

The AAFP's comment letter went further: "The AAFP is quite concerned that, as currently proposed, only large and established integrated health systems that already possess the capital and infrastructure would be able to qualify as a Medicare ACO."

"Physicians have not been allowed to be capital aggregators. Ifs a significant error to not consider the small- to mediumsized practices that take care of many Medicare patients," Goertz says.

The Advanced Pay Initiative CMS announced in mid- May might alleviate some of these concerns. As envisioned, the program would offer monthly advances based on patient count against future shared savings, but CMS is looking for input on what structure would be most helpful to smaller practices. …