The Patient Protection and Affordable Care Act ("PPACA") became law on March 23, 2010. Since then, one of the provisions generating the most discussion and interest among health care providers is the Shared Saving Program ("SSP"). Fundamental to the SSP is development of so-called accountable care organizations ("ACOs"). These organizations would include independent health care providers and institutions involved in different aspects of an episode of care. ACOs are conceived of as systems of care that emulate the care delivery approaches of the participants in the Physician Group Practice Demonstration Project, including Geisinger Clinic, Marshfield Clinic and Park Nicollet Clinic, and other leading organizations, such as Mayo Clinic and Group Health Cooperative.
The term "Accountable Care Organization" is now used to refer to any arrangement, not just SSP organizations, where independent providers, working together, focus on bringing efficiency and quality to the delivery of health care services by decreasing mistakes and taking responsibility for the entire episode of care. A notable success in California is the collaboration involving Catholic Healthcare West, Blue Shield of California and Hill Physicians Medical Group for enrollees in the Sacramento area who receive health care benefits through the CalPERS. Estimated savings were $15,000,000 over two years. The proposed SSP regulation was published on April 7, 2010. Proposed at the same time were rules and announcements setting the processes and procedures by which ACOs could receive some assurance that their new relationships would not violate antitrust laws, would not have a negative effect upon the tax-exempt status of nonprofit participants, and would not violate the federal anti-kickback and Stark statutes.
After wading through and assessing the proposed SSP regulation, the verdict was clear and was reflected in many of the over 1,200 comments received by the Centers for Medicare & Medicaid Services ("CMS"). Grave concerns were expressed about the complexity of the proposal, the difficulties inherent in the new processes to achieve compliance with other laws, the costs to develop systems that would permit successful participation in the SSP, and the amount of return to be received. Perhaps the most important issues were the freedom given to assigned beneficiaries to receive services from providers who were not members of the ACO and the retroactive assignment of beneficiaries to an ACO, making the ACO responsible for beneficiaries who chose to receive their most complex and expensive care outside of the ACO.
While PPACA requires the SSP to begin on January 1, 2012, the final SSP regulations were only made available on October 20, 2011, and only take effect 60 days after the date of publication of November 2, 2011. As expected, no ACO will begin operations under the SSP on January 1, 2012 and, unless CMS has made great strides in the final SSP regulation to improve the SSP, we believe that it will be of limited importance with few providers electing to participate, certainly not at the earliest possible time.
CMS's attempts to salvage the SSP from universal rejection was reflected in two recent demonstration projects announced by the Center for Medicare & Medicaid Innovation ("Innovation Center").
The first Innovation Center program is the Pioneer ACO Program. "Mature" ACOs may elect to participate in this demonstration project. The stated benefits are that this program is less complex and has greater potential upside returns and lower downside risks than the SSP. Only 30 health systems will be permitted to participate. CMS has not revealed the names of the applicants, although recent reports by Kaiser Health News and Politico Pro indicate that some of the more recognizable names in the industry (Mayo Clinic, Geisinger Clinic, etc.) have decided not to participate in the Pioneer ACO Program and, rather, will continue to participate in the Physician Group Practice Demonstration Project. It appears, however, that a number of notable and successful providers have applied to participate in the Pioneer ACO Program.
The second program announced by the Innovation Center is the Comprehensive Primary Care Initiative. This initiative invites health plans to participate in a demonstration whereby patients covered by private health insurance would participate along with Medicare beneficiaries. If a State Medicaid program participates in this initiative, then CMS would make up to 100 percent of the additional reimbursement available to the States.
This initiative addresses several of the negative reactions to the proposed SSP regulation. There does not appear to be a downside risk to the physicians. The initiative will make additional Medicare payments to participating primary care physicians expected to average $20 per Medicare beneficiary per month to be reduced in years three and four. Moreover, in years three and four, participating primary care physicians will share in a portion of the total Medicare savings in their marketplace.
The variety of private arrangements that are called ACOs is breathtaking and resemble, at first blush, the integrated delivery systems of the 1990s. ACOs, unlike their integrated delivery system precursors, have a greater chance to succeed. ACOs can deploy new systems and tools, including electronic health records, quality programs and best practice approaches, to the hard work of real clinical integration rather than mere structural changes.
Based on our experience, we expect continuing and increasing private activity led by local health care providers and payors who will use these new tools to increase quality and decrease costs, doing what is best for their communities in their marketplaces. We believe that Medicare programs will be effective only to the extent that they positively respond to these developments, as seen in the Innovation Center programs. While the recently announced initiatives by the Innovation Center demonstrate this flexibility, it is uncertain, until the 700 pages of preamble and regulations are fully considered, whether the recently announced final ACO regulations (to be published in the Federal Register on November 2, 2011) demonstrate such flexibility. While the changes touted by CMS certainly reflect responsiveness and flexibility—increased provider sharing of savings, no downside risk in one track, prospective assignment of beneficiaries, increased program focus by reduction of the number of quality measures, and elimination of the EHR requirement, among others—examination of the SSP components that CMS did not change from the proposed regulation, or did not tout, may undercut the initial favorable reviews. For example, CMS has continued its commitment to freedom of beneficiary choice, assigning beneficiaries to an ACO based on the use of primary care service but permitting beneficiaries to choose non-ACO providers for any non-primary care service. 42 CFR § 425.400(b). Despite this gap (and others), CMS may have done enough to entice participation in the SSP—at least by providers who were unwilling to take downside risk.
Mitchell Olejko is a Shareholder in the Health Care Practice Group in San Francisco.
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