Proposed ACO regulations raise questions of risks vs. rewards for PCPs

May 12, 2011

Since passage of the Affordable Care Act last year, you've probably been curious to find out what shape accountable care organizations (ACOs) will take and how they will affect your practice. The Centers for Medicare and Medicaid Services (CMS) answered some of those questions recently, and raised more.

 

Since passage of the Affordable Care Act last year, you’ve probably been curious to find out what shape accountable care organizations (ACOs) will take and how they will affect your practice. The Centers for Medicare and Medicaid Services (CMS) answered some of those questions recently-and raised more.

In 400 pages of proposed regulations, CMS clarified participation, quality, and governance issues, but introduced some unexpected twists in reimbursement. Primary care practices are not currently required to participate in ACOs, but pressure to join likely will increase because primary care physicians (PCPs) are central to the concept. “There’s great excitement around the idea,” says Quentin Pirkle, MD, vice president and chief medical officer of Atlanta-based Piedmont Medical Care Corporation and chairman of the board of Piedmont Clinic.

But the regulations may contain some deal-killers, too. Pirkle cautions that three aspects of the proposed regulations are worrisome to PCPs considering participation in an ACO-patient assignment, lack of data, and reimbursement issues. In addition, unlike specialists, hospitals and labs, PCPs are only allowed to belong to one ACO at a time, limiting their options.

CMS proposes to assign patients retroactively, based on their usage patterns, so ACOs would not know which patients they have been assigned or whose care is being monitored. Pirkle suggests that practices may have to call all the patients assigned to the ACO to learn their health status and who among them needs follow-up. That could make the start-up process unmanageable for small practices or less-extensive networks that won’t have the staff or financial resources to stay on top of every patient.

While the goal is for all patients to receive high-quality care, Pirkle says, “If you have 40,000 Medicare patients and you know which 5,000 are being tracked, you can hire personnel to keep up with those patients and focus on preventive care. If you can bend the cost curve for them, then you have the resources to help more” through the shared savings program.

Smaller practices won’t be managing 40,000 Medicare patients, of course. But there’s some question as to whether ACOs that have fewer than 15,000-20,000 Medicare patients are financially viable. (ACOs must have at least 5,000 Medicare patients.)

If you thought the primary costs of joining or creating an ACO would come from upfront organizational and information technology investments, chances are you were unpleasantly surprised by two new concepts embedded in the reimbursement schemes: mandatory risk-sharing and a 25% holdback.

CMS proposes two models, both requiring ACOs to accept downside financial risk. In the first, the ACO accepts risk from the beginning of the three-year contract and receives a larger percentage of the savings (up to 62%). In the second, the ACO assumes no risk until year three, but receives a lower percentage of savings (a maximum of 50%). The kicker is that, under both plans, CMS sets a minimum threshold for savings before the ACO gets any savings. In addition, if the ACO is entitled to a share of savings in the first two years, CMS holds back 25% until the last year to ensure that later losses can be covered.

CMS is requesting comments through June 6.