ACOs an Opportunity for “Real Money,” Just Not Yet

Healthcare Attorney Recommends Taking It Slow

Healthcare veterans of the early 1990s remember the acronyms – IPA, PHO, PSO, MSO -- mustered under the threat of capitation that never really materialized. So, will providers hold back when it comes to establishing the accountable care organizations (ACOs) included in the healthcare reform act?

Thomas E. Bartrum, a Nashville attorney with Baker, Donelson, Bearman, Caldwell & Berkowitz, said his firm has “seen the spectrum of responses” so far to the prospect of ACOs, ranging from large health systems already gearing up to small physician practices taking a wait-and-see approach. “Some people are calling out of the blue saying, ‘I need an ACO, and I need it immediately!’ ” Bartrum said.

Under the Patient Protection and Accountable Care Act of 2010, ACOs would be provider partnerships -- even among previous competitors -- forged to address the lack of accountability in today’s healthcare-delivery system. Their mission would be to curb costs and boost quality. Yet Bartrum said it’s important to remember that ACOs “aren’t a specific legal structure.” In fact, he called ACOs “an umbrella concept” that may be structured in a variety of ways “to measure quality, to measure the cost of delivering care and then to create a positive change.”

The carrot for ACOs is Medicare’s Shared Savings Program, benefiting these groups of providers that join forces to take responsibility for quality, cost and overall care of a patient population. The idea is that providers and suppliers will work collaboratively to coordinate care and share in the resulting savings. The Shared Savings Program is set to launch by Jan 1, 2012.

“Do I expect all hospitals and health systems to be rolling out accountable care organizations come Jan. 1, 2012? No, I don’t,” Bartrum said, adding, “This all seems to be a march toward more financial risk being borne by providers. … Government payers are always looking to put more risk of delivery of care onto the providers.”

In November, Bartrum was named co-chair of the American Health Lawyers Association’s newly created Accountable Care Organizations Task Force, created to address the variety of legal issues potentially impacting ACO development and operation. It’s the job of the task force to monitor and evaluate relevant statutes, regulations and cases and then develop educational materials and activities for AHLA members.

That’s a particularly difficult task now, Bartrum noted, because so few rules and regulations are available. “In reality, from my perspective, I’m already feeling the time crunch,” he said. “How do you develop an ACO for a big health system to be operational Jan. 1, 2012, when you really don’t even have rules yet.” Regulations from the Centers for Medicare and Medicaid Services were expected last fall, and as of press time, CMS was still accepting comments.

One of the biggest legal hurdles is antitrust concerns, obvious since the situation requires competitors coming together to set pricing. “The FTC has indicated that they are going to provide an expedited process for resolving and giving advice to ACOs on their antitrust exposures,” Bartrum said. The guidelines should define when an ACO is sufficiently clinically integrated for single-signature contracting, he explained.

The health reform act also gives the secretary of Health and Human Services the power to waive anti-kickback, antitrust and civil monetary penalty issues, but as of yet, there’s no waiver process and no indication of new safe harbors and exceptions.

So what’s a provider to do? “This is going to sound bad,” Bartrum acknowledged, “but if you move too quickly, increase your efficiency and increase your cost accountability for care, what you’re going to see is a decrease in revenue without any corresponding savings to share with anybody. I don’t want to say there’s a fair amount of gamesmanship here, but I don’t think you want to get too far in front of the curve, either.”

He cautioned systems, hospitals and physician practices to be wary of consultants that pop up claiming to have all the ACO answers. He suggests instead that providers begin a self-evaluation to identify opportunities to save money and improve care for the patient population they serve. He said eventually the Shared Savings Program might be “an opportunity for real money.”

“I think what we’re going to be moving toward is true payment reform, meaning more bundled payments, more pay for performance, more episodic pay arrangements,” Bartrum predicted. “As we move toward that, possibly even to capitation, building an accountable care organization that makes sense is the first step into taking financial risk for the delivery of care.”