On March 31st, the HHS’s Center for Medicare and Medicaid Services (CMS) dropped its neutron bomb (proposed Accountable Care Organization (ACO) rules, caution PDF) on the healthcare industry. Much like the neutron bomb, the proposed rules will leave buildings standing, but any healthcare organization (HCO) planning to become a successful ACO will need to decimate cherished internal processes to create new models of care delivery. Those new models of care delivery by an ACO are intended to meet three core objectives of these proposed rules:
- Deliver better care for individuals
- Provide better health for populations and
- Lower growth on Medicare expenditures.
The proposed rules, which go by the overall heading of Medicare Shared Savings Plan (MSSP), provide as an incentive an ability for an ACO to share in the expected savings to CMS (it’s a rather complicated two tier structure) that also includes some downside risk should the ACO not meet some of the core objectives. To become an ACO, an HCO must have a minimum of 5,000 Medicare beneficiaries under management. The first round of applicants, who will sign-on to a three year ACO contract with CMS, will begin January 1, 2012. It is envisioned, these are proposed rules after all, that subsequent HCOs wishing to become an ACO may do so at the beginning of the calendar year.
The ACO rules have been anticipated for some time (they are an outcome of the Healthcare Reform Act) and at 429pgs, this document is quite a tome. The proposed rules are very expansive covering everything from ACO governance (a Medicare beneficiary must be on the Board), to ACO marketing (CMS wants to review ALL ACO marketing material), to quality measures & reporting, to how savings will be shared. We at Chilmark Research have reviewed a good portion of these rules and provide the briefest of summaries below focusing on the healthcare IT (HIT) aspects of these proposed rules.
Without a robust HIT infrastructure already in place, an HCO simply will not cross the chasm to becoming an ACO.
The above statement is about as brief and simple as we can make it regarding these proposed rules. CMS, along with its sister agencies that helped draft these rules, have set a very high bar for HCOs to leap over to meet these requirements. We predict that exceedingly few HCOs will make that leap in the inaugural year for the following reasons:
The ACO will need to report on 65 quality measures in five categories. Even though the quality measures chosen are well-known, accepted standards, few HIT systems today can automatically produce such reports. Thus the overhead burden of manually creating such reports may result in little upside gain for an HCO.
Core to the ACO model that CMS proposes is facilitating transitions in care via use of HIT (e.g., summary of care record) not only within the ACO but also beyond the ACO to whomever a beneficiary cares to see. This requires a level of local/regional health information exchange (HIE, the verb) that simply does not exist today in most communities. Sure, its coming but it won’t be ready in 2012.
An ACO must have at least 50% of its primary care physicians (PCPs) be “meaningful EHR users” as defined by the HITECH Act. The big challenge with EHR adoption under the HITECH Act has always been the small PCP practice. Will an ACO be able to aggregate enough of these practices to meet the 50% threshold?
Patient-centered care is a hallmark of these proposed rules with the term mentioned on nearly every page. A core objective that an ACO will need to meet is:
“…ACOs must have systems in place to identify high-risk individuals and processes to develop individualized care plans for targeted patient populations.” And goes on to state: “The individualized care plans should include identification of community and other resources to support the beneficiary in following the plan.”
A robust HIT infrastructure will be required to facilitate and automate many of the processes required to identify at-risk populations and create and share those beneficiary-specific care plans. Very few HCOs today have the systems and processes in place to enable the creation and distribution of such care plans.
After reviewing these proposed rules the first thing that came to us was:
From an HIT perspective, meeting meaningful use criteria is a cakewalk in comparison to meeting these proposed ACOs rules, they are that big, that much of a game changer.
Clearly, CMS is taking this somewhat unique opportunity to create a future model for healthcare delivery that will meet those three core objectives mentioned at the beginning of this post. But in doing so, there is the very real danger that CMS has bitten off far more than it can chew, which will ultimately result in an even bigger bureaucracy at HHS than the one we have today and subsequently higher administrative costs. (Seriously, review all marketing material that an ACO proposes to use? What were they thinking?).
There is also the issue of HIT maturity in this sector and the woeful lack of process maturity that we discussed in a previous post. Exceedingly few HCOs will rise to the ACO challenge in the early years. Therefore, are we setting ourselves up for a colossal failure or more likely, a nation of haves and have nots wherein those communities with skilled, IT savvy HCOs will ultimately be able to capitalize on the MSSP at the expense of their smaller rivals? There is plenty of language in the proposed rules to prevent predatory and monopolistic practices but the threat is there just the same should one HCO, by becoming an ACO, become more profitable than their competitors down the street or across town squeezing them out of business.
But not to end on a sour note, we are quite pleased by some of the language we saw in the proposed rules. Specifically we like:
The strong focus on processes to enable an ACO. Process change is put right out front as core to the metrics that CMS will use to evaluate an ACO, which frankly is right where it should be. Technology is just an enabler of process change.
Openness to innovative approaches and new models of care delivery including the use of telemedicine and remote monitoring. This has the potential to finally crack open the telemedicine/telehealth market.
The strong focus on patient-centric care. Finally, the lightbulb has gone on in DC that to truly bend that proverbial cost curve, the patient (beneficiary), their community and their personal care team (family, friends, loved ones) all need to be an integral part of the care team. This is visionary and for that we applaud CMS’s efforts to create a new model of care for this country.
Other good sources of ACO information we have found include:
- CMS head, Dr. Berwick’s article in NEJM.
- Kaiser Health News provides a comprehensive list of ACO material.
- 50 Things to Know about ACO rules by legal expert Scott Becker.
- Another legal expert, David Harlow’s first look at ACO rules.
- A couple of ex-CEOs of HCOs give their view.
- Friend of CR & knowledgable consultant provides his perspective.
- CIO of Harvard Medical School provides a detailed look at ACO rules.