The law firm McGuireWoods and healthcare analytics company Sg2 discussed the regulations for accountable care organizations in an April 6 webinar titled "Interpreting New ACO Regulations: Implications for Growth and Performance."
Representatives from McGuireWoods and Sg2 offered analysis and advice on ACO development. The presenters from McGuireWoods included Scott Becker, JD, CPA, a partner and Bart Walker, JD, and Brent Rawlings, JD, both associates. The presenters from Sg2 included Vice President Jeff Moser and Senior Vice President Bill Woodson.
During the presentation, Mr. Becker listed 10 observations on ACOs as a whole:
1. ACOs will create administrative burdens. Health systems that participate in the ACO program will be investing in the Centers for Medicare and Medicaid Services. This large-scale investment in administration will create bureaucratic and administrative demands for leaders.
2. True cost of ACOs will exceed $1.7 million. CMS' Physician Group Practice Demonstration showed an average initial investment of $1.7 million. However, this cost does not account for preparing the structure and operations of a healthcare organization to be able to participate as an ACO. For example, organizations need to implement EMRs before becoming an ACO.
3. Few Medicare beneficiaries estimated for shared savings program. CMS estimates five million beneficiaries will be part of a shared savings program through ACOs. Compared to the total number of Medicare beneficiaries, however, this is a relatively small amount. Understanding the benefits and costs of ACOs to Medicare may help leaders decide whether they will join the program.
4. Large, integrative systems will be better prepared. Large systems that are already integrated will have an advantage over smaller, nonintegrated systems because of the structure and goals of an ACO.
5. Leaders cannot afford to ignore ACOs. Healthcare leaders should not ignore ACOs, according to Mr. Becker. First, trends in Medicare necessarily become important in the commercial market because CMS affects insurance companies and other groups in addition to hospitals. If leaders ignore the movement towards ACOs, they could get left behind. In addition, continuing to use a fee-for-service model may yield only 80 percent of Medicare payments that the new, quality-based model could potentially receive.
6. Medicare payments/sanctions drive behavior. CMS has invested and will invest a significant amount of money in ACOs — more than they invested in physician-hospital organizations and multi-provider networks. The monetary sanctions and rewards offered to healthcare organizations will drive organizations to align and coordinate care.
7. ACO regulations involve faith and aspirations. Leaders will need to have faith in the ACO model to be successful in developing the organization. Many of the concepts in the regulations are new and untested, requiring strong leadership, a desire to engage in the system and the ability to take risks.
8. Regulations are negative toward specialty interests. While ACOs can include physician specialists, the focus is on primary care physicians.
9. Regulations are positive toward primary care management. The ACO model gives primary care physicians a central role in the delivery of care and requires a minimum number of primary care physicians to operate.
10. Transition will be a challenge. Hospital leaders should be able to or appear to compete in both a fee-for-service as well as a risk model while healthcare transitions to ACOs and more integrated systems.
In addition to the general points made above, one theme mentioned throughout the webinar was the need for healthcare leaders to implement the components of an ACO regardless of their intentions to form one. The webinar presenters said while ACOs are not the only model for care delivery, the founding concepts represent a definite movement to a value-based system of care.
For hospital leaders to succeed in their organizations, they should implement key elements of ACOs, including electronic medical records, quality metrics, patient safety measures, updated coding capabilities and coordination among leaders. The speakers said ACO regulations are not something leaders can ignore, even if they do not plan to participate in the program. If ACOs do not last, as some predict, the changes ACOs necessitate would still continue to be essential for a successful healthcare system in the future.
Representatives from McGuireWoods and Sg2 offered analysis and advice on ACO development. The presenters from McGuireWoods included Scott Becker, JD, CPA, a partner and Bart Walker, JD, and Brent Rawlings, JD, both associates. The presenters from Sg2 included Vice President Jeff Moser and Senior Vice President Bill Woodson.
During the presentation, Mr. Becker listed 10 observations on ACOs as a whole:
1. ACOs will create administrative burdens. Health systems that participate in the ACO program will be investing in the Centers for Medicare and Medicaid Services. This large-scale investment in administration will create bureaucratic and administrative demands for leaders.
2. True cost of ACOs will exceed $1.7 million. CMS' Physician Group Practice Demonstration showed an average initial investment of $1.7 million. However, this cost does not account for preparing the structure and operations of a healthcare organization to be able to participate as an ACO. For example, organizations need to implement EMRs before becoming an ACO.
3. Few Medicare beneficiaries estimated for shared savings program. CMS estimates five million beneficiaries will be part of a shared savings program through ACOs. Compared to the total number of Medicare beneficiaries, however, this is a relatively small amount. Understanding the benefits and costs of ACOs to Medicare may help leaders decide whether they will join the program.
4. Large, integrative systems will be better prepared. Large systems that are already integrated will have an advantage over smaller, nonintegrated systems because of the structure and goals of an ACO.
5. Leaders cannot afford to ignore ACOs. Healthcare leaders should not ignore ACOs, according to Mr. Becker. First, trends in Medicare necessarily become important in the commercial market because CMS affects insurance companies and other groups in addition to hospitals. If leaders ignore the movement towards ACOs, they could get left behind. In addition, continuing to use a fee-for-service model may yield only 80 percent of Medicare payments that the new, quality-based model could potentially receive.
6. Medicare payments/sanctions drive behavior. CMS has invested and will invest a significant amount of money in ACOs — more than they invested in physician-hospital organizations and multi-provider networks. The monetary sanctions and rewards offered to healthcare organizations will drive organizations to align and coordinate care.
7. ACO regulations involve faith and aspirations. Leaders will need to have faith in the ACO model to be successful in developing the organization. Many of the concepts in the regulations are new and untested, requiring strong leadership, a desire to engage in the system and the ability to take risks.
8. Regulations are negative toward specialty interests. While ACOs can include physician specialists, the focus is on primary care physicians.
9. Regulations are positive toward primary care management. The ACO model gives primary care physicians a central role in the delivery of care and requires a minimum number of primary care physicians to operate.
10. Transition will be a challenge. Hospital leaders should be able to or appear to compete in both a fee-for-service as well as a risk model while healthcare transitions to ACOs and more integrated systems.
In addition to the general points made above, one theme mentioned throughout the webinar was the need for healthcare leaders to implement the components of an ACO regardless of their intentions to form one. The webinar presenters said while ACOs are not the only model for care delivery, the founding concepts represent a definite movement to a value-based system of care.
For hospital leaders to succeed in their organizations, they should implement key elements of ACOs, including electronic medical records, quality metrics, patient safety measures, updated coding capabilities and coordination among leaders. The speakers said ACO regulations are not something leaders can ignore, even if they do not plan to participate in the program. If ACOs do not last, as some predict, the changes ACOs necessitate would still continue to be essential for a successful healthcare system in the future.