At an Oct. 5 listening session on antitrust enforcement for accountable care organizations, FTC representatives asked a panel of stakeholders what financial incentives should ACOs work under in order to be granted antitrust waivers.
Incentives should be significant
Speakers representing physicians and hospitals said incentives need to be significant to overcome countervailing fee-for-service forces based on volume, such as for certain high-paying specialty services.
The reward needs to be significant enough to incent independent physicians in solo or small practices to join the ACO, added Cecil Wilson, MD, president of the AMA. Physicians in groups of nine or fewer make up 79 percent of all physicians, he said, adding: "How do you encourage physicians in small groups to get together?"
What happens when potential savings run out?
Since the "shared savings" ACOs will get from Medicare are based on reducing the cost of care, Dr. Wilson asked what happens with payments when ACOs become fully efficient and the potential savings go away. That won’t happen for a while, suggested Harold Miller, president and CEO of the Network for Regional Healthcare Improvement in Pittsburgh. A lot of potential savings exist in areas like readmissions, prevention of hospital admissions, and ambulatory care-sensitive admissions, he said.
Mr. Miller said Pittsburgh physicians working with his organization have reduced hospital readmissions by 40 percent. Similar successes have occurred at Fairview Health Services in Minneapolis, said Fairview CIO Terry Carroll. Due to an ACO-like collaboration with the insurer Medica, 50 percent of Fairview's income will come from some form of shared savings as of Jan. 1, and rate increases that used to be 12-18 percent are now at 1-3 percent, he said.
Payors fear ACOs' market power
Other panelists, however, were skeptical the shared savings approach could halt healthcare inflation and might even exacerbate it. "I’m very concerned about shared savings as a model," Robert Galvin, MD, CEO for Equity Healthcare at the Blackstone Group. He worried providers uniting in ACOs would enhance their negotiating power and impose 15-18 percent price increases. "Size is very powerful," he said. "It worries me."
But even if ACOs become dedicated to lowering costs, it make take years for them to ramp up and achieve savings, said Joseph Turgeon, vice president for network strategy and development at CIGNA. "It doesn't happen in year one," he said.
Should penalties be included?
MedPAC has discussed adding penalties to incentives as a way of making sure ACOs are committed to savings. Lee Sacks, MD, president of Advocate Physician Partners in Illinois, was asked if there was a penalty for Advocate physicians not meeting targets. Dr. Sacks said there is a penalty, in the sense that a physicians who does not meet certain goals is not eligible for a bonus. "You leave money on the table," he said. He said five physicians left the organization last year because they did not meet Advocate standards over two years.
Lawrence Casalino, MD, chief of the Division of Outcomes and Effectiveness at Weill-Cornell Medical College, noted that the FTC, when granting waivers, already looks at whether the organization has a graded plan to deal with physicians who don't meet standards. But he noted that available performance measures are "pretty dinky" and "we need more robust measures."
Dana Gelb Safran, senior vice president for performance measurement and improvement at Blue Cross Blue Shield of Massachusetts, agreed, noting there are not many quality measurements around in specialty care, particularly around outcomes. The AMA's Dr. Wilson said evidence-based medicine is still fairly "rudimentary," but "if physicians are provided with information that they believe is scientifically appropriate, they will do that."
Incentives should be significant
Speakers representing physicians and hospitals said incentives need to be significant to overcome countervailing fee-for-service forces based on volume, such as for certain high-paying specialty services.
The reward needs to be significant enough to incent independent physicians in solo or small practices to join the ACO, added Cecil Wilson, MD, president of the AMA. Physicians in groups of nine or fewer make up 79 percent of all physicians, he said, adding: "How do you encourage physicians in small groups to get together?"
What happens when potential savings run out?
Since the "shared savings" ACOs will get from Medicare are based on reducing the cost of care, Dr. Wilson asked what happens with payments when ACOs become fully efficient and the potential savings go away. That won’t happen for a while, suggested Harold Miller, president and CEO of the Network for Regional Healthcare Improvement in Pittsburgh. A lot of potential savings exist in areas like readmissions, prevention of hospital admissions, and ambulatory care-sensitive admissions, he said.
Mr. Miller said Pittsburgh physicians working with his organization have reduced hospital readmissions by 40 percent. Similar successes have occurred at Fairview Health Services in Minneapolis, said Fairview CIO Terry Carroll. Due to an ACO-like collaboration with the insurer Medica, 50 percent of Fairview's income will come from some form of shared savings as of Jan. 1, and rate increases that used to be 12-18 percent are now at 1-3 percent, he said.
Payors fear ACOs' market power
Other panelists, however, were skeptical the shared savings approach could halt healthcare inflation and might even exacerbate it. "I’m very concerned about shared savings as a model," Robert Galvin, MD, CEO for Equity Healthcare at the Blackstone Group. He worried providers uniting in ACOs would enhance their negotiating power and impose 15-18 percent price increases. "Size is very powerful," he said. "It worries me."
But even if ACOs become dedicated to lowering costs, it make take years for them to ramp up and achieve savings, said Joseph Turgeon, vice president for network strategy and development at CIGNA. "It doesn't happen in year one," he said.
Should penalties be included?
MedPAC has discussed adding penalties to incentives as a way of making sure ACOs are committed to savings. Lee Sacks, MD, president of Advocate Physician Partners in Illinois, was asked if there was a penalty for Advocate physicians not meeting targets. Dr. Sacks said there is a penalty, in the sense that a physicians who does not meet certain goals is not eligible for a bonus. "You leave money on the table," he said. He said five physicians left the organization last year because they did not meet Advocate standards over two years.
Lawrence Casalino, MD, chief of the Division of Outcomes and Effectiveness at Weill-Cornell Medical College, noted that the FTC, when granting waivers, already looks at whether the organization has a graded plan to deal with physicians who don't meet standards. But he noted that available performance measures are "pretty dinky" and "we need more robust measures."
Dana Gelb Safran, senior vice president for performance measurement and improvement at Blue Cross Blue Shield of Massachusetts, agreed, noting there are not many quality measurements around in specialty care, particularly around outcomes. The AMA's Dr. Wilson said evidence-based medicine is still fairly "rudimentary," but "if physicians are provided with information that they believe is scientifically appropriate, they will do that."