By Ruth Carol, contributing writer, July 01, 2011
The Centers for Medicare and Medicaid Services (CMS) may have published its proposed rule regarding accountable care organizations (ACOs), but that doesn’t mean dermatologists have any clearer picture of their role in these new entities.
Particularly worrisome to dermatologists is the lack of specificity regarding how specialists will participate in ACOs, what quality measures they will be required to meet, and how much risk they will be asked to assume.
In brief, ACOs are patient-centric entities that create incentives for health care providers to coordinate care for Medicare beneficiaries across settings.
Those ACOs that lower costs while meeting quality measures defined by CMS will be financially rewarded through the Medicare Shared Savings Program (SSP). “Like many of the new federal programs related to health care, such as health information technology, medical homes, and value-based purchasing, ACOs are an initiative for lowering costs and improving care,” noted Karen Edison, MD, who serves on the American Academy of Dermatology’s ACO Workgroup. “This is CMS’s attempt to revise how we pay for health services because our current system is not really sustainable and health care costs keep going up.”
Described as lengthy, complex, and vague as it relates to specialists, the proposed rule isn’t winning dermatologists over. “It has been conceived to improve care coordination and save money, both of which are very laudable goals,” said Robert Swerlick, M.D., also a workgroup member. “But I am very concerned that it will not achieve either goal as presently proposed.”[pagebreak]
“People need to keep in mind that the ACOs are voluntary at this point and only for Medicare patients,” said Oliver Wisco, DO, another workgroup member. Although he is also concerned that the proposed rule leaves many unanswered questions, Dr. Wisco believes that it will undergo a significant amount of change between now and when ACOs are actually instituted. “The SSP proposal is not perfect, but it is an important step in creating a better health care system,” he added.
In the meantime, dermatologists may want to sit back and observe what is going on in their part of the country before jumping into the ACO pond. As Alexander Miller, MD, another member of the ACO workgroup, cautioned, “The first frog in the water may be the one consumed by the big fish.” This system has never been tested on a broad scale, and whether or not it will work is all based on conjecture, Dr. Miller said. The one good thing about ACOs, he said, is that participation in them is voluntary.
Under the proposed rule, an ACO refers to a group of physicians, hospitals, and other health care providers and suppliers of services that will work together to coordinate and improve care for Medicare beneficiaries. An ACO may comprise the following groups of providers and suppliers:
- Physician group practices,
- Networks of individual practices of physicians and hospitals,
- Partnerships or joint ventures between hospitals and physicians, or
- Hospitals employing physicians.
An ACO must apply to CMS to participate in the SSP. In order to be accepted, the ACO must serve at least 5,000 Medicare patients and agree to participate in the program for three years. Participating providers will continue to receive payment under Medicare’s current fee-for-service system.[pagebreak]
Those ACOs that meet quality measures and achieve cost-saving targets, both of which are established by CMS, will receive an additional payment through the SSP. Those that don’t will be held accountable for losses. According to CMS, the benchmark for determining whether an ACO earns a bonus will be “an estimate of what the total Medicare fee-for-service Parts A and B expenditures for ACO beneficiaries would otherwise have been in the absence of the ACO, even if all of those services would not have been provided by providers in the ACO.” The benchmark will take into account beneficiary characteristics and other factors that may affect the need for health care services and will be updated annually for the three-year performance period that is slated to begin on Jan. 1, 2012.
CMS initially proposed two models for sharing savings from which ACOs can choose; the two models offer different financial benefits and risks. In the one-sided risk model, the ACO would share in the savings for the three years and share in the losses only in the third year. In the two-sided risk model, the ACO would share in a greater portion of the savings and share in losses for all three years. The one-sided risk model is seen as an entry point for organizations lacking experience with risk models, such as some physician-driven organizations or smaller ACOs. It will give these organizations time to gain experience with population management before transitioning to a model in which they incur more risk. The second option provides an opportunity for more experienced ACOs that are willing to risk paying a portion of the losses for a greater share of savings.
The 65 measures ACOs must meet focus on five quality domains. They are patient experience, care coordination, patient safety, preventive health, and at-risk population/frail elderly health. These measures align with those in other CMS programs such as the Physician Quality Reporting System (PQRS). Therefore, an ACO that successfully reports the quality measures required under the SSP would also be eligible for the PQRS bonus.
Beneficiaries will be assigned to an ACO based on their primary care provider (PCP). However, beneficiaries will be allowed to see any Medicare provider they wish, even if the provider is not in the beneficiary’s designated ACO.[pagebreak]
Dermatologists out of the loop
Some dermatologists are concerned that the role of specialists is largely undefined in the proposed rule. “Right now, we don’t see dermatologists fitting in very much at all simply because ACOs are primary care driven,” Dr. Miller said. The cost savings generated by ACOs will primarily come from reducing hospital stays, expensive diagnostic in-house testing, and hospital readmissions. Dermatologists very rarely hospitalize patients or utilize expensive diagnostic tests such as MRIs, CTs, and PET scans, he added.
But because ACOs will be responsible for coordinating the health care needs of the Medicare population, they must offer dermatology services as well as those provided by other specialists. CMS’s intent is to initially focus on primary care practitioners and high volume inpatient services because that’s where a lot of Medicare money is being inefficiently spent, Dr. Wisco said. “That leaves specialists as a low priority in the current proposal. But over time, the plan is to broaden the system to incorporate our participation.”
Down the line, options for a dermatologist to participate in an ACO may include becoming a member of a large specialty or multispecialty group, contracting with existing ACOs, becoming employed by a hospital that will join or form an ACO, or joining a network of individual practices to form an ACO. The proposed rule allows specialists to join more than one ACO while PCPs can join only one.
“Dermatologists in large tertiary care centers may be in a better position to dip their toes in the whole ACO methodology,” said Dr. Edison, who is concerned that the solo and small group practitioner will have a harder time doing so. “I don’t want them to be left behind,” she said. “We need every single dermatologist in the country practicing because we are in such short supply.”
Dermatologists should be looking at their referral network to align formally or informally with these other physicians, Dr. Edison said. The latter may include PCPs; other dermatologists; Mohs surgeons; plastic surgeons; and ear, nose, and throat specialists. “Dermatologists may be out there by themselves, but they share patients,” Dr. Edison said. “Talk to the PCPs to find out how to deliver better access to dermatologic services. One option may be to offer teledermatology.”
Next, she said, find out who is forming ACOs in the area. Depending on where one practices, that could be an independent physician association (IPA) or a large community hospital. Large integrated delivery systems, multispecialty practices, and IPAs are very interested in forming ACOs, said Chet Speed, vice president of the American Medical Group Association (AGMA) in Alexandria, Va. In fact, many large integrated delivery systems have all the components of an ACO. Larger group practices and integrated health delivery systems will be far more able to meet the requirements than a five-person dermatology practice, he added. Hospitals, which don’t have a great track record of managing physician groups, do not necessarily want to get in the game, Speed said. He does not anticipate that ACOs will be dominated by employment models, but rather will resemble one large series of contracts with specialists. Whatever that entity turns out to be, dermatologists should make a point to form a relationship with it, Speed said.[pagebreak]
In markets dominated by small physician groups, doctors will likely get together by specialty, noted Jeff Wasserman, a Woburn, Mass.-based health care consultant. In many markets, he is beginning to see the formation of clinical integration organizations, which are basically large physician groups intended to accomplish many of the same goals as ACOs.
Given that the quality measures included in the proposed rule are driven by primary care, dermatologists who have reviewed the proposed rule wonder how they fit into the measurement metrics. Assuming that ACOs become prevalent, CMS will start including measures that cover a larger spectrum of specialties, including dermatology, Speed said.
A handful of measures addressing patient experience, preventive health, and care coordination are pertinent to all physicians, Wasserman noted. He suggested that dermatologists familiarize themselves with these to ensure that they can meet the measures. CMS has published a list of them at https://www.cms.gov/MLNProducts/downloads/ACO_Quality_Factsheet_ICN906104.pdf; the first several measures on the list, Wasserman said, relate to patient experience and are broadly applicable. They measure the timeliness of care, appointments, and information; how well physicians communicate; how helpful, courteous, and respectful office staff are; how patients rate their physicians; how health promotion and education is provided; and how decision-making is shared.
While dermatologists await specialty-specific measures for ACOs, Dr. Wisco recommended that they begin incorporating outcomes measures into their practices by looking at, for example, how effectively they biopsy for basal cell or squamous cell carcinoma, although he noted that he wouldn’t want dermatologists to be judged solely on outcomes measures because there are too many patient variables that cannot be controlled. To improve the process, Dr. Wisco does suggest that more dermatologists become active in the development of guidelines and quality measures.[pagebreak]
Not only is the formula used to determine risk confusing, Dr. Wisco said, it is unclear how different providers will share in the costs and risks or how ACOs will internally distribute income; the rules do not spell this out. With that kind of uncertainty, dermatologists may question whether participation is worth the risk in the initial stages. “The issue isn’t which of the current models is better, but whether you should participate at all at this time,” he said.
“The ACO model clearly wants to move risk from the payers to the provider, the more risk the better from the payer standpoint,” Dr. Swerlick, noted, adding, “The opportunity to get a bonus is small. The opportunity to fail to meet some key metric is almost a certainty.” Given that, it is hard to conceive there will be a major incentive for substantial numbers of dermatology practices to align with ACOs in any major way, he said. Moreover, Dr. Swerlick believes that the proposed rule will need to be tweaked to make it more attractive to the general medical community.
Dr. Swerlick is not alone in his assessment. The upfront investment to form an ACO for previous pilot programs was $1.7 million, on average, according to a recent study published in the April 7, 2011 issue of the New England Journal of Medicine and the return on that investment was not strong. Eight out of 10 ACOs participating in the CMS Physician Group Practice Demonstration, upon which the proposed rule is based, were ineligible to receive any money from the SSP in the first year. Six out of 10 didn’t receive such payments in the second year. Only half were eligible in the third year. The study authors suggest that the high upfront investment makes the model a poor fit for most physician group practices, adding that the timeframe in which they can expect a reasonable return on their initial investment is more than five years. The Everett Clinic, one of the PGP Demonstration participants that actually garnered a small bonus, has already declined ACO participation, Dr. Swerlick said, citing a lack of financial reward for high achievement. “There is real concern that attendance at the ACO party’ will be scarce,” he added.
Adding to the risk equation is the potential antitrust issues that may arise from participation in an ACO, specifically with regard to the ability to jointly negotiate fees without incurring antitrust liability for price fixing. While the federal government did establish some safe harbors, Dr. Miller said, participating providers will have to be vigilant to ensure that they remain within the boundaries set or face investigation.[pagebreak]
In the meantime
In all likelihood, it will take a while for CMS to review the comments it received on the proposed rule and make revisions based on them. Then it will be a couple of years before ACOs are fully implemented.
“Most dermatologists would be wise to take a wait-and-see approach,” said Dr. Edison, who views the proposed rule as more of a work in progress than a fait accompli. “There is still opportunity for all of us to have an impact on the final rollout of this new payment methodology,” she said. Dermatologists can impact the process by weighing in through the AADA and their local medical societies.
“Right now, it’s more about paying attention to the trends occurring in your area,” Dr. Wisco added. As ACOs start forming, he said, look at their performance over the next few years. “It’s simply about gathering information now because the rules for specialists are so unclear.”
Dermatologists don’t have to worry that there isn’t a place for them in ACOs, Wasserman said. “It’s a question of how you position yourself to play and how much risk you’re willing to take on.” The key is clinical integration, that is, working more closely with physician colleagues than in the past, for example, by collaborating to develop and implement care coordination guidelines and quality measures. “If you do those kinds of things, you will be well positioned for whatever kind of structure comes out of the final federal regulations,” he concluded.
AADA comments on proposed rule
The American Academy of Dermatology Association submitted comments on the proposed rule for the Medicare Shared Savings Program and accountable care organizations on June 6. The organization’s comments noted “a major oversight in the rule any acknowledgement or explanation of CMS’ vision of the role of specialist physicians in an ACO,” and said that “if specialists are intended to be a real part of these new delivery systems, more specific discussion of their role must be included in the final rule.” The AADA also commented on issues related to quality measurement, information technology, the manner in which expenditure benchmarks are set, retrospective assignment of patients to ACOs, and the withholding of performance payments to offset future losses. The full comment letter is available online at www.aad.org/member-tools-and-benefits/practice-management-resources/health-system-reform-resource-center/accountable-care.