Tackling cost, qual­ity

De­sign­ing ac­count­able-care pay model not easy

Modern Healthcare - - The Week In Healthcare - Me­lanie Evans

De­bate sur­round­ing a more ob­scure pro­vi­sion in the new health re­form law to cre­ate net­works known as ac­count­able-care or­ga­ni­za­tions un­der­scores the chal­lenge pol­i­cy­mak­ers and the in­dus­try face as re­form seeks to end tan­gled fi­nan­cial in­cen­tives cited as fuel for un­needed care.

Un­der the law, Medi­care has be­come one of the lat­est—and largest—health­care play­ers with plans to test whether doc­tors, hos­pi­tals and in­sur­ers can slow fast-ris­ing med­i­cal spending by giv­ing providers a chance to keep some of the sav­ings from re­duced spending.

Congress cleared the way for Medi­care to of­fer the in­cen­tives, beginning in Jan­uary 2012, to ac­count­able-care net­works, which must also achieve qual­ity tar­gets be­fore any bonus will be paid out.

Com­mer­cial health plans, in­clud­ing Unit­edHealth­care and Hu­mana, and large health sys­tems, among them Catholic Health­care West, Bay­lor Health Care Sys­tem and the Car­il­ion Clinic, have also un­veiled plans to try the pay­ment model in the pri­vate mar­ket.

If suc­cess­ful, the ex­per­i­ment could save Medi­care roughly $4.9 bil­lion though 2019, ac­cord­ing to one fed­eral pro­jec­tion. But first, Medi­care of­fi­cials must fig­ure many key de­tails of how the un­tried pay­ment model will work.

Among the de­tails Congress left to be de­cided by fed­eral health of­fi­cials: How much Medi­care will award in in­cen­tives, qual­ity mea­sures, per­for­mance and sav­ings tar­gets, and cri­te­ria for mem­bers in an ac­count­able-care or­ga­ni­za­tion.

Un­der the law, ac­count­able-care groups must agree to man­age care and costs for at least three years and at least 5,000 Medi­care pa­tients. Net­works must also pledge to in­clude enough pri­mary-care providers to meet de­mand and find a le­gal struc­ture to share sav­ing bonuses among providers.

Set­tling those de­tails won’t be an easy task, and suc­cess will hinge on whether in­cen­tives over­come le­gal ob­sta­cles and avoid pit­falls that un­der­mined sim­i­lar ef­forts more than a decade ago, pol­i­cy­mak­ers and health­care ex­ec­u­tives said.

Laws that seek to pre­vent price-fix­ing or abuse by hos­pi­tals and doc­tors of re­fer­rals and pay­ments stand as bar­ri­ers to ac­count­able­care groups, though health sys­tems that em­ploy doc­tors face fewer risks than net­works of in­de­pen­dent hos­pi­tals and doc­tors, said lawyers work­ing with the Med­i­cal Group Man­age­ment As­so­ci­a­tion. An­titrust reg­u­la­tors have also made al­lowances for some net­works cre­ated to im­prove the qual­ity of med­i­cal care, said Ger­ald Nie­der­man, a health lawyer in Colorado who is a part­ner at Fae­gre & Ben­son and MGMA gen­eral coun­sel. Less clear is how net­works can avoid vi­o­lat­ing laws to pre­vent kick­backs, fi­nan­cial in­cen­tives to with­hold care or re­fer­rals by doc­tors to busi­nesses in which they have a fi­nan­cial stake, said Bruce John­son, a Fae­gre & Ben­son part­ner who con­sults for the trade group.

El­liott Fisher, di­rec­tor of the Cen­ter for Health Pol­icy Re­search at the Dart­mouth In­sti­tute for Health Pol­icy and Clin­i­cal Prac­tice, said the model stands to curb health spending growth by ty­ing pay­ment to qual­ity and cost-sav­ings, rather than how much care pa­tients re­ceive. The Dart­mouth In­sti­tute and the Brook­ings In­sti­tu­tion’s En­gel­berg Cen­ter for Health Care Re­form have launched three ac­count­able-care pi­lots (July 27, 2009, p. 7).

Fisher said crit­i­cal to the suc­cess of the ac­count­able-care group will be ef­forts to es­tab­lish stan­dards for how to de­sign such net­works. Mean­while, pi­lot hos­pi­tals are seek­ing to ne­go­ti­ate with pri­vate in­sur­ers and ad­dress fraud or an­titrust is­sues that may arise, he said.

Bonuses may also not be enough to en­tice hos­pi­tals to forgo rev­enue and in­come from health plans that pay for each test, surgery and hospi­tal stay, health­care ex­perts said.

Robert Beren­son, a fel­low at the Ur­ban In­sti­tute, ar­gued that bonuses could be an “aw­fully weak” in­cen­tive for hos­pi­tals if in­sur­ers con­tinue to pay hos­pi­tals by vol­ume. “You’re pay­ing me one dol­lar for a dol­lar’s work to­day and pay­ing me a few cents later not to do it,” he said.

Con­tracts that in­clude some cap on pay­ment for cer­tain care, or par­tial cap­i­ta­tion,

Davis: In­surer in talks to cre­ate ac­count­able­care net­work.

Beren­son: Bonuses can be an “aw­fully weak” in­cen­tive for hos­pi­tals.

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