Tackling cost, quality
Designing accountable-care pay model not easy
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.