Con­fer­ring over provider com­plaints, Medi­care of­fi­cials ease up on ACO rules to en­cour­age par­tic­i­pa­tion

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FDA looks at over­seas tri­als

Medi­care of­fi­cials sweet­ened the deal in­tended to en­cour­age hos­pi­tals and doc­tors to take on risk in ex­change for re­wards for high qual­ity and ef­fi­cient care.

The CMS is­sued a fi­nal rule last week es­tab­lish­ing a frame­work for ac­count­able care or­ga­ni­za­tions, and it prom­ises more money and fewer mea­sures of qual­ity in di­rect re­sponse to heavy crit­i­cism of draft reg­u­la­tions from providers and pol­icy ex­perts (June 6, p. 6).

The reg­u­la­tions re­duced the num­ber of qual­ity mea­sures by about half and in­creased the fi­nan­cial in­cen­tives for providers. The changes won pre­lim­i­nary praise from ma­jor trade groups and pro­fes­sional as­so­ci­a­tions, which moved quickly to di­gest hundreds of pages of rules from mul­ti­ple fed­eral agen­cies, in­clud­ing the CMS, the Fed­eral Trade Com- mis­sion and the Jus­tice Depart­ment.

Such sig­nif­i­cant changes un­der­scored the Obama ad­min­is­tra­tion’s de­sire to sal­vage what many pol­i­cy­mak­ers hope will be a promis­ing model to over­haul health­care fi­nanc­ing and de­liv­ery. Un­der ac­count­able care, providers that meet cer­tain qual­ity and cost-sav­ing tar­gets are el­i­gi­ble for a share of the sav­ings.

“This is very much an at­tempt to res­ur­rect or res­cue an ini­tia­tive that wasn’t do­ing well,” said Paul Gins­burg, pres­i­dent of the Cen­ter for Study­ing Health Sys­tem Change. Gins­burg lamented fi­nan­cial in­cen­tives in the March pro­posal as “some­what stingy,” which he said he be­lieves the fi­nal rule at­tempted to rem­edy.

Medi­care would save up to $940 mil­lion over four years un­der pro­jec­tions for the fi­nal rule. The agency’s prior pro­posal would have saved Medi­care up to $960 mil­lion over three years.

More gen­er­ous bonuses con­trib­uted to the smaller fed­eral gains un­der the fi­nal rule. Bonuses paid to providers could climb as high as $1.9 bil­lion.

Fed­eral of­fi­cials should worry less about how much Medi­care can save dur­ing the early years of ac­count­able care, Gins­burg said, and fo­cus more on rais­ing in­ter­est with stronger in­cen­tives. Of­fi­cials al­ways un­der­stood the trade-off be­tween fed­eral sav­ings and provider in­cen­tive to form ACOs, he said, but ap­par­ently “guessed wrong” the first time around.

“Re­al­is­ti­cally, it’s an ex­per­i­ment,” Gins­burg said. “You need par­tic­i­pants.”

Henry Ford Health Sys­tem in Detroit will not be among them. The health sys­tem with­drew an ap­pli­ca­tion through the Cen­ter for Medi­care and Med­i­caid In­no­va­tion for an ad­vance guard of ACOs, dubbed pi­o­neers. In­stead, Henry Ford will con­cen­trate on a fed­eral pri­mary-care co­or­di­na­tion in­cen­tive pro­gram and the fed­eral pi­lot of bun­dled pay­ments, said Dr. Mark Kel­ley, ex­ec­u­tive vice pres­i­dent and chief med­i­cal of­fi­cer for the health sys­tem and CEO of Henry Ford Med­i­cal Group.

Kel­ley called the rule changes a “good start” but said the health sys­tem de­cided even be­fore their re­lease that bun­dled pay­ments would bet­ter serve the sys­tem’s co­or­di­na­tion ef­forts.

Agree­ments for Medi­care ACOs and a newly un­veiled ad­vanced-pay­ment pro­gram, which will pro­vide up­front fi­nanc­ing for small ac­count­able care net­works, will be­gin next year on April 1 and July 1.

Medi­care of­fi­cials read­ily ac­knowl­edged the in­dus­try’s out­cry over the pro­posed fi­nan­cial in­cen­tives and po­ten­tial costs prompted the rule’s mod­i­fi­ca­tions.

HHS’ fi­nal set of ACO reg­u­la­tions spanned 696 pages. A strong out­pour­ing of com­ments prompted changes.

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