Physicians uncertain about taking part in ACOs

With final regulations released for the Medicare shared savings program and commercial insurers designing accountable care organizations, the decision is whether to sign up.

By — Posted Dec. 5, 2011

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Many physicians are familiar with accountable care organizations as a concept, but some are either opting out of them or are unsure whether they will participate, according to a recent survey.

This finding reflects what those in the industry say is an indication of a lack of clarity about ACO details. They are designed to allow fee-for-service payments with a bonus for lowering projected total costs while maintaining or improving quality. But beyond that general description, ACOs could be very different from one another. Numerous physician groups, hospitals and insurance companies are starting ACOs or offering consulting services.

"ACOs are like unicorns. Everybody wants one, but nobody knows what it is yet," said Nancy Greenstreet, MD, a family physician and medical director of Physicians Medical Group of Santa Cruz County in California. "But this is a very exciting time."

The Optum Institute for Sustainable Health is an arm of UnitedHealth Group, which has another division offering ACO consulting services. The institute released a survey of 1,000 physicians on Nov. 15 that found 61% were acquainted with ACOs -- 59% among specialists and 64% among primary care physicians.

Of the physicians who said they were familiar with ACOs, 28% said they were considering forming or joining one -- 23% for specialists and up to 36% for those in primary care.

An additional 26% of all physicians were at practices that were not considering taking part in this model, with the numbers going up to 31% for specialists and down to 18% for primary care.

Of the doctors who are familiar with ACOs, 46% said they did not know whether the practice would take part by joining or forming an ACO. The percentages were similar for specialists and primary care.

One factor in so many physicians being noncommittal about, or unfamiliar with, ACOs: The survey was conducted Oct. 20-30, the first 10 days after the Centers for Medicare & Medicaid Services released its final rule governing Medicare ACOs.

Analysts said some of this uncertainty is in part because ACO has been used loosely for the past several years. The National Committee for Quality Assurance on Nov. 21 launched an accreditation program for ACOs in hopes of making things clearer.

What physicians need to do about ACOs has been the subject of numerous law firm and medical society webinars and reports. The American Medical Association hosted a webinar titled "Final Medicare Rules for ACOs: Major New Opportunities for Physicians" on Nov. 21. The Association has resources on its website and, along with other medical societies, advocated successfully for changes to the Medicare ACO final rule that reduced the financial risk to physicians and made it more likely an ACO would achieve shared savings bonuses.

"The AMA is committed to assisting physicians engaged in the formation of ACOs and participation in other payment models," AMA President-elect Jeremy A. Lazarus, MD, said during the webinar.

Determining the market?

Experts say the first step is for practices to look at the local market and the patient population. Medicare patients will be assigned to an ACO but are not required to receive care from it. Those who decide to switch practices or who split their residences by season may lead to higher costs over which a practice has no control.

"I don't think Medicare beneficiaries are going to seek out an ACO," said Fred Geilfuss, a partner in the health law practice of Foley & Lardner in Milwaukee. "They're going to seek out their doctor, and Medicare beneficiaries might prefer not to be part of an ACO."

Physicians also need to consider who is running the ACO and who is included. Medicare ACOs are not required to have a hospital on board, though commercial entities might want that.

Before joining, physicians need to know what type of ACO the entity will be. For instance, CMS has two tracks for ACOs. In track one, CMS would not penalize ACOs that have an increase in health care costs, and the ACO would receive up to 50% of any savings. In track two, an ACO would pay CMS up to 60% of any cost growth beyond expectations but would share in up to 60% of any derived savings.

Other issues to consider are how practices will be judged and how savings will be achieved. Will the ACO contract only with Medicare or with commercial insurers as well? How will shared savings be divided among participants? How will reducing total cost of care received by a patient affect fee-for-service revenue? Will any loss be balanced out by shared savings bonuses?

"In a large part, it's going to be a business decision that takes in a variety of factors," said Anne Hance, a partner with McDermott Will & Emery in Washington.

Practices might need to pay for additional staff and technology to reduce health care costs. ACOs might be eligible for money from CMS' Advance Payment Model. This program provides early funding for physician-based and rural accountable care organizations. The money is later recouped from generated shared savings. If it is not, the loan is forgiven. Some commercial insurers have provided funding for work toward an ACO.

Analysts are advising physicians to think about new payment models but not to rush to join an ACO. Medicare has deadlines for those who want to start participating in 2012, but ACOs will continue to be accepted in subsequent years. Opportunities most likely will remain with commercial payers. In addition, the ACO model is not the only novel payment model available. Physicians may want to participate in bundled payment or medical home programs or something else that is a better fit.

"This is more of a coming trend than something [physicians] need to participate in right away, but they ought to be thinking about these things," Geilfuss said.

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Minority of physicians sure about ACOs

The Optum Institute for Sustainable Health surveyed 1,000 physicians, including 600 specialists and 400 in primary care, in late October. The institute, part of UnitedHealth Group, wanted to get physicians' thoughts on ACOs after the Centers for Medicare & Medicaid Services released the final rule for the Medicare shared savings program on Oct. 20.

Physicians' familiarity with ACOsAll physiciansSpecialistsPrimary care
Familiar with ACOs61%59%64%
Unfamiliar with ACOs39%41%36%
Plans of those familiar with ACOsAll physiciansSpecialistsPrimary care
Practice is considering joining or forming an ACO28%23%36%
Practice is not considering joining or forming an ACO26%31%18%
Unknown whether the practice is considering joining or forming an ACO46%46%46%

Source: Sustainable health: A manifesto for improvement, Optum Institute for Sustainable Health, Nov. 15 (link)

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External links

Payment model resources for physicians, American Medical Association (link)

Sustainable health: A manifesto for improvement, Optum Institute for Sustainable Health, Nov. 15 (link)

Accountable care organizations, National Committee for Quality Assurance (link)

Shared Savings Program Application, Centers for Medicare & Medicaid Services (link)

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