Failed Accountability?

TMA, Others Criticize ACO Rules

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Medical Economics Feature – August 2011

Tex Med. 2011;107(8):57-60. 

By Ken Ortolon
Senior Editor

Accountable care organizations (ACOs) are the keystone of a program the Affordable Care Act (ACA) created to improve health care quality and lower costs in Medicare. 

But federal officials may have a hard time finding physicians and other health care professionals to participate in those ACOs unless they make drastic changes in a series of draft rules issued this spring. Several state and national organizations representing physicians, hospitals, medical group managers, and others complained that ACOs likely will fail if the rules are implemented as written. 

"The consensus is that, except for perhaps a very limited segment of the market, those rules are not workable, are not viable," said Tyler anesthesiologist Asa Lockhart, MD, chair of Texas Medical Association's Ad Hoc Committee on Accountable Care Organizations. 

This spring, the U. S. Centers for Medicare & Medicaid Services (CMS), Department of Justice (DOJ), Federal Trade Commission (FTC), and Internal Revenue Service (IRS) proposed rules to govern ACOs under the Medicare Shared Savings Program (MSSP). The rules also would give physicians, hospitals, and other providers participating in ACOs some protection from antitrust charges, and provide some guidance for tax-exempt organizations involved in these entities.

In comments submitted June 5 to CMS Administrator Donald Berwick, MD, Dr. Lockhart said the proposed rules "fail to further CMS' 'triple aim' of better health, better care, and lower cost, and lack critical physician governance provisions necessary to ensure the primacy of quality over lower costs." He said the rules also are "too prescriptive and cumbersome to permit adequate participation by solo physicians and small group practices." 

Some large physician groups and hospital systems in Texas say the proposed rules are so burdensome that they will opt out of the program. 

"The proposed Medicare Shared Savings ACO rules make the prospect of achieving any payments so low that the investment required to participate cannot be justified," said Spencer Berthelsen, MD, chair of the Board of Managers of the Kelsey-Seybold Medical Group, a large multispecialty group in Houston. "Consequently, Kelsey-Seybold will not be able to participate." 

Sharing Gain or Pain?

The health system reform law Congress passed last year requires CMS to establish a shared savings program to improve care and lower costs. It would promote accountability for the care of Medicare beneficiaries, require coordinated care for all services under Medicare fee for service, and encourage investment in infrastructure and redesigned care processes, such as implementing electronic medical records.  

Eligible health care professionals, hospitals, or suppliers may participate in the program by creating or joining an ACO. 

On March 31, the U.S. Department of Health and Human Services (HHS) and CMS issued proposed rules for implementing ACOs under the MSSP. 

"The Affordable Care Act is putting patients and their doctors in control of their health care," HHS Secretary Kathleen Sebelius said at the time. "For too long, it has been too difficult for health care providers to work together to coordinate and improve the care their patients receive. That has real consequences: Patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes. Accountable care organizations will improve coordination and communication among doctors and hospitals, improve the quality of care their patients receive, and help lower costs." 

Under the proposed rules, ACOs that meet certain quality standards and reduce costs by ensuring that Medicare patients get the right care at the right time – for example by improving access to primary care so patients avoid a trip to the emergency room – would share in any savings.  

The quality standards fall into these five key areas:   

  • Patient satisfaction;  
  • Care coordination; 
  • Patient safety; 
  • Preventive health; and  
  • Care for chronic illnesses such as diabetes, hypertension, and osteoporosis.   

"An ACO will be rewarded for providing better care and investing in the health and lives of patients," said Dr. Berwick, MD. "ACOs are not just a new way to pay for care but a new model for the organization and delivery of care." 

Also this spring, DOJ and FTC issued a proposed antitrust enforcement policy regarding ACOs participating in the MSSP. IRS issued proposed guidance on tax-exempt organizations’ participation in ACOs. 

Physician Leadership Vital

While many organizations – including TMA – support the ACO concept, reaction to the proposed rules appears overwhelmingly negative. 

TMA expressed strong opposition to a number of provisions in the rules, including the proposed ACO governance structure. The proposed rules require ACOs to have a mechanism for shared governance that provides all ACO participants with "appropriate proportional control" over the ACO's decision-making processes. 

"TMA is concerned that the 'proportionate control' language … may be misconstrued as referring to control proportionate to capital contributions, which fails to appropriately acknowledge the importance of physician leadership in the ACO and the physician contribution of sweat equity into the ACO," Dr. Lockhart wrote in those comments. 

TMA went even further in suggesting CMS amend the rules to specifically require at least 51 percent of an ACO's governing body be physicians elected by an ACO's participating professionals. 

TMA also opposed the proposed "two-sided" payment structure that not only would reward physicians and other health care professionals with a share of any savings, but also would penalize them if the ACO incurred losses. 

Under that proposal, each ACO could choose a payment track for the first three-year agreement with CMS. Under Track 1, ACOs would share in savings during the first two years of the agreement and share in saving or losses during the third.  

Under Track 2, the ACOs would share in savings and losses during all three years of the agreement with Medicare. All subsequent agreement periods would require the ACOs to share in both savings and losses. 

In its comments, TMA contended that introduction of shared losses fundamentally alters the primary incentive system envisioned under the health reform law. Although the law authorizes the use of payment models other than shared savings, the primary payment structure envisioned “was one designed to encourage participation in the MSSP by rewarding greater efficiency and quality," Dr. Lockhart said. 

Dr. Lockhart also complained the rules set up too many administrative and financial barriers to make ACO participation feasible for solo physicians and small group practices, which make up most of the physician practices in Texas. TMA also opposed provisions that would allow CMS to assign patients to an ACO retrospectively, which he says would leave ACO participants "completely in the dark" about which Medicare patients for whose care they will be financially responsible. 

In its comments, the American Medical Group Association (AMGA), which represents nearly 400 multispecialty groups and integrated health systems, said ACOs will be unsuccessful from the start without dramatic changes to the CMS rules. 

CMS has "created a design specification encompassing onerously complex application and participation requirements coupled with unbalanced risk/reward criteria that disadvantages ACO entities," the group said. 

Flying Blind

While TMA expressed concern for small groups and solo physicians, some large group practices and health systems also say they are unwilling to participate in the MSSP under the proposed rules. 

Carl Couch, MD, president of the Baylor Quality Alliance, an ACO being formed by the Baylor Health System in the Dallas-Fort Worth area, says his organization does not intend to apply for MSSP certification. 

"We think that there are numerous parts of that that are unworkable," Dr. Couch said. First among them is the retrospective assignment of patients. 

"The idea of retrospective attribution makes no sense to us," he said. "How do I really get involved with and help manage the care of patients to whom I'm retrospectively attributed? That is a complete conundrum to us and not something we see ourselves able to work with. My simple analogy is Medicare is asking us to fly the airplane into the airport without instruments, and they'll tell us later whether we crashed." 

Dr. Couch says another problem is that patients are allowed to seek care outside the ACO and can elect not to have their data measured as part of the quality measurements. That, he says, means there is no accountability whatsoever on the part of patients. 

Finally, he says CMS has included 65 separate quality standards that must be measured and reported on, which he says are "so prescriptive that we find that a little rigid." 

AMGA also complained about the number of quality measures, calling them unreasonable. That group recommends that the quality measures be limited to 32 and that they be phased in over three years.  

And, Dr. Berthelsen says the potential financial rewards for the ACOs are just too small to provide any real incentive to participate. 

"I'm a firm believer in the concept of accountable care and accountable care organizations," Dr. Berthelsen said. "But, in general, the amount of potential dollars that an organization could achieve out of this are small relative to the number of dollars and effort required to qualify for the dollars." 

Dr. Berthelsen says the rules cap the amount of savings ACOs can share at 7.5 percent for ACOs that choose the shared-savings-only payment track and 10 percent for those that opt for the shared-savings-and-losses track. So, there is no financial reward for the ACO if it achieves savings above those levels, he says. 

The ACO's share of the savings they achieve is 50 percent for the first payment option and 60 percent under the second. AMGA suggests boosting those levels to 70 percent for the payment track with no downside risk and 80 percent for the two-sided payment track. 

Carving Out Safety Zones

TMA also found fault with the DOJ and FTC antitrust enforcement policy. Dr. Lockhart says it fails to take into account the realities of medical practice, particularly in rural communities. 

The proposed policy allows an ACO in a rural area to include just one physician per specialty from each county in the primary service area. 

"Under the rural exception, as currently drafted, TMA is unable to discern whether a physician could take a vacation or utilize other specialists for call coverage when he or she is otherwise unavailable for patient care," Dr. Lockhart wrote in comments to the FTC. "To deliver high-quality care, more than one physician per rural county per specialty is necessary." 

CMS, FTC, and the other agencies are reviewing comments to their proposed rules and are expected to issue final regulations and policies later this year. Final rules must be in place by Jan. 1, 2012. 

Ken Ortolon can be reached by telephone at (800) 880-1300, ext. 1392, or (512) 370-1392; by fax at (512) 370-1629; or by e-mail.


ACOs Explained

To help physicians make informed decisions about participating in accountable care organizations (ACOs), TMA sponsored a series of ACO seminars in June and July. Resource materials from those seminars are still available on TMA's website

Physicians who missed those seminars may purchase a copy of the course syllabus for $50. To order a copy, contact Cheryl Krhovjak at, or call (800) 880-1300, ext. 1452, or (512) 370-1452.  


TMA House of Delegates Adopts ACO Policy

 Accountable care organizations (ACO) must be physician led and governed in a manner that allows physicians to retain independent medical judgment, according to a new policy the Texas Medical Association House of Delegates adopted in May. 

The new policy was recommended by TMA's Ad Hoc Committee on Accountable Care Organization, following nearly a year of study of the health care delivery model that is gaining support among policy consultants and state and national lawmakers. 

The ad hoc committee's report also suggested that physicians must receive guidance, tools, and education about ACOs to prepare them to make good decisions about whether to participate in these entities. 

Then-TMA President Susan Rudd Bailey, MD, appointed the ad hoc committee in 2010 on the recommendation of the Council of Socioeconomics. Council Chair Christopher Crow, MD, of Plano says that panel felt it was important to "get ahead of the storm and have some guiding principles in place" as formation of ACOs became more prevalent. 

Tyler anesthesiologist Asa Lockhart, MD, who chairs the ad hoc committee, says the panel's charge was to look at the emerging delivery system and develop a TMA response. 

"ACOs have the potential to improve medical care and deliver it – if it's done right – at a lower cost," he said. "But physicians have to be front and center in that mission." 

In its report, the ad hoc committee particularly stressed the importance of ACO governance. 

"ACOs must be physician-led and encourage an environment of collaboration and professionalism among physicians and other health care team members," the ad hoc committee wrote. "This ensures that health care delivered under the ACO model is patient-centric and that a physician's medical decisions are not based on commercial interests but rather on professional medical judgment that puts patients' interests first." 

The ad hoc committee also concluded that ACOs must be operationally structured and governed by an appropriate number of physicians, rather than lay entities.  

Clinical decisions must be made by the physician or physician-controlled entities in an environment where they are free to exercise independent medical judgment free from commercial influence, the panel added. 

Other policy recommendations the House of Delegates adopted include:   

  • ACO participation by physicians should be voluntary unless a physician is a member of a preexisting physician group that elects to participate. 
  • ACO participation by patients should be voluntary. 
  • Where a hospital is part of an ACO, the ACO governing board should be separate and independent from the hospital governing board. 
  • Physicians participating in ACOs should be afforded whistleblower protections if the ACO acts in a way contrary to the patient's best interests. 
  • ACOs must not impose marketplace limiting agreements, such as covenants not to compete or exclusivity provisions, on physicians or physician practices. 

Dr. Lockhart says it is important that physicians begin to educate themselves about ACOs now so that they can make informed decisions about whether to participate. 

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