115.015 Accountable Care Organizations

115.015

Accountable Care Organizations: Accountable Care Organizations will develop into complex organizations tailored to meet the health care needs of a local community. The Texas Medical Association supports accountable care organizations as a tool in the delivery of medical care if the following safeguards and elements are present:

Physician Outreach and Education. Texas physicians must receive guidance, tools, and education about accountable care organizations. Toolkits that provide the information necessary for physicians to make informed decisions about establishing, affiliating, or joining ACOs must be developed and disseminated. In addition, development and dissemination of information about ACO governance, payment models, as well as economic and quality measures (including strategies to meet them) should be undertaken. Various methods of outreach should be utilized including webinars, podcasts, seminars, and publications.

ACO Governance.

Physician Led. ACOs must be physician-led and encourage an environment of collaboration and professionalism among physicians and other health care team members. 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. Primary care and subspecialty physicians must be actively engaged in the organization’s design, implementation, monitoring and evaluation.

Physicians Retain Independent Medical Judgment Within an ACO. Medical decisions should be made by physicians. ACOs must be operationally structured and governed by an appropriate number of physicians (rather than lay entities) and place patients’ interests first. Physicians are the medical professionals best qualified by training, education, and experience to provide diagnosis and treatment of patients. Clinical decisions must be made by the physician or physician-controlled entity in an environment where they are free to exercise independent medical judgment free from commercial influence.

(1) Policies and Procedures. ACOs may not have any policies and procedures that serve to impede a physician’s primary ethical obligation to the well-being and safety of his patients. Any time period for an appeal of an alleged breach of conduct must be heard in a clinically appropriate time frame.

(2) Whistleblowing Protections. Physicians should be afforded the right to whistleblow to ACO leadership and/or to the appropriate regulatory authority if the ACO acts in any way contrary to the patient’s best interests. No retaliation should be permitted by the ACO or associated hospital/parent entity for such whistleblowing. For an ACO to truly be patient-centric, physicians must be free to advocate for their patients. The physician’s ethical obligations to the patient must supersede the physician’s employment or contractual obligations to the ACO or an associated hospital.

(3) Medical record ownership. To aid in continuity of care and to ensure the highest quality of treatment, there should be joint ownership of the medical records by the ACO and the participating physician. In the alternative, ACOs should provide participating physicians (including upon their departure from the ACO) with a right of access to the medical record in the same form in which the medical record is typically maintained.

Physician Board of Directors. The ACO should be governed by a physician board of directors that is elected by the ACO professionals. The governing board is ultimately responsible for the care and well-being of patients. The ACO must adopt a conflicts of interest policy and conflicts of interest disclosure policy to ensure that the board of directors appropriately represents the interests of the ACO. Any physician-entity (e.g., independent physician association (IPA), medical group, and so on) that contracts with, or is otherwise part of, the ACO should be physician-controlled and governed by an elected board of directors.

Hospital-participating ACOs. Where a hospital is part of an ACO:

(1) The governing board of the ACO, which is comprised of physicians, should be separate and independent from the hospital governing board; and

(2) The physician’s privileges at the hospital should not be conditioned on the physician’s participation in the ACO, nor should the physician’s privileges at the hospital automatically cease upon the termination of the physician’s agreement with the ACO.

Physician Leadership Licensure/Practice. The ACO’s physician leaders, including the medical directors, should be licensed in the state in which the ACO operates and in the active practice of medicine. To ensure local accountability and oversight, any medical director(s) must report to the physician governing board who will be actively engaged in the development and oversight of the ACO’s medical policy, utilization review, quality improvement, and performance measurement.

ACO State Regulation. Existing state laws offer appropriate means for organization of ACOs without the need for ACO-specific legislation in Texas. Depending upon an ACO’s structure and scope of activities, various state agencies should have oversight authority over an ACO organized and/or operating in Texas. For example, the Texas Medical Board should appropriately regulate the practice of medicine (i.e., clinical aspects) associated with an ACO. If an ACO takes on insurance risk (e.g., capitation), the Texas Department of Insurance (TDI) should appropriately regulate that function. TDI has the background and expertise to deal with the financial and risk-bearing aspects of ACO operations. ACOs should maintain appropriate and adequate reserves and risk-based capital requirements in the same manner as licensed health insurance carriers.

Physician Participation. Physician participation in an ACO generally should be voluntary unless they are a member of a preexisting physician group that elects to participate. Physicians should not be required to join an ACO as a condition of contracting with Medicare, Medicaid, or a private payer or being admitted to a hospital medical staff.

Patient Participation. Patient participation in an ACO must be voluntary. Patients must be free to choose whether to enroll in an ACO.

Marketplace Limiting Agreements. As the purpose of an ACO is to promote community-based care, an ACO must not impose marketplace limiting agreements (e.g., covenants not to compete and exclusivity provisions) upon physicians or physician practices. Further, the ACO must not interfere with the internal management of physician practices regarding covenants not to compete.

Due Process. Physician participants in an ACO should have due process (consisting of, at a minimum, the right to notice, a hearing, and an appeal to the physician board of directors) to challenge:

The physician’s (or his group’s) involuntary termination from participation in an ACO;

The physician’s satisfaction of performance standards (with an opportunity to explain and/or cure any alleged departures from performance standards);

The physician’s eligibility to receive savings or distributions from the ACO;

The amount of the distribution received by the physician from the ACO (i.e., the appropriate distribution of savings and revenue of an ACO);

The patients assigned to the physician’s care under the ACO;

The measurements used to determine the quality of care/efficiency of care provided to patients under the ACO; and

The ACO’s assessment of the quality of care provided to patients by the physician under the ACO.

Economic and Quality Measures. Physicians currently in clinical practice must be actively involved in the development of economic and quality measures used by ACOs for performance measurement. Such measures and methodologies must be transparent, valid, and approved by the physician governing board. The economic and quality performance standards must meet the TMA principles for reporting, including the use of nationally accepted, physician specialty-validated clinical measures; the inclusion of a sufficient number of patients to produce statistically valid quality information; appropriate attribution methodology; risk adjustment; reflection of geographic costs; and the right for physicians to appeal inaccurate quality/efficiency reports and have them corrected. There also must be timely notification and feedback provided to physicians regarding the economic and quality measures and results. Physicians must be provided all economic and quality measures prior to the evaluation period. ACOs should periodically conduct assessments of patients’ satisfaction with the timeliness and availability of care.

Flexibility in Patient Referral and Antitrust Laws. The federal and state antikickback and self-referral laws and the federal Civil Monetary Penalties (CMP) statute (which prohibits payments by hospitals to physicians to reduce or limit care) should be sufficiently flexible (with bright-line exemptions) to allow physicians to collaborate with hospitals in forming ACOs without being employed by the hospitals or ACOs or in legal jeopardy. This is particularly important for physicians in small- and medium-size practices who may want to remain independent but otherwise integrate and collaborate with other physicians (i.e., so-called virtual integration) for purposes of participating in the ACO. The Patient Protection and Affordable Care Act explicitly authorizes the secretary to waive requirements under the Civil Monetary Penalties statute, the Antikickback statute, and the Ethics in Patient Referrals (Stark) law for Medicare ACOs. The secretary should establish a full range of waivers and safe harbors that will enable independent physicians to use existing or new organizational structures to participate as Medicare ACOs. In addition, the secretary should work with the Federal Trade Commission to provide explicit exceptions to the antitrust laws for ACO participants in Medicare, Medicaid, other state-based programs, and commercial markets. Physicians cannot completely transform their practices only for the Medicare patients, and antitrust enforcement could prevent them from creating clinical integration structures involving their privately insured patients. These waivers and safe harbors should be allowed where appropriate to exist beyond the end of the initial agreement between the ACO and CMS so that any new organizational structures that are created to participate in the program do not suddenly become illegal simply because the shared savings program does not continue.

Medicare ACOs.

CMS Provision of ACO Resources. Additional resources should be provided up front to encourage ACO development. CMS’s Center for Medicare and Medicaid Innovation (CMI) should provide grants to physicians in order to finance up-front costs of creating an ACO. ACO incentives must be aligned with the physician or physician group’s risks (e.g., start-up costs, systems investments, culture changes, and financial uncertainty). Developing this capacity for physicians practicing in rural communities and solo-small group practices requires time and resources and the outcome is unknown. Providing additional resources for the up-front costs will encourage the development of ACOs since the “shared savings” model only provides for potential savings at the back-end, which may discourage the creation of ACOs (particularly among independent physicians and in rural communities).

ACO Spending Benchmark in Shared Savings Program. The ACO spending benchmark should be adjusted for differences in geographic practice costs and risk adjusted for individual patient risk factors.

(1) The ACO spending benchmark, which will be based on historical spending patterns in the ACO’s service area and negotiated between Medicare and the ACO, must be risk adjusted to incentivize physicians with sicker patients to participate in ACOs and incentivize ACOs to accept and treat sicker patients, such as the chronically ill. The use of standardized mechanisms across different types of ACOs will minimize the administrative complexity and costs of physicians participating in an ACO and make it easier to analyze ACO performance across multiple populations.

(2) The ACO benchmark should be risk adjusted for the socioeconomic and health status of the patients that are assigned to each ACO, such as income/poverty level, insurance status prior to Medicare enrollment, race, and ethnicity, and health status. Studies show that patients with these factors have experienced barriers to care and are more costly and difficult to treat once they reach Medicare eligibility.

(3) The ACO benchmark must be adjusted for differences in geographic practice costs, such as physician office expenses related to rent, wages paid to office staff and nurses, hospital operating factors (i.e., hospital wage index) and physician HIT costs.

(4) The ACO benchmark should include a reasonable spending growth rate based on the growth in physician and hospital practice expenses as well as the patient socioeconomic and health status factors.

(5) There shall be a determination that access to care is not compromised in fragile medical environments (e.g., inner city and rural settings).

Medicare Shared Savings Procedural Due Process. An ACO must be afforded procedural due process with respect to the secretary’s discretion to terminate an agreement with an ACO for failure to meet the quality performance standard.

Medicaid ACO Spending Benchmark. Any ACO spending benchmarks established under the Medicaid program should be adjusted for differences in geographic practice costs and risk adjusted for individual patient risk factors.

The ACO spending benchmarks must be risk adjusted to incentivize physicians with sicker patients to participate in ACOs and incentivize ACOs to accept and treat sicker patients, such as the chronically ill. The use of standardized mechanisms across different types of ACOs will minimize the administrative complexity and costs of physicians participating in an ACO and make it easier to analyze ACO performance across multiple populations.

The ACO benchmark should be risk adjusted for the socioeconomic and health status of the patients that are assigned to each ACO, such as income/poverty level, insurance status prior to Medicaid enrollment, race, and ethnicity, and health status. Studies show that patients with these factors have experienced barriers to care and are more costly and difficult to treat once they reach Medicaid eligibility.

The ACO benchmark must be adjusted for differences in geographic practice costs, such as physician office expenses related to rent, wages paid to office staff and nurses, hospital operating factors (i.e., hospital wage index) and physician HIT costs.

The ACO benchmark should include a reasonable spending growth rate based on the growth in physician and hospital practice expenses as well as the patient socioeconomic and health status factors.

If Medicaid tests the ACO concept, the state should seek input from practicing physicians and providers on the pilot’s design, including the pilot’s quality and financial benchmarks, the mechanisms for collecting and reporting data, and how data will be shared with ACO physician participants, patients, and the public. Any ACO pilot tested in the Medicaid system must be of sufficient length to ensure valid and reliable evaluation of the pilot’s impact on health outcomes and spending.

There shall be a determination that access to care is not compromised in fragile medical environments (e.g., inner city, rural settings).

State ACO Pilot Initiatives [e.g., Employee Retirement System (ERS)/Teachers Retirement System (TRS)] Spending Benchmarks. Any ACO spending benchmarks established under a state ACO pilot initiative should be adjusted for differences in geographic practice costs and risk adjusted for individual patient risk factors.

The ACO spending benchmarks must be risk adjusted to incentivize physicians with sicker patients to participate in ACOs and incentivize ACOs to accept and treat sicker patients, such as the chronically ill. The use of standardized mechanisms across different types of ACOs will minimize the administrative complexity and costs of physicians participating in an ACO and make it easier to analyze ACO performance across multiple populations.

The ACO benchmark should be risk adjusted for the socioeconomic and health status of the patients that are covered by the ERS/TRS ACO, such as income/poverty level, insurance status prior to ERS/TRS enrollment or ACO assignment, race and ethnicity, and health status. Studies show that patients without health coverage have experienced barriers to care and are more costly and difficult to treat once they do have coverage due to pent up demand.

The ACO benchmark must be adjusted for differences in geographic practice costs, such as physician office expenses related to rent, wages paid to office staff and nurses, hospital operating factors (i.e., hospital wage index) and physician HIT costs.

The ACO benchmark should include a reasonable spending growth rate based on the growth in physician and hospital practice expenses as well as the patient socioeconomic and health status factors.

If ERS tests the ACO concept, the state should seek input from practicing physicians and providers on the pilot’s design, including the pilot’s quality and financial benchmarks, the mechanisms for collecting and reporting data, and how data will be shared with ACO physician participants, patients, and the public. Any ACO pilot tested in the ERS system must be of sufficient length to ensure valid and reliable evaluation of the pilot’s impact on health outcomes and spending.

There shall be a determination that access to care is not compromised in fragile medical environments (e.g., inner city, rural settings).

Financial Incentives.

Public and private payers who partner with ACOs must invest sufficient resources to monitor and evaluate the ACO’s compliance with financial and quality benchmarks, including mechanisms to ensure the entity is not withholding medically necessary care to achieve financial gain.

ACOs should have the flexibility to use a variety of payment methods alone or simultaneously, including fee-for-service, care management fees, shared savings, partial capitation, or global capitation.

ACOs must have the flexibility to develop a mix of financial and other incentives designed to foster safe, high quality and cost-effective patient care. However, to ensure that incentives are fair and reasonable, and not intended to promote the inappropriate denial of medically necessary care or unfair restraint of trade, the ACO’s local physician governing board shall develop and oversee the incentive structure. Further, the ACO shall publicly disclose the types of incentives to avoid appearance of impropriety.

As ACOs gain expertise in patient care management and become more cost-effective, there will be a diminishing rate of achievable savings over time. Financial incentives must be designed to recognize that successful ACOs will eventually achieve efficiencies that will not offer ever increasing savings. To impose penalties where there is little or no opportunity to increase savings may create an improper incentive that may adversely affect patient care. To that end, and to ensure an ACO maintains a patient-centered focus, ACOs that perform at or below a national or state spending benchmark should continue to be rewarded for maintaining cost-effective, high quality care.

There shall be a determination that access to care is not compromised in fragile medical environments (e.g., inner city, rural settings).

Transparency. ACOs should be required to annually disclose administrative expenditures as well as the organization’s aggregate payments to physicians and providers (to permit comparison of payments to physicians versus facilities).

HIT. Health information technology, including use of interoperable electronic medical records, is a desirable feature of an ACO but should not be a required element. (CSE Rep. 6-A-11).

Last Updated On

October 07, 2016