© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED. ® Getting Ready For Healthcare Reform How Can We Be An Accountable Care Organization (If We Aren’t

© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED.

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Getting Ready For Healthcare Reform How Can We Be An Accountable Care

Organization (If We Aren’t Already)?June 17, 2010

Presented by

Lori H. Spencer Smith Moore Leatherwood LLP

Atlanta, [email protected]

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The topic today is about healthcare delivery and

payment reform.


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• Reason: current payment systems have produced fragmented healthcare delivery.

• Rather than disincentives for over use, volume and intensity drive payment now.

• The incentive now: more care without necessarily worrying about quality.

Why is Reform Needed?


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New buzz word: “systemness”, or, lack there of, in U.S.

healthcare delivery produces lack of coordination.

With lack of coordination comes lower quality.


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Accountable Care Organizations (“ACOs”) have the potential to change how healthcare is

delivered and paid for.


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And ACOs are officially part of Medicare as a result of the Patient Protection and Affordable Care Act (“Reform Act”).


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Overview

1. Other payment reforms.

2. Putting ACOs in a payment reform context.

3. ACO basics.

4. How does any of this apply to you?


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Two Overarching Goals

1. Where do/could you fit in?

2. What should you do and when?


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Part III of the Reform Act

“Encouraging Development

of New Patient Care Models”


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Section 3021. Establishment of Center for Medicare and Medicaid Innovation (“CMI”) within

CMS.

• Purpose: Test innovative payment and service delivery models to reduce Medicare and Medicaid expenditures, while preserving or improving the quality of care.

• Preference in testing models is to be given to models that improve the coordination, efficiency and quality of healthcare services.

• CMI is to be carrying out its duties by not later than January 1, 2011.

• Note: CMI’s activities cover only Medicare Parts A and B, and Medicaid.


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CMI will test models where there is evidence the model addresses a

defined population for which there are deficits in care leading to

poor clinical outcomes or potentially avoidable expenditures.

Specific “opportunities” or models with the potential for

testing by CMI are described in the Reform Act.


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Patient centered medical homes (for high need individuals)

Medical homes addressing needs unique to women

Global or salary based payment in primary care

Models:


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Care coordination between providers of services and suppliers that transition providers away from fee-for- service based reimbursement and toward

salary based payment.

Community based health teams supporting small practice medical home with focus on chronic care

management.

Models:


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Continuing care hospitals offering in-patient rehab, long term care, and home health or skilled nursing care during an in-patient stay and the 30 days immediately following discharge

Home health providers offering chronic care management via interdisciplinary teams

Models:


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Collaborative of high quality, low cost healthcare institutions responsible for:

Developing, documenting, disseminating, and implementing best practices and

Providing assistance to other healthcare institutions in doing the same.

Models:


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Facilitate in-patient care, including intensive care, at local hospitals, through the use of electronic monitoring by specialists based at integrated health systems.

More models:


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Allowing states to test and evaluate systems of all-payer payment reform for residents of the state, including dual eligibles.

More models:


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Other Attributes of Pilot Models:

Patient centeredness

Use of technology, such as EHR and remote monitoring systems

Use of care coordinators

Team based approach


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The Context for ACOs


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What is an ACO?Common attributes:

• Provider led

• Accountable for

(i) Improved quality

(ii) Reduced healthcare spending growth

• For a defined group of patients


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Reform Act sets out basic ACO characteristics,

including specifying that an ACO will be a “group

of providers of services”.


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Eligible Groups Under the Reform

Act are defined broadly to include:

• Group practices• Networks of individual practices• Partnerships or Joint Ventures• Hospitals employing physicians• Other groups as determined by the Secretary of HHS


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Other fundamental qualifications under Reform Act:

• Shared governance

• Formal legal structure

• Sufficient Primary Care Providers

• At least 5,000 patients


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How will patient population be determined?

• As mentioned, the Medicare ACO program applies only to Medicare Parts A and B

• Patients will be “assigned” to an ACO based on previous selection of a provider who is participating in an ACO


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How will ACOs change delivery?

• Evidence based medicine• Coordination of care• Focus on clinical outcomes• Patient and caregiver “experience of care”• Information technology/EHR


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How will Medicare ACOs change payment models?

• Initially, Medicare ACOs will be eligible to participate in “shared savings” programs

• Providers will continue to be paid on FFS basis, but the ACO will be eligible to receive a portion of shared savings

• Requirement for formal legal structure is that the ACO will be permitted, legally, to distribute these shared savings payments


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How will shared savings be determined?

• Secretary of HHS will set benchmark for each ACO based on the most recent three years of per beneficiary expenditures for those beneficiaries assigned to the ACO

• Secretary will set target percentage below, and ACO must achieve estimated average per capita Medicare expenditures at or below this target.

• If ACO accomplishes this, it becomes entitled to receive a percentage of the difference (Secretary of HHS sets percentage amount)

• ACO participants will enter into a three year contract with the Medicare program to participate in the shared savings program


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Section 10307 of the Reform Act expands payment models for ACOs to include

partial capitation models or other models the HHS Secretary concludes will improve

the quality and efficiency of delivery of healthcare services by the ACO.


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Legal Issues and Waiver Authority

Given the nature and purpose of ACOs, a variety of financial relationships will be involved, and, therefore, certain legal issues require consideration. These include:

– Anti kickback statute

– Stark law

– Civil monetary penalties law

– Anti-trust laws

– Tax-exemption laws


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Most Recent Development

CMS office of legislation posted “Preliminary Questions & Answers” about ACOs on the CMS website. https://www.cms.gov/OfficeofLegislation/Downloads/AccountableCareOrganization/.pdf


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Special CMS Open Door Forum on

Accountable Care OrganizationsJune 24, 2010 2 – 4 p.m. ET

Conference call only

Participation Instructions:Dial: 1-800-837-1935

Conference ID: 82156293


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CMS is seeking stakeholder input on topics including:

• Joint accountability among providers in the formation and use of ACOs

• Cost and quality measures to assess performance

• Risk adjustment

• Attribution of Medicare beneficiaries to ACOs

• Benchmarks for purposes of defining shared savings

• Coordination with other value-based purchasing initiatives

• Medicare beneficiary protections


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Private Payers:

• Private insurance companies are pressing ahead with ACO related activities and not waiting for CMS.

• Several pilots, in various stages of development, are launching soon.

• Engelberg Center for Healthcare Reform at Brookings Institution and the Dartmouth Institute for Health Policy and Clinical Practice (Brookings-Dartmouth Program) are supporting several pilots.


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Where do you fit in?


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What should you be doing now?


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QUESTIONS?

Lori H. SpencerSmith Moore Leatherwood, LLP

Atlantic Center Plaza1180 W. Peachtree St. NW, Suite 2300

Atlanta, GA 30309-3482T: 404.962.1013

[email protected]

Documents

© 2010 Smith Moore Leatherwood LLP. ALL RIGHTS RESERVED. ® Getting Ready For Healthcare Reform How Can We Be An Accountable Care Organization (If We Aren’t