By Michael Bologna
CHICAGO--With much of the steam behind accountable care organizations (ACOs)
being generated by the health care industry, such structures will likely survive
and grow, even if the U.S. Supreme Court voids the Patient Protection and
Affordable Care Act this week, a panel of health care attorneys said June
Even the federal government's voluntary pilot ACO program under PPACA,
offering shared savings to hospitals and physician networks establishing ACOs
that cover Medicare beneficiaries, could survive, depending on the scope of the
court's ruling, or be reinstituted later, the speakers said. The court's
decision on health reform is expected June 28.
John R. Washlick, an attorney with Buchanan Ingersoll & Rooney PC, who
practices in the Philadelphia area, said ACOs have attracted a lot of attention
due to the shared savings opportunities under Medicare. But private payers,
providers, and physician networks also are investing in the concept, finding
value in more accountable health delivery models. Even if the court were to wipe
PPACA clean of ACOs, Washlick said, the industry would continue to gravitate
toward these structures.
“A lot of payers are out there now forming ACOs,’’ Washlick told attorneys at
the American Health Lawyers Association's annual meeting here. “A lot of
networks and ACO-type organizations are being formed because they are going to
use the same payment philosophy/shared savings philosophy on the commercial
payer side. So these things have a lot of tread regardless of what the Supreme
Court does in the next couple days.”
Julie Kass, with the Health Law Group at Ober Kaler, predicted the Centers
for Medicare & Medicaid Services would probably develop some alternative
structure to bring the ACO/shared savings model back into Medicare if the
Supreme Court jettisoned the program. She speculated that the pilot could be
folded into activities directed by the Center for Medicare and Medicaid
“My guess is that they would have to find some new statutory reason for it,
or shift everything to CMMI and say 'it's an innovative program now,’’’ Kass
said during the same panel discussion.
Washlick said PPACA directed CMS to create a voluntary Medicare pilot ACO
program Jan. 1, 2012. The objective was to provide financial incentives through
a program of shared savings to promote the delivery of coordinated care across
medical specialties to defined populations of Medicare beneficiaries. The three
primary goals of the program are to:
better care to individuals;
better total health to populations; and
the cost of health care through a process of continuous improvement.
Washlick said ACOs conceptually turn the traditional health care services
model upside down. Speaking broadly, he said ACOs represent a migration from
fragmented care to coordinated care and integrated care models. ACOs feature
value-based payment methodologies over the volume-based payment logic of
traditional fee-for-service medicine. The concept also suggests a shift in focus
from individuals to the health of small populations of health care consumers.
Finally, ACOs suggest a shift from payer-driven managed care to provider-driven
Washlick noted that the pilot program regulations, released in October (204
HCDR, 10/21/11), determine the structure and operation of ACOs before an
organization can realize a portion of the shared savings. The regulations also
limit the program to specific groups within the health field, including:
and other professionals in group practices;
and other professionals in networks of practices;
or joint venture arrangements between hospitals and physicians and
employing physicians and professionals;
qualified health centers; and
structures that the government may determine appropriate.
Andrew Ruskin, a health law attorney with Morgan, Lewis & Bockius LLP in
Washington, said hospitals, physician networks, and health partnerships need to
perform a rigorous evaluation of their organizations before jumping into the ACO
game. He said the regulations are complicated and the opportunities for shared
savings depend on dozens of issues unique to the organization. Ruskin added that
investments in ACOs can be substantial and the rewards can be thin, so an
organization must understand the potential risks.
Ruskin offered a checklist of questions organizations must consider before
making an ACO investment:
stable is the organization's patient population? As ACOs must be formed around a
captured group of at least 5,000 patients, organizations with unstable or
transient populations are not a good fit.
the organization coordinate well with its physicians and practice groups?
Difficult relations with physician groups might interfere with a viable ACO
the organization made significant progress implementing electronic health
the organization financially solvent? What level of financial risk can the
other demonstration programs potentially more profitable?
Finally, Ruskin said, organizations need to consider the competitiveness of
their local commercial markets. Providers with lots of competitors might think
about ACOs as a strategy for gaining leverage on other players. Similarly, if
payers in a local market are pushing providers toward ACO structures, a hospital
or physician group may have little choice. On the flip-side, Ruskin said health
providers that don't have to compete for patients might be wasting their
“A lot of entities are going into this because it is 'do or die,'” Ruskin
said. “As John [Washlick] points out, even if health care reform is overturned,
it is likely that commercial insurers will demand this anyway.
“So the question is: Is this a good way to prepare?’’ Ruskin said. “So you
really have to look at your market.’’