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PPACA: Feds Eye Accountable Care Organizations

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Federal officials are looking at ways to cut through old health care payment system reform mechanisms to try new reform mechanisms.

The Office of the Inspector General (OIG) at the U.S. Department of Health and Human Services Department (HHS) teamed with other agencies to organize a workshop recently to hear from participants’ thoughts on the accountable care organization (ACO) – a formal or informal group of providers that will take responsibility for caring for a whole patient.

Provisions in the Affordable Care Act, the legislative package that includes the Patient Protection PPACA Toolkitand Affordable Care Act (PPACA), will encourage the Centers for Medicare and Medicaid Services (CMS) to use ACOs to try to improve the quality and reduce the cost of care.

The provisions do not require private payers to use ACOs, but CMS and private payers have already been testing ACOs and similar mechanisms for getting beyond the practice of paying a separate fee for each service provided, and private carriers often end up emulating new ideas that work well for CMS programs.

The HHS OIG workshop focused on concerns about “antitrust, physician self-referral, anti-kickback, and civil monetary penalty laws.”

Congress passed those laws in the past because of allegations that physicians and hospitals were colluding to drive up health care prices.

“As Medicare and Medicaid programs move to incorporate and test payment and delivery models, there is a need for fresh thinking about program integrity and the types of risks for programs and patients,” Vicki Robinson, an HHS OIG staffer, said at the workshop, according to an ACO workshop transcript provided by the HHS OIG.

Affordable Care Act provisions give CMS and HHS OIG officials the ability to waive fraud

and abuse laws when necessary to help ACOs, and new and existing laws give the agencies the ability to create exceptions and safe harbors, according to Troy Barsky, a CMS legal expert.

Federal agencies want to hear ideas for using the authority, Barsky said.

Joseph Turgeon III, a panelist from CIGNA Corp., Philadelphia (NYSE:CI), said history shows that past efforts to allocate provider financial risk have run into problems.

“There was a lot of failure,” Turgeon said. “More failure than any of us would want to really see in the system. I think it’s really important that if we’re going to consider the appropriate financial incentive alignment, that … we’re measuring the right things.”

Coming up with a way to measure total costs that includes quality improvement is particularly important, Turgeon said.

“And I think it’s important that we don’t look to try to get an organization to take on risk that it can’t accommodate, so we have to allow groups to grow into that risk, to grow into the ability to handle that risk,” Turgeon said. “So being able to put some structure around there to address particular concerns about unit cost increase would be a total cost – a total cost type of goal in terms of drastically improving quality and total cost as partners.”

Joseph Miller, general counsel of America’s Health Insurance Plans (AHIP), Washington, has filed a written comment on the ACO issue.

AHIP believes ACOs could be an “important part of transitioning from volume to value-based payment,” but ACOs will not help consumers “if they are mere vehicles for price fixing or aggregating market power, and the antitrust agencies must continue their efforts in this area,” Miller writes.


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