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PPACA: HHS Tries to Sweeten ACO Program

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The Centers for Medicare & Medicaid Services (CMS) has released an interim final rule that will help doctors and hospitals participate in the new accountable care organization (ACO) tests without violating federal anti-kickback laws.

CMS, an arm of the U.S. Department of Health and Human Services (HHS), has pleased doctors and hospitals but alarmed employers and health insurers by replacing a mandatory ACO antitrust screening provision with a voluntary antitrust screening provision.


An ACO is supposed to be a vehicle for paying teams of health care providers to provide and manage care for whole patients, instead of paying for care one service at a time.

The Patient Protection and Affordable Care Act of 2010 (PPACA) requires CMS to try using ACOs and other new approaches to paying doctors and hospitals to get providers to work harder at paying attention to the cost of care, and the ratio of value to cost.

CMS has announced two major ACO pilot projects, and private carriers also have been testing ACOs.

The rules released today affect the Medicare Shared Savings Program (MSSP).

Providers have been slow to sign up for MSSP, in part because of concerns that the original version of the MSSP program unveiled in March seemed complicated.

In addition to requiring a mandatory antitrust review of all new ACOs, officials were going to require that providers be evaluated using 65 separate performance versions.

The MSSP rules released today would reduce the number of performance measures to 33.

The U.S. Department of Justice and the Federal Trade Commission (FTC) have spent decades trying to keep doctors and hospitals from colluding to increase health care prices, and antitrust experts have warned all along that a poorly designed ACO program could give providers a chance to jack up prices.

To address the results of past efforts to keep health care providers from engaging in anticompetitive behavior, the interim final rule released today exempts providers who participate in the MSSP and follow MSSP guidelines from a “physician self-referral” law, which keeps physicians from referring Medicare patients to their own facilities, and a civil monetary penalty law.

The Justice Department and FTC said today that they will continue to watch closely for anticompetitive practices.

The Justice Department and the FTC will continue to enforce antitrust laws vigorously, and they will continue to use antitrust “safety zone” rules, Justice Department officials say.

If two or more health care providers in an ACO provide the same service, those providers must have a combined share of 30% or less for that service in each provider’s market, officials say.

A draft ACO policy statement posted in March gave examples of ACO-related activities that could raise competitive concerns, and the Justice Department and FTC will continue to oppose those sorts of practices, officials say.

The final rules do not create antitrust exemptions or other exemptions for ACOs that work with private health insurers as well as the MSSP.

But ACOs that work with commercial plans should be able to qualify to participate in the MSSP, and providers probably could structure commercial “shared savings” reimbursement arrangements so that they can fit within an existing physician self-referral law exception for risk-sharing arrangements or within some other exception, officials say.


Karen Ignagni, president of America’s Health Insurance Plans (AHIP), Washington, put out a statement praising the ACO test programs, welcoming the Justice Department-FTC statement and noting that AHIP members are still disappointed by the weakening of the antitrust screening provision.

“We remain concerned about the trend of provider consolidation that drives up medical prices and results in additional cost-shifting to families and employers with private coverage,” Ignagni said.

James Klein, president of the American Benefits Council, Washington – an employer group – blasted the elimination of the mandatory ACO antitrust reviews.

The Justice Department and the FTC earlier this year “identified all the right reasons it is essential that ACOs not exert such undue market power that they could dictate higher prices to health care purchasers and consumers or restrict access to health care providers for Medicare beneficiaries,” Klein said.

The Justice Department and FTC now have to use the tools they still have to keep the MSSP from creating a legacy of anticompetitive structures or behavior, Klein said.

CMS would be better off having an ACO test program with a smaller number of ACOs than a test program that could make the health care cost situation worse than it is today, Klein said.

Dan Mendelson, chief executive officer of Avalere Health L.L.C., Washington, a health policy firm, say he thinks many health care providers will still have problems with the idea of participating in the MSSP, in spite of the change in the antitrust provision and the smaller number of quality measures.

“Fundamentally, most health systems continue to struggle with the fact that their present operations are oriented toward billing per service, and not taking on risk and responsibility for quality,” Mendelson said.

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