Administration offers early start for new Medicare arrangement

The Obama administration is trying to hasten the spread of new arrangements to coordinate and pay for the health care of older Americans, even as major groups of hospitals and doctors are skeptical of the government’s plans.

Administration health officials announced a program Tuesday under which medical teams and health systems could begin the arrangements, known as “accountable care organizations,” for Medicare patients by the fall.

The program is intended as a way to move forward quickly with a small group of ACOs within Medicare, while officials finish writing rules for a broader effort to foster these organizations. The early version will try to find 30 teams of doctors, hospitals and other providers of care across the country who are experienced at working as an ACO with younger patients on private insurance.

ACOs are a recent form of managed care run by medical groups, rather than insurers. Teams take responsibility for almost all of a patient’s care and try to save money by coordinating treatment. The idea has become a darling of many health policy experts, who regard it as a salve for two major thorns in the U.S. health care system: the fragmentation of medicine and the rapidly escalating cost of care.

The 2010 federal law to overhaul the nation’s health care system calls for ACOs to become part of Medicare, the insurance program for the elderly that, because of its size and influence, often has been a harbinger of changes in the rest of the health care system.

Early this spring, the Department of Health and Human Services proposed specific rules for Medicare ACOs under the law. Basically, the government would give monetary rewards to teams that prove they can deliver high-quality care at lower costs. Government officials are inviting comments on the proposal until mid-June, then they must shape the rules into final form by the end of the year.

In recent days, several leading health-care groups have criticized the proposal.

They include a group of 10 respected physician-run organizations that took part in an experiment at coordinating care in Medicare that started in 2005. In a letter to Donald M. Berwick, administrator of HHS’s Centers for Medicare and Medicaid Services, the leaders of the 10 groups wrote that “we ALL have serious reservations about the economics and the complexity” of the ACOs as they are proposed.

Specifically, the group said the rules would place ACOs at too much financial risk and not consider enough patients’ varying need for care. In addition, the letter said, the proposal would require organizations to meet too many measures of quality. “[I]f left unaddressed,” the group said of the proposed rules, “we will not be able to participate.”

The American Medical Group Association, an organization of nearly 400 physician groups and health systems, wrote to Berwick last week that a survey had found that more than 90 percent of its members would not sign up as an ACO. The proposed rules, it said, are “overly prescriptive, operationally burdensome, and the [financial] incentives are too difficult to achieve to make this voluntary program attractive.”

Meanwhile, the American Hospital Association released a study it commissioned that concluded the financial investment needed to create an ACO under the proposal — including for information systems — would be six to 14 times as high as what federal officials envision.

During a phone call with reporters Tuesday, Berwick did not address the specific criticisms but said, “Of course, we are listening to their concerns. We are going to come up with a way to work together. . . . We will produce a better final rule. That we know.”

The new program announced by Berwick and his staff members — for an early start to Medicare ACOs by teams experienced enough to move ahead quickly — would borrow some, but not all, the rules envisioned for the broader program.

It would require the early ACOs to meet the same quality measures — 65 of them, under the proposed rules. But it would allow organizations to suggest different arrangements for sharing savings — and for bearing financial risks if they spend too much on care.

The deadline for applying for the early program is mid-July, months before the full rules will be finished. Richard Gilfillan, acting director of the Medicare agency’s Innovation Center, said that early ACOs will be allowed to drop out if they do not like the final version.

Robert E. Nesse, chief executive of the Mayo Health System, said the organization of 18 hospitals and 900 doctors in Minnesota, Iowa and Wisconsin is committed to the model of accountable care. But he said he does not know whether Mayo would be able by the July deadline to make the series of complex decisions about the early program. “We will engage and transform our practice,” he said. “It is just a question of how we do it and who we do it with.”

Amy Goldstein is a national reporter for The Washington Post, focus on health-care policy.
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