Improving the Quality of Care for Medicare Recipients Through Accountable Care Organizations.

Coordination of health care is growing more and more important with the increase of elderly patients, to ensure that quality standards are maintained while also lowering costs. Today’s Medicare patient typically has five or more chronic conditions, which usually require an individual to receive care from several different physicians.¹ One report found “nearly one in five Medicare patients discharged from the hospital is re-admitted within 30 days – a re-admission many patients could have avoided if their care outside of the hospital had been aggressive and better coordinated.”²   

When the Patient Protection and Affordable Care Act (“PPACA”) became Federal Law in March of 2010, the pledge under the new legislation was to provide quality health care at lower costs for all Americans.  A number of policies included in the PPACA focus on improving quality care by linking payments to outcomes.  One specific policy addresses better coordination of care provided to Medicare Patients by encouraging health care providers to create new health care entities or networks called Accountable Care Organizations (ACOs).³  

As explained by the Centers for Medicare & Medicaid Services (CMS), “Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve.”⁴  By creating an ACO, the member providers are encouraged to collaborate in providing overall care to individual patients and reducing unnecessary treatments and procedures.⁵  In return, Medicare will reward the ACO through a shared savings program which provides incentives if the total quality of care of the patient improves.⁶  The Medicare Shared Savings Program is scheduled to take effect on January 1, 2012. 

Given the number of Medicare patients that nursing home and skilled nursing facilities care for on a daily basis, it seems logical that these facilities would be eligible to participate in an ACO.  However, initially these facilities should not be affected and will not recoup any possible benefits of creating an ACO, but that could change as the provisions of the PPACA continue to be implemented (and may face further revision) through 2014.  On March 31, 2011, the CMS released proposed new rules to outline the specifics of the shared savings programs and to further define which health care providers can participate in an ACO.⁷ According to the current rules established by the CMS, the following providers and suppliers of Medicare-covered services may participate in an ACO:

• ACO professionals (i.e. physicians and hospitals meeting the statutory definition) in group practice arrangements,
• Networks of individual practices of ACO professionals,
• Partnerships or joint ventures arrangements between hospitals and ACO professionals,
• Hospitals employing ACO professionals, or
• Other Medicare providers and suppliers as determined by the Secretary.⁸ 

As currently defined, skilled nursing facilities, nursing homes, and long-term care hospitals “are not specifically designated as eligible participants in the Shared Savings Program” and/or ACOs.⁹  However, the proposed rule released by the CMS provides the Secretary for Health and Human Services with discretion to expand the list of Medicare providers eligible to participate in an ACO.  The CMS specifically addressed this area by stating:

“We expect to expand the measures through future rulemaking to include other highly prevalent conditions and areas of interest, such as frailty, as well as measures of caregiver experience. In addition to ambulatory measures, we would expect to add measures of hospital-based care and quality measures for care furnished in other settings, such as home health services and nursing homes.”¹⁰   

Theoretically, the creation of an ACO should improve the quality of care to Medicare patients, while the cost to actually implement the Medicare Shared Savings Program is still to be determined as the roll out date quickly approaches.  With a number of the regulations outlined in the PPACA continuing to be analyzed by the U.S. Department of Health and Human Services (HHA), the realities of the true cost savings could raise challenges in implementing specific reforms as envisioned by the new health care law. 

Therefore, as the concept of the ACO continues to be explored throughout the health care industry, it is in the best interest of the home heath and nursing home industries to be excluded from participating in the initial implementation phase.  Allowing other health providers to test the waters to see the true cost savings may prove to be more beneficial in the long run.  Weltman will continue to monitor the effects on the long-term health industry as the new health care law and regulations are implemented.

¹ Accountable Care Organizations: Improving Care Coordination for People with Medicare, http://www.healthcare.gov/news/factsheets/2011/03/accountablecare03312011a.html
² Id.
³ Affordable Care Act to improve quality of care for people with Medicare,http://www.hhs.gov/news/press/2011pres/03/20110331a.html; see also Healthcare Services Industry Update (SRR journal, Fall 2011)
⁴ Accountable Care Organizations (ACO) Overview,https://www.cms.gov/ACO/
⁵ Healthcare Services Industry Update (SRR journal, Fall 2011); see also Summary of Proposed Rule Provisions for Accountable Care Organizations Under the Medicare Shared Savings Program,https://www.cms.gov/MLNProducts/downloads/ACO_NPRM_Summary_Factsheet_ICN906224.pdf
⁶ Affordable Care Act to improve quality of care for people with Medicare, http://www.hhs.gov/news/press/2011pres/03/20110331a.html
⁷ 42 CFR Part 425 [CMS-1345-P].
⁸ Summary of Proposed Rule Provisions for Accountable Care Organizations Under the Medicare Shared Savings Program, at page 3, https://www.cms.gov/MLNProducts/downloads/ACO_NPRM_Summary_Factsheet_ICN906224.pdf.
⁹ CMS-1345-P, http://edocket.access.gpo.gov/2011/pdf/2011-7880.pdf, at page 11.
¹⁰ Id. at page 66.