Publications: Accountable Care Organizations Workshop: Applying Clinical Integration Concepts to Governmental Payment Programs

This is the first in a series of client alerts focusing on the legal and operational issues associated with the development of clinically integrated health delivery systems and accountable care organizations.

On October 5, 2010, three governmental agencies hosted a public workshop in Baltimore on regulatory issues  surrounding the development of accountable care organizations (ACOs). Representatives from the U.S. Federal Trade Commission (FTC), the Centers for Medicare and Medicaid Services (CMS) and the Office of the Inspector General (OIG) issued statements, received input from healthcare industry representatives and fielded questions that addressed how ACOs might fit into the current regulatory framework. We were among the parties present at the workshop.

Although the term ACO was coined in a 2006 Health Affairs article, the concept recently gained significant traction with the passage of the Patient Protection and Affordable Care Act (PPACA) earlier this year. At their most basic level, ACOs consist of provider networks, partnerships and joint ventures that offer Medicare patients a multi-disciplinary provider panel structured to achieve a patient centric approach to healthcare services. Section 3022 of the PPACA directs the Secretary of Health and Human Services to establish a shared savings program for providers participating in ACOs no later than January 1, 2012. ACOs that meet certain quality performance benchmarks will be eligible for shared savings payments from CMS. Current Fraud and Abuse, Physician Self Referral and Antitrust laws, however, present signifi cant legal challenges to the formation of ACOs.

The agency officials present at the October 5th workshop demonstrated a willingness to explore additional safe harbors, exceptions or waivers that could potentially shield ACOs from the purview of these laws. Throughout the workshop, the officials reiterated that current regulations should not stand in the way of the delivery of effi cient, high quality care. Specifically, Daniel Levinson, the HHS Inspector General, noted that his office needed fresh thinking when it comes to the application of new delivery models.

The push for ACOs represents a subtle shift from the clinical integration programs that have garnered attention among certain healthcare providers and private payors over the past decade. Now that governmental payors are also endorsing similar models, providers have an even greater incentive to organize themselves in clinically integrated networks that will allow them to deliver higher quality, more effi cient patient care.

Despite the general consensus among the agencies that ACOs present an opportunity to bend the cost curve, practically speaking, many uncertainties remain with respect to how an ACO might operate. Comments at the October 5th workshop suggested that CMS may issue proposed regulations before the end of 2010. Questions remain however, regarding FTC and OIG enforcement priorities as ACO development progresses.

Nonetheless, providers can take steps now to ensure they are well positioned to participate in the shared savings programs that will accompany the formation of accountable care organizations. Effective clinical integration programs that focus on quality outcomes, rather than the quantity of patients treated, will allow providers to more easily transition into the value-based payment systems ultimately adopted by federal healthcare programs.

Ungaretti & Harris will continue to monitor the issuance of further guidance and/or agency rules and regulations on ACOs as such pronouncements are issued. For more information, please contact healthcare partner Steven F. Banghart at 312.977.4880.