ACO Pioneers Request Delay on Quality Penalties and Rewards

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When the Obama Administration first began its roll-out of the PPACA, it wanted to test the key tenet of its cost-control goals: the ACO model, under which doctors are paid for quality value not patient volume. As Sarah Kliff notes at The Washington Post’s Wonkblog, 32 healthcare systems, known as the Pioneers, agreed to test-run the feasibility of this ambition.

You’ve probably heard the old saying, “Pioneers take the arrows.” Well, these healthcare systems were incredibly brave to pilot the ACO model, because they were opening themselves up to a potential barrage of arrows.

Kliff explains, “Under this system, a set of providers bands together and agrees to accept a lump-sum payment for seeing a set number of Medicare patients. If they can deliver seniors’ care at a lower price, while hitting certain quality metrics, the hospitals would share in some of the savings generated. If they went over budget though—or could not make the quality targets—they would be out of luck.”

As you probably know, the ACO model places top priority on quality metrics, and meeting those metrics determines, in Kliff’s words, “whether a healthcare system nets a bonus, or takes a hit. And, right now, most of the ACO Pioneers disagree with the Obama administration’s approach to appraising quality.”

The fundamental problem here is the very definition of what a quality metric or measurement is. As one researcher told Kliff, there is “no industry standard.” Kavita Patel, a fellow at the Brookings Institute and ACO researcher, wondered, “Where do you set the target? If you set a flat percentage—let’s say that 75 percent of seniors should get flu shots—that sounds reasonable. But what if no one is getting above that? Or everybody is?”

Do you hold that against physicians and systems or do you accept that as a reasonable fulfillment of ACO’s goals?

Originally, there were 70 quality metrics. This was reduced to 33. These metrics include 30-day readmissions and the number of patients receiving tests (e.g., mammograms).  While the Pioneers reported their outcomes in 2012, they weren’t penalized or rewarded for those outcomes, but in 2013, they will “move from pay-for-reporting to pay-for performance,” and they’re “nervous about how they will be judged,” Kliff reports.

In a February letter to Medicare, 18 of these Pioneers requested a review of current benchmarks, charging “the ones in place now either have too little data behind them and don’t take into account the baselines from which hospital systems are starting.” They want 2013 to be the same as 2012—reporting with no penalties or rewards.

This sounds reasonable, Kliff writes, but delays “the whole point of the ACO program: Tethering providers’ payments to the quality of the healthcare that they provide.” The 18 Pioneers are hoping for a decision by April 2 and will base their “ongoing participation” on that response.

ACO researcher Elliott Fisher from Dartmouth understands where the Pioneers are coming from. “There are good reasons to be nervous about the flat rates that have been chosen. We don’t actually know, until we collect more data, how hard it will be to meet some of those standards. So I think the argument in the letter is a reasonable way forward.”

What do you as hospital executives think? Are you part of one of the Pioneer ACOs? What have been your experiences with the ACO model so far?

-by Pete Fernbaugh

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