APRIL 26, 2012

Welcome to the Accountable Care Update eNewsletter
This issue is sponsored by ACO Summit

CMS Expects 28 States to Take Part in Duals Demo, Lets States Delay Implementation
Twenty eight states are projected to participate in the CMS Demonstration Project aligning payment between Medicare and Medicaid for state residents covered by both programs (dual eligibles). The majority of the states are pursuing capitated models. A delayed implementation date allowed several states to participate. (Inside Health Policy, April 25, 2012)

ACOs Multiply as Medicare Announces 27 New Ones
CMS has announced the selection of 27 ACOs for participation in Medicare's Shared Savings Program. These ACOs will provide services to some 350,000 Medicare beneficiaries in 18 states. Another 150 applications are being reviewed for participation beginning this summer. (Kaiser Health News, April 10, 2012)

AMA Pleased that Majority of New ACOs Will Be Physician-Led
The AMA was critical of the initial ACO rules, arguing that they made it extremely difficult for physician-led groups to qualify for and succeed as an ACO. Their input into the process was significant, and they were pleased to see that smaller, physician-led ACOs represent the majority of the 27 ACO recently accepted to participate in Medicare's Shared Savings Program. Additionally, the AMA's recommendations helped create the Advance Payment Model (which provides start-up funding) which will be employed by at least 5 of the new ACOs. (American Medical Association, April 10, 2012)

Herzlinger Predicts ACOs, PCMHs Will Fail
Noted healthcare scholar and author Regina Herzinger, Ph.D., Chair of the Harvard Business School, opines on the future of healthcare's current evolving organizational models. She predicts that ACOs will go the way of HMOs due to lack of capital and culture and that the PCMH model will fall victim to the 80/20 rule as the 20% of patients that produce 80% of the costs are not easily affected by primary care physicians. She continues to advocate for "focused factories." (Managed Care, April 2012)

ACOs: Making Sure We Learn from Experience
Elliott Fisher and Stephen Shortell, two of the early principal authors of the literature leading to the formation of accountable care organizations, argue here that the realization of "Version 1.0" of the accountable care organization is an important step but only the first small step in reforming healthcare. Much must be studied and learned from the current initiative particularly around 1) contract design, 2) organizational capabilities, 3) the impact on patients, and 4) the impact on community-level health and cost. (Commonwealth Fund, April 12, 2012)

New Insurer-Hospital ACO Touts Early Success
AdvocateCare, Illinois' largest health system, and Blue Cross Blue Shield, Illinois' largest insurer, formed an ACO in 2010. They have announced that the first six months of operation have seen admissions drop 10.6% and ER visits fall by 5.4%. This early adopter ACO represents 10 hospitals and 4,000 physicians, providing care to 375,000 PPO and HMO members. (Kaiser Health News, March 8 2012)

ACOs Must Choose How to Cover Potential Losses
As both Type I and Type 2 ACOs participating in Medicare's Shared Savings Program must repay losses, strategies for funding the risk potential are reviewed in this article. Depending on the size of the ACO and its funding sources, reinsurance may be a necessary alternative. (AMANews.com, April 12, 2012)

Ask These Questions before Joining an ACO
An article in Medical Economics advises physicians to be smart about joining an ACO. Neil Kirschner, PhD, Senior Associate for Regulatory and Insurer Affairs at the American College of Physicians, offers here simple and practical advice to physicians and physician groups evaluating potential participation in an ACO. (Medical Economics, April 19, 2012)

Cigna and Weill Cornell Physician Organization Launch First Accountable Care Program in New York City Involving a Physician Organization and a Health Plan
Cigna and Weill Cornell Physician Organization have created the first ACO collaborative in New York involving physicians and an insurer. This collaborative will apply the Patient-Centered Medical Home principles into the model whose intent is to realize the Triple Aim. (Business Wire, January 11, 2012)

ACOEM Calls for Integrating Workplace Health with ACO/PCMH Concepts
The American College of Occupational and Environmental Medicine (ACOEM) has released a position paper advising that ACO and PCMH models are important elements to include in workplace health programs. The authors suggest that Occupational and Environmental Medicine (OEM) has an important role to play in extending the effects of both ACOs and PCMHs into the daily lives of the populations served. Such interaction holds significant opportunities to improve population health and reduce healthcare costs. (ACOEM Newswire, April 20, 2012)

Hospice Unit Gets Contract to Manage ACO's Sickest as Detroit Medical Center (DMC) Looks to Cut Costs, Improve Care
The Detroit-based Hospice of Michigan (HOM) has signed a three-year contract with Detroit Medical Center's (DMC) Pioneer HMO (Michigan Pioneer ACO) to manage their sickest patients. A subsidiary of HOM will identify the terminally ill patients with less than 24 months to live. HOM's research suggests that they will be able to reduce cost for this patient population by an estimated 36%. (Crain's Detroit Business, April 23, 2012)

MCOL's 2012 Accountable Care Directory Released
MCOL has released its 2012 Accountable Care Directory. Included in this 200+ page resource are details of 100 selected ACOs including over 400 individuals as well as contact and biographical information on over 160 executives and thought leaders involved in Accountable Care. (MCOL, April 2012)

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Testing the Future of Accountable Care

Richard J. Gilfillan, MD
Acting Director, Center for Medicare and Medicaid Innovation, Washington, DC