Fascinating discussion — US Senate panel considering regulatory barriers to ACOs

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The first meeting of a panel convened by Sen. Angus King (ME) to consider federal regulatory barriers to provider risk payment models was held in Dirksen Senate Office Building this morning. The panel was moderated by Michael Chernew of the Health Care Markets and Regulation Lab at Harvard Medical School, which is guiding the process with Sen. King’s policy staff. I was joined on the panel by Carrie Arsenault of Beacon Healthin Brewer ME, one of the brave remaining 19 Pioneer ACOs of the original 32, Eric Bieber of University Hospitalsin Cleveland OH, and Janet Niles of Ochsner Health System in New Orleans. The discussion was thought-provoking and a little provocative at times. After hearing all the challenges, I left wondering why any group would consider becoming an ACO. Only one in four Medicare ACOs earned savings payments last year, despite spending $2 million each on average to support the model. It was clear that all the panelists are primarily motivated by improving the quality of care they provide; financial interests are far less important. Concerns included regulatory paperwork burdens, even if you get a commonsense waiver, the difficulty of reaching the savings threshold, attribution, and the need for a glide path for organizations wishing to develop ACO models responsibly. Downside risk is a very heavy lift for these organizations; reportedly many Medicare ACOs will leave the program if they are required to accept downside risk, as the Pioneer ACOs are this year. We heard a lot about the importance of engaging consumers in improving their health. In my remarks, I focused on consumers’ perspectives and concerns – that shifting risk onto providers holds great promise to build value and reduce overtreatment, but great risk in that it significantly changes incentives in the patient-provider relationship. Every regulation was a good idea and served a purpose at the time it was proposed. Undoing those standards should be done carefully. I talked about the importance of monitoring for underservice and how CT’s health neighborhood pilots for dual eligibles is building such a monitoring system. There was no argument that incentives in Medicaid are different than other programs – when providers are underpaid, the incentives to overtreat are less, but undertreatment is more of a concern. I talked about anti-competitive concerns of consolidating providers, overlap and conflict with state regulatory roles, and the importance of paying for quality, independent of and in addition to shared savings. Relying only on shared savings to improve quality is not realistic – if we want it, we have to pay for it.

It was a fascinating conversation. I can’t wait for the next meeting.