Massachusetts Moves Forward to Implement ACOs

A key part of the healthcare reform law enacted in 2010 encourages the development of Accountable Care Organizations (ACOs) that would allow doctors to team up with each other and hospitals in new ways to provide medical services. ACOs are defined as organizations of healthcare providers that agree to be accountable for the quality, cost and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program. The goal of ACOs is to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs.

One state that is rapidly moving forward with ACOs is Massachusetts. A panel of state officials and healthcare executives drafted a first-in-the-nation blueprint for scrapping current fee-forservice payments. The new system, called global payments, would require doctors, hospitals and other providers to band together into ACOs that would split the payments and better coordinate patient care, thereby improving quality. These provider groups generally would get a flat per-patient fee, along with incentives for high-quality care, which, it is hoped, will eliminate unnecessary tests and procedures and encourage greater focus on preventive care.

However, the Massachusetts health panel still must agree on a number of contentious issues, such as how much power state regulators will have over the prices paid to providers, the rules for forming ACOs, and whether providers — many of which profit from the fee-forservice system — will have seats on the board that eventually oversees the potential dismantling of that system.

One example of an ACO is the Alternative Quality Contract created by Blue Cross Blue Shield of Massachusetts, which the Becker’s Hospital Review calls one of the most advanced versions yet. April Greene, director of payment reform at Massachusetts Blue Cross, said benefits include allowing both physicians and hospitals to join, granting contracts with providers for five years, creating a collegial relationship rather than the traditional managed care contracting, giving providers freedom to create their own approaches to improve quality and reduce costs, and offering providers data on utilization of services and referral patterns so they can gain insight into their performance.

Under the health reform law, the ACO program will become fully operational in 2012. On Oct. 5, 2010, the Centers for Medicare & Medicaid Services (CMS), the Federal Trade Commission (FTC) and Office of the Inspector General (OIG) of the Department of Health and Human Services hosted a workshop on legal issues related to ACOs. The workshop focused on the interactions of ACOs with the antitrust, physician self-referral, anti-kickback and civil monetary penalty laws.

Despite successes thus far of both Blue Cross and the Massachusetts legislature to implement ACOs, the nation as a whole may not be ready for such a payment revolution. According to Kaiser Health News: “The current payment system is so profitable for most medical providers that they are not inclined to change it. National conversion to such a system would require a major change in the attitude of providers and in the political climate.”