On May 17, 2011, the Centers for Medicare & Medicaid Services (“CMS”) announced that it would be considering an Advance Payment Initiative for those Accountable Care Organizations (“ACOs”) entering the Medicare Shared Savings Program (“MSSP”) to test whether and how pre-paying a portion of future shared savings could increase participation in the Medicare Shared Savings Program. In response to provider concern about the lack of ready access to the capital needed to invest in infrastructure and staff for care coordination, CMS has proposed the initiative which would allow eligible organizations to receive an advance on the shared savings they are expected to earn as a monthly payment for each aligned Medicare beneficiary. CMS would require ACOs to provide a plan for using these funds to build care coordination capabilities and meet other organizational criteria. Advance payments would be recouped through the ACOs’ earned shared savings.
CMS requested comments to the Advance Payment Initiative by June 17, 2011, and both the American Hospital Association (“AHA”) and American Medical Association (“AMA”) weighed in on the initiative.
AHA Urges CMS to Combine Advance Payment Initiative with Grant Program
The AHA focuses on the significant upfront investment needed to form an ACO, and urges CMS “to consider investments beyond pre-payment of future bonuses because ACOs will need to make investments that go well beyond what they will potentially earn in shared savings bonuses.” The AHA notes that this is true particularly in the case of small and/or rural hospitals and other organizations. AHA provided examples of the start up costs necessary to be successful as an ACO, noting that the combined start-up and first-year ongoing costs (collectively “Year 1 costs”) are much higher than initially estimated by CMS. For example, CMS estimated an average ACO Year 1 cost of $1,800,000. In sharp contrast, AHA estimates a 200-bed, single hospital system with 80 primary care physicians and 150 specialists would incur an average Year 1 cost of $11,600,00 and a 1200-bed, five-hospital system with 250 primary care physicians and 500 physicians would incur an average Year 1 cost of $26,100,00.
AHA also urges CMS to be flexible in estimating the appropriate monthly amount that should be disbursed; determining how the reconciliation process between the pre-payments and the calculation of shared savings would be implemented; and establishing the process by which nascent ACOs would pay back the pre-payments if adequate shared savings were not achieved.
AMA Suggestions Include Reimbursement for Non-Covered Services
In its June 16, 2011 comments on the Advance Payment Initiative, the AMA advises CMS of the burdensome nature of the proposed ACO requirements. These requirements, the AMA contends, will make it very difficult for many physicians to participate in or form an ACO. The AMA goes on to note that an “Advance Payment Initiative could help to mitigate some of those problems, but whether such an initiative can be successful in facilitating broader participation in the MSSP will inherently depend on the details of how the final ACO regulations are structured.”
The AMA notes that Medicare does not reimburse physicians for certain services that can be very beneficial to patients. The AMA suggests that Medicare pay physicians for non face-to-face communications between physicians and patients, such as telephone calls and electronic mail; patient education and care management services by physicians and other health professionals; phone consultations between primary care and specialist physicians to enable the primary care team to tap the expertise of the specialty physician without requiring a face to face visit between the specialist and patient. The AMA believes that payment for these types of services will result in care that is more “patient-centered, coordinated, and efficient.”
In order to facilitate payment for these services, Medicare should authorize the assignment of CPT codes for telephone and online consultations, care management, patient education and team conferences. The AMA believes that “[c]overing these services as they are delivered would not only eliminate short term cash flow problems for the physician practice, but also protect the practice from receiving too small a portion of any “shared savings” payments that are ultimately paid to the ACO.”
This article was originally published in the August 2011 issue of Atlanta Hospital News