ACOs as Precursor to Clinical Integration

Medicare ACOs are a great starting point for your clinical integration (CI) strategy. First, they require discipline when it comes to creating CI infrastructure. The application process for the MSSP ACO addresses 80-85% of the issues you will need to address to be clinically integrated per FTC criteria.

Second, Medicare ACOs come with legal shields. If you have a Medicare ACO, the FTC and DOJ will view your group as clinically integrated for Medicare patients. These waivers include:

  • The Pre-Participation Waiver protecting certain start-up activities in connection with ACOs
  • The Participation Waiver protecting ACO arrangements with participants, providers, and suppliers during their participation in the MSSP
  • The Shared Savings Distribution Waiver protecting distributions from an ACO to its participants, providers, and suppliers
  • The Compliance with the Stark Law Waiver protecting ACO arrangements that comply with the federal Stark Law
  • The Patient Incentive Waiver protecting certain ACO incentives to Medicare beneficiaries

In a nutshell, these waivers allow the ACO entity (i.e., the hospital sponsoring the ACO) to totally fund the infrastructure components, ranging from the ambulatory EMR serving as the common platform, to the IT connectivity, aggregating, analyzing, and reporting clinical data among disparate EMRs, to the financial gain-sharing arrangements incentivizing independent providers to align with the hospital and its ACO. And the good news for hospitals is … this can all be done as a Track 1 ACO with no downside financial risk.

Third, the move toward a Medicare ACO will help you change the hospital/ physician interactions. Those discussions will be more focused on value, more focused on changing care management, more focused on best practices, and more focused on future success.

As the ACO matures and refines its population health management capabilities, and proves performance via the metrics generated for MSSP reporting, the hospital ACO is perfectly positioned to represent itself to commercial payers as a clinically integrated network. CMS reports that as of April 2015, there are 404 ACOs operational in the Medicare Shared Savings Program. There are at least as many ACOs holding commercial contracts, most of which are MSSP ACOs. Why the overlap? The answer is simple: commercial payers are seeking to transfer risk to provider organizations that have the clinical and administrative infrastructure to be accountable for producing value. Commercial payers are seeking organizations that are clinically integrated.

For the ACO to work with private payers, additional FTC hurdles must be met. Your counsel, or counsel experienced in this arena, can ensure those are addressed appropriately. When those hurdles are met, you will have the legal ability to jointly negotiate financial reimbursements on behalf of many disparate providers owned by independent entities (e.g., physician practices, hospitals, and nursing homes, etc.). As several clients have noted, the private market is the ultimate target of this activity.