IBJNews

Medicare rules hammer hospitals, docs

Back to TopCommentsE-mailPrintBookmark and Share

Being an accountable care organization will be the major leagues of health care after the federal Medicare program set a high bar for the new kind of doctor-hospital organization.

Medicare, administered by the Centers for Medicare and Medicaid Services, issued proposed rules for accountable care organizations, or ACOs, on March 31. And boy are they tough.

“It’s going to be burdensome for a lot of ACOs,” said Brian Betner, an attorney at Indianapolis-based Hall Render Killian Heath & Lyman PC, a health care law firm. He added, “You’re going to have people say, ‘It’s not for me now. We don’t have the resources right now.’”

Other industry observers drew the same conclusion. Vince Kuraitis, an Idaho-based health care strategy consultant, cut his estimates for the number of ACOs that would form by as much 90 percent—from a range of 750 to 1,000 nationwide, to about 75 to 150.

“Thus, at least for now ACOs will not be mainstream armies occupying every American community. Approved ACOs will be elite, highly trained and well equipped special forces units,” Kuraitis wrote in a blog post.

Medicare was asked to create rules for ACOs by the 2010 health reform law. They must include physicians who will not merely provide health care services, but will also commit to managing the health of a specific population of patients. That population must include at least 5,000 Medicare recipients and it can include hospitals, nursing homes and other health care providers.

The idea is that by coordinating care across many so many providers, errors and costs will go down while overall health will go up.

No health care providers are required to form ACOs. But for those who do, Medicare is offering to share up to 60 percent of money the ACO saves, compared with previous years’ of health expenses for patients the ACO takes responsibility for. The shared savings money would come as a bonus on top of the fee-for-service payments Medicare makes to doctors and hospitals.

But that’s where the first difficulty comes in. Health care providers will need to implement highly sophisticated computer systems to track the patients in 65 separate categories established by Medicare—and file regular reports for each category.

Also, within a year of starting a shared-savings contract with Medicare, an ACO will need to show that at least half its physicians are using electronic medical records in a “meaningful” way—sharing records seamlessly with other doctors, making them available to patients, and using the data on electronic records to improve their clinical decision-making and patient management efforts.

Buying and implementing those software systems can be hugely expensive.

“The difficult entry issues in my opinion are going to relate to the capital requirements, the health information technology,” said Betner, the Hall Render attorney. “The ability to to gather data and crunch it and report it is very difficult. But the biggest shift is, ‘You mean we now have to use it?’”

If that weren’t enough, Medicare’s proposed rule requires all ACOs—by at least their third year of a contract—to take at least some of the financial hit if the cost of caring for their patients goes up.

So instead of having a no-risk shot at earning a bonus, ACOs face the prospect of losing money if they don’t do things right.

“They’re trying to get you to assume some of the risk,” said Betner, adding, “You’ve got to make a commitment. You’ve got be all in.”

He expects the major hospital systems in Indianapolis to still try to form ACOs. All of them have been working toward that goal since even before the health reform law was passed a year ago. It’s far less likely that health care providers in smaller communities will conclude they have the scale to absorb the significant costs to start an ACO, he said.

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. President Obama has referred to the ACA as "Obamacare" any number of times; one thing it is not, if you don't qualify for a subsidy, is "affordable".

  2. One important correction, Indiana does not have an ag-gag law, it was soundly defeated, or at least changed. It was stripped of everything to do with undercover pictures and video on farms. There is NO WAY on earth that ag gag laws will survive a constitutional challenge. None. Period. Also, the reason they are trying to keep you out, isn't so we don't show the blatant abuse like slamming pigs heads into the ground, it's show we don't show you the legal stuf... the anal electroctions, the cutting off of genitals without anesthesia, the tail docking, the cutting off of beaks, the baby male chicks getting thrown alive into a grinder, the deplorable conditions, downed animals, animals sitting in their own excrement, the throat slitting, the bolt guns. It is all deplorable behavior that doesn't belong in a civilized society. The meat, dairy and egg industries are running scared right now, which is why they are trying to pass these ridiculous laws. What a losing battle.

  3. Eating there years ago the food was decent, nothing to write home about. Weird thing was Javier tried to pass off the story the way he ended up in Indy was he took a bus he thought was going to Minneapolis. This seems to be the same story from the founder of Acapulco Joe's. Stopped going as I never really did trust him after that or the quality of what being served.

  4. Indianapolis...the city of cricket, chains, crime and call centers!

  5. "In real life, a farmer wants his livestock as happy and health as possible. Such treatment give the best financial return." I have to disagree. What's in the farmer's best interest is to raise as many animals as possible as quickly as possible as cheaply as possible. There is a reason grass-fed beef is more expensive than corn-fed beef: it costs more to raise. Since consumers often want more food for lower prices, the incentive is for farmers to maximize their production while minimizing their costs. Obviously, having very sick or dead animals does not help the farmer, however, so there is a line somewhere. Where that line is drawn is the question.

ADVERTISEMENT