As featured in NYSight Winter 2011 Edition

By:       Jennifer Kirschenbaum, Esq.
Anish Mashettiwar, Esq.

The mandate: to improve the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care.[1] One vehicle that has been identified to accomplish this goal is Accountable Care Organizations (otherwise known as an “ACO”).  To better understand the ACO concept, the best place to start is to look at the chosen designation: “accountable care organization”, because that is exactly what Congress and Medicare aim to achieve with the creation of ACOs – organizations that are accountable for the quality, cost and overall care they provide to Medicare beneficiaries.

The ACO model follows other current healthcare trends, including transparency in documentation coding and billing, and increased communication between patients, their providers, and third party payors.  These general themes also pair with the incentives and penalties implemented by Medicare with electronic health records.  For those practices unable or unwilling to make the change to electronic health records, the changes in healthcare may be more traumatic as electronic systems will likely include quality trackers that will soon be required by Medicare for reimbursement.  Such a scenario is truly problematic for practitioners used to working with paper; if you are one of these practitioners, an ACO option may be a wonderful solution.  The ACO concept, as presented, is not in lieu of your own practice, but a network you may be able to join that would function as your data collector, sorter and presenter for participation in a quality assurance shared cost savings program.

While enough information has been disseminated by the government to discern the general purpose and operations of ACOs, there remain gaping holes in how ACOs are to be structured and operate.

What We Know

• Moving toward a system of clinical integration
• Shared Cost Savings will likely be offered to approved ACOs
• Medicare participation will be required with participation conditions
• Structurally and for negotiation purposes, ACOs will be required to abide by Anti-Trust guidelines

What We Don’t Know

• The ACO structure(s) that will be approved by Medicare
• How Cost Savings will be implemented
• What benchmarks will be adopted to track accountability and increased quality of care
• Once formed, what will be considered “too much market power” under anti-trust laws
• How ACOs will interplay with existing health care regulations, i.e., Stark law and Anti-kickback (whether an ACO safe-harbor will be created)

As with many new industry structures, ACO formation will likely involve plenty of trial and error.  In fact, several New York physician groups that have acknowledged and accepted that the ACO model is the wave of the future are presently moving ahead with formation.  Further, practices that are structured now will be in a better position to take into account those requirements that will likely be mandatory to qualify as an ACO.  However, work remains to be done for the ACO model to be an effective player on the healthcare scene; specifically, modifications will have to be made to healthcare-specific federal regulations such as the Stark law and anti-kickback law to allow small practices to work together as ACOs.  Also, we are awaiting an updated advisory opinion by the Federal Trade Commission and the Department of Justice regarding an ACO’s ability to operate without violating Anti-Trust considerations.  Hopefully additional guidelines will be promulgated shortly.

As it stands now, ACO formation and operation requirements, as well as shared cost-savings are all on “wait and see” status.  We are waiting and seeing what Medicare will determine as required for an ACO to qualify for reimbursement and what sort of reimbursement that ACO would qualify for.  In the meantime, we encourage practitioner involvement in the process. Medicare is also in the “wait and see” stage and is readily accepting comments from practitioners regarding ACO formation.  We also recommend you stay abreast of updates on this topic so that should an ACO spring up in your area you are capable of making an informed decision as to whether you practice would benefit from involvement.

For additional information about ACOs and how to structure your practice with healthcare trends in mind, contact Jennifer Kirschenbaum at (516) 747-6700 x. 302 or at Jennifer@Kirschenbaumesq.com or Anish Mashettiwar at (516) 747-6700 x. 308 or at AMashettiwar@Kirschenbaumesq.com.

Jennifer Kirschenbaum and Anish Mashettiwar are members of Kirschenbaum & Kirschenbaum, P.C.’s healthcare department and regularly represent healthcare providers in managed care audits, transactional and regulatory compliance matters, licensure proceedings and litigation.  For additional information about Kirschenbaum & Kirschenbaum’s general practice, visit: www.kirschenbaumesq.com.

*Please be advised that the information contained herein is for educational purposes only and does not constitute legal advice.