September 2012 Edition Vol.6, Issue 5

The Rapidly Evolving ACO World

The Rapidly Evolving ACO World

By Ronald R. Barkley, MS, JD

With the matriculation of the class of July 1, 2012 we now have 148 Medicare designated Accountable Care Organizations (ACO)1 and the 3-year race is on to establish that by virtue of concerted care coordination and attention to quality metrics and matters of population health by a cadre of dedicated primary care physicians, the healthcare costs curve can actually be bent downward. 

By demonstrating savings to the Medicare program against a pre-set “expenditure benchmark,” an ACO is rewarded with a refund check of 50 cents on the dollar for the savings achieved (or 60 cents for those 32 organizations that are designated Pioneer ACOs).  The vision of some is that ACOs will be the vanguard in a sea change for the way healthcare services will be delivered and paid for in the future. 

But it doesn’t end there. Another batch of Medicare ACOs is to be introduced in January 2013 and rumor is that up to 400 applicants for the January class are expected. So, within the next 4 months, perhaps some 500 Medicare ACOs will have been established. Add to this the growing number of some 221 non-Medicare inspired ACO’s2 typically involving an arrangement between a commercial health plan and localized healthcare providers and it would certainly seem that there is something brewing.3

Consensus wisdom seems to be that regardless of the outcome of the 2012 National Election, healthcare reform is now embedded in the very fabric of the healthcare industry. In a June 15 interview with The Guardian, former CMS Administrator Donald Berwick said the US healthcare system will never go back to a pre-reform state. “There is so much tectonic motion now—the plates are shifting—and I don’t think they can go back,” he said.

So Where Does Oncology Fit In?

After all, cancer costs are accelerating at a rate of twice that of healthcare inflation. A patient being treated for cancer today can incur up to 26 times the costs associated with patients without cancer,4 costs range from $25,000 to $240,000 per cancer patient per year, depending on phase of care.5

Given the magnitude of the cancer spend and the documented ability to curtail it, it would seem that turning to the potential for a cancer cost savings contribution from the oncologist specialist “neighbor” would be attractive to an ACO. But what are ACO leaders thinking with regard to accessing a potential newfound savings source for the ACO shared savings pool?

2012 Survey: Oncology’s Fit in an ACO World 

The Cancer Center Business Summit6 conducts annual surveys on the business matters facing the oncology sector. This year the subject of Oncology’s Fit in an ACO World is being explored to help identify trends, patterns, and initiatives in oncology in the context of ACO shared savings reimbursement design. 

Last year, the Summit’s 5th annual survey: Where Does Oncology Fit in the Scheme of Accountable Care? was of a similar nature. That survey was conducted prior to the final ACO regulations being issued by CMS and was focused on ACO plans for accommodating oncology and cancer costs by those organizations intending to make application for designation as a Medicare ACO. 

The findings from the 2011 survey were that oncology was not considered an attractive candidate for “early win” cost savings in an ACO shared savings context, and that despite the “stepchild” status of oncology within Medicare accountable care initiatives, the commercial health insurance sector was quite active in exploring non-traditional and innovative methodologies in care coordination and payment re-design for oncology services.

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