Accountable Care Organizations in the Affordable Care Act

PASQUALE.DOCX (DO NOT DELETE) 10/22/2012 11:02 AM Accountable Care Organizations in the Affordable Care Act * Frank Pasquale I. INTRODUCTION On March 23, 2010, Section 3022 of the Patient Protection & Affordable Care Act (PPACA or ACA) established the Medicare Shared Savings Program (MSSP). The MSSP depends on Accountable Care Organizations (ACOs) to coordinate care for large groups of Medicare beneficiaries and reduce their overall costs while 1 maintaining quality. ACOs are a critical part of the PPACA. If they succeed, they could be a model of care coordination critical to cost reductions, quality improvements, and expanded access to care both 2 within and beyond the Medicare program. Their failure would not bode well for the wide array of pilot programs promoted and funded 3 by the PPACA. Seton Hall was the first law school to host a conference on * Schering-Plough Professor of Health Care Finance and Regulation, Seton Hall Law School. I would like to thank Gianna Cricco-Lizza, Temi Kolarova, and other members of the Law Review for their excellent work on the symposium. Professors John Jacobi and Kathleen Boozang were also invaluable to planning the event. Deans Rosa Alves-Ferreira and Denise Pinney also offered invaluable contributions to our planning and organization. 1 Jenny Gold, FAQ On ACOs: Accountable Care Organizations, Explained, KAISER HEALTH NETWORK (Oct. 21, 2011), http://www.kaiserhealthnews.org/Stories/2011 /January/13/ACO-accountable-care-organization-FAQ.aspx. 2 Maulik Joshi, American Hospital Association, Accountable Care Organizations AHA Research Synthesis Report, American Hospital Association Committee on Research, (June 2010), available at http://www.hret.org/accountable/resources /ACO-Synthesis-Report.pdf; Accountable Care Organizations (ACO): What’s an ACO?, CTRS. FOR MEDICARE & MEDICAID SERVS., (Apr. 5, 2010), http://www.cms.gov/Medicare/Medicare-Fee-for-ServicePayment/ACO/index.html. 3 For a discussion of pilot programs’ importance to health care, see Frank Pasquale, Ending the Specialty Hospital Wars: A Plea for Pilot Programs as InformationForcing Regulatory Design, in THE FRAGMENTATION OF U.S. HEALTH CARE: CAUSES AND SOLUTIONS (Einer Elhauge, ed., Oxford Univ. Press 2010). For an accessible account of the role of pilot programs in PPACA, see Atul Gawande, Testing, Testing, THE NEW YORKER, Dec. 14, 2009, at 34, available at http://www.newyorker.com/reporting/2009 /12/14/091214fa_fact_gawande. 1371 PASQUALE.DOCX (DO NOT DELETE) 10/22/2012 11:02 AM 1372 [Vol. 42:1371 SETON HALL LAW REVIEW ACOs. We planned the conference in early 2011, as excitement about ACOs was building in much of the policy community. Moreover, we felt that whatever happened to the ACA in the Supreme Court, the organizational forms suggested by the PPACA regarding ACOs were influencing private sector players. Providers, insurers, and employers were increasingly coordinating to deal with cost and quality concerns. On March 31, 2011, the proposed rule guiding providers on the 4 establishment of ACOs was released. The negative industry response was nearly immediate: providers felt that they were being asked to move too fast and aggressively on a wide variety of initiatives. For example, merely developing IT systems to keep track of the sixty-five quality performance standards needed to qualify for shared savings payments seemed daunting. Keeping up with the “meaningful use” rulemakings guiding American Recovery and Reinvestment Act of 2009 (ARRA) subsidies for electronic health records (EHRs) was hard enough; now a whole other program was affecting recordkeeping. While federal policymakers had assumed there would be synergies between ACO establishment and a larger health information 5 technology (HIT) revolution, providers felt they were being asked to do too much, too soon. Industry resistance left us wondering if the conference might be rendered irrelevant due to lack of provider interest in establishing ACOs. The MSSP is an incentive program, not a mandate: the private sector must choose to participate if it is to be effective. We should not have worried. The idea of accountable care proved attractive to private insurers, regardless of its fate at the Centers for Medicare & Medicaid Services (CMS) and the Department of Health and Human Services (HHS). And by the time of the conference, the regulatory treatment of ACOs had bent toward 4 Jordan Rau, Phil Galewitz & Bara Vaida, New ACO Rules Outline Gains And Risks HEALTH NEWS (Mar. 31, 2011), For Doctors, Hospitals, KAISER http://www.kaiserhealthnews.org/Stories/2011/March/31/ACO-rules.aspx; U.S. DEP’T OF HEALTH AND HUMAN SERVS., FACT SHEET: ACCOUNTABLE CARE ORGANIZATIONS: IMPROVING CARE COORDINATION FOR PEOPLE WITH MEDICARE (Mar. 31, 2011), available at http://www.kaiserhealthnews.org/~/media/Files/2011/HHS%20ACO %20Overview%20Fact%20Sheet%2033111.pdf; CMS OFFICE OF MEDIA AFF., FACT SHEET: SUMMARY OF PROPOSED RULE PROVISIONS FOR ACCOUNTABLE CARE ORGANIZATIONS UNDER THE MEDICARE SHARED SAVINGS PROGRAM (Mar. 31, 2011), available at http://www.kaiserhealthnews.org/~/media/Files/2011/CMS%20ACO %20Fact%20Sheet%20%20Summary%20Proposed%20Rule%20110331.pdf. 5 See, e.g., Bob Spoerl, 6 Steps to Building an ACO’s Health IT Capacity, BECKER’S HOSP. REV., June 15, 2012, available at http://www.beckershospitalreview.com /hospital-physician-relationships/6-steps-to-building-an-acos-health-it-capability.html. PASQUALE.DOCX (DO NOT DELETE) 2012] 10/22/2012 11:02 AM FOREWORD 1373 provider demands. Hospitals and doctors successfully demanded key changes to the regulatory template. Industry, HHS, and CMS were 6 soon singing from the same hymnal. The final rule only imposed thirty-three quality measures, and gave other concessions to those forming ACOs. By the time our conference occurred on October, 28, 2011, ACOs were again a buzzword in health policy, both as specific description related to the MSSP and as a larger catchall term for trends in health care organization and finance. The pas de deux between business and government over ACOs 7 had a larger significance for administrative law scholarship. From the time of its passage in 2010 to the climactic Supreme Court ruling in NFIB v. Sebelius, prominent attacks on PPACA have come almost entirely from the right on the political spectrum. The rhetoric of the “constitution in exile” succeeded both in empowering states to resist the ACA’s Medicaid expansion and influencing the Commerce 8 Clause jurisprudence of the Court. But the individual mandate survived, as Congress’s power to tax prevented the four justices in the joint dissent from using nonseverability doctrine to sweep the ACA from American law forever. Now that the ACA is to be implemented in earnest, we should expect to hear more critiques of it from the left. Focused on the ethics and effectiveness of leading providers and insurers, these are the critiques most relevant to ACOs. For ACOs to work, many large c (...truncated)