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New concept to counter HMOs?

By Jim Saunders of Health News Florida and
Phil Galewitz and Jenny Gold of Kaiser Health News

Faced with a likely expansion of Medicaid HMOs, the Florida Medical Association is looking at a new possibility to give doctors more control over patient care:  "accountable care organizations."
 
The federal health overhaul encourages the creation of these "ACOs,'' a broadly defined concept aimed at integrating care between doctors, hospitals and others. Medicare will start using ACOs in 2012, but Florida's largest physicians' group also thinks ACOs might work in Medicaid.

"Perhaps they're a business model that physicians can control and use to compete with managed care,'' said Jeff Scott, the FMA's general counsel.

Nationally, ACOs have set off a feeding frenzy among industry groups intent on getting a slice of the action, or protecting their own financial interests.

"ACOs are the latest fad," said Dan Hawkins, senior vice president for policy and research at the National Association of Community Health Centers. "I call them the hula hoop of health care because everyone wants one even if they haven't actually been defined anywhere. The whole doggone health care community is in a frenzy to own and dominate these ACOs."

For now, ACOs are just a concept; federal regulators haven't yet drawn up the rules. As envisioned by the law, health professionals in ACOs would have their pay partly based on meeting certain quality and cost targets.

The twin goals: to improve care and slow rising costs. And while Medicare won't start using them until 2012, they're already being developed for the private insurance market.

"The whole concept of an accountable-care organization is for providers to organize and coordinate care and be paid based on the outcome of that care,'' said Bruce Rueben, president of the Florida Hospital Association.

Rueben said conversations are taking place within hospital systems to try to figure out how they might start and operate ACOs. But questions remain about many details because of the lack of federal rules.

ACOs could be similar to provider-service networks that already operate in parts of the state, including Duval, Broward and Miami-Dade counties Those networks, which are often closely linked with hospital systems, offer managed care to Medicaid recipients and are an alternative to HMOs.

Under a pilot program, Florida requires most Medicaid recipients in Duval, Broward and three smaller counties to enroll in managed-care plans. Lawmakers are widely expected to require managed-care enrollment in other areas of the state next year to try to curb soaring Medicaid costs, despite opposition from doctors and some other groups.

"Basically, our position is that we still oppose the move to managed care, and we will fight that,'' said the FMA's Scott.

Lawmakers likely would need to agree to allow ACOs as an alternative to more-traditional managed care. Scott said the FMA is not pushing doctors to create the organizations but is providing information and serving as a resource.

More than 300 health-industry representatives attended a meeting last week in Baltimore hosted by federal officials to discuss how to set up the new organizations without violating antitrust and anti-fraud laws.
 
Aside from groups representing physicians, hospitals and insurers, the session attracted medical device makers, employers and labor unions, nurse practitioners and pharmacists, all of whom want to ensure that ACOs expand their business and influence. Many are worried that ACOs, if allowed to become too powerful, will result in less money and fewer patients for them.

ACOs are the "wave of the future," said John Coster, senior vice president of government affairs at the National Community Pharmacists Association. "So we either get on the train or get run over by it."

Here's a sample of what’s at stake:

Device makers

They worry ACOs could encourage doctors to use less costly devices instead of what works best for the patient.

"We are worried about the market power ACOs may wield…and it may present significant risks to patients," said Ann-Marie Lynch, executive vice president of the Advanced Medical Technology Association, which represents medical device makers.

Her group is pushing for safeguards in the ACO rules to make sure new technologies are not discouraged and independent monitoring to make sure patients get appropriate care.

Labor unions and employers

They fear large hospitals will grab more market power, enabling them to increase prices for care.

Elizabeth Gilbertson, chief strategist for the Hotel Employees and Restaurant Employees International Union Welfare Fund, said she is hopeful about the ACOs but worries that they might push up costs if they get too big. The fund helps pay the health care bills for a total of 280,000 workers and their dependents.

Employers are looking to ACOs to improve care for their workers and slow rising costs. "We have not been getting our money’s worth and quality of care has varied," said Mary Jo Condon, director of public affairs for the St. Louis Area Business Health Coalition.

Pharmacists

They see themselves "as partners with doctors and hospitals" in ACOs in helping ensure appropriate drug use, which could lower spending, said Coster.

Pharmacists would be paid for their services and share in the potential rewards of delivering better patient care. He added that the relationship also carries
financial risks if pharmacists can't help control drug compliance.

Medical manufacturers
 
Corporations that sell medical imaging and radiotherapy technology are worried that the financial incentives to slow spending in ACOs could hurt sales.
 
If the primary goal of an integrated system is to hold down costs and utilization, said Dave Fisher, executive director of the Medical Imaging & Technology Alliance, an industry trade group, "the incentive is to reduce the volume of procedures" -- including diagnostic tests such as MRIs, CT scans and ultrasounds -- "regardless of whether or not they're appropriate."

Fisher said ACOs will prod doctors and hospitals to join forces, and to consolidate. "We just want to be sure it's done in a fair way that preserves competition," he said.

Home infusion

Companies that deliver IV drugs in the home see ACOs as a way to get Medicare to expand coverage of their services.
 
"We are evaluating this model because it has the opportunity to be a game changer," said John Magnuson, vice president of National Home Infusion Association. "This could be a way to open the door to home-infusion therapy in Medicare," he said.

Home infusion therapy involves delivering intravenous drugs to people at home. 

Health centers

Community health centers are uncertain if they’ll be winners or losers in ACOs.  Hawkins, from the centers' association, says he's advising members to hold off joining any ACOs until they know more about them.

On the upside, he said, community health centers that join an ACO might have an easier time securing diagnostic services and treatment for their patients. But they risk losing their autonomy and distinct character as safety net providers and could face pressure to lower costs.