By Dana Bandera - Zumpano Patricios & Winker, P.A.
When the Patient Protection and Affordable Care Act of 2010 (PPACA) was signed into law by President Obama earlier this year, the media focused coverage on the healthcare reform bill’s cost-cutting and quality improvement measures. Many consumers expressed concern about how the PPACA would affect their relationships with their hospitals and physicians of choice.
The PPACA includes measures designed to integrate the care patients receive in the hospital with the follow-up care they receive after discharge. The idea is that increased cooperation will result in better quality of care for the patient and lower costs for Medicare due to improved efficiency. These cooperative efforts will be facilitated by the formation of a new type of healthcare entity: the Accountable Care Organization or ACO.
Under PPACA, ACOs, which are made up of groups of providers that may include hospitals and physician practice groups, among others, are subject to payment and performance measurement approach designed to ensure accountability. Because ACOs are responsible for making decisions regarding patient care, they require a mechanism for shared governance. The Shared Savings Program and the National Pilot Program on Payment Bundling are two examples of measures designed to encourage coordination of care through the formation of ACOs.
Under the Shared Savings Program, an eligible ACO will receive payment for a portion of the total savings it attains for Medicare in addition to the payments it receives for services provided. Participation in this program is conditioned on the ACO meeting certain requirements related to quality measurements, patient-centeredness, and minimum per-patient savings amounts for Medicare Part A and B beneficiaries. In addition, receipt of savings payments are conditioned on the ACO meeting certain quality performance standards and submitting the required performance data.
The National Pilot Program on Payment Bundling also changes some aspects of the Medicare fee-per-service system by aligning the financial interests of acute and post-acute care providers. Rather than making separate fee-for-service payments to providers, payments to all providers under the program will be consolidated over an entire episode of acute and post-acute care. Some expected benefits of payment bundling include improved practice efficiency, particularly with regard to the management of complex patients, and reduction in preventable readmissions.
In summary, the ACO concept is expected to lead to significant consolidation and integration efforts within the health care industry. However, among other unknowns, ACOs raise questions about compliance with existing laws governing relationships between hospitals and physicians, such as the federal anti-kickback statute, the Stark Statute, and antitrust laws. Although the PPACA calls for the formation of ACOs by January 2012, the concept is already being incorporated into some private sector managed care arrangements and is expected to lead to significant industry consolidation. Section 3022 of the PPACA grants the Secretary of Health and Human Services statutory authority to waive requirements of some of the aforementioned laws, but it is unclear how this authority will be exercised.
By Dana Bandera
Zumpano Patricios & Winker, P.A.
312 Minorca Avenue
Coral Gables, FL 33134
South Florida Legal Guide Midyear 2010