ACCOUNTABLE CARE ORGANIZATION DISPUTES: WHY WILL THEY HAPPEN AND HOW SHOULD WE SOLVE THEM?

Transcription

1 This Article is from Dispute Resolution Journal (DRJ), Vol:69, No:3. JurisNet, LLC ACCOUNTABLE CARE ORGANIZATION DISPUTES: WHY WILL THEY HAPPEN AND HOW SHOULD WE SOLVE THEM? Stephanie Sprague Sobkowiak and Paul E. Knag As of January 2014, there were over 600 Accountable Care Organizations ( ACO ), and this number is growing. Of these, 366 are Medicare Shared Savings Program ( MSSP ) ACOs, 123 of which were new in Approximately 14% of the United States population is served by an ACO, and many of these people may not understand it or even know it. I. ACO, MSSP, PPACA ACRONYM SOUP AND HOW ALL OF THE PIECES FIT TOGETHER ACOs are networks of hospitals, physicians and other providers that share medical and financial responsibility for coordinating patient care with the goals of reducing unnecessary spending and improving care. The recent growth in ACOs stems from Section of the Patient Protection and Affordable Care Act ( PPACA ) 2 which established the MSSP and spiked parallel interest in ACOs by providers and private payors. The final MSSP rule was published in the Federal Register on November 2, Under the regulations, CMS assesses each ACO s quality and financial performance based on a given population s use of primary care services at the end of each year. Based on that assessment, Medicare determines whether the ACO should be credited with improving care and reducing growth in expenditures compared to a benchmark population. In one model, the Stephanie Sprague Sobkowiak is a Senior Associate in the health care practice group of Murtha Cullina LLP and has ten years of experience as a health care attorney. Paul E. Knag is a Partner of Murtha Cullina LLP and serves as co-chair of the firm s health care practice group. He is also a member of the American Arbitration Association s Health Care Advisory Council. 1 Section 3022 [Medicare Shared Savings Program] amends Title XVIII of the Social Security Act (42 U.S.C et. seq.) by adding new 1899 [42 U.S.C. 1395jjj]. 2 H.B. 3590, Pub. L (March 11, 2010) Fed. Reg (Nov. 2, 2011). 25

2 26 DISPUTE RESOLUTION JOURNAL VOL. 69 NO. 3 ACO carries no risk if the expenditure target is not met. The ACO simply shares in the cost savings with CMS. In the second model, the ACO shares in the savings but is also at risk for losses as well. As you can imagine, while the first model is safer, the potential rewards are not as high. The traditional Fee-For-Service program incentivizes providers to order more tests. In contrast, while the MSSP does not do away with Fee-For-Service, it provides a bonus to providers that keep costs down, thereby incentivizing them to provide care efficiently. In essence, providers make more money if they are able to keep patients healthy without ordering unnecessary tests or performing unnecessary procedures. ACOs include primary care physicians, specialists, hospitals, pharmacies, post-acute care providers, joint ventures between hospitals and physicians and federally qualified health centers, as well as other providers and suppliers. The only required element is primary care physicians, and many ACOs do not include all categories of providers as owners. For example, many ACOs consist primarily of physician groups and do not contain an owner hospital at all. Regardless of its composition, each Medicare ACO must establish a governing body representing ACO providers, suppliers and Medicare beneficiaries. This governing body must be responsible for oversight and direction of the ACO, maintain transparency regarding the governing process, act consistent with its fiduciary obligations and maintain a conflict of interest policy. In addition, ACO participants must have a meaningful role in the composition and control of the governing body. The ACO must be able to establish that its governing body has the power to distribute shared savings to its members and to hold its members responsible for their failure to adhere to patient care requirements and cost-conscious performance. CMS also imposes management, leadership and operational requirements on ACOs. Operations must be managed by an officer, manager or similar individual who reports to and is under the control of the governing body. A senior-level medical director must be responsible for clinical management and oversight. A quality assurance and process improvement committee must oversee an ongoing quality assurance and improvement program. While ACOs do have the ability to request consideration of innovative leadership or management structures outside of the requirements explained

3 ACCOUNTABLE CARE ORGANIZATION DISPUTES 27 above, the new structures should be designed with these requirements in mind. 4 In order to participate in the MSSP, an ACO must accept responsibility for at least 5,000 Medicare Fee-For-Service beneficiaries and must complete CMS application an ACO is not automatically accepted into the program. In the application, the ACO must explain how it plans to deliver high quality health care while lowering the growth in expenses for the Medicare patients that it serves. It must also have documented plans to promote evidence-based medicine, promote beneficiary engagement, report internally on cost and quality metrics and provide coordinated care. If CMS approves the application, the ACO is in the MSSP for at least 3 years, unless CMS terminates the agreement for cause. Cause includes things such as failing to comply with eligibility or program requirements, avoiding beneficiaries who appear to be at-risk and failing to meet quality performance standards. Once CMS approves the ACO and thus authorizes the ACO to commence the delivery of patient care services in accordance with the PPACA and CMS requirements, the ACO must accomplish the following: The ability to provide and manage, with patients, the continuum of care across different institutional settings; The capability of prospectively planning budgets and resource needs in order to deliver care in accordance with the organization s patient care needs; and Attain and operate at a sufficient size to support comprehensive, valid and reliable performance measurement. Inherent in the MSSP is CMS ability to monitor ACO performance to ensure compliance with the foregoing. This monitoring includes analyzing claims and specific quality and financial data as well as periodic reports, making site visits, surveying Medicare beneficiaries and performing audits when necessary. 5 While the standards are high and the requirements complex, it is clear that many providers have 4 For a discussion of the governance and leadership requirements that ACOs must adhere to, see Demetriou, Andrew J. and Patterson, Jr., J.A., ACO Legal Structure, Governance and Leadership, ABA Health esource, April 2011 ACO Special Edition. 5 See Department of Health and Human Services, Centers for Medicare & Medicaid Services, Medicare Learning Network article, Summary of Final Rule Provisions for Accountable Care Organizations under the Medicare Shared Savings Program, April 2014.

4 28 DISPUTE RESOLUTION JOURNAL VOL. 69 NO. 3 determined it is worth it, viewing ACOs as the way to improve patient care while sharing in savings. II. STATUS OF ACOS AND THE MSSP As is mentioned above, PPACA spurred the growth of ACOs. There are now 366 MSSP ACOs and over 600 total ACOs. (By way of background, in mid-2011, there were about 80 ACOs nationwide.) ACOs are projected to save Medicare up to $940 million in their first four years. 6 CMS expects to complete the final reconciliation of the first year s performance later this year for the ACOs that began participating in 2012 and At this point, we will have a much better sense of whether and how the PPACA s ACO efforts are working. Many providers are eagerly awaiting the release of this information. Providers want to know how similar organizations fared in the MSSP. They went to know if the goals are attainable and if the promised savings are achievable. If the results remain promising, the health care system will probably see another significant jump in the number of functioning ACOs. In contrast, if the gloss wears off and providers are not realizing savings or worse, seem to be facing numerous and/or large disputes related to MSSP participation, we will surely see a decrease in the formation of new Medicare ACOs. In addition, if the number of ACOs is to grow, it will be important for ACOs to see other ACOs with similar composition flourish. As the majority of ACOs are composed of physician groups rather than large hospitals, physician groups will be watching the other physician-focused ACOs. Success of huge health system ACOs with far greater resources to draw upon (both financially and administratively) is unlikely to bring them much comfort. One consequence of the drive to ACOs is increased provider consolidation. Many providers in many areas of the country are already working to build integrated care delivery networks, with hospitals acquiring physician practices and small physician groups joining forces to create massive multi-specialty groups. The success of ACOs comprised of hospitals or other large providers in the MSSP could have the effect of hastening this consolidation. If providers 6 Kaiser Health News, FAQ on ACOs: Accountable Care Organizations, Explained, April 16, 2014, available at

5 ACCOUNTABLE CARE ORGANIZATION DISPUTES 29 and networks continue to grow larger, patients will have fewer and fewer choices regarding their health care. If choices diminish, we can only hope that the MSSP truly achieves what it was set out to achieve. If so, while patients may have fewer choices, they will likely be able to receive high quality, coordinated care from the provider that is available to them. III. STATUS OF PRIVATE ACOS While ACOs participating in the MSSP get a great deal of press as we wait to see how the existing ACOs fair, the number of private ACOs is also on the rise. Providers of all types, specialties and sizes are considering ACOs, other types of shared savings programs and strategic alliances aimed at improving quality and reducing cost. Some follow a model similar to the MSSP and others are exploring alternative types of arrangements. A number of these private ACOs are the result of commercial payors, including Anthem Blue Cross of California, United HealthCare, Humana and Cigna, partnering with providers to form their own ACOs. Some of these organizations are already beginning to see reduced inpatient admissions, shorter inpatient stays and reduced radiology and laboratory needs, and thus some cost savings. One of the advantages of private ACOs and other strategic alliances is their ability to be flexible. ACOs participating in the MSSP must follow the MSSP requirements and must provide services to at least 5,000 patients. In contrast, private ACOs and alliances can work with their member providers, some of whom may be more prepared to participate in an ACO or alliance than others, to develop strategies and standards that make sense for the individual providers and the population that they serve. Health plans or other sizable entities can provide support of various types to smaller participants with the goal of strengthening the ACO or other strategic alliance as a whole. This flexibility can be vital to the success of an ACO. There are multiple agreements involved in all ACO structures. Some providers are owners of the ACO; others are merely participants. All are supposed to operate in new ways, with an emphasis on preventive care, use of care pathways purportedly based on evidence-based medicine, exchange of data concerning common patients, referrals of patients to lower cost providers, adjustment of responsibility based on level of risk assumed, good citizenship and various related concepts. This model assumes that providers not

6 30 DISPUTE RESOLUTION JOURNAL VOL. 69 NO. 3 meeting the requirements of the new world will be compensated less, and possibly even excluded. This leads us to the issue of how to deal with the inevitable disputes that will result. IV. WHAT DOES THIS HAVE TO DO WITH ALTERNATIVE DISPUTE RESOLUTION? Under current circumstances, where many payor contracts are nonrisk sharing, many provider-payor disputes are arbitrated. However, given the complexity of relationships in an ACO, a significant increase in the number of mediations and arbitrations concerning payment disputes is inevitable. There will be no shortage of issues. Were quality standards met? Did the provider follow the care protocols? Did the ACO properly communicate expectations to the provider? Did the payor properly calculate patient utilization and cost? What if the providers disagree over the risk adjustment calculation? If success is not obtained, is it the fault of a particular provider or providers in the network? Were losses allocated fairly? What if certain providers are overusing medical resources? Should providers be excluded from the ACO due to poor performance? Are sanctions against providers really based on anti-competitive considerations? Should providers provide data that they are not providing? Should providers be allowed to withdraw from the network? What about exclusivity? Are the ACO practice guidelines the real reason for malpractice liability incurred by a participating provider? As mentioned above, CMS has the right to conduct site visits and to perform audits when necessary. Private payors may also audit. Either of these occurrences is likely to promote stress within an ACO. What if the investigator happens to visit one of the weaker members? What if the governing body answers a question or asks a question in a way that reflects less favorably on one member than another? Calculations and audits aside, there are also issues relating to quality of care. This is, after all, the business of health care. Therefore, ACOs can expect disputes relating to quality of care and potential efforts to blame the ACO for malpractice liability. It is key that ACOs have mechanisms in place to address these issues. If an ACO suffers a denial or other negative consequence from CMS or if it simply fails to achieve its goals in the private context, it

7 ACCOUNTABLE CARE ORGANIZATION DISPUTES 31 should work quickly and fairly to take corrective and preventative action based on its own internal procedures. It should also work to update and improve its delivery system. This requires the ACO to make some tough decisions and work with providers who have experienced problems, keeping vigilant to focus on collaboration and not blame. It is also important to note in this context that neither CMS nor private payors are perfect. There have been instances of payors miscalculating metrics and amounts owed to providers. Therefore, both MSSP ACOs and private ACOs must be vigilant in tracking their earnings and rewards. It will not serve any ACO or ACO participant well to start down the road of blaming providers or formulating corrective action if calculations were performed improperly. In addition, even before success is measured by CMS or a commercial ACO entity, new ACOs and their providers may face conflict over compliance with the ACO s practice guidelines, compliance with the ACO s quality benchmarks, quality of care issues and compliance with evidence-based medicine standards. Having a mechanism for dealing with these disputes will be essential for making sure that the ACO can get back on track and have a chance at meeting the MSSP or other performance standards and realizing real savings. If ACO participates cannot agree on these items before they are even evaluated by CMS or other evaluator, the chances of success are slim. Whether the conflict arises before CMS evaluates the ACO or upon receipt of word that the ACO failed and will not be receiving a bonus, the need for harmony among the ACO members going forward is essential. The same is true in the private ACO context. To this end, conflicts between ACOs and their members are well-suited for alternative dispute resolution ( ADR ) mechanisms for a variety of reasons. Litigation is expensive. Litigation is messy. Litigation is long. Litigation is public. Litigation often has no real winner. While one party may walk away with damages, the relationship between the parties is usually beyond repair, with the parties hating each other and well beyond any semblance of a working relationship. In contrast, mediation will usually be a much faster process and less expensive. The parties are encouraged to work together to arrive at their own resolution rather than being pitted against each other in a fight decided by a third party likely previously unfamiliar with the salient issues. Mediation, unlike litigation, may not completely

8 32 DISPUTE RESOLUTION JOURNAL VOL. 69 NO. 3 disrupt the operation of the ACO and may not become the focus of every ACO participant. The confidentiality of the process is invaluable. The other ACO participants may be able to carry on their practices as usual without the threat of being dragged into the litigation and without being consumed by gossip about the involved parties. Perhaps most importantly, the parties to mediation have the ability to walk away with the ability to work together. In this sense, mediation may have no loser. In fact, the mediation process may strengthen the parties ability to work together, create strategies and solve problems. 7 While not as congenial as mediation, arbitration has many of the same benefits. It will likely be much faster than litigation and may indeed be cheaper. Like mediation, it will be a private and confidential forum, away from the eyes of the media and other providers. Though arbitration still carries a real risk of ruining the relationship between the parties, the risk is lower than it is for litigation, perhaps because it does not drag on for as long, it may not cost as much, and it is not under the scrutiny of others. Given the foregoing, ACO documents should contain ADR clauses, whether they require mediation followed by arbitration, which would be preferable, or whether they simply require arbitration. This is true for agreements among MSSP ACO, private ACO and other alliance participants as well as for agreements between private ACOs and commercial payors. For disputes among ACO or alliance providers, these clauses will help to ensure that disputes are resolved as quickly as possible with the least confrontation possible and thus with the greatest chance of preserving the relationship (or at least minimizing the damage) going forward. For disputes between ACOs and commercial payors, whether they be the result of allegedly erroneous payment calculations or other issues, such clauses will again help to ensure that disputes are resolved much more quickly and less publicly than they would be through litigation. The American Arbitration Association (the AAA ) and the American Health Lawyers Association (the AHLA ) are the premier ADR organizations for health care providers. The AAA has recently broadened its roster of experienced health care neutrals, each of 7 For additional discussion regarding the mediation of disputes in accountable care organizations, see the American Health Lawyers Association s Mediating Disputes in Accountable Care and Value-Based Healthcare Settings, July 30, 2013

9 ACCOUNTABLE CARE ORGANIZATION DISPUTES 33 whom has considerable experience in the technical, business and legal aspects of healthcare disputes. In addition, to better address the unique reimbursement disputes between payors and providers, the AAA developed and established the AAA Healthcare Payor Provider Arbitration Rules which became effective in January For efficiency in time and cost, arbitrations are heard by a single arbitrator regardless of the amount in controversy unless the parties agree otherwise. There are three pre-set administrative procedures which is determined by the parties and not dictated by size and complexity of the matter. This helps to streamline the process and get providers back to their real mission of providing patient care. 8 As the number of ACOs increases and as the delivery of high quality, efficient care becomes even more important to health care providers bottom lines, the number of disputes is sure to increase. Providers in ACOs are in it together, reliant on their peers to do things right in order to receive maximum payment. For the reasons set forth above, ADR processes are a viable solution for ACOs facing challenges but looking to maximize their potential for long term success. 8 Additional information regarding the AAA s healthcare dispute resolution process is available at &_afrWindowMode=0&_afrWindowId=f9hay0lck_42#%40%3F_afr WindowId%3Df9hay0lck_42%26_afrLoop%3D %26_afrWindowMo de%3d0%26_adf.ctrl-state%3df9hay0lck_86.

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