Complex Medicare savings program faces opposition

The Medicare Shared Savings program is intended to help control costs and improve the quality of health care, but many of these medical centers are complaining about red tape and micro-managing in the government's proposed requirements.

There aren't many people who will admit to finding any part of the over 900-page federal health care law exciting. But exciting is exactly how one health care provider executive described a single paragraph explaining the Medicare Shared Savings Program.

That program is designed to spur medical groups into creating so-called Accountable Care Organizations or ACOs — organizations designed to better coordinate and track patient care.

"We thought, 'great we can start working with Medicare in a way that isn't just a fee for service-based and help provide better care and reduce the overall costs,'" said Peter Person, CEO of Duluth-based Essentia Health Care.

Person said many in the Midwest had been developing those ideas for reshaping the health system for the last 10 to 15 years.


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Fee-for-service is the traditional payment system in which the government and insurers largely pay hospitals and doctors for each visit or procedure. Health care overhaul supporters say it's is a major factor driving up health care costs because there's no incentive for providers to hold down costs. But the Medicare Shared Savings Program turns that kind of payment system on its ear.

The government would give providers a lump sum for a group of patients, say those with diabetes. If those patients get healthier and don't require a lot of expensive care, the clinics keep the savings. If patients do poorly — for example, they're readmitted to the hospital — doctors and clinics are on the hook for that excess cost.

In order for clinics to reap financial savings, they need to be nimble at coordinating patient care. They need to have people and systems in place that track whether a patient has already had a particular X-ray or a nurse who telephones patients with diabetes to prevent minor problems from turning into a hospital stays.

Person said the enthusiasm about the Shared Savings and ACO ideas lasted until new proposed regulations came out in April.

"We go from one paragraph and it's probably 10 sentences to 462 pages of rules," Person said.

Rules so numerous and technical that even Park Nicollet in St. Louis Park, which was already experimenting with a federal shared savings program, found the rules hard to interpret.

"We've been involved in this for 5 years, but even for us it was difficult to plow through hundreds of pages and digest it and understand what's going on," said CEO David Abelson.

The proposed requirements fueling complaints include complicated financial formulas, 65 new quality measurements and giving patients a voice in management.

A survey by the American Medical Group Association, which represents the multi-practice health systems best suited to become ACOs, found 93 percent would not enroll as an ACO under the proposed rules.


Letters to the government from two dozen health systems around the U.S. show that even the most supportive organizations now have serious reservations about this central part of the health overhaul. Among the groups with serious reservations is Mayo Clinic.

"If we had to create a new governance structure, implement new quality metrics, that's a very big deal," said Mayo's Dr. Patricia Simmons. "It takes months to do those things, not days and weeks."

Mayo officials say the restrictive approach creates a sense of mistrust between clinics and the government.

The Centers for Medicare and Medicaid, which issued the proposed rules, declined to comment since the rule making process is still pending.

Person of Essentia said that, in some ways, it's already too late. For example, he said about a dozen of the 65 quality measures could be satisfied with Essentia's claims data, but the rest require going through patient charts manually and setting up new processes to collect and analyze the information.

Person said for most health systems, it's just not practical to meet the Obama Administration's proposed requirements by the January 1 deadline.

"It is disappointing because there was so much enthusiasm across the country in the groups that I interact," Person said. "But I think they've lost an opportunity to engage all of us."

Given the discontent, there's already talk of pushing back the January deadline.