Jason Henderson, D.O., J.D.
Medical Affairs Liaison
March 2013
What is an ACO?
 Accountable Care Organizations (ACOs) are groups of
doctors, hospitals, and other health care providers,...
ACOs and Risk Shifting
 The ACO places a degree of financial responsibility on the providers in hopes of
improving care m...
ACOs Impact on Pharm
 Adoption of best practices and establishing treatment
guidelines will mean physicians have less aut...
Managed Medicaid & Risk Shifting
 Some policymakers have recently proposed placing a “per capita
cap” on federal Medicaid...
FFS vs. Managed Medicaid
 A fee-for-service (FFS) delivery system is where health
care providers are paid for each servic...
Benefits of a Managed Care
Model?
States and enrollees have enjoyed numerous benefits
of Medicaid managed care over fee-fo...
The New Pharm Frontier
 With clinical data driving outcome studies, payers are gaining
greater power over physicians. Cou...
Recommendations to Pharm
The new context of risk shifting mandates
that the pharmaceutical industry adapt by:
 Collaborat...
References
 Gold J. Accountable Care Organizations, Explained. Kaiser Health News, NPR. Jan 18,
2011. http://www.npr.org/...
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Risk shifting and healthcare reform

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Risk shifting and healthcare reform

  1. 1. Jason Henderson, D.O., J.D. Medical Affairs Liaison March 2013
  2. 2. What is an ACO?  Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.  The goal of coordinated care is to ensure that patients (especially the chronically ill) get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.  When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.
  3. 3. ACOs and Risk Shifting  The ACO places a degree of financial responsibility on the providers in hopes of improving care management and limiting unnecessary expenditures, while continuing to provide patients freedom to select their medical services.  The success of the ACO model in fostering clinical excellence while simultaneously controlling costs depends on its ability to "incentivize hospitals, physicians, post-acute care facilities, and other providers involved to form linkages and facilitate coordination of care delivery."  ACOs have been compared to health maintenance organizations (HMOs), but ACOs are different in that they allow providers much freedom in developing the ACO infrastructure. Any provider or provider organization may assume the leadership role of running an ACO. The ACA does not explicitly designate any provider to that role.  The ACO is accountable to the patients and the third-party payer for the quality, appropriateness, and efficiency of the health care provided.
  4. 4. ACOs Impact on Pharm  Adoption of best practices and establishing treatment guidelines will mean physicians have less autonomy over their prescribing practices.  Physicians will also have a vested financial vested in prescribing cost effective treatments, complying with formularies, and following recommended treatment guidelines established by the ACO.  This will make it more difficult for pharmaceutical representatives to directly influence prescribing of products not supported by ACOs.
  5. 5. Managed Medicaid & Risk Shifting  Some policymakers have recently proposed placing a “per capita cap” on federal Medicaid funding:  The federal government would no longer cover a fixed share of each state’s overall Medicaid costs.  Would limit each state to a fixed dollar amount per beneficiary.  A per capita cap would represent a fundamental change in Medicaid’s financing structure  Would shift significant fiscal risks and costs to states  Would likely lead states to impose substantial cuts over time on low-income beneficiaries and health care providers.  See, for example, H.R. 5979 (the Medicaid Accountability and Care Act of 2012), introduced by Representative Bill Cassidy (R- LA)
  6. 6. FFS vs. Managed Medicaid  A fee-for-service (FFS) delivery system is where health care providers are paid for each service (like an office visit, test, or procedure).  States have traditionally provided patients Medicaid benefits using a FFS system.  Over the past 15 years, states have more frequently implemented a managed care delivery system for Medicaid benefits.  Managed Care Organizations (MCOs), like HMOs, agree to provide most Medicaid benefits to people in exchange for a monthly payment from the state.
  7. 7. Benefits of a Managed Care Model? States and enrollees have enjoyed numerous benefits of Medicaid managed care over fee-for-service (FFS) including:  Predictable costs  Access and care coordination  Delivery system innovation  Fraud and abuse prevention  Quality assurance and improvement
  8. 8. The New Pharm Frontier  With clinical data driving outcome studies, payers are gaining greater power over physicians. Coupled with less tangible innovation, the result is that the industry’s historical “innovation frontier” will be replaced by an “efficiency frontier.”  Cost-conscious payers are diving into data on performance to determine which treatments get approved for reimbursement. In addition, regulatory scrutiny is amplifying.  The unique dynamics of the Pharm industry have traditionally placed a huge burden on the R&D function, but the pressures of today’s marketplace are making that burden unsustainable.
  9. 9. Recommendations to Pharm The new context of risk shifting mandates that the pharmaceutical industry adapt by:  Collaboration to form strategic partnerships  Develop a risk management mindset  Make information transparent *further explanations of this tri-pillar approach are detailed in the attached memorandum*
  10. 10. References  Gold J. Accountable Care Organizations, Explained. Kaiser Health News, NPR. Jan 18, 2011. http://www.npr.org/2011/04/01/132937232/accountable-care-organizations-explained (accessed on March 19, 2013)  McClellan M, McKethan AN, Lewis JL, et al.(2010). A National Strategy to Put Accountable Care Into Practice. 29. pp. 982=990.  Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, §3022 124 (2010).  McClellan, M, et al. A National Strategy to put Accountable Care into Practice. Health Affairs. 29(5). 2010. 982-990.  Berwick DM. Making good on ACOs’ promise – the final rule for the Medicare Shared Savings Program. N Engl J Med 2011; 365:1753-6  Health Policy Brief: Accountable Care Organizations. Health Affairs, July 27, 2010.  Medicare Payment Advisory Commission. (2009). Report to the Congress—Improving Incentives in the Medicare Program."MedPac. p.39-56  http://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ACO/index.html?redirect=/aco/ (accessed on March 19, 2013)  Sisk JE, Gorman SA, Reisinger AL, et al. Evaluation of Medicaid Managed Care: Satisfaction, Access, and Use. JAMA. 1996;276(1):50-55.

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