Administration looks to curtail unnecessary medical procedures

The Obama administration on Thursday released a long-awaited regulation that aims to reward physicians and hospitals for working together on patient care.

The regulation governing Accountable Care Organizations, which got a boost in the healthcare reform law, is billed as a way to improve care while saving as much as $960 million over the next three years. The proposed rule will enable medical providers to share in Medicare savings if they collaborate to limit duplicative tests, needless procedures and other inefficiencies caused by Medicare's fragmented payment system for medical care.

The nation's high rate of hospital readmissions and hospital-acquired infection deaths "are unacceptable," Health and Human Services Secretary Kathleen Sebelius said in a conference call with reporters. "But when you look at how our healthcare system works, unfortunately they're not surprising."

"To provide the best care for patients, doctors, nurses and other healthcare providers must work closely together to coordinate care, and they also need to follow up with patients to make sure they're taking the day-to-day steps they need to stay healthy," she added. "But today, the fragmented way we pay for care often stands in the way."

ACOs, she said, will reverse the incentives that currently reward hospitals and physicians for ordering more tests and procedures than they might need.

Provider groups who cover at least 5,000 beneficiaries will be eligible to start an ACO.

The regulation is only a proposed rule, and officials said they'd be holding listening sessions over the next few months to make any changes that are needed. 

During the call, administration officials sought to dispel concerns raised by medical providers and healthcare experts.

Centers for Medicare and Medicaid Services Administrator Donald Berwick said the regulation proposes 65 quality measures to ensure providers aren't incentivized to skimp on care in order to reap higher profits from Medicare. The quality measures are in five broad categories:

• patient experience of care;

• care coordination;

• patient safety;

• preventive health; and 

• care delivery for at-risk and frail elderly populations.

As for health insurers' concerns that the regulation will lead to more consolidation in the hospital industry and higher prices, officials said antitrust laws remain in effect.

"By forming an ACO, one is not exempt from the anti-trust laws," Assistant Attorney General Christine Varney said. "Those who collaborate to fix prices inappropriately will be prosecuted."

The regulation, however, doesn't allow specialists to start their own ACOs. 

"ACO has its roots in primary care," Berwick said. Providers who will be allowed to form an ACO will include "physicians in primary care practices and other practitioners like physicians' assistants, nurse practitioners, clinical nurse specialists."

"Specialists can be involved in ACOs, and will undoubtedly be; they can't lead in forming the ACO because they don't have primary care patients attributed to them."