June 06, 2011
Dr. Donald M. Berwick
Centers for Medicare & Medicaid Services
Department of Health and Human Services
7500 Security Boulevard
Baltimore, MD 21244-1850
Dear Dr. Berwick:
I am writing on behalf of the members of the Association of Academic Health Centers (AAHC) to express our strong concerns regarding the proposed rule on Accountable Care Organizations (ACOS). For the reasons discussed below, the proposed rule fails to create a viable framework for most academic health centers to sponsor or participate in Medicare ACOs. I urge you to modify the proposed rule to address these significant barriers to academic health center participation.
An academic health center, as defined by AAHC, is an educational institution that includes a medical school and at least one additional health professions school (e.g., nursing, dentistry, pharmacy, allied health, public health, veterinary medicine, graduate school), and either owns or is affiliated with a hospital or health system. In the course of carrying out their mission to advance and apply knowledge to improve health and well-being, academic health centers engage in three essential activities:
• Educating the nation’s health workforce through their health professions schools;
• Conducting cutting-edge biomedical and clinical research; and
• Providing comprehensive patient care.
Academic health centers, with their strong voluntary (and often mandatory) social missions, their commitment to evidence-based medicine, their track record of innovation, and their growing focus on the social determinants of health, are natural partners for ACOs. As a result, the success of the ACO program would be seriously compromised if academic health centers do not participate in the program in significant numbers. Unfortunately, based on recent conversations with our member institutions, it appears that few academic health center leaders currently believe the proposed rule strikes a sufficient balance of risks and rewards to justify the substantial investment necessary for them to organize or participate in an ACO.
Our member institutions have cited the following reasons for their lack of interest in organizing or participating in ACOs as currently constituted in the proposed regulations:
- The extensive compliance and reporting requirements are overly burdensome, even for fully-integrated entities. Many academic health centers do not own their affiliated hospitals and practice plans. As a result, implementing reporting and compliance programs as complex and extensive as the requirements included in the proposed rule will be very difficult for such institutions. Even fully integrated academic health centers that own their hospitals and practice plans have indicated that the reporting and compliance requirements will be very challenging to implement.
- The inclusion of IME and DSH payments in the benchmark strongly discourages academic health center participation in ACOs, which will have a significant adverse impact on access to care for vulnerable beneficiaries. Both because of their social missions and the avoidance behavior of competing providers, many academic health centers serve as provider of last resort for indigent and underinsured patients within their communities. Member institutions believe the inclusion of IME and DSH payments in the benchmark will strongly discourage referrals to academic health centers, as well as strongly discourage inclusion of academic health centers in ACOs organized by others. As a result, financially vulnerable beneficiaries may find that they cannot enroll in an ACO and still receive care from the academic health center they rely on for access to care.
- The potential upside gain from organizing or participating in an ACO does not sufficiently offset the substantial downside risk and start-up costs associated with organizing or participating in an ACO. The uncertainty that the ACO will realize any shared savings, coupled with the sizeable upfront investment required to organize or participate in an ACO, as well as the exposure to downside experience risk and costs of beneficiaries seeking care outside the ACO, add up to a sizeable risk exposure that most academic health centers appear unwilling to assume. At a time when academic health centers’ revenue streams and funding sources are already at risk due to the state of the economy, there is little interest in assuming additional risk without a reasonable expectation of financial reward.
In summary, although ACOs are conceptually aligned with academic health centers’ mission, the proposed rule appears to offer too few rewards and imposes too many startup costs and financial risks to be embraced by more than a handful of academic health centers. Therefore, I urge you to revise the proposed rule to strike a better balance between risks and rewards in order to ensure that all academic health centers have a reasonable opportunity to participate.
Steven A. Wartman
President & CEO