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PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1371AccountableCareOrganizationsintheAffordableCareActFrankPasquale*I.
INTRODUCTIONOnMarch23,2010,Section3022ofthePatientProtection&AffordableCareAct(PPACAorACA)establishedtheMedicareSharedSavingsProgram(MSSP).
TheMSSPdependsonAccountableCareOrganizations(ACOs)tocoordinatecareforlargegroupsofMedicarebeneficiariesandreducetheiroverallcostswhilemaintainingquality.
1ACOsareacriticalpartofthePPACA.
Iftheysucceed,theycouldbeamodelofcarecoordinationcriticaltocostreductions,qualityimprovements,andexpandedaccesstocarebothwithinandbeyondtheMedicareprogram.
2TheirfailurewouldnotbodewellforthewidearrayofpilotprogramspromotedandfundedbythePPACA.
3SetonHallwasthefirstlawschooltohostaconferenceon*Schering-PloughProfessorofHealthCareFinanceandRegulation,SetonHallLawSchool.
IwouldliketothankGiannaCricco-Lizza,TemiKolarova,andothermembersoftheLawReviewfortheirexcellentworkonthesymposium.
ProfessorsJohnJacobiandKathleenBoozangwerealsoinvaluabletoplanningtheevent.
DeansRosaAlves-FerreiraandDenisePinneyalsoofferedinvaluablecontributionstoourplanningandorganization.
1JennyGold,FAQOnACOs:AccountableCareOrganizations,Explained,KAISERHEALTHNETWORK(Oct.
21,2011),http://www.
kaiserhealthnews.
org/Stories/2011/January/13/ACO-accountable-care-organization-FAQ.
aspx.
2MaulikJoshi,AmericanHospitalAssociation,AccountableCareOrganizationsAHAResearchSynthesisReport,AmericanHospitalAssociationCommitteeonResearch,(June2010),availableathttp://www.
hret.
org/accountable/resources/ACO-Synthesis-Report.
pdf;AccountableCareOrganizations(ACO):What'sanACO,CTRS.
FORMEDICARE&MEDICAIDSERVS.
,(Apr.
5,2010),http://www.
cms.
gov/Medicare/Medicare-Fee-for-ServicePayment/ACO/index.
html.
3Foradiscussionofpilotprograms'importancetohealthcare,seeFrankPasquale,EndingtheSpecialtyHospitalWars:APleaforPilotProgramsasInformation-ForcingRegulatoryDesign,inTHEFRAGMENTATIONOFU.
S.
HEALTHCARE:CAUSESANDSOLUTIONS(EinerElhauge,ed.
,OxfordUniv.
Press2010).
ForanaccessibleaccountoftheroleofpilotprogramsinPPACA,seeAtulGawande,Testing,Testing,THENEWYORKER,Dec.
14,2009,at34,availableathttp://www.
newyorker.
com/reporting/2009/12/14/091214fa_fact_gawande.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1372SETONHALLLAWREVIEW[Vol.
42:1371ACOs.
Weplannedtheconferenceinearly2011,asexcitementaboutACOswasbuildinginmuchofthepolicycommunity.
Moreover,wefeltthatwhateverhappenedtotheACAintheSupremeCourt,theorganizationalformssuggestedbythePPACAregardingACOswereinfluencingprivatesectorplayers.
Providers,insurers,andemployerswereincreasinglycoordinatingtodealwithcostandqualityconcerns.
OnMarch31,2011,theproposedruleguidingprovidersontheestablishmentofACOswasreleased.
4Thenegativeindustryresponsewasnearlyimmediate:providersfeltthattheywerebeingaskedtomovetoofastandaggressivelyonawidevarietyofinitiatives.
Forexample,merelydevelopingITsystemstokeeptrackofthesixty-fivequalityperformancestandardsneededtoqualifyforsharedsavingspaymentsseemeddaunting.
Keepingupwiththe"meaningfuluse"rulemakingsguidingAmericanRecoveryandReinvestmentActof2009(ARRA)subsidiesforelectronichealthrecords(EHRs)washardenough;nowawholeotherprogramwasaffectingrecordkeeping.
WhilefederalpolicymakershadassumedtherewouldbesynergiesbetweenACOestablishmentandalargerhealthinformationtechnology(HIT)revolution,5providersfelttheywerebeingaskedtodotoomuch,toosoon.
IndustryresistanceleftuswonderingiftheconferencemightberenderedirrelevantduetolackofproviderinterestinestablishingACOs.
TheMSSPisanincentiveprogram,notamandate:theprivatesectormustchoosetoparticipateifitistobeeffective.
Weshouldnothaveworried.
Theideaofaccountablecareprovedattractivetoprivateinsurers,regardlessofitsfateattheCentersforMedicare&MedicaidServices(CMS)andtheDepartmentofHealthandHumanServices(HHS).
Andbythetimeoftheconference,theregulatorytreatmentofACOshadbenttoward4JordanRau,PhilGalewitz&BaraVaida,NewACORulesOutlineGainsAndRisksForDoctors,Hospitals,KAISERHEALTHNEWS(Mar.
31,2011),http://www.
kaiserhealthnews.
org/Stories/2011/March/31/ACO-rules.
aspx;U.
S.
DEP'TOFHEALTHANDHUMANSERVS.
,FACTSHEET:ACCOUNTABLECAREORGANIZATIONS:IMPROVINGCARECOORDINATIONFORPEOPLEWITHMEDICARE(Mar.
31,2011),availableathttp://www.
kaiserhealthnews.
org/~/media/Files/2011/HHS%20ACO%20Overview%20Fact%20Sheet%2033111.
pdf;CMSOFFICEOFMEDIAAFF.
,FACTSHEET:SUMMARYOFPROPOSEDRULEPROVISIONSFORACCOUNTABLECAREORGANIZATIONSUNDERTHEMEDICARESHAREDSAVINGSPROGRAM(Mar.
31,2011),availableathttp://www.
kaiserhealthnews.
org/~/media/Files/2011/CMS%20ACO%20Fact%20Sheet%20%20Summary%20Proposed%20Rule%20110331.
pdf.
5See,e.
g.
,BobSpoerl,6StepstoBuildinganACO'sHealthITCapacity,BECKER'SHOSP.
REV.
,June15,2012,availableathttp://www.
beckershospitalreview.
com/hospital-physician-relationships/6-steps-to-building-an-acos-health-it-capability.
html.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1373providerdemands.
Hospitalsanddoctorssuccessfullydemandedkeychangestotheregulatorytemplate.
Industry,HHS,andCMSweresoonsingingfromthesamehymnal.
6Thefinalruleonlyimposedthirty-threequalitymeasures,andgaveotherconcessionstothoseformingACOs.
BythetimeourconferenceoccurredonOctober,28,2011,ACOswereagainabuzzwordinhealthpolicy,bothasspecificdescriptionrelatedtotheMSSPandasalargercatchalltermfortrendsinhealthcareorganizationandfinance.
ThepasdedeuxbetweenbusinessandgovernmentoverACOshadalargersignificanceforadministrativelawscholarship.
7Fromthetimeofitspassagein2010totheclimacticSupremeCourtrulinginNFIBv.
Sebelius,prominentattacksonPPACAhavecomealmostentirelyfromtherightonthepoliticalspectrum.
Therhetoricofthe"constitutioninexile"succeededbothinempoweringstatestoresisttheACA'sMedicaidexpansionandinfluencingtheCommerceClausejurisprudenceoftheCourt.
8Buttheindividualmandatesurvived,asCongress'spowertotaxpreventedthefourjusticesinthejointdissentfromusingnonseverabilitydoctrinetosweeptheACAfromAmericanlawforever.
NowthattheACAistobeimplementedinearnest,weshouldexpecttohearmorecritiquesofitfromtheleft.
Focusedontheethicsandeffectivenessofleadingprovidersandinsurers,thesearethecritiquesmostrelevanttoACOs.
ForACOstowork,manylargecorporateenterpriseswillneedtodelicatelybalancetheinterestsof6MarkMcClellan(GeorgeW.
Bush'sCMSDirector)andElliottFishersangitspraisesinHealthAffairs.
SeeMarkMcClellanandElliottFisher,TheACOFinalRule:ProgressTowardBetterCareAtLowerCost,HEALTHAFF.
BLOG(Oct.
21,2011),http://healthaffairs.
org/blog/2011/10/21/the-aco-final-rule-progress-toward-better-care-at-lower-cost/;MarkMcClellan,AaronN.
McKethan,JulieL.
Lewis,JoachimRoski&ElliottS.
Fisher,ANationalStrategyToPutAccountableCareIntoPractice,29(5)HEALTHAFF.
982(2010).
7Therelativepowerofbusinessandgovernmentincommoncollaborationshasbeenafrequenttopicofinquiry,particularlyinagenciesregulatingcompetition.
Thecompetingimperativesofrecognizingbusinessneeds,whileavoidingcorporatistoveridentificationofstateandcorporateinterests,arearecurringthemeinadministrativelaw.
See,e.
g.
,FrankPasquale,IndecopiasBrandandHoldingCompany:TheBusinessModelofGovernance,inTHEROLEOFTHESTATEINCOMPETITIONANDINTELLECTUALPROPERTYPOLICYINLATINAMERICA:TOWARDSANACADEMICAUDITOFINDECOPI91(BeatrizBoza,ed.
,2000)(describingthetensionsinacompetitionlawregulator).
8Theanti-ACAdecisionbecameastapleofconservativejurisprudencedespitechallengingwhatmanycommentatorsbelievedtobesettledlaw.
SeeMarkA.
Hall,JudgeVinson'sTeaPartyManifesto,CONCURRINGOPINIONS(Jan.
31,2011),http://www.
concurringopinions.
com/archives/2011/01/judge-vinsons-tea-party-manifesto.
html.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1374SETONHALLLAWREVIEW[Vol.
42:1371patientsandserviceproviders.
9Willtheytrulymaintainquality,orgameindicatorsofqualityWillcost-savingscomeattheexpenseofpatientcareWherearetherealopportunitiestoimproveoutcomes,andwhatismeregaming10Responsiveregulationwillneedtoanswerallthesequestions,andmanymore,asACOimplementationcontinues.
ThisintroductoryessaydescribestheacademicandregulatoryagendaforACOs,andthewayourconferenceauthorsclarifiedit.
PartIIdescribestherationaleoftheACAingeneralandtheACOprograminparticular.
PartIIIexplainstheleftcritiqueoftheACA,andhowtheACOprogramprovidesagoodtestcaseforwhethertheACA'smodelofcorporate-governmentcooperationcanactuallyimproveoutcomesandreducecosts.
PartIVsummarizesthepositionsofourconferencespeakers.
PartVconcludes.
II.
ACOSINTHEACACriticsoftheACAhavefrequentlycomplainedthatthelegislationdoesnotdoenoughtoimprovequalityortocutcosts.
However,theActdidcreateincentivesforACOstochallengetraditionalhealthcareregulatorymodels.
ElliottFisher,directoroftheCenterforHealthPolicyResearchatDartmouthMedicalSchool,describesthe"threekeyattributes"ofACOs:"organizedcare,performancemeasurement,andpaymentreform.
"11Fisherhasarguedthatinsurersarenotwell-positionedtoimprovethequalityofhealthcarebecausethey"havelargelyfocusedonnegotiatingfavorablepriceswithinrelativelyopennetworksofproviders"insteadoftryingtoimprovethehealthcaretheirmembersreceived.
12Hebelievesthata"virtualnetwork"ofphysicianscoulddoabetterjob,iftheyteamedupwithhospitals.
An"accountablecare9SeeRobertPear,ConsumerRisksFearedasHealthLawSpursMergers,N.
Y.
TIMES,Nov.
20,2010,http://www.
nytimes.
com/2010/11/21/health/policy/21health.
html.
10DavidWhelan,HowCherryPickingCouldHurtObama'sHealthCarePlan,FORBES,July13,2009,http://www.
forbes.
com/forbes/2009/0713/health-obama-insurance-hmo-cherry-picking.
html(discussingpossibilitiesforgamingthesystem).
11ElliottS.
Fisheretal.
,CreatingAccountableCareOrganizations:TheExtendedHospitalMedicalStaff,26(1)HEALTHAFF.
w44(2007),availableathttp://content.
healthaffairs.
org/content/26/1/w44.
full.
12Id.
Privateinsurershavelittleincentivetokeepcurrentsubscribershealthyoverthelongterm,sinceatleasthalfofsubscribersonaveragechurnintodifferentplanswithinthreeyearsofsigningupwithagivenplan.
SeeRandallD.
Cebuletal.
,OrganizationalFragmentationandCareQualityintheU.
S.
HealthcareSystem,22(4)J.
ECON.
PERSPECTIVES93(2008),availableathttp://www.
aeaweb.
org/articles.
phpdoi=10.
1257/jep.
22.
4.
93.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1375organization"isreallyalegalnetwork,withcertainmembersandentitiesentitledtoreceivepaymentsinexchangeforcuttingcostsorimprovingquality.
InanACO,an"extendedhospitalmedicalstaff"(or"ahospital-associatedmulti-specialtygrouppractice")canjoinforceswithahospitalandagreetobecompensatedviaalumpsumpayment.
Ifthegroupmanagestokeepoverallcostsbeneaththelumpsumpayment,itcansharethegainsamongitsmembers.
Eachpartoftheteamalsohasanincentivetoworktogethertokeepthosetheycareforhealthy.
Inanidealworld,theACOrespondstoconcernsaboutfragmentationraisedbyseveralhealthlawexperts.
13ForACOproponents,virtualnetworksofphysiciansandhospitalsmayprovideefficiencyandqualitygains.
However,therearemanyskeptics.
JeffGoldsmithworriesaboutshadowynewpressuresonprovidersthatpatientswon'tbeawareof:ConsumerswouldnotbeawarethattheywerebeingtreatedbyACOs.
Rather,theywouldbe"attributed"tothem:virtualpatientsofvirtualorganizations.
Aggregatehealthspendingforattributedpatientswouldbetracked,andincreasesinthatspendingwouldbecappedusingaformof"shadowcapitation.
"ACOsthatlivedwithinthecapswouldgettheirfeesincreased.
Thosethatoverspentwouldseetheirfeesreducedorfrozen.
14RobertPearhasreportedthata"frenzyofmergersinvolvinghospitals,clinicsanddoctorgroupseagertosharecostsandsavings"worriesconsumeradvocatesandantitrustscholars.
15"Thenewlawisalreadyencouragingawaveofmergers,jointventuresandalliancesinthehealthcareindustry,"accordingtoProf.
ThomasL.
Greaney,anexpertonhealthandantitrustlawwhospokeatSetonHall'sACOConference.
16AsGreaneyputsit,"[t]heriskthatdominantproviders13SeetheessaysinTHEFRAGMENTATIONOFU.
S.
HEALTHCARE:CAUSESANDSOLUTIONS(EinerElhauge,ed.
,OxfordUniv.
Press2010).
14JeffGoldsmith,TheAccountableCareOrganization:NotReadyforPrimeTime,HEALTHAFF.
BLOG(Aug.
17,2009),http://healthaffairs.
org/blog/2009/08/17/the-accountable-care-organization-not-ready-for-prime-time/.
15Pear,supranote9("Inanenvironmentwherehealthcareprovidersarefinanciallyrewardedforkeepingcostsdown,"[alawyerfortheConsortiumforCitizenswithDisabilities]said,"anyonewhohasadisabilityorachroniccondition,anyonewhorequiresspecializedorcomplexcare,needstoworryaboutgettingaccesstoappropriatetechnology,medicaldevicesandrehabilitation.
Youdon'twanttosavemoneyonthebacksofpeoplewithdisabilitiesandchronicconditions.
").
16ThomasGreaney,AccountableCareOrganizations:ANewNewThingwithSomeOldProblems,10HEALTHLAWOUTLOOK6(2010),availableathttp://papers.
ssrn.
com/sol3/papers.
cfmabstract_id=1679492;ThomasGreaney,PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1376SETONHALLLAWREVIEW[Vol.
42:1371anddominantinsurersmayexercisetheirmarketpower,individuallyorjointly,hasneverbeengreater.
"17ACOsalsoimplicatefraudandabuselaws,sinceanti-kickbackandotherprohibitionscanhamstringeffortstocreaterelevantfinancialincentives.
AtarecentgovernmentworkshoponACOs,participantsaddressed"circumstancesunderwhichcollaborationamongindependenthealthcareprovidersinanACOpermitsACOproviderstoengageinjointpricenegotiationswithprivatepayerswithoutrunningtheriskofengaginginillegalpricefixingundertheantitrustlaws.
"18HHSalsoexplored"thedifferentwaysinwhichtheSecretarymayexercisewaiverauthorityorcreatenewexceptionsandsafe-harborsrelatedtothephysicianself-referrallaw,theAnti-kickbackstatuteandtheCMPlawinordertoencouragethecreationanddevelopmentofACOs.
"19TheAmericanMedicalAssociation(AMA)haspushedfor"explicitexceptionstotheantitrustlaws"forparticipatingdoctors.
20ThepresidentoftheFederationofAmericanHospitalssays"thefraudandabuselawsshouldbewaivedaltogether.
"21Somescholarsmaysharethatskepticalviewoffraudandabuselaws,atleastastheypertaintothetypesofeconomictransactionsTheAffordableCareActandCompetitionPolicy:AntidoteorPlacebo,89OR.
L.
REV.
811(2011).
SeealsoCoryCapps,PhD&DavidDranove,PhD,MarketConcentrationofHospitals(June2011),availableathttp://www.
ahipcoverage.
com/wp-content/uploads/2011/06/ACOs-Cory-Capps-Hospital-Market-Consolidation-Final.
pdf.
17GreaneyquotedinPear,supranote9.
ItishardtoreadGreaney'sworkonthetopicwithoutconcludingthatatoxicmixof"doctrinalshortcomings,politicalpressures,andinstitutionalconstraints"haveseverelycompromisedantitrustenforcementalready.
Greaney's2004articleonantitrustinhealthcare,Chicago'sProcrusteanBed,alsosuggeststhathealthcareantitrusthas,foryears,beenbiased"strongly[in]favorofdefendants"duetothepersistentfailuresofChicago-inspireddoctrinetoreflect"marketimperfections"inhealthcare.
Therehavebeensomerecentwinsforfederalenforcersagainstcertainmajormergers,buttheoverallrecordofthepasttwodecadeshasbeenoneofconsolidation.
See,e.
g.
,JoeWhite,MarketsandMedicalCare:TheUnitedStates,1993–2005,85(3)MILLBANKQUARTERLY143(2007)("Hospitalmanagersconsolidatedsystemsinordertostrengthentheirbargainingpowerwithinsurers,andstudiesshowthatconsolidationdidindeedenablehospitalstoextracthigher-than-averagepriceincreases.
").
18Agenda,WorkshopRegardingAccountableCareOrganizations,andImplicationsRegardingAntitrust,PhysicianSelf-Referral,Anti-Kickback,andCivilMonetaryPenalty(CMP)Laws,CTRS.
FORMEDICARE&MEDICAIDSERVS.
(Oct.
5,2010),availableathttp://www.
cms.
gov/Medicare/Medicare-Fee-for-Service-Payment/PhysicianFeeSched/downloads/100510_Meeting_Agenda.
pdf19Id.
20Id.
21Pear,supranote9.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1377necessarytomakeACOswork.
Overthepasttwentyyears,regulationoffraudandabusehaswaxedandwaned.
In1996,JamesF.
Blumsteinconcludedthat"themodernAmericanhealthcareindustryisakintoaspeakeasy—conductthatisillegalisrampantandcountenancedbylawenforcementofficialsbecausethelawissooutofsyncwiththeconventionalnormsandrealitiesofthemarketplace.
"22Nevertheless,asJoanKrausehasshown,thereareimportantpublicpurposesbehindtheselaws.
23ItisthereforetroublingtoseeahospitalleaderadvocateforthemtobesweptawaytoutcourtinthecaseofACOs.
PolicymakersshouldalsobecautiousaboutgrantingoverlybroadantitrustexemptionstoACOsinafieldwherecompetitionlaw'sprerogativeshavealreadybeenwhittledaway.
24LegalscholarKevinWerbachonceobservedthattheInternethasbeencentripetal,"pull[ing]itselftogetherasacoherentwhole.
"25ForWerbach,networkformationtheorybothexplainsthesecentripetaltendencies,andsomeof"thepressuresthreateningtopulltheInternetapart"intobalkanizedunits.
26Werbachcounselsthatgovernmentsneedto"catalyz[e]networkformation,andmoderat[e]theforcesthatpushtowardsexcessiveconcentrationofpower.
"27Theserecommendationsshouldalsogovernneweffortstocreate"virtualnetworks"ofcareinthewakeoftheACA.
Likemanyformsofnetworkpower,theACOscouldquicklyhavenegativeunintendedconsequencesifregulatorsfailtoanticipatethewaysthey22JonathanBlumstein,TheFraudandAbuseStatuteinanEvolvingHealthcareMarketplace:LifeintheHealthCareSpeakeasy,22AM.
J.
L.
&MED.
205,207(1996).
Grayareasinthelawremainaproblem;see,e.
g.
,JeanM.
Mitchell,ThePrevalenceofPhysicianSelf-ReferralArrangementsAfterStarkII,26(3)HEALTHAFF.
W415(April2007).
23JoanH.
Krause,Regulating,Guiding,andEnforcingHealthCareFraud,60N.
Y.
U.
ANN.
SURV.
AM.
L.
240(2004).
24FactCheck:ProviderConsolidationDrivesUpPrices,AMERICA'SHEALTHINSURANCEPLANCOVERAGE(Feb.
17,2012),http://www.
ahipcoverage.
com/2012/02/17/fact-check-provider-consolidation-drives-up-prices/.
AnalternativeistostartregulatingdominantACOsasveritablehealthcareutilities,ascriticaltoregionalinfrastructureasroads,electricity,orwater.
SeeFrankPasquale,TheLimitsofCompetition,CONCURRINGOPINIONS(Oct.
26,2009),http://www.
concurringopinions.
com/archives/2009/10/the-limits-of-competition-and-the-rebirth-of-the-public-option.
html.
Thelogicofconcentrationseemsinevitableinthefield:insurersandprovidershavelongbeeninanarmsraceforbargainingpower,andassoonasonesidegetspermissiontomergeoracquire,theotherclamorsforit.
25KevinD.
Werbach,TheCentripetalNetwork:HowtheInternetHoldsItselfTogether,andtheForcesTearingitApart,42U.
C.
DAVISL.
REV.
343,343(2009).
26Id.
at345.
27Id.
at346.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1378SETONHALLLAWREVIEW[Vol.
42:1371couldbeabused.
28ACOsmaywork,butonlyifpolicymakerscanreplaceclassicinstrumentsofhealthcareregulationwithcalibratedfinancingdecisionsthatreflectnewindustryrealities.
III.
SITUATINGACOS:COOPTATION,CAPITULATION,ORCOOPERATIONBYDOMINANTPROVIDERSThehistoryofAmericanhealthcareislitteredwithcostreductionideasthatranintothebuzzsawofqualityconcerns,providerresistance,orpatientrebellion.
29Whilecapitationpromisedtoincentivizecostdiscipline,themanyhealthmaintenanceorganizations(HMOs)chargedwithimplementingtheconceptfacedabacklashinthe1990sastheyattemptedtoimplementaggressiveutilizationreview.
30Morerecently,thelesscontroversialideasbehindgainsharingranintoanumberoflegalobstacles.
31TheACAhasemphasizedACOsasbothamoreandlessambitiousformofcostcutting.
ImplementedaspartofaMedicareSharedSavingsProgram,32ACOsarenetworksofprovidersand/or28SeeFrankPasquale,NetworkPower:ForcedandFree,CONCURRINGOPINIONS(May27,2008),http://www.
concurringopinions.
com/archives/2008/05/network_power_f.
html;DanielleKeatsCitron&FrankPasquale,NetworkAccountabilityfortheDomesticIntelligenceApparatus,62HastingsL.
J.
1441,1453–54(observingmechanismsfortheabuseofnetworks).
29GREGGBLOCHE,THEHIPPOCRATICMYTH(2010);FrankPasquale,TheHippocraticMath:HowMuchShouldSocietySpendonHealthCare,32(4)JOURNALOFLEGALMEDICINE529(2012)(reviewingGREGGBLOCHE,THEHIPPOCRATICMYTH(2010))(critiquingsomecostreductionefforts).
30ThomasH.
Greaney,ManagedCare:FromHerotoGoat,47ST.
LOUISU.
L.
J.
217,217.
(2003);JoeWhite,MarketsandMedicalCare:TheUnitedStates,1993–2005,85(3)MILBANKQUARTERLY(2007)("Utilizationreductionswerepartofthereasonthatcostincreasesslowedinthemid-1990s.
Group/staffHMOscertainlydidreducehospitalizationrates.
Moreover,healthinsurersdidretreatfrommanyofthemethodsofutilizationcontrolsthattheyhademphasizedinthemid-1990s.
")(internalcitationsomitted).
31Gainsharingisafinancialarrangementthatpermitsphysicianstoshareinthesavingsthatresultwhentheyalterpracticepatterns.
RichardS.
Saver,SquanderingtheGain:GainsharingandtheContinuingDilemmaofPhysicianFinancialIncentives,98NW.
U.
L.
REV.
145,147(2003).
Forexample,agroupofsurgeonsmayengageinbulkpurchasingtoobtaindiscountsonsurgicalequipment,ratherthaneachchoosinginstrumentsindividually.
Start-upslikeGrouponandLivingSocialhaveexploitedthissavingsmodel,butresidualqualityconcernshaveimpededitsadoptioninhealthcaresettings.
Somerecentpilotprogramshaveindicatedthepotentialforsavingsfromgainsharing.
MikeKalison,PresentationattheSetonHallLawReviewSymposiumonACOs(Oct.
28,2011).
32PPACA§3022(a)(1),124Stat.
119,395,codifiedat42U.
S.
C.
§1395jjj(a)(1).
ThetermACOoriginatedina2006exchange.
ElliottS.
Fisheretal.
,CreatingAccountableCareOrganizations:TheExtendedHospitalMedicalStaff,26(1)HEALTHAFF.
w44(2007),availableathttp://content.
healthaffairs.
org/content/26/1PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1379hospital(s)33thatarechargedwithcoordinatingcareforagroupofatleast5,000Medicarebeneficiaries.
34Asofearly2012,HHShadalreadynamedthirty-two"healthcareorganizationsandprovidersthatarealreadyexperiencedincoordinatingcareforpatientsacrosscaresettings"aspioneerACOs.
35ACOscanbephysician-centered,hospital-centered,orsomecombinationofthetwo.
36CMSwillrewardtheprovisionofqualitycarebygivingprovidersparticipatingintheACOashareofthesavingsifrisk-adjusted,per-beneficiaryspendinglevelscameinbelowabenchmarksetbytheagencyattheoutset.
Forexample,ifbenchmarkspendwere$10,000apiecefor10,000beneficiariesin2014,andtheACOreducedthespendto/w44.
full.
Itisdesignedtosolveaclassic"chickenandegg"probleminhealthcarereform:whethertostartwithpaymentordeliverysystemreform.
SeeKellyDevers&RobertBerenson,CanAccountableCareOrganizationsImprovetheValueofHealthCarebySolvingtheCostandQualityQuandaries,ROBERTWOODJOHNSONFOUND.
(Oct.
2009),availableathttp://www.
rwjf.
org/files/research/acobrieffinal.
pdf,inwhichtheauthorsstatethat:Manybelievethattobendthecostcurvewhileimprovingquality,wemustreformtheproviderpaymentsystemfirst,becauseitpaysforvolumeratherthanvalue.
Othersholdthatitisimpossibletochangethepaymentsystemtoachievethedesiredobjectivesunlessdeliverysystemreformfirstproducesorganizationscapableofhandlinganalteredpaymentsystem.
Theypointtotheneedforhealthcareprofessionals,nowusuallyworkinginseparateinstitutionalsettings,toworkcollaborativelyandtodemonstratetheircapacityforhandlingnewpaymentapproaches.
Toavoidthequandaryofwheretostartfirst—providerpaymentordeliverysystemreform—theACOconceptattemptstocombinethem.
Id.
33BruceMerlinFriedetal.
,AccountableCareOrganizations:NavigatingtheLegalLandscapeofSharedSavingsandCoordinatedCare,4J.
HEALTH&LIFESCI.
L.
88(2010)("AwiderangeofprofessionalsmayworktogethertoestablishACOs,includingphysiciansingrouppracticearrangements,networksofindividualphysicianpractices,hospitals,andpartnershipsorjointventuresbetweenhospitalsandphysiciangroups.
ACOsalsomayincludeotherformsofgroupsastheHHSSecretary(Secretary)deemsappropriate.
ByforminganACO,thesehealthcareproviderscommittobeingheldaccountableforthequality,cost,andoverallcareofMedicarebeneficiaries.
").
34FrancisJ.
Crosson,TheAccountableCareOrganization:WhateverItsGrowingPains,TheConceptIsTooVitallyImportantToFail,30(7)HEALTHAFF.
1250(2011),availableathttp://content.
healthaffairs.
org/content/30/7/1250.
full.
ACOshavealsobeencalled"amorphouscluster[s]ofpossiblecollaborativemodels,"wherehospitalsareboundtoremaincentralbecause"thelargestavoidableMedicarecostsarehospitalrelated"and"inmanycommunities,thehospitalistheonlyorganizedcaredeliveryentitycapableofexecutingthemodel.
"Id.
35PioneerACOModel,CTRS.
FORMEDICARE&MEDICAIDSERVS.
,http://innovations.
cms.
gov/initiatives/aco/pioneer/(lastvisitedJuly12,2012).
36Physician-centeredACOscouldincludemultispecialtygrouppractices(MSGs)andinterdependentphysicianorganizations(IPOs),alsoknownasindependentpracticeassociations(IPAs).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1380SETONHALLLAWREVIEW[Vol.
42:1371$9,000whilemaintainingqualitylevels,$10millioninsavingscouldbeattained,someofwhichwouldcompensateparticipantsintheACO.
SomemayquestionwhyACOswereincludedintheACAwhenmoredirectcostsavings(suchasdirectdiscouragementofmarginallyeffectivetreatments,orreducedreimbursementlevels)arealsopartoftheAct.
PartoftheanswerliesingrowingDemocraticpartyconsensusaboutgovernmentpartneringwithcorporateentitiestoachievepublicends.
Thereisstillaresidualdividebetween"realists"intheDemocraticpartyandmoreidealisticprogressives;asEdKilgorestates,"onawideningrangeofissues,Obama'scriticstotherightsayhe'sengineeringagovernmenttakeoveroftheprivatesector,whilehiscriticstotheleftaccusehimofpromotingacorporatetakeoverofthepublicsector.
"37Butbyandlarge,therealistsguidedtheACA'sdrafting.
OppositiontothepublicoptionbecamesointenseinofficialWashington(especiallyamongtheinsuranceindustry-friendlystaffersofSenateFinanceChairMaxBaucus)thatthosepursuinguniversalcoveragehavebecomeidentifiedwiththeveryentitiestheyweretryingtodisciplineviahealthinsuranceexchangesanddeliverysystemreforms.
38Somepoliticalcommentatorsrejectedthecompromisesthatresulted.
GlennGreenwaldofferedamultifacetedindictmentofCongressionalDemocrats'bargainswithcorporateinterests:Thehealthcarebillisoneofthemostflagrantadvancementsof.
.
.
corporatismyet,asitbizarrelyforcesmillionsofpeopletobuyextremelyinadequateproductsfromtheprivatehealthinsuranceindustry—regardlessofwhethertheywantitor,worse,whethertheycanaffordit(evenwithsomesubsidies)It'saboutaffirmativelyharnessinggovernmentpowerinordertobenefitandstrengthenthosecorporateinterestsandevenmerginggovernmentandtheprivatesector.
39OnlythefullimplementationofPPACAwillallowustojudgehowseriousGreenwald'sconcernsare.
Rulemakingonessential37EdKilgore,Left-RightConvergence,DEMOCRATICSTRATEGIST(Dec.
16,2009),http://www.
thedemocraticstrategist.
org/strategist/2009/12/leftright_convergence.
php.
38Forbackgroundonthepublicoption,seeFrankPasquale,PublicOptionasPrivateBenchmark,CONCURRINGOPINIONS(June9,2009),http://www.
concurringopinions.
com/archives/2009/06/public-option-as-private-benchmark.
html.
39GlennGreenwald,TheUnderlyingDivisionsintheHealthcareDebate,SALON(Dec.
18,2009),http://www.
salon.
com/2009/12/18/corporatism/.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1381healthbenefitspromisestomakemostinsuranceproductsavailableonexchangesadequate.
However,medicallossratiowaiversgrantedtosomecarriersthreatentohampertheACA'seffect.
40Moreover,affordabilityisamajorconcern,especiallysincetheTreasuryDepartmentruledthatthe9.
5%-of-incomelimitonthecostsofinsuranceforthosemakingunder400%oftheFederalPovertyLineonlyappliestothecostofaplanforanindividualworker,andnotforhisorherfamily.
41ThesedevelopmentsensurethataharshspotlightwillbecastonACOs.
WilltheysuccessfullymeldthebestofpublicvaluesandprivateinitiativeOrwilltheyrecapitulatethecronycapitalismsooftenidentifiedinthedefenseandbankingsectorsOften,theveryinterestgroupsthataresupposedtobereinedinbypilotprogramsdotheirbesttoalter,influence,orlimitthoseprograms.
Oneneedonlylookattheconvolutedhistoryofgainsharingpilotprogramstogetasenseofhow,asthe"rubberhitstheroad,"variouslobbieswillbestormingvetopointstoundermineexperimentalists'efforts.
42Thisisnottosaythatpilotprogramsareasham—I'vepublishedabookchapteronpilotprogramsasinformation-forcingregulatorydesign,andMikeKalison'spresentationattheSetonHallACOConferencedemonstratedsomeverypromisingresultsfromgainsharingstudiesthatfinallygotofftheground.
IjustwanttotemperthetechnocraticoptimismattheheartofprogressiveenthusiasmfortheACAingeneral,andACOsinparticular.
Like2009'sstabilizationsofthefinancialsystem,theACAmaybeaPyrrhicvictoryfortheDemocraticParty.
Asonestrategistputit:"IntheirdeterminationtoavoidHarryandLouise,they'vebecome40Forloopholes,seeFrankPasquale,ConsumerWatchdogonHealthReformLoopholes,CONCURRINGOPINIONS(Apr.
8,2010),http://www.
concurringopinions.
com/archives/2010/04/consumer-watchdog-on-health-reform-loopholes.
html.
41JudySolomon,HealthCareCoverageMustbeAffordableforFamilies,Too,CTR.
FORBUDGETANDPOLICYPRIORITIES(July27,2012),http://www.
offthechartsblog.
org/health-coverage-must-be-affordable-for-families-too/("Treasury'scurrentinterpretationoftheACA.
.
.
considersemployercoverageaffordablefortheentirefamilyaslongascoveragejustfortheemployeecostsnomorethan9.
5percentofthefamily'sincome.
Unfortunately,onaverage,employer-sponsoredhealthplanschargeemployeesmorethantwiceasmuchforfamilycoverageasindividualcoverage.
Thus,manyworkerswouldn'tqualifyforhelpbuyingcoveragefortheirfamilyeventhoughthecostofemployer-providedfamilycoveragefarexceededtheACA's9.
5percentaffordabilitythreshold.
").
MarcoFerreirahaswrittenanexpandedversionofthiscritique.
Ferreira,AffordabilityAftertheACA,manuscriptonfilewithauthor(2012).
42SeeHearingonGainsharingBeforetheH.
Comm.
onWaysandMeans,109thCong.
(2005).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1382SETONHALLLAWREVIEW[Vol.
42:1371Thelma&Louise.
"43AlthoughitwasacharacteristicallysnideandsmugobservationfrominsidetheBeltway,thisbonmothassomechanceofcomingtrue.
Likemostoftheconventionalwisdomexcrudescingfrompundits,it'slessareflectionofrealitythananarrativeourentrenchedpoliticalclassenacts.
The"politicsofreform"willbeendlesslyrefractedinD.
C.
mediacelebrities'hallsofmirrors,whereatwenty-four-hournewscycleisalwayshungryfor"backlash.
"ThelazyconventionalwisdomhasalreadycoalescedaroundanarrativeofObama-as-Icarus,perpetuallymistakinghiscautiousincrementalismascreepingsocialism.
Intheculminationofadecades-longstruggleforthesouloftheDemocraticparty,realistsroutedidealistsduringtheACAlegislativeprocess.
Theypushedthepublicoptionoffthetable,assuringthatpublic-privatepartnershipslikeACOsandinsuranceexchangeswouldbetheACA'sprimarymechanismsfordeliveringaccesstocare.
ThescleroticSenate'ssupermajorityrulesandtheCongressionalBudgetOffice'srigidanalysesputtherealistsinthedriver'sseat,andidealisticprogressiveswereleftwithlittlemorethanthepowertorefusethebillthatSenatecentristscrafted.
44BypassingtheACA'stechnocraticandbusiness-centeredsolutions,Democratsjettisonedpopulismforanearly-twentieth-centuryprogressivevisionoftechnocraticalliancesbetweencorporateandgovernmentexperts.
45AsHHSimplementstheACA,wearecommencinganendlessargument(read:noticeandcommentrulemakingandsubsequentadministrativeadjudications)overwhatconstitutesanadequatebaselineofcoverage,whatisthefairshareofrevenueformiddlemenlikeinsurers,andwhatregulatoryinfrastructurecanbestvindicatetheentitlements(andimposetheburdens)specifiedbythebill.
Butthefundamentalvictoryofreform—thenationalcommitmentthatnooneshouldhavetochoosebetweendeathorbankruptcywhenconfrontedwithaseriousillness—willalsoendure.
Thatcommitmentwillonlyproveeffective,43That'stheverdictontheObamaAdministrationfromaDemocraticstrategisttweetedbyhorseracereporterextraordinaire,ChrisCillizza,referencinga90s-eraadcampaignagainsttheClintonplanforhealthreformandafilmstarringtwoexuberantyetultimatelyself-destructiveprotagonists.
44SeeFrankPasquale,PoliticizedPrognosticationattheCongressionalBudgetOffice,CONCURRINGOPINIONS(July28,2009),http://www.
concurringopinions.
com/archives/2009/07/politicized-prognostication-at-the-congressional-budget-office.
html.
45ForadiscussionoftheplaceofpopulismandprogressivisminAmericanlaw,seeJ.
M.
Balkin,PopulismandProgressivismasConstitutionalCategories,104YALEL.
J.
1935(1995).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1383though,ifreformslikeACOsmanagetoimprovequalityandaccess.
IV.
SYMPOSIUMVIEWPOINTSONTHEFUTUREOFACOSACOscantakeavarietyoforganizationalforms,suchasintegrateddeliverysystems,primarycareormultispecialtymedicalgroups,hospital-basedsystems,andcontractualorvirtualnetworksofphysicianssuchasindependentpracticeassociations.
Somepolicymakersworrythatsharedsavingmaynotadequatelymotivateproviderstochangelong-establishedcustomarypractices,howeverlackingtheevidencebasemaybeforthosepractices.
OneofourSymposiumcontributors,JessicaL.
Mantel,complementsthatworrybyofferingnuancedperspectivesbasedonhealthservicesresearchontheinteractionsbetweenthedeliverysystemandthepaymentsystem.
Mantel'scompellingarticle,AccountableCareOrganizations:CanWeHaveOurCakeandEatItToo,soundsajudiciousnoteofcautionaboutdeliverysysteminnovation.
WhileACOproponentshaveofferedmanyexcellentideasforimprovedhealthcareatlowercost,therehavebeenmanyotherhistoricaleffortstotrim"fat"andimprovethetreatmentofchronicconditions.
ACOs'politicalappealmaywellspelltheirundoingasavectorofcostcontainment.
Washington"wisemen"havelonginsistedthatsomuchhealthcarespendingiswasteful,makingitpossibletocovermanymoreindividualsandimprovequalitybycuttingoutunnecessarycareandusingthesavingstopurchaseproductivemedicalinterventions.
46Indeed,someestimatessaythatathirdofcareiswasted.
47However,considerwhatwaslongsaidoftheadvertisingindustry:halfofmarketingbudgetsarewasted,theonlyproblemisthatwedon'tknowwhichhalf.
ThatmaybefarlesstrueinanageoftargetedGoogleAdWords,butnoonehasyetsucceededindevelopingtheGoogleofhealthcare.
Manteltakesthehumblinglogicofadvertising'sblackboxtohealthcarepolicy,adducingnumerouspiecesofevidencetodemonstratethatitissometimesverydifficulttodisincentivizeunnecessarycarewithoutalsodiscouragingneededinterventions.
Mantelalsoreviewsthehealthpolicyliteraturetodemonstratethatthepotentialcost-savingsfrombettermanagementofpatients46EzraKlein,TheNumber-Cruncher-in-Chief,AM.
PROSPECT,Dec.
11,2008,availableathttp://prospect.
org/article/number-cruncher-chief.
47SeeRichMcManus,PerhapsOne-ThirdofHealthCareSpendingisWasted,SaysBrownlee,NIHRECORD,Apr.
17,2009,availableathttp://nihrecord.
od.
nih.
gov/newsletters/2009/04_17_2009/story2.
htm.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1384SETONHALLLAWREVIEW[Vol.
42:1371withchronicconditionsmaybelowerthanACOproponentscontend.
48ShealsodoubtsthatACOscandomuchaboutlong-terminflationarypressuresfromadvancesinmedicaltechnology.
Avoidingexpensivetechnologywithoutsacrificingqualitywillprovedifficultinatleastsomecases.
Mantelexpertlyintegratesinsightsfromdiverseliteraturesintohercontributiontothesymposium.
Herworkraiseslargerquestionsforlawprofessorsengagingwithpolicyscienceliteratures.
Howdoweassessthevalidity,replicability,andextrapolabilityofresultsHowrobustarepredictivemodelsDuringthedebateonhealthcarereform,severalexpertschallengedtheCongressionalBudgetOffice'sestimatesoftheoverallcostsarisingoutofHouseandSenatebills.
49TheystatedthattheCBO'sworkwasparticularlydubiousbecauseitdidnotfullytakeintoaccounttheefficiencygainsthatcouldariseoutofsynergisticallyreinforcingdeliverysystemreforms.
Mantel'sworkgivesussomereasontorespectCBO'scautionaboutprojectingcostsavings,howevertroublingmaybetheCBO'sneglectofmanyimportantsocialvaluesinitscalculations.
Giventheextraordinarydifficultyofvalidatinglong-termcostprojections,scholarsmightwanttoexploreotherpathsforward.
Theeffortwillneedtobeginwithhumilityaboutthelimitsandscopeofquantitativepredictions.
Forexample,GeorgeMasoneconomistRussRobertshascritiquedproblemsofreliabilityandreplicabilityinsocialscienceresearchinaseriesofwell-regardedinterviewswithleadersintheeconomicsandfinancefields.
50Ineconometrics,EdLeamerhascomplainedforyearsaboutproblematicanalyses.
51BrianNosekhasworriedthatsocialscientificpracticesdepartsofarfromidealsofsciencethatheisco-authoringaseriesofarticleson"scientificutopias"tobuildsupportforentirelynewmodesofopen48AccordingtoMantel,studiesofbothpreventativemeasuresanddiseasemanagementprogramshaverepeatedlyfoundthatmostfailtoproducenetcost-savings,andinsomecases,theprogramsevenincreasehealthcarespending.
JessicaMantel,AccountableCareOrganizations:CanWeHaveOurCakeandEatItToo,42SETONHALL.
L.
REV.
1393,1405(2012).
49MichaelRicciardelli,CBOWrongonCostNumbers,HEALTHREFORMWATCH(Aug.
30,2009),http://www.
healthreformwatch.
com/2009/08/30/cbo-wrong-on-health-care-reform-cost-numbers/.
50SeeRoberts'sinterviewswithEdLeamer,NicholasNassimTaleb,andBrianNosek,availableatLIBRARYOFECONMICSANDLIBERTY,http://www.
econtalk.
org/(lastvisitedOct.
10,2012).
51EdLeamer,Let'sTakethe'Con'OutofEconometrics,73AM.
ECON.
REV.
31(1983),availableathttp://www.
international.
ucla.
edu/media/files/Leamer_article.
pdf.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1385research.
52Finally,VictoriaStoddenhasledanefforttowardopensciencethatwouldempowerthosewhorelyuponresearchtoreviewtheunderlyinganalysesitisbasedon,andtodrawtheirownconclusions.
53Ofcourse,evenifallofthesecritiquesandpositiveprojectssucceedinbetterilluminatingthedataunderlyinghealthpolicyanalysesandprojections,costbenefitanalysismaystillfailtograspthecomplexdynamicsofhealthcarecostandqualitytrends.
Wemightexpectphysicianstoengageinvariousformsofincomemaintenance,whateverplansHHSorstateagenciesdevise.
Squeezethehealthcarecost"balloon"ononeside,anditmayonlybulgeoutsomewhereelse.
54Giventhelimitsofquantitativeprojection,weneedtoseemoreopennesstoqualitativeanalysisinthehealthpolicyarena.
Onepromisingalternativeis"scenarioplanning,"nowcommonintheenvironmentalarenaandcatchingoninbusiness.
Scenarioplannersimaginehowavarietyofeconomic,cultural,political,andotherdevelopmentsmayinteract.
AsRobVerchickexplains,amorecomprehensiveapproachmaybetheonlywaytodojusticetotheinteractionsandunexpectedconsequencesinevitableinacomplexeconomy:Cost-benefitapproachesprovidepoormeasureswhentheydependonforecastingtoomanylong-termanduncertaincosts.
S]cenarioplanningbroadensknowledgebytakingaholisticapproachtodescribingcircumstances.
.
.
.
Thestrongemphasisonnarrativeallowsthetechniqueto52BrianA.
Nosek&YoavBar-Anan,ScientificUtopia:I.
OpeningScientificCommunication(May5,2012),availableathttp://papers.
ssrn.
com/sol3/papers.
cfmabstract_id=2051047.
53Stoddenetal.
,ReproducibleResearch,12(5)COMPUTINGSCIENCEANDENGINEERING,8–13(September/October2010,doi:10.
1109/MCSE.
2010.
113.
).
54See,e.
g.
,CharlesMorris'sstatementthat:Thereisastronglyheldopinion,particularlyamongconservativethinktanks,thatwithmultiplecompetitiveprivatepayers,thenormalinteractionsbetweenvendorsandpayerswillgraduallycreateamoreefficienthealthcaresystem.
Isawnoevidencetosupportthatbelief.
Whatactuallyhappens[atthehospitaldivisionheobservedwasthat]thebillingstaffsitdowneachyear;layoutthevariouspaymentplansonaspreadsheet,anddecideonthedivisionstrategy—whichsurgeonswilljoinwhichplans,andwhichcarrierswillbecarriedonanonplanbasis,tradinghigherpaymentsforgreatercollectionrisk.
Oncethatstrategyisset,itismanagedentirelybythecollectionsstaff.
Thesurgeonssimplyjointheplansthey'reassignedto.
CHARLESMORRIS,THESURGEONS236(2007).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1386SETONHALLLAWREVIEW[Vol.
42:1371captureaprobleminitsfullcomplexity.
55RogerBoesche'sessay,WhyCouldTocquevillePredictSoWell,describesasimilarcapabilityinthegreatFrenchsocialtheorist.
AsBoescherelates,inTocqueville'sworks,"societyisan'ensemble'inwhichtheelementsare'indissolublyunited:'"[T]hesecondvolumeofDemocracyinAmericaendeavorstodemonstratehowlanguage,literature,therelationsofmastersandservants,thestatusofwomen,thefamily,property,politics,andsoforth,mustchangeandalignthemselvesinanew,symbioticconfigurationasaresultofthehistoricalthrusttowardequality.
56Tocqueville'sworkfocusedonthechainreactionsofsocialchangethatoccurredassocialequalityspread.
Inourowntime,weneedtousesimilarmethodstodescribetheconsequencesofahistoricalthrusttowardinequality,particularlywithrespecttothehealthcaresystem.
Howmightdecliningincomesharesforthemiddleandlowerclasses,andincreasingsharesfortheverywealthy,affectproviders'goalsandincentivesAstheverytopoftheincomescalepullsawayfromhealthprofessionalsmaking,say,$140,000to$800,000annually,howmighttheseprofessionalsrespondtopolicyinitiativesthatfurthercuttheirshareofincome57Forexample,onemightexpectthataconsolidationoffacilitiesmightleavethelargeplayersstillstandingwithanopportunitytodemandmorecompensationoncetheyaredominantinagivenhealthcaremarketplace.
InherexpertanalysisoftheinteractionofcompetitionlawandACOs,TaraRagonetriestoassurethatproperantitrustenforcementagainsthealthcaretitanspreventsabusivepractices,whilenotinadvertentlydiscouraginginnovativeserviceprovisionforprovidersfocusedonat-riskpopulations.
Herarticle,StructuringMedicaidAccountableCareOrganizationstoAvoidAntitrustChallenges,focusesonconcernsthatNewJersey'sMedicaidACOpilotprogrammaytriggerfederalantitrustconcerns.
ItwillproveusefultoadvisorsinanystateinterestedindevelopingnewcaremodelsfortheirMedicaidpopulations.
ThereareaspectsoftheNewJerseyMedicaidACOcollaborationsthatsomecompetitionlawexpertsmayfindtroubling.
55ROBERTVERCHICK,FACINGCATASTROPHE242(HarvardUniv.
Press,2010).
56RogerBoesche,WhyCouldTocquevillePredictSoWell,11POLITICALTHEORY79(1983).
57Forfiguresontherelativeincomegainsofthetop1,0.
1,0.
01,and0.
001%,seeFrankPasquale,AccesstoMedicineinanEraofFractalInequality,19ANNALSOFHEALTHL.
269,276(2010).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1387Forexample,onlyoneMedicaidACOispermittedineachdefinedregion,andtheACOmusthavethesupportofallthehospitalsandatleastseventy-fivepercentoftheprimarycareprovidersinthatregion.
NewJerseybelievesthatsuchstringentrequirementsarenecessarytoguarantee"clinicalintegration,"asinequanonforthepriceimprovementandcostcuttingthatoughttobeatthecoreofconsumer-orientedantitrustanalysis.
"Ruleofreason"reviewforNewJersey'spilotMedicaidAccountableCareOrganizationDemonstrationProject58("pilot")seemsanappropriately"lighttouch"antitrustdoctrinetoapply.
59Soundprinciplesofantitrustlawsupportsuchamove,sincetheFederalTradeCommission(FTC)andDepartmentofJustice(DOJ)haverecognizedthepotentialforclinicalintegrationtoboostquality.
Giventheclearlegislativeintentofthepilottoencourageclinicalintegrationinthenameofqualityimprovementatreducedcosts,itseemslikelythattheDOJandFTCwillfindthattheprocompetitiveadvantagestoconsumersofNewJersey'spilotoutweighitspotentialharmtocompetition,andthattheanticompetitiveaspectsofthecollaborationarenecessarytorealizeitsbenefits.
60Allinall,itwouldbeashametoseeantitrustlaw,reducedtoanearlyvestigialroleinmanypurelyprofit-maximizingindustries,scuttleinnovationamonghealthcareproviderswhoareparticipatingincommunity-orientedinitiatives.
Scenarioplanningforpolicyinnovationwilldependoncloseattentiontothe"factsontheground"indifferentstates'healthcaremarkets.
BarbaraJ.
Zabawa,LouiseG.
Trubek&FeliceF.
Borisy-Rudin'sarticle,AdoptingAccountableCareThroughtheMedicareFramework,furtherconfirmstheimportanceofanempiricalapproach.
Zabawaetal.
arguethatthethoughtleadersbehindACOs58NewJersey'sMedicaidACOdemonstrationprojectisathree-yearpilottotestmulti-stakeholder,geographic-basedMedicaidACOs.
59SeeTaraRagone,StructuringMedicaidAccountableCareOrganizationstoAvoidAntitrustChallenges,42SETONHALLL.
REV.
1443(2012).
Antitrustconcernsstemfromthefactthatthepilotincreasesregionalcoordinationandsharedaccountability,whichcanleadtolesscompetition(integrationencouragesfewercompetitorsinthemarkets,whichcouldincreasemarketpower).
Evenwherepricesaresetbythegovernment(Medicare)oreffectivelycappedbygovernmentpaymentstoHMOs(muchofMedicaid),andnotsubjecttobeingheavilyinfluencedbyanticompetitivecollusion,regulatorsmayworryaboutnon-priceelementsofcompetition(suchasoutput,qualityofservices,andinnovation).
60AccordingtoRagone,thestatehasarticulatedapolicytoallowtheanticompetitiveconducttoensurethattheState'sgoals,andnotsimplyself-servinggoals,arefurthered,andhassuggestedacommitmenttoprovideactivesupervisionhere.
Ragone,supranote59,at1462.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1388SETONHALLLAWREVIEW[Vol.
42:1371werecognizantofpastfailureswhendesigningtheMedicareSharedSavingProgram,addressingtheissuesraisedbysuchresistancemovementsasthe"managedcarebacklash.
"Zabawaetal.
notethatNewJerseyconsistsofmainlysmallpractices,butdespitethisfragmentation,itwitnessedprecursorsofACOs.
TheseincludedcollaborativestoimprovepatientsafetyintheICU,andathree-yeargain-sharingpilotprojectfundedbyCMSin2009.
Amulti-tieredgovernmentalguidanceandmanagementstructurewillbenecessarytoachievethetripleaimof"betterhealth,bettercare,andreducedcosts"viaACOs,alongwithmeaningfulpatientengagement.
Zabawaetal.
'sstoryofWisconsinaccountablecareisrichlylayered,drawingontheauthors'decadesofexperiencepracticingandteachinghealthlawthere.
TheyattestthatWisconsinhasa"richcultureofcollaboration"with"prominen[t]integrateddeliverysystems,"andreportthatmanyhealthsystemstherebelievethattheyalreadyprovideaccountablecare.
TheiraccountoftheWisconsinCollaborativeforHealthCareQualityalsohasimportantlessonsforthosewhowillbediscussingandimplementingACOsinthefuture.
61Zabawaetal.
believethataccountablecarereformershavelearnedfrommanagedcare'sdifficultiesinthe1990s,62asespeciallyevidencedintheconcessionsmadebetweentheproposedandfinalrulesontheMSSP.
63TheybelievethatACOsarebuildinguponthesuccessofpilotprogramsinWisconsinandNewJersey,andwillprovideeffectivepatientengagement.
Zabawaetal.
thereforeprovidetargeted,localizedevidencethatstateslikeNewJerseyandWisconsinmaybeabletoovercometheconsiderablehurdlestoclinicalintegrationandcostcontrolnotedinMantel'swork.
Theprocessofclinicalintegrationisnotonlyhappeningatthemacro-levelwithACOs,butisalsomovingforwardonthemicro-level,inPatientCenteredMedicalHomes(PCMHs).
SallieThieme61"Eachsystemhasstrongaffiliationsorpartnershipswithatleastonehospital;allhaveitsownemployedphysiciangroups,whichincludesbothprimarycareandspecialist;allbuttwohaveitsownhealthplanaspartofitssystem;andeachhasanEMRthatthesystemhasbeenusingformanyyears.
"Zabawaetal.
,AdoptingAccountableCareThroughtheMedicareFramework,42SETONHALLL.
REV.
1471,1479(2012).
62Forexample,freedomtoleaveanACOcoupledwiththeprohibitionagainstreferralsandfinancialincentivestoenticebeneficiariestoremainintheACOisarguablyaresponsetothemanagedcarebacklash.
63TheMSSPencouragesormandatestheuseofsharedgovernance,informationtechnology,multi-professionalpractitioners,financialincentives,benchmarks,metricsandpatientparticipation;itrequiredpopulation-basedaccountability,coordinatedcare,qualityhealthcare,andefficiency.
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1389Sanford'sinsightfularticle,DesigningModelHomesfortheChangingMedicalNeighborhood:AMulti-PayerPilotOffersLessonsforACOandPCMHConstruction,takestheconstructionmetaphorforhealthcareseriously,andilluminatesseveralimportantlessonsthatshouldguidepolicymakersgoingforward.
SanfordexplainsthatthePCMHisaprimarycareinitiative"notfarremovedinprinciple"64fromtheACOmodel;indeed,insomeformulationsthePCMHisanecessarypartofanywell-functioningACO.
Sanfordremindsusthatzoninglawsexertapowerfulinfluenceontheresidentialandbusinessactivity,ofteninunseenways.
Sotoocanpaymentsystemsandregulatoryapproachesinfluencedoctors,patients,andhospitals'actions,andcanmotivateentirelynewformsofcaredelivery.
65Sanford'sarticleconsidershowtheseredesigned"medicalhomes"couldfitintotherezoned"high-performingmedicalneighborhoods"66envisionedbyFisherandothers.
AsSanfordobserves,managedcarecuttherateofthehealthcarecostgrowthdramatically,butprovokedabacklashwhensomemembersfelttrappedinclosednetworksofproviders.
Newprogramsneedtobesensitivetotheseconcernsandtobuilduptrustamongmembersandproviders.
Sanford'sarticleexplainstheWashingtonMulti-PayerMedicalHomeReimbursementPilot,amulti-payermodelwhichincludesadditionalupfrontpayments,potentialsharedsavings,downsidefinancialrisk,andotherelementsreflectiveof"accountablecare.
"Thispilotinvolvesmostofthestate'smajorinsurersinathirty-two-monthprojecttoprovideupfrontpaymentsforenhancedprimarycareinselectedpractices.
ThesepracticeswillalsoseesharedsavingiftherearereductionsinERvisitsorhospitalizationsbeyondsettargets.
Therearesomeencouragingmodelshere.
Washington'sGroupHealthCooperativepilotedamedicalhomedemoin2006.
AsSanfordexplains,thisprojectdevelopedpatientengagementthroughelectronichealthrecords.
Italsopromotedcareplansforthe64BARRYR.
FURROWETAL.
,HEALTHLAW185(West,6thed.
Supp.
2011).
65SeealsoFrankPasquale,TheThreeFacesofRetainerCare,7YALEJ.
HEALTHPOL'YL.
ÐICS39,56(2007)(discussinghowinterpretationsofMedicareandstateinsuranceregulationscouldaffectconciergemedicine);FrankPasquale,EndingtheSpecialtyHospitalWars:APleaforPilotProgramsasInformation-ForcingRegulatoryDesign,inTHEFRAGMENTATIONOFU.
S.
HEALTHCARE:CAUSESANDSOLUTIONS235(EinerElhauge,ed.
,OxfordUniv.
Press,2010)(discussingtheriseofambulatorysurgicalcentersandspecialtyhospitalsinthecontextoflargerchangesinthehealthcareindustry).
66ElliottS.
Fisher,BuildingaMedicalNeighborhoodfortheMedicalHome,359NEWENG.
J.
MED.
1202,1205(2008).
PASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM1390SETONHALLLAWREVIEW[Vol.
42:1371chronicallyill,morecomprehensivephysicianvisits,routinecare-term"huddles"toreviewpatientneeds,andgreaterinvolvementbynurses,pharmacists,medicalassistants(andotherphysicianextenders)incoordinatingpatientcare.
AdditionalcostswererecoupedbysignificantreductioninERvisitsandhospitalizations.
AlsoinWashington,theBoeingIntensiveOutpatientCareProgramhelpedaligntheincentivesofamajorself-insuredairplanemanufacturerwithemployeesandproviders.
Employeeswerematchedwithateamofproviderswhoofferedhealthservicesinamedicalhomemodelinexchangefortheirusualfeespluscaremanagementfees.
Theextrafeeswereawiseinvestment:theoverallcostsforthoseemployeesweretwentypercentlessthanacontrolgroup.
TheBoeingprojectandotherslikeitsuggestthatPCMHmodelsfunctionbestwithupfrontfunding.
UpfrontfundingisafeatureofWashington'smulti-payer,multi-sitepilotwhichlaunchedinMay2011.
Practicesitesinthepilotreceivenotonlytheirusualfee-for-servicepayments,butalsoamonthlycaremanagementfee(CMF).
Thisshouldallowinfrastructuralinvestmentincarecoordination(includingtechnologytoadvancetelemedicalpractice,emails,andteammeetings)andelectronichealthrecords.
Sevenhealthplansandeightprimarycarepracticeshavesignedon.
IfqualitymetricsaremaintainedandERvisitsandhospitalizationsarereducedbelowbreak-eventargets,thepracticesitessharethefinancialsavingswiththeinsurers;ifthetargetsarenotmet,thepracticesitesfacedownsidefinancialrisk,includingareducedCMF.
Thispilotisintendedtosupportabroadertransformationofthehealthcaresystemtowards,andSanford'sarticleconsidersthelessonsitoffersforaccountablecareingeneralandthePCMHinparticular.
Sanford'scarefulresearchdemonstratesthatPatient-CenteredMedicalHomesandAccountableCareOrganizationsmaydevelopsynergistically,iftherightlegal,policy,andtrainingframeworksareinplace.
Overall,thefourarticlespresentinvaluableresearchonthepastandfutureofaccountablecarepolicyinitiativestoachievethe"tripleaim"ofreducingcosts,increasingquality,andenhancingaccess.
MantelandRagoneofferwakeupcallsaboutthepolicyandlegalrisksofACOs.
It'simpossibletoreadtheirarticlesandtocomeawaywithasensethattheroadaheadforaccountablecarewillbeeasy.
Ontheotherhand,Zabawaetal.
andSanfordhavedemonstratedthatinsomesettingsinWashington,NewJersey,andWisconsin,effortstocoordinatecarehavesavedmoneywithoutnegativelyPASQUALE.
DOCX(DONOTDELETE)10/22/201211:02AM2012]FOREWORD1391impactingpatients—andhave,onoccasion,improvedqualityaswell.
Political,economic,andmedicaltrendswilldeterminewhetherskepticismoroptimismtowardACO'swasthepropermoodasof2012.
Regardlessofwhattheybring,anyoneinterestedinthefutureofhealthpolicywillberichlyrewardedbycarefulreadingofthesearticles.
V.
CONCLUSIONTheU.
S.
healthcaresystemtoooftenputsprofitsaheadofpatients'interests.
67Economicincentivesmustbecomemorefine-tuned.
TheACAingeneral,andACOsinparticular,areworthyeffortstoofferincentivestoimprovequality,controlcosts,andexpandaccess.
PanelistsatSetonHall'sACOconferenceofferedagreatdealofinsightandadviceonhowbesttoaccomplishthosegoals.
68Thisvolumememorializesnotablecontributionstothisimportantpublicdialogue.
67TimothyS.
Jost,OurBrokenHealthCareSystemandHowtoFixIt:AnEssayonHealthLawandPolicy,41WAKEFORESTL.
REV.
537(2006).
682011Symposium:ImplementingtheAffordableCareAct:WhatRoleforAccountableCareOrganizations,SETONHALLL.
REV.
(Oct.
28,2011),http://erepository.
law.
shu.
edu/shlr_symposia/2011/.

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