Hospitals, Health Systems and Payors Hesitant About Medicare ACO Participation, KPMG Led Polls Show

Physician Buy-In Seen as Biggest Challenge to Participation

28 Jun, 2011, 08:00 ET from KPMG LLP

NEW YORK, June 28, 2011 /PRNewswire/ -- Senior executives at hospitals, health systems and payor organizations are uncertain about their organization's position on participating in the Centers for Medicare and Medicaid Services' shared savings program (MSSP), commonly referred to as the Medicare ACO program, according to the findings from polls conducted by KPMG LLP, the U.S. audit, tax and advisory firm; EpsteinBeckerGreen; and JHD Group.

According to responses from healthcare leaders who participated in webcast polls conducted in April, 39 percent of the hospital and health system executives surveyed didn't know their organization's position on MSSP participation, while another 25 percent said their organization would be "watching and waiting" and would not meet a Jan. 1, 2012 launch of the program under current proposed rules.

Fifteen percent said they needed to further build-out their accountable care organizations and expected to file later, while just 17 percent of hospital and health system respondents said they would be a first wave player and expect to file with CMS in time to launch their MSSP by Jan. 1, 2012.

Payor Respondents 'Watch-and-Wait'

Among payor respondents, close to half said they didn't know what their organization's position on MSSP participation was, while 21 percent said they would be watching and waiting. Fifteen percent said they needed to further build out their accountable care organizations and expected to file later, and just 10 percent said they would be a first wave player and expected to file with CMS in time to implement by Jan. 1.

"There are still important questions about how accountable care fits into an organization's current strategy and business model, along with competing investment decisions, such as those related to ICD-10 and upgrading information technology," said Brad Benton, KPMG Healthcare's national account leader. "There are also enterprise-wide business considerations related to adopting an ACO model which are complex to evaluate, but the transformation of the U.S. healthcare system is under way and all healthcare organizations need to actively consider the related business model implications."

Implications of ACO Business Model

The surveys found that healthcare leaders are looking to better understand the implications of an ACO business model. Sixty-two percent of hospital and health system respondents said their organizations have started to move forward in determining whether they will participate in an ACO, while just nine percent said their organizations are not interested in participating.

Additionally, 50 percent of hospital and health system respondents said their ACO orientation would include a commercial accountable care like arrangement. Among payor respondents, the percentage who said their ACO orientation would include a commercial accountable care like arrangement was even higher at 67 percent. Just nine percent of hospital and health system respondents and five percent of payor respondents said their orientation would be Medicare only.

Gain-Sharing Opportunities

"Hospitals, health systems and payors seem to like the notion of accountable care's gain-sharing opportunities from reduced utilization and improved quality," said Ed Giniat, KPMG's National Sector Leader – Healthcare & Pharmaceuticals. "But it's clear they are not jumping in with both feet."

An additional reason for the hesitation may be physician participation. In launching an ACO, physician buy-in was seen by hospital and health system respondents as the greatest challenge (36 percent), followed by cost (31 percent); staff and skill sets (22 percent); and management buy-in (11 percent). Payor respondents similarly cited the same challenges in the same order.

"Clinical leadership and integration will be a key ACO operational consideration," said Benton. "The challenges here are not only the typical recruiting and economic alignment questions, but a host of new and intense change management issues associated with driving both cost and quality in a new type of clinically integrated organization. It's a complex transformation challenge of the highest order."

Regarding length of time to create an ACO, a majority (66 percent) of hospital and health system respondents said it will take at least a year or more. Many also felt that return on investment would be delayed, with 65 percent of hospital and health system respondents saying that it would take 25 months or more to see a return.

"There isn't a single definition of what an accountable care organization is, or what its components should include so there is some confusion," said Joe Kuehn, a partner in KPMG's Healthcare Advisory Practice. "The proposed MSSP program has added to the complexity of the discussions and analysis of what it will take to successfully operationalize a Medicare ACO and this may be causing many potential ACO market entrants to pause. However, organizations seem to want to be accountable care 'capable,' focusing on specific populations to bring about improved quality and health, at a reduced cost, and they are seeking ways to clinically integrate with their physicians and other potential partners."

The KPMG Healthcare & Pharmaceutical Institute, EpsteinBeckerGreen, and JHD Group conducted a three-part webcast series on accountable care on April 12, 19 and 26, for a total of about 3,000 healthcare industry professionals. The results reflect responses from about 140 hospital and health system leaders and close to 50 payor leaders who self selected to participate in the webcast polls. Respondents consisted of senior members of these organizations who have awareness of, or responsibility for, their organizations' financial programs. Replays of the video webcasts can be accessed via the following KPMG Healthcare and Pharmaceutical Institute links: http://www.kpmginstitutes.com/healthcare-pharma-institute/events/aco-rules-released-what-do-they-mean.aspx; http://www.kpmginstitutes.com/healthcare-pharma-institute/events/operationalize-acos.aspx; http://www.kpmginstitutes.com/healthcare-pharma-institute/events/aco-org-ready-to-participate-in-acc-care.aspx.

The KPMG Healthcare & Pharmaceutical Institute (www.kpmghealthcarepharmainstitute.com)

provides a forum for healthcare business leaders to gain insight into emerging issues, consider approaches to help balance risk and controls and improve performance, and further explore the accelerating transformation within the healthcare industry, both domestically and globally.

About KPMG LLP

KPMG LLP, the audit, tax and advisory firm (http://www.us.kpmg.com), is the U.S. member firm of KPMG International Cooperative ("KPMG International.")  KPMG International's member firms have 138,000 professionals, including more than 7,900 partners, in 150 countries.

About EpsteinBeckerGreen's Health Care and Life Sciences Practice

For nearly 40 years, EpsteinBeckerGreen (www.ebglaw.com) has been at the forefront of health care law, taking the lead in understanding, interpreting, and shaping the laws and regulations that affect every institution involved in health care and life sciences.

About The JHD Group

Since 1998, The JHD Group (www.jhdgroup.com) has been a leader in assisting physician organizations meet the challenges of care delivery, patient services, managed care, technology integration, market development and profit/income improvement.

Contact:
Laura Sheridan Powers
KPMG LLP
212 872 7665
lsheridan@kpmg.com

SOURCE KPMG LLP



RELATED LINKS

http://www.us.kpmg.com