by Mark Lutes

With the imminent release of shared savings program regulations from the Centers for Medicare and Medicaid Services, one might ask whether the immense hype and build-up over accountable care organizations is doing a disservice to the cause of provider innovation around cost and quality improvement. Like the eponymous Godot, archetypal ACOs might be something for which everyone claims they know the formula, but it may take several years before they can meet our lofty expectations.

[More:]

The error is through our lawyerly tendencies to focus on structure, when function is more central to the concept. Are we better off promoting an understanding of "generic accountable care" than the particular structural requirements, or the financial deal that the program regulations will set forth? The goals of the Patient Protection and Affordable Care Act are better served through a cauldron of innovation--providers discerning and implementing a plethora of care management pathways and supporting them through financial incentives--than through fixing our hopes and dreams on the particular incentive systems Medicare promulgates as the shared savings program.

Incentivizing providers has always been the art of managed care. In the 20th century, we did this through IPAs and primary/specialty care risk pools. In the decade ahead, we will need to harness the predictive power of data analysis to identify population segments that need new care management interventions, and to encourage their application with a rich mixture of monetary incentives.

No organization will get it right the first time. The RAND report on performance measures supporting payment reform models catalogued no fewer than 90 payment reform programs. The menu includes not just shared savings programs but global payment programs, bundled payments for episodes of care, pay for performance, payment adjustments for readmissions and hospital acquired conditions, and medical home incentives, to name a few. As reform continues, provider organizations will blend payment models. "Complex organizational types may benefit from complex measurement strategies that support internal incentive and quality improvement models," RAND concludes in its report for the National Quality Forum.

One might reason that the goals of PPACA are best served by not exalting CMS's ACO regulations as the "be all and end all" of changing the perverse incentives of a fee-for-service payment system. Incentivizing efficiency and aligning payment with quality goals will be a long-term odyssey. It will be a quest to identify the right set of performance incentives for each physician group and hospital system as it moves along its unique path towards providing the right care to the right patient at the right time in the right amount.

Thus, when the shared savings regulations emerge, take them with a grain of salt. Whatever risk/reward options they present, understand that these options represent CMS's best guess as to an incentive program that will move today's delivery system in the right direction. Let us hope that physicians, hospitals, and public and commercial payers continue to innovate incentives and performance measures that support the development and implementation of care management paths resulting in appropriate, efficient and effective care.

Mark Lutes is a partner with the law firm of Epstein, Becker Green P.C., based in Washington, D.C. He can be reached at mlutes@ebglaw.com.