I recently co-presented a session regarding ACO’s with Tony Colarossi of Plante Moran.  We presented to the Michigan Hospital Association Excellence in Governance Fellows.  The audience consisted of hospital board members who participate in the fellowship program.  The board members were from hospitals large and small.
The audience was keenly interested in the topic and asked many practical, probing questions.  Below are some of the questions/concerns from those “real world” potential ACO users and related answers.
1.  How is an ACO’s baseline affected if the number of assigned beneficiaries changes from year to year?

Answer:  The baseline value is a per-beneficiary value.  Although this per-beneficiary amount will change year to year, the number of assigned beneficiaries is not a factor that will cause the amount to vary.

2.  Can a practice based in the Upper Peninsula and a large hospital in Detroit (hundreds of miles away) both be ACO participants in the same ACO?

Answer:  Yes, there are no geographic limitations on participants in an ACO.  If a participant satisfies the participation requirements for an ACO, then it may participate in that ACO.

3.  How would a potential ACO participant control which other potential ACO participants would be in a proposed ACO?

Answer:  This is a material question, considering that an ACO participant’s economic risk (upside and downside) could be largely dependent on other ACO participants.  The proposed rule does not affect an ACO’s ability to function like a partnership, etc. that grants its initial/current participants the right to govern which participants might join in the future.  I expect that a form of ACO participant due diligence will quickly emerge to assist providers to assess potential ACO dance partners.

4.  If a rural hospital wants to be the sole ACO participant in its own ACO and it is a dominant player in some service areas, must it still seek anti-trust review?

Answer:  Yes, regardless of the nature of an ACO participant or its relation to a market prior to forming/participating in an ACO, the FTC/DOJ guidance requires that ACO participant to seek review if it forms/participates in an ACO.

5.  Is there a practical advantage to participating in an ACO sooner rather than later?

Answer:  It seems that for the great majority of providers, there is little to recommend immediate participation in an ACO.  The upfront costs and governance issues are certainties, while potential economic benefits will be deferred, if they come at all.  I believe that most providers would be wise to permit the early adopters to absorb painful lessons and develop best practices.