Contracting News

Worth Watching

Headlines and trends in healthcare

The following are some of the leading stories the Major Accounts Exchange (MAX) monitored in recent months, and worth paying attention to in early 2015.

CMS releases proposed rule changes for MSSP ACOs

CMS (Baltimore, MD) issued a proposed rule designed to improve its Medicare Shared Savings Program. Among the changes are a proposed longer lead transition time for participating ACOs to transition from a no-risk to a shared-risk model and a Track 3 option that would incorporate aspects of the Pioneer ACO program, such as higher rates of shared savings and a defined list of beneficiaries for each performance year. Other proposals include changing the way beneficiaries are assigned to ACOs by paying more attention to primary care services and allowing some specialist providers to participate in multiple ACOs and redefining the methodology for ACO benchmarks to better reflect its local market rather than its past performance alone. The rule has a 60-day comment period.

Jefferson University System, Abington Health announce merger agreement

Jefferson University System (formerly Jefferson Health System) (Radnor, PA), Thomas Jefferson University, and Abington Health (Abington, PA) signed a letter of intent to merge. The deal would create the largest healthcare provider in the region, with five hospitals and more than 13,000 employees. Stephen Klasko MD, Jefferson’s president and CEO, is expected to serve as president and CEO of the combined organization. Under the shared governance model, Jefferson and Abington will each appoint an equal numbers of members to a combined board, which will also have a few independent trustees. The health systems expect to execute a definitive agreement in 120 days, and the deal will close sometime in 2015.

FDA begins requirement for medical device manufacturers/health facilities to use electronic tracking

In September 2014, the US Food and Drug Administration (FDA) (Silver Spring, MD) began the long-awaited move requiring electronically readable unique medical-device labels for high-risk devices. Broader use will take up to seven more years. In the past, medical-device manufacturers said it didn’t make sense to mark their products with unique identification numbers since hospitals and other healthcare providers are not required to use the system, but that’s no longer the case. The FDA now requires reports on adverse events leading to a patient death, and high-risk medical devices (such as implants) must include a unique device identifier (UDI) if the safety failure occurs at specified facilities such as hospitals, ambulatory surgery centers, or nursing homes. Those medical facilities are required by law to report cases of patient deaths related to a device to the FDA and now are required to report the UDI as well. Manufacturers also must notify the FDA.

Sutter Health announces restructuring

Sutter Health (Sacramento, CA) will undergo a major restructuring in 2015, consolidating its five-region model into two divisions: Bay Area and Valley. A Sutter Health official said the change came, in part, due to the response Sutter received when it asked thousands of company managers for input on how to improve the health system and prepare it for the changing healthcare environment. Sutter also created several new positions, including SVP for patient experience and SVP for medical and market networks, a role that focuses on the system’s health insurance products and health management services. Stephen Lockhart, currently CMO for Sutter Health’s East Bay Region, will become system CMO. The restructuring will also create a new office of innovation to develop new care delivery models.

CMS launches new ACO initiative for rural, underserved areas

CMS (Baltimore, MD) announced a new ACO initiative that is designed to encourage new ACOs to form in rural and underserved areas, and for current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk. The initiative is called the ACO Investment Model, and will build on the experience with the Advance Payment Model. CMS will provide up to $114 million in upfront investments to up to 75 ACOs across the country. The model is in response to stakeholder concerns and some research which suggests some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management. Participation in the ACO Innovation Model will be limited to the following groups:

New Shared Savings Program ACOs joining in 2016: The ACO Investment Model seeks to encourage uptake of coordinated, accountable care in rural geographies and areas where there has been little ACO activity, by offering pre-payment of shared savings in both upfront and ongoing per beneficiary per month payments.

ACOs that joined Shared Savings Program starting in 2012, 2013, and 2014: The ACO Investment Model will help ACOs succeed in the shared savings program and encourage progression to higher levels of financial risk, ultimately improving care for beneficiaries and generating Medicare savings.

The application deadline for organizations that started in the Shared Savings Program in 2012 or 2013 was December 1, 2014. Applications will be available in summer 2015 for ACOs that started in the Shared Savings Program in 2014 or will start in 2016.

Advocate Health Care, NorthShore University HS plan merger

In September, Advocate Health Care (Downers Grove, IL) and NorthShore University HealthSystem (Evanston, IL) announced plans to merge and form a new integrated system to be called Advocate NorthShore Health Partners. The new system will be the largest in Illinois and 11th largest in the country, serving over 3 million patients each year. Advocate Health Care CEO James Skogsbergh and NorthShore CEO Mark Neaman will jointly lead the organization. The new system should officially launch in early 2015 after regulatory approvals.

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