Telemedicine Payments to Expand Under New Breed of ACOs

March 11, 2015

Telemedicine got a big boost yesterday when the Obama administration announced that it would waive onerous restrictions on how Medicare pays for this kind of high-tech care in a new breed of accountable care organizations (ACOs).

Proponents of telemedicine — understood as clinicians encountering patients remotely in real time via audio and video channels — have complained that Medicare holds back the growth of these services by paying for them only if the patient lives in a rural area, and never when the patient is at home. At the same time, healthcare reformers inside and outside the government see telemedicine as a key tool in providing more accessible and coordinated care. So why not pay for telemedicine everywhere?

Medicare will do just that for physicians and other providers who sign up for its new Next Generation ACOs, which it touts as giving providers more predictable financial goals and greater opportunities to coordinate care as well as make money. With the geographic limitation waived, Medicare will pay for a physician checking in virtually on a patient hospitalized in Manhattan or suburban Dallas. In addition, a telemedicine visit will qualify for payment if the patient is at home, not just at a hospital, a physician office, or one of six other "originating sites" specified by Medicare.

The government's announcement about expanded telemedicine coverage for Next Generation ACOs was not exactly a surprise. The Centers for Medicare and Medicaid Services (CMS) floated the idea in December 2014 in proposed regulations, and organized medicine responded with "full speed ahead."

A telemedicine advocacy group called the Alliance for Connected Care applauded the CMS for following through with its proposal.

"This policy is a critical step forward in expanding the use of telehealth services in Medicare, which will allow for greater care coordination and improved quality of care," said Joe Peterson, MD, chairman of the Alliance for Connected Care, in a news release. "It represents a major victory for patients and the broader telehealth community, which has been gathering evidence of telehealth's benefits for decades."

A policy expert at another telemedicine group recommended that the CMS also should lift its telemedicine restrictions for Pioneer and MSSP ACOs as well as other healthcare reform experiments, such as medical homes and bundled payments.

The waiver for Next Generation ACOs "is a good step forward," said Gary Capistrant, chief policy officer for the American Telemedicine Association, in an interview with Medscape Medical News. "But there are additional steps. We'll encourage CMS and Congress to go further."

New ACO Model Will Have More Predictable Benchmarks to Beat

ACOs are consortiums formed by healthcare providers — often hospitals and physicians, but sometimes just group practices by themselves — to deliver coordinated, high-quality, and thrifty care across different patient settings and reap financial rewards for succeeding.

Under the Affordable Care Act, Medicare has launched two basic programs for ACOs to treat seniors — the Pioneer ACO model for organizations experienced in care coordination and risk contracting, and the Medicare Shared Savings Program (MSSP) for newbies in these areas. The CMS views them as the vanguard in the movement to switch Medicare reimbursement from wasteful fee-for- service to pay-for-performance and all of its efficiency.

The Next Generation ACO program that was unveiled yesterday builds on the lessons learned from its predecessors, according to the CMS. Compared with the other models, Next Generation ACOs can receive a greater share of the cost savings that they produce for Medicare, but they also stand to lose more money for missing quality and cost-saving goals. At the same time, the CMS has tried to make Next Generation ACOs less of a risk. For example, these ACOs will know the financial benchmarks they have to beat for each performance year beforehand. In contrast, the CMS sets these benchmarks in stone at the end of performance years for Pioneer and MSSP ACOs. Benchmarks for Next Generation ACOs will be more predictable and stable, the CMS promises.

All existing ACOs can apply to become a Next Generation version. The CMS will accept ACOs into the new model through two rounds of applications in 2015 and 2016. In the 2015 round, a letter of intent is due by May 1, and the application by June 1. The deadlines are the same in 2016.

More information on the Next Generation ACO program is available on the CMS website.

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