ACOs serve more Americans while increasing quality and savings

Accountable care organizations (ACOs) are serving more Medicare beneficiaries while generating larger savings to the Medicare Trust Funds and delivering higher quality care. In the third year of the Pioneer ACO program and Medicare Shared Savings Program (MSSP), both programs showed significant improvements, according to CMS’ 2014 quality and financial performance results. CMS Acting Administrator Andy Slavitt said, “These results show that accountable care organizations as a group are on the path towards transforming how care is provided. Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending.”


ACOs are groups of physicians, facilities, and other health care professionals that agree to provide coordinated care to their patients to receive savings. ACOs use financial incentives to change behavior, such as paying more to physicians who coordinate care and use health information technologies. ACOs are judged on the care they provide, measured by various metrics—including how highly patients rate the doctor, how well clinicians communicate, whether the ACO screened for high blood pressure and tobacco use and cessation, and use of Electronic Health Records (EHRs). The Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) authorized two distinct ACO models.

The Pioneer ACO model, created by section 3021 of the ACA, is designed to support organizations with more experience in offering coordinated, patient-centered care. The program aims to test the payment arrangement of shared savings and shared losses, offering “higher levels of reward and risk than in the Shared Savings Program.” For the Pioneer program, ACOs agree to share their savings and losses with CMS, to a certain amount. Each Pioneer ACO had a minimum savings rate / minimum loss rate—if the gross savings / loss percentage was within that rate, the ACO neither received shared savings nor paid shared losses. If the ACO gained or lost more than their minimum rate, they either received a shared savings payment from CMS or owed CMS a shared loss payment, splitting the remaining amount.

Section 3022 of the ACA authorized the MSSP, which requires ACOs to meet 33 quality metrics specified in CMS implementing regulations. ACOs in the MSSP are not required to be subject to losses.

Third-year results

In 2014, the third performance year for both programs, Pioneer ACOs showed improvements in 28 of 33 quality measures and experienced average improvements of 3.6 percent across all quality measures. MSSP ACOs that reported quality measures in 2013 and 2014 improved on 27 of 33 quality measures.

When an ACO achieves high-quality care and effectively reduces spending above specified thresholds, it shares in the savings generated for Medicare. In 2014, 20 Pioneer and 333 Shared Savings Program ACOs generated more than $411 million in savings, which includes all ACOs’ savings and losses.

Other findings

In its analysis of the third-year results, CMS also discussed trends in the. For example, ACOs with more experience in the program tend to perform better over time, and the number of beneficiaries served by ACOs has consistently grown from year to year, and is likely to continue growing. Since the ACA was passed, more than 420 Medicare ACOs have been established, serving more than 7.8 million Americans.

Highlight on Louisiana: State stung by both failed cooperative and West Nile carriers

Louisiana Health unCooperative

About 17,000 Louisiana Health Cooperative customers were shocked last month to learn that the company would not be providing any coverage whatsoever in 2016. The company, a not-for-profit created through the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) with $56 million in federal loans, had been the subject of numerous complaints dating back to the beginning of 2014. In the latter half of 2014, the company saw a 23 percent enrollment drop as thousands abandoned the co-op. Still, many relied on the coverage and will have to seek out new options during this year’s open enrollment period. As the surprise is wearing off, the reasons behind the company’s decision to shut down are being explored.

The co-op was formed by a group with experience in the industry, several of whom had been executives with Ochsner Health System. Louisiana Insurance Commissioner Jim Donelon, who is now working with the company and policyholders to ensure that customers are properly served,  was originally pleased to see so many experienced individuals become involved, and expected that Louisiana’s co-op would have more resources than most others. Yet, it appears that the cooperative may have paid millions to its board members and executives even before it offered anyone coverage. The co-op paid out over $3.6 million to businesses associated with its board members in 2013 alone, but the compensation did not translate into success.  Although almost all co-ops struggled, Louisiana’s coop had the highest rate of dropped enrollment of any co-op in the nation.

The company’s issues were clear and numerous from the start of the coverage period. A mere 17 days into the initial 2014 coverage period, a customer filed a complaint stating that the co-op misrepresented its products. Louisiana Health Cooperative had the highest rate of complaints per customer of all of the state’s major insurers at the end of 2014, with 106 (or 101, depending on the source) complaints filed. The complaint-per-customer rate was almost twice that of Blue Cross Blue Shield of Louisiana (BCBS), which had 45 times the number of customers as the co-op. The most common complaints in 2014 focused on adherence to state rules, claim delay, and access to care. Between January 1 and May 15 of this year, 91 complaints had been filed, with over half related to claim delays.

The company experienced substantial financial losses in its first year, and it finished at $20 million in the red in 2014. Some of this was probably due to enrollment numbers being far lower than projected, with 13,000 in mid-2014. The 23 percent enrollment drop by December 2014 marked the highest percentage loss among all co-ops in the country.

Donelon explained that any new company would find it difficult to break into the market, and the ACA’s effect of substantially changing access to and payment for care made it even harder. Sabrina Corlette of Georgetown University’s Center of Health Insurance Reforms also pointed out that a new company needed to create a network of providers as well as offer premium prices low enough to compete with BCBS, which had already cornered 70 percent of the market.

Don’t forget the bug spray

The U.S. is experiencing a widespread outbreak of West Nile virus, and the Louisiana Department of Health and Hospitals (DHH) reported in July that the first cases of 2015 had been identified in the state.  Although most cases of West Nile are asymptomatic, everyone is at risk of infections. Those at least 65 years of age are at an increased risk. Even if no cases have been reported in a particular area, residents are still at risk as the virus is present all over the state. As of August 23, 2015, 20 cases in the state had been confirmed.

The DHH reminded citizens to take precautions each time they step outside.  They should apply mosquito repellent to both clothing and exposed skin. Everyone can help reduce the risk. Eliminating standing water and cleaning clogged roof gutters will remove breeding grounds and can reduce the population by millions.

6th Cir.: After Supreme Court remand, ‘nothing changed’ in failed contraceptive mandate challenge

The Sixth Circuit reaffirmed its position that the religious accommodation for the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) contraceptive mandate does not violate the Religious Freedom Restoration Act (RFRA) (42 U.S.C. § 2000bb). After reviewing the Supreme Court’s decisions in Burwell v. Hobby Lobby Stores, Inc. (Hobby Lobby) and Wheaton College v. Burwell (Wheaton College), the Sixth Circuit adhered to its prior opinion—a preliminary injunction was inappropriate because it was unlikely that the challengers would succeed on the merits of their claims—and held that “nothing in Hobby Lobby” changed that conclusion (Michigan Catholic Conference v. Burwell, August 21, 2015, Moore, K.).


At an earlier stage in the litigation, several religious organizations challenged the exemption and the accommodation. The plaintiffs sought a preliminary injunction on the grounds that the exemption and accommodation violated the RFRA. The district court and the Sixth Circuit rejected the request (see Religious employers lacked strong likelihood of success in contraceptive mandate challenge, Health Reform WK-EDGE, June 18, 2014). Subsequently, the groups filed a petition for a writ of certiorari with the Supreme Court, asserting that the accommodation violated the RFRA. The Supreme Court granted the writ filed by the Michigan Catholic Conference (MCC) and the Catholic Diocese of Nashville (CDN), vacated the Sixth Circuit’s decision, and remanded the case back to the appellate court. The high court directed the Sixth Circuit to reconsider the case in light of the Supreme Court decisions in Hobby Lobby and Wheaton (see ACA’s contraceptive coverage provisions may not provide sufficient protection, Health Reform WK-EDGE, April 27, 2015).

The challengers

The Sixth Circuit’s second evaluation of the accommodation challenge centered around the objections of nine religious employers: MCC; CDN; Catholic Charities Diocese of Kalamazoo; Catholic Charities of Tennessee, Inc.; Camp Marymount, Inc.; Mary, Queen of Angels, Inc.; St. Mary Villa, Inc.; Aquinas College; and Dominican Sisters of St. Cecilia Congregation. Some of the religious organizations (MCC, CDN, and St. Cecilia Congregation) are eligible for the exemption whereas the others are only eligible for the accommodation.


Entities defined as religious employers under federal law are exempt from the ACA’s mandate that health insurance plans provide coverage for contraception. This means that religious employers do not need to provide or pay for contraceptive coverage to individuals covered under their insurance plans or have their insurance plan provide or pay for contraceptive coverage. The contraceptive mandate, simply stated, does not apply to these organizations—they are exempt.


For some objecting organizations that are not exempt, an accommodation is available. The accommodation, initially, was available only for objecting non-profit entities. However, the Hobby Lobby decision expanded the reach of the accommodation to closely held, for-profit corporations. However, the non-exempt religious organizations in the litigation are all within the accommodation because they are non-profit entities. Catholic Charities of Kalamazoo offers a self-insured health plan. Otherwise, the remaining organizations offer fully-insured group health plans. The two types of plans, for the purposes of the contraceptive mandate, are distinguished by the fact that, under self-insured plan, the employer bears the risk associated with providing health benefits. Under a fully-insured group health plan, the insurance company assumes the risk.


For non-objecting entities, the contraceptive mandate is satisfied by requiring the insurance company to provide contraceptive coverage without cost-sharing to insured individuals. In this circumstance, the insurance company provides contraceptive coverage, and the non-objecting entity pays for the coverage with the premiums collected. However, when a non-profit entity objects to such a coverage scheme, the objecting entity may take part in an accommodation either through a self-certification form (EBSA Form 700) or by notifying HHS directly of the objection. All that changes, in the context of a fully-insured group health plan, is that an insurance issuer “must segregate premium revenue collected from the eligible organization from the monies used to provide payments for contraceptive services.” With or without an accommodation, “the insurance company must, as a matter of federal law, provide contraceptive coverage to insured individuals without cost-sharing.” The coverage is identical—the payor changes.

Self-insured accommodation

In the case of a self-insured plan, without an objection, a third party administrator (TPA) would process a claim for contraceptive coverage and the non-objecting entity would pay the claim. In the case of an objecting entity with a self-insured plan, the responsibilities for contraceptive coverage shift entirely to the TPA. The federal government then reimburses the TPA for the expenses associated with providing the coverage.

Success on the merits

When reconsidering whether a preliminary injunction should have been granted, the Sixth Circuit began by evaluating the likelihood that the religious organizations would succeed on the merits of their accommodation challenges. Specifically, as directed, the court considered how Hobby Lobby did or did not alter the earlier conclusion. The court explained that the, in essence, Hobby Lobby stood for the proposition “that the government cannot compel closely held companies with sincere religious objections to provide contraception coverage to their employees.” However, the Sixth Circuit explained, that the holding in Hobby Lobby and the case at issue, were “fundamentally different.” The court reasoned that Hobby Lobby did nothing to “negate the underlying federal requirement that some entity must provide contraceptive coverage.”

RFRA challenge

With respect to whether the accommodation constitutes a substantial burden under the RFRA, the Sixth Circuit noted that every circuit evaluating the issue has answered the question in the negative. Specifically, the court pointed to the Tenth Circuit’s analysis in Little Sisters of the Poor Home for the Aged v. Burwell (Little Sisters), where the Tenth Circuit explained that “whether a law substantially burdens religious exercise in one or more of these ways is a matter for courts—not plaintiffs—to decide.” The Sixth Circuit agreed with the reasoning in Little Sisters that the substantiality of a burden cannot turn on “moral or theological consequences.”

ACA and exempt organizations

The court decided not to revisit its analysis of whether the exempt religious organizations would succeed on the merits of their exemption challenge. The court explained that their mere status as religious employers meant that they did not need to provide, pay for, or facilitate access to contraceptives either before the ACA or after its enactment. Accordingly, the contraceptive mandate had no effect on those organizations and, therefore, the exempt organizations had no basis for a legal challenge to the mandate.

Accommodation challenges

The court engaged in a more detailed analysis regarding the merits of the accommodation challenges. In the context of both fully-insured plans and self-insured plans, the Sixth Circuit explained that there is hardly a less burdensome requirement. The court characterized the obligations of the accommodation simply—“tell us who you are, and tell us how we can contact you.” The court went on to agree with the holding in Little Sisters that, in the context of fully-insured plans, the accommodation does not impact the provision of contraceptive coverage because insurers are obligated to provide contraceptive coverage under the ACA as an independent obligation that runs “irrespective of the notification.”

Regarding the single self-insured plan, Catholic Charities of Kalamazoo, the court explained that the accommodation did not require it to “provide, pay for, and/or facilitate contraceptive coverage.” The Sixth Circuit explained that the accommodation shifts the cost of contraceptive coverage from the objecting entity to the federal government, and leaves the administration of the coverage to the TPA. The court also rejected the argument that such a shift could be construed to mean that the accommodation “triggered” contraceptive coverage, because it was the ACA, and not some aspect of the accommodation, that triggered the contraceptive coverage obligations. The Sixth Circuit also acknowledged that a TPA, unlike an insurer of a fully-insured group health plan, is not required to provide contraceptive coverage prior to an accommodation. However, the court reasoned that even though the accommodation is “a but-for cause of someone else—the TPA—providing contraceptive coverage,” that is the point of an accommodation, to shift a responsibility from an objector to a non-objector.

Denied injunction

The court explained that the accommodation challenges were premised upon a misunderstanding of the RFRA. The court reasoned that while the RFRA allows a particular party to request that the government create an exception to the rule for that particular party, “it does not, however, allow accommodated parties to challenge the rule itself.” After reasoning that the religious entities failed to demonstrate a likelihood of success on the merits of their accommodation challenge, the court analyzed the other factors under consideration for injunctive relief. The court explained that there were no other factors which did anything to outweigh “the clear unlikelihood of success.”

The case is No. 13-2723/6640.

10th Cir.: Little Sisters granted relief from the heat

Refusing to give up in its battle for religious freedom, the Little Sisters of the Poor Home for the Aged, Denver, Colorado (Little Sisters) can breathe a temporary sigh of relief; it will not at this time need to comply with the contraceptive coverage provision of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148). The Tenth Circuit’s order granted the Little Sisters a reprieve until the Supreme Court rules on its case (The Little Sisters of the Poor for the Aged, Denver, Colorado v. Burwell, August, 21, 2015, per curiam).

The Little Sisters of the Poor recently filed their petition with the Supreme Court, following their dissatisfaction with a decision by the Tenth Circuit (see Prayers for injunction go unanswered in appellate review of contraceptive accommodation, Health Reform WK-EDGE, July 15, 2015). In that decision, the Tenth Circuit upheld the district court’s denial of the preliminary injunction, which the Little Sisters requested after the court’s finding that the ACA and its regulations do not burden the free exercise of religion or violate First Amendment rights.


The Little Sisters initially challenged the government’s accommodation allowing religious organizations that were not exempt from the contraception mandate to file Employee Benefits Service Administration (EBSA) Form 700. This form notifies HHS of the organization’s religious objection, and submission to the insurer or third-party administrator puts the responsibility of providing the coverage on these parties and shifts it away from the employer. The Little Sisters were initially denied a request for preliminary injunction, but the Supreme Court granted relief pending appeal (see Supreme Court grants reprieve to nuns opposing contraceptive requirement, pending appeal, Health Reform WK-EDGE, January 29, 2014 and Little Sisters of the Poor file appeal in contraceptive challenge, Health Reform WK-EDGE, February 26, 2014).

Supreme Court appeal

While the Tenth Circuit provided the Little Sisters with a reprieve, religious organizations and various states are wasting no time voicing their opinions. To date, 20 states, a group of Orthodox Jewish Rabbis, six orders of nuns, the flagship seminary of the Southern Baptist Convention, and various other religious and secular organizations are filing friend-of-the-court briefs at the Supreme Court, expressing support for the Little Sisters in the contraceptive coverage mandate challenge.

“This strong show of support for the Little Sisters demonstrates just how important it is that the Supreme Court address the impact of the HHS mandate, particularly on religious groups,” said Mark Rienzi, Senior Counsel at the Becket Fund for Religious Liberty, who is leading the challenge. “It is especially significant that 20 state governments are supporting the Little Sisters at the Supreme Court.”

The case is No. 14-6028.