Identifying and Resolving Disputes in New Accountable Care Settings

By Michael D. Roth, Law Offices of Michael Dundon Roth LLP and Dr. Leonard M. Fromer, Group Practice Forum, Los Angeles, CA

Introduction to New Disputes in Accountable Care
Disputes arising in accountable care settings across the United States will be different in substance and other important respects from those previously confronted by physicians, hospitals, health plans, and payers across the health care continuum in connection with how care is provided and how providers get paid. This article explores the nature of these potential disputes, and how and why mediation can offer the most affordable, efficient, and least disruptive means for resolving them. A snapshot of two disputes, both unheard of in our nation’s prior health care delivery system and likely to arise in the new paradigm of accountable care, should help illustrate the novelty and complexity of this new paradigm. First Snapshot: Dr. Elder and her partner Dr. Older have received written notice from Best Accountable Care Organization (Best) that: (1) their report card scores for patient disease outcomes, quality of care process, and patient experience are low, (2) this has contributed to Best being unable to lower its costs and meet benchmark quality and value standards, (3)

this has resulted in Best’s being financially penalized by a third party payer, and (4) Best will exclude them from its physicianpanel if their scores do not come up to specified levels within three months. Drs. Elder and Older argue in response to Best, to no avail, that they cannot meet the measures because their patients are exclusively geriatric and comparing their scores to those of general internists, whose patients are less expensive and easier to treat, is unfair and inappropriate. Best responds that Drs. Elder and Older have not completed any special training and do not hold any special certification in geriatric care and, therefore, must be held to the same report card standards as all internists at Best. Drs. Elder and Older promptly retain legal counsel and prepare to sue Best for wrongful exclusion and breach of contract because, in their judgment, it would be futile to try meeting Best’s specified metric scores and continuing to provide good care to their geriatric patients. Drs. Elder’s/Older’s attorney advises them to expect Best to crossclaim against them for breach of contract in the event they sue Best following their termination.


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Second Snapshot: Community Physician Group (the Group), a large multi-specialty practice, applies for membership on the physician panel of the Preferred Provider Organization (PPO) Premium Level product of Accountable Care ACO (ACO), and are declined on grounds that: (a) the Group generates costs that are significantly higher than those of the other ACO primary care and specialty physicians already on the panel, and (2) the Group belongs to Exceptional Independent Practice Association (the IPA), which generates very high patient care costs. ACO is owned by (1) Green Cross Insurance Company (Green Cross), (2) Heavenly Hospital, (3) the Group, and (4) non-Group primary/specialty physicians. Heavenly Hospital owns and manages the IPA. The Group files a wrongful exclusion lawsuit against Green Cross and the ACO based upon their losing a large pool of patients who will not select the Group as their primary care physician because of financial incentives for the patients to select physicians belonging to the Premium Level panel as their providers.1 Additionally, a few of the Group’s physicians request peer review fair hearings to contest their exclusion from the Premium Level product based upon the common law right in their state for fair procedure.2 To understand how and why mediation offers the most efficient and least expensive means to resolve these two disputes, the article first focuses on the goals of accountable care, the steps that must be taken to achieve these goals, the organizational and operational means needed to implement these steps, and, importantly, the resulting new demands and expectations that will, as a result of the foregoing, be placed on accountable care providers.

where the United States was ranked sixth by the World Health Organization and thirty-second for life expectancy.3 Facing rising costs for care and coverage, more Americans could no longer afford to pay for their health care and/or purchase health insurance, and instead frequently obtained excessively high-cost care in the nation’s emergency rooms. The costs of increasing amounts of uncompensated care then needed to be spread among and absorbed by the insured patients and payers and this, in turn, contributed to spiraling costs, including for health insurance premiums. It is this largely broken health care delivery system that accountable care is designed to address.

Goals of Accountable Care and Steps to Achieve Goals
The lynchpin of accountable care is that there is a direct correlation between improving care and lowering costs. Indeed, improving care and lowering costs are the two overriding goals that all accountable care systems, whether they are ACOs in the Medicare Shared Savings Program (MSSP) or ACOs in the private commercial market,4 have in common. In other words, improving quality comes first and lowering costs will follow, resulting in delivery of higher value care. The paramount question then becomes how do you improve quality? The simple answer is that: (a) patients must receive the right health care, at the right time, and in the right setting ; (b) providers must make the provision of chronic disease care one of their chief priorities; and (c) payments to physicians must be aligned with improving quality and lowering costs. Patients will receive better health care at lower costs in accountable care settings that are successful at achieving these three goals. The ACO organizational and operational structure is designed for the sole purpose of helping providers and health care delivery systems achieve these goals.

Why Accountable Care?
Accountable care is designed to address the problems created by the cost and volume-based reimbursement model used in the United States for decades to pay health care providers for taking care of patients. That is, there was a direct relationship between the volume of services supplied by providers and the amount they were paid; the more goods and services provided—the more they were paid. The amount of such payments was largely unrelated to the quality of care or patient outcomes. In sum, the financial incentives were for health care providers to provide more care, but not necessarily better care, because they were rewarded for doing so. This model placed less emphasis on keeping patients as healthy as possible through preventative care. For example, a physician who failed to monitor the hemoglobin A1C levels of her diabetic patients wound up treating a patient population with higher morbidity and a resulting need for more services as compared to a population of patients whose A1C levels were routinely and timely monitored. Treating a less healthy population led to increased patient care and resulting greater amounts of payment to providers across the health care spectrum. In sum, the health care delivery system in the United States found itself with the highest median health expenditure among nations studied by the Organization for Economic Cooperation and Development (OECD) and lower quality of care in many important measurable categories, such as infant mortality 15

The key element to the ACO organizational and operational structure, which is discussed directly below, is that all ACO participants will agree to: (1) provide services on the foundation of the patient-centered medical home, and (2) be held accountable to being measured by the ACO building blocks of guidelines, benchmarks, and metrics designed to improve quality and lower costs.

Not surprisingly, there will be many new demands and expectations placed on physicians in ACOs, both in terms of how they practice medicine and how they are paid for practicing medicine.
ACO Organization and Structure: What Is an ACO?
An ACO is a group of providers of health care goods and services, which agrees to be held accountable for delivering quality care at a transparent cost to a defined patient population.5 ACOs will provide health care services for its patient population across the continuum of care; that is, in all types of inpatient and outpatient settings. To accomplish this, participants in each ACO will comprise virtually the entire spectrum of health care providers and suppliers, each of whom will either have part ownership in the ACO or will contract with the ACO to provide goods and services. For example, a typical ACO could be owned by a hospital, physician group, and third-party payer, and contract with rehabilitation facilities, laboratories, skilled nursing facilities, pharmacies, etc. to provide the full continuum of health care services to its patient population.6 While most ACOs will have in common this overall ownership/ contracting organizational structure, the exact ownership and contracting make-up of each ACO will differ and, at the risk of using a worn-out cliché, it will be the case that “if you’ve seen one ACO, you’ve seen one ACO.” In MSSP ACOs, at least 75% of the ACO’s governing board must comprise the ACO participants for the purpose of ensuring that the ACOs are provider-driven rather than controlled by non-providers.7 While commercial ACOs are not bound by this requirement, based on the authors’ experience, most ACOs are complying with it in whole or in part, because: (a) it contributes to the seamless delivery of care, which ACOs must provide across the health care continuum, and (b) it keeps open the option of joining the MSSP program without forming a separate ACO. In a departure from the usual standard of care applicable to governing boards, the fiduciary duty of each MSSP ACO’s governing body must be to the ACO itself and not to its owners.8 In other words, the governing board must put the interest of the ACO before the interests of any entity-owner(s).

Foundation and Building Blocks of Accountable Care Organizations
To repeat, the universal foundation of accountable care is the patient-centered medical home (PCMH). The DNA-building blocks of ACOs are the metrics, benchmarks, and clinical practice guidelines that ACOs adopt to measure whether they are successfully providing better care and lowering costs. The PCMH is a patient-centered collaborative team-based model of patient care where a primary care physician leads an interdisciplinary team of specialists, nurses, and other health providers in order to ensure seamless care across all settings and services for each patient, including utilization of appropriate community resources. This model is designed to improve patient access to care by better ensuring that patients receive the right care when and where it is needed. For example, it will generally be far less likely that a patient could inadvertently be subjected to duplicate pre-operative tests ordered by a surgeon who was unaware that the tests had already been completed by the patient’s primary care physician, because the surgeon and primary care physician will be members of the same team, meaning that they will have access to the same electronic health record (EHR) information on the patient, and many team members will be tracking the patient. Further, most EHR information systems will include warnings and alerts designed to prevent contraindicated care and treatment, which will help prevent duplicate testing. In essence, the PCMH helps to better ensure coordinated care centered on each of its patients. The benchmarks, metrics, and clinical practice guidelines are the quality and cost measures and scores that ACOs will adopt and require their providers to comply with in order for the ACO to improve quality and lower costs. Typically, an ACO will first adopt evidence-based medicine guidelines for its practitioners and providers that it determines are scientifically valid and authoritative. In turn, the ACO will typically adopt performance measures, which simply convert these evidencebased medicine guidelines into metrics for the purpose of ensuring that the guidelines are either followed or that the provider gives a good reason for not following them. The MSSP model has adopted initially 33 quality measures that over time must be met by the participating ACO.9 Commercial ACOs have generally been adopting comparable, but not identical, quality measures. Among the most important measures that ACOs will track for individual practitioners and for the system as a whole are: (1) patient disease outcomes, e.g., are patients’ diabetic A1C scores going down; (2) quality-of-care process, e.g., are patients’ diabetic A1C scores being measured at least once


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Illustration 1: Sample Dashboard Best Accountable Care Organization – Metrics 2014 CLINICAL EXCELLENCE














every six months; (3) patient experience scores, i.e., how satisfied are patients emotionally and physically with their care and how did this experience translate into better outcomes, or not; (4) citizenship scores, e.g., does the physician do what is necessary to support the team-based collaboration of the PCMH by completing histories and physicals on a timely basis, responding to calls from nurses, participating in quality assurance committee activities, etc.; and (5) costs for attributed patient populations, e.g., has the physician’s average cost for each diabetic patient met the pre-set cost target for that patient group. In sum, everyone in the ACO must be accountable by proving through these various measures that care is improving and costs are being lowered. To facilitate and enforce compliance with these new measures, physicians and providers across any ACO setting will receive periodic report cards, which show their scores, the scores of other providers and physicians, and the ACO’s overall scores for these various measures. These scores for providers individually and collectively will be available via dashboards on the computers of providers and administrators throughout the ACO. As a result, physicians and providers will know how their scores compare to others in the ACO, and upper level managers and executives in the ACO will know from day to day how everyone is doing individually and in the aggregate on an ongoing basis in terms of meeting the measures, improving

quality, and lowering costs.10 An example of a few typical dashboards in use at ACOs is set forth in the illustration above.

Alignment of Financial Incentives
The transparency and availability of these individual and aggregate scores is, importantly, what enables an ACO to align its providers’ and its own financial incentives with improving care and lowering costs. That is, ACO and provider scoring will be transparent and available to third-party payers, whether or not those payers are part of the ACO ownership. In turn, financial incentives will be aligned by payers rewarding ACOs and their practitioners for improved care and lower cost by means of their: (a) making bonus payments to the ACOs/physicians based upon compliance with the quality and cost measures, (b) sharing the payer’s savings that are calculated based upon improved care and lower costs, and/or (c) penalizing the ACO and their physicians financially when they are not successful in meeting quality and cost metrics and measures. On a related note, ACOs will be compelled to terminate participants who are unwilling or unable to comply with the quality and cost metrics and benchmarks because failure to do so, will leave the ACO vulnerable to adverse financial consequences, e.g. a payer could terminate its contract with an ACO for failing to improve quality and/or lower costs. In sum, the ACO and its participants benefit financially when care is improved, and costs lowered, and suffer adverse 17

financial consequences when these goals are not accomplished. There is a direct correlation between: (1) quality and cost, and (2) third-party payments related to the entire spectrum of health care delivered to a specific patient population.

Issues Prone for Dispute in ACOs
The vast majority of disputes in ACOs and accountable care settings will stem from these new expectations and demands confronted by the ACO physicians and participants. Space precludes discussing all of the different type of disputes. However, we foresee that the majority of disputes will fall within one of the categories discussed below. 1.  An ACO terminates a participating physician or restricts the physician’s clinical privileges based upon these facts: the physician fails to meet the patient disease outcome metric set by his group, and this materially contributes to the overall A1C diabetic levels of the group’s patient population failing to meet the outcome measure. This leads to the ACO either being ineligible to receive bonus payments from a payer, being required to pay a penalty to the payer, or not receiving a withheld amount. Issues in this dispute could include disagreements between the group and physician as to why his patients’ A1C levels were going up (or not coming down more quickly); the group may claim the physician was failing to inform his patients of their diabetic status and/or what to do to manage their diabetes while the physician contends that his patients are either sicker to begin with or not following his instructions.11 2. A  n ACO threatens to terminate a group or financially penalizes the group because too many of the group’s patients are going out of the ACO-network to obtain unnecessary and/or expensive care. The ACO is at risk of losing a contract with a payer if this problem is not resolved. The ACO and group strongly disagree on who is primarily responsible for this overutilization of outof-ACO network care. Each party points to the other as responsible for not doing what is necessary to keep patients in-network. For example, the group asserts that the ACO failed to sufficiently communicate to its enrollees the disincentives for going out-of-network, and the ACO counters that the group has failed to provide patients with timely access, which is why they are going out of network. 3.  An ACO financially penalizes, suspends, or terminates a physician based upon his substandard citizenship score. At issue is the reason for the physician’s substandard score. The ACO asserts that the score is low because the physician’s consulting notes are consistently untimely or incomplete and/or the physician fails to be accessible and in proper communication with interdisciplinary team members; the physician counters that the scoring is subjective, he is as cooperative as most, if not all, other physicians in the ACO, and he is being subjected to unfair treatment or discrimination.

New Demands and Expectations on Physicians in ACOs
Not surprisingly, there will be many new demands and expectations placed on physicians in ACOs, both in terms of how they practice medicine and how they are paid for practicing medicine. It is these new expectations and demands that will lead to many, if not most, of the new types of disputes arising and needing resolution in accountable care settings. In large measure, these new demands include the following, discussed below. The first new demand ACO physicians will face is that they are an integral member of a team-based provider of health care services, which utilizes all of the training and experience of the team members for the benefit of patients. For example, in the old paradigm, if a physician’s consultant notes were not completed or lacking in detail, this would frequently be overlooked. However, in the new team-based accountable care world where team members are functioning in close collaboration with one another, a consultant’s untimely or incomplete charting will adversely affect the efficient and collaborative delivery of care, and likely be called to the physician’s attention more frequently and more quickly than in the past. The second new demand, part and parcel of a team-based delivery of health care, is that there will be an exponential increase in the communication flow related to patient care. While in the past the primary channel of communication was frequently between solely the physician and patient, PCMH-based team care delivery will engender multiple levels of communication between and among team members. For example, a pharmacist who sees a contraindication for prescriptions ordered by different physicians will need to communicate with both physicians; in turn, the physicians will need to communicate with each other and with the pharmacist. Further, any home care providers and other ancillary providers will need to know and/or provide input on patient medication issues. The upshot of the communication flow in this example is that medication errors and adverse events should be reduced and care improved. The third new demand on physicians and ACO participants is that they will be subject to external accountability in terms of meeting quality and cost metrics/benchmarks and being financially penalized, disciplined, or even terminated as a participant in the ACO. For example, in the new world of accountable care, a provider group or physician that fails to meet quality-of-care benchmarks or patient experience scores will risk being financially penalized or removed as one of the ACO’s providers and, no doubt, financial penalties assessed on a group will likely be passed down by the group to the physician(s) in the group found most responsible for these deficiencies. Of course, a group’s termination from an ACO will affect all physicians in the group.


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tion of its 30-days readmission rate is inaccurate; (b) the hospital asserts that the high readmission rate is the result of the cardiologists’ failing to issue appropriate discharge orders; and (c) the cardiologists counter that the hospitals’ discharge planners are allowing patients to be discharged before they have time to enter the appropriate discharge orders. 6. W  e also foresee disputes between providers within ACOs relating to distribution of shared savings. For example, family physician, internist, and OB-GYN groups could each argue that it is chiefly responsible for the ACO’s reduced readmission rate and, therefore, should receive a greater portion of the bonus payment received by the ACO attributable to this reduced rate of readmissions. 7. D  isputes between an ACO and its participants will arise concerning the validity of clinical practice guidelines adopted by the ACO on which its metrics and benchmarks are based. For example, a physician group that has been terminated from the ACO based upon its failure to screen a sufficient number of its patients for prostate or breast cancer in accordance with quality process metrics adopted by the ACO might argue that the metric is based upon guidelines that are neither authoritative nor scientifically valid, and are derived from biased sources.13 8. D  isputes will arise out of the following, or comparable, situations: An ACO excludes a specialty medical group from the provider panel for its premium level product based upon the ACO’s determination that the group costs are too high for inclusion on the panel. Issues here could include claims by the group that: (1) their costs are not higher than similarly situated groups or physicians granted membership in the panel; (2) the higher costs for their patient population is the fault of the ACO hospitals and not a result of their practice; and/or (3) their costs are higher—if only marginally—because their care and patient outcomes are better than those of practitioners allowed on the panel. 9.  An ACO and physician group could disagree on the risk-adjustment that the ACO has made to the group’s payment. That is, the ACO has made an adjustment in what it would otherwise pay the group in an effort to protect the group from a disproportionately higher number of sicker patients selecting the group as their primary care physician, and the group claims that the adjustment is inaccurate or inadequate. Issues to be litigated in this dispute could include the group’s complaint that the ACO miscalculated the adjustment versus the ACO’s counter-claim that the group furnished it with inaccurate data on which the ACO’s calculations were made.

4.  Another type of dispute, which we believe will become more prevalent than in the past, are those involving the classically disruptive physician. This is because the “disruptive” physician will be more likely than others to suffer: (a) low patient experience scoring from patients and their families who, for example, feel as if they have not been treated courteously and respectfully, and (b) substandard citizenship scoring from team members who, for example, do not receive timely return phone calls and responses from the physician. While the disruptive physician in the past would often be tolerated for extended periods of time, the new paradigm will change this because (1) it will affect the ability of the ACO to meet quality measures and various other benchmarks, and (2) there will be objective measures of the physician’s “disruptive” conduct, i.e., the citizenship/ patient experience scores. Issues likely to be disputed in these types of conflicts will likely focus on whether the scoring is accurate and reflective of the physician’s actual conduct. The physician will argue that his citizenship/ patient experience scores are subjective, unfair, and not materially different from the scores of other similarly situated physicians in the ACO, and the ACO will dispute this defense.12 5. A  nother common disagreement will be based upon the following, or comparable, facts: An ACO fails to qualify for a bonus payment from a payer because it has not reduced its 30-day readmission rate for post-cardiac surgical patients. Counterclaims in dispute between the parties in this type of argument could, for example, include: (a) the ACO claims that the payer’s calcula- 19

10.Traditional quality-of-care disputes will also arise within accountable care settings. For example, an ACO or one of the ACO’s acute-care hospitals could terminate or restrict a physician’s clinical privileges based upon her practice falling below the standard of care. However, there could be a new twist even in this scenario. That is, the physician might argue that the reason she has failed to meet a standard of care is because a clinical practice guideline on which the subject standard is based, in whole or in part, has changed since its adoption by the ACO and/or hospital.

Costs and Disruptions in Litigating and Arbitrating ACO Disputes
These various new types of disputes will in many, if not most, instances disrupt an ACO’s operations and/or governance if not promptly resolved internally. Among the reasons for this is because absent prompt resolution the disputes will be litigated. The litigation will likely be time consuming and expensive, because the issues in dispute will be complex, contentious, and oftentimes never before litigated. A few examples follow. Whether a clinical practice guideline is scientifically valid and authoritative is a complex issue that to the authors’ knowledge has never been previously litigated. Whether a physician or physician group’s readmission rate has exceeded applicable benchmarks due to their patient management practices versus the morbidity of their patient population is an issue that has previously not been litigated. Whether an accountable care organization has accurately determined a physician group’s risk-adjustment is also an issue not previously litigated. Disagreements regarding a physician/physician group’s report card scores on quality metrics, patient experience, and citizenship are all issues that have heretofore never been litigated. The reason why these and most all of the other above-described disputes likely to arise in accountable care settings have not previously been litigated is because there was no reason for

these matters to become the subject of litigation. As experienced litigators know only too well, lawsuits focused on complex, novel issues will likely be especially expensive and disruptive to ACO governance and operations. That is, cases of this nature will be complicated in terms of both evidence and expert testimony that parties will need to present to the judge or arbitrator. For example, in a case involving whether a group’s readmission rate is too high, each party will call on experts to review the literature and statistics on readmission rates, each parties’ experts will no doubt review a large number of medical records for readmitted patients in order to testify on the reasons/need for the readmissions, and the parties could need to present fact evidence on the issue of whether the high readmission rate is the fault of the hospital, the ACO, or other third party participating in the ACO. The need to present all of this evidence and expert testimony will lead to extensive discovery and expensive discovery disputes. Moreover, the litigation will involve providers who are seeking to set aside terminations from an ACO panel or avoid the assessment or imposition of significant adverse financial decisions on an ACO. The contentiousness of these disputes will likely become more pronounced over time because, as increasing numbers of patients obtain their care through ACOs, an increasing portion of a physician’s income will be attributable to participating in the ACO and the more important it will become for physicians to remain on an ACO’s provider panel. Apart from the time and cost of litigation as discussed above, what is perhaps at least equally important is that the parties to these lawsuits will be the accountable care physicians, providers, institutions, payers, etc. who must for the sake of the ACO’s success continue to seamlessly work together in order to manage care. These vitally important relationships could be significantly disrupted if the ACO participants are engaged in vituperative and hard-fought lawsuits between and among each other. Even worse, in many instances the lawsuits will be between and among ACO participants who sit together on the ACO’s governing body. As stated above, many of the most important stakeholders in an ACO will serve on its board, and lawsuits promise to be particularly disruptive to an ACO’s governance and operations when it is its board member(s) versus board member(s) on competing sides of a lawsuit. Indeed, litigated disputes of this nature can pose an existential threat to an ACO, the financial consequences of which could be devastating for all participants.

These various new types of disputes will in many, if not most, instances disrupt an ACO’s operations and/or governance if not promptly resolved internally.
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Time and Expense of Fair Hearings
There is yet one additional reason why these disputes may prove to be extremely costly and time consuming for ACOs and their participants. That is, an adverse action taken against a physician in an ACO setting may under applicable law in many states trigger the right of the physician to request a fair hearing before a neutral panel of physicians. For example, a physician whose clinical privileges at a hospital are adversely affected or a physician who is excluded from participating in an ACO may be entitled to a fair hearing. While a discussion of fair hearing rights is beyond the scope of this

article, in California for example,: (1) an action that adversely affects a physician’s staff membership or clinical privileges at a hospital or health plan based upon the physician’s professional competence or conduct will trigger the physician’s right to request a fair hearing, and (2) an insurer operating an ACO, or an ACO treated as comparable to an insurer by a court, could also be required to grant a fair hearing to a physician if the ACO’s action or decision could negatively impact the physician’s income to a substantial degree.14 This is significant because fair hearings that focus on quality and cost issues are, similar to litigation, likely to be time consuming and expensive. Those lawyers, physicians, and administrators experienced in the fair hearing process know that a hearing, at which evidence and argument is presented by both sides and that typically takes place in evening hours when neutral physicians can be out of their office to sit on the panel, occasionally takes months and, in some instances, years to complete. And upon completion of the fair hearing, the aggrieved physician may have the right to challenge the fair hearing decision in a subsequent civil court proceeding.

example, malpractice/Employee Retirement Income Security Act litigation against the ACO involving quality versus cost of care issues.

Added Value of Co-Mediators
Given that so many of the disputes in ACOs will be novel and, therefore, beyond the experience and/or expertise of many of those involved in the disputes, it will be advantageous for ACOs to engage co-mediators comprising an experienced health care attorney-mediator and a physician who has background and expertise in clinically integrated value-based medicine and the related new value-based compensation methodologies. This type of co-mediation team may, depending on the nature, specifics, and dynamics of the underlying dispute, be in a better position than any one attorney/retired judge-mediator to help the parties better understand the dynamics and context of their dispute, and better respond to clinical and practice matters at issue. To this end, a physician-co mediator may have a level of credibility with physicians involved in an ACO mediation that only one physician can have with another physician. An important caveat is that the attorney-mediator and the physician-mediator must be effective working together, and the physician co-mediator must have the skill-set needed to be effective in mediation.

Reasons to Use Mediation to Resolve ACO Disputes15
There are significant advantages to using mediation to resolve ACO disputes that cannot be resolved in the normal course of business. First, as discussed, successful mediation will enable the ACO and its participants to avoid the time, expense, distraction, and disruption of litigation, arbitration, and/or fair hearings. On a related note, mediation will help ACOs avoid litigation and contentious proceedings between and among members of its governing body. Mediation will help ACO participants to preserve ongoing working relationships, which are critical in the accountable care setting where providers must seamlessly deliver care together to patients across the health care continuum. Mediation can contribute to the quality and continuity of patient care by enabling parties to resolve their disputes sooner and amicably, thus reducing the risk of any ACO participant acting precipitously to the detriment of patient care. Mediation can provide predictability because the parties themselves control the outcome. By contrast, in any adversarial setting, a third party—who knows less about the matter than the parties—makes the decision. Moreover, parties to a mediation can craft a solution that is not possible in litigation. This is because civil courts are limited to what can be included in a judgment, i.e., generally being bound to finding liability and determining damages. Mediation offers the benefit of being private.16 Unlike litigation, the fact that parties are engaged in mediation is not a public record. This allows the parties to resolve their differences out of the public eye. Avoiding unwanted adverse publicity between providers is more important than ever in the increasingly competitive health care marketplace. Preserving confidentiality by mediating rather than litigating may also benefit an ACO and its participants by helping to keep information out of the public domain, which would be potentially valuable evidence to plaintiffs’ lawyers in, for

Resolution of Snapshots One and Two
Having discussed the goals of accountable care, the related organizational and operational structure of ACOs, the new expectations being placed on ACO participants, and the benefits that mediation brings to resolving disputes in this new paradigm, we now address how the disputes presented in the opening two snapshots can be resolved through mediation.

First Snapshot: Mediated Resolution
The respective attorneys for Drs. Elder and Older, on the one hand, and Best ACO, on the other hand, decide to try heading off a lawsuit by going to mediation before these two geriatricians are terminated by Best for failing to meet various quality metrics. At this mediation, which is co-mediated by a health care mediator and primary care physician team, Drs. Elder and Older explain to Best that the patient population of non-geriatric internists is generally younger, healthier, and easier-to-treat than patients cared for by geriatric physicians. For example, younger patients better hear and understand their physician’s pre-operative instructions and, therefore, are more likely than geriatric patients to obtain ordered pre-operative tests and avoid activities and prescriptions contraindicated within 48 hours of their surgery.17 That is, even though there is no special certification for geriatricians, the geriatric patient population has more morbidity than the patient population for a general internist and, therefore, it is not entirely fair to hold geriatricians to the same patient experience and patient outcome scoring as Best’s other internists. Best and Drs. Elder/Older together review the basic underlying health measures for the patients of Best’s general internist versus its geriatricians, using statistical sampling. Based upon these comparative health measures and the explanation of Drs. 21

Elder and Older as to why it is more difficult to treat and obtain good outcomes for elderly patients, Best is persuaded that it is unreasonable to require Drs. Elder and Older to have the same patient outcome and patient experience scores as the other Best internists. Using nationally recognized, authoritative data and taking into account the demographics and underlying health measures of Best’s geriatric patient population, the parties agree upon target patient outcome and patient experience scores, which Drs. Elder and Older will be asked to meet over the next six months, at which time the issue will be revisited. These new patient outcome/experience target scores still require Drs. Elder and Older to improve patient care, but are set at a level that recognizes the greater morbidity of and difficulty treating elderly patients. Additionally, Drs. Elder and Older come to understand during the mediation that there is no reason why they should not be held to the same quality process scores as Best’s other internists. For example, the parties agree that Drs. Elder and Older should be held to the same quality process standard applicable to all Best internists with respect to testing the A1C levels for their diabetic patients once every six months. The aforementioned agreements have enabled the parties to avoid litigation. Each side has adjusted its pre-mediation positions and arrived at solutions believed fair by both parties. Indeed, their agreed upon solution would have not been possible had the dispute been litigated, because the court’s decision would have been limited to determining whether to uphold Best’s termination of Drs. Elder and Older and/or to award monetary damages to one party or the other. Resolution of the dispute has also: (a) promoted continuity of patient care at Best because Drs. Elder and Older’s patients would not need to begin seeing replacement physicians, and (b) helped to improve patient care, because Drs. Elder and Older should now implement performance improvement at testing their patients’ A1C levels.

patients will not have an incentive to switch to physicians who belong to the Premium Level panel. Importantly, the parties have been able to resolve their dispute in a manner unavailable in a lawsuit, because a court would only have had the jurisdiction to decide whether the Group’s exclusion from the Premium Level panel was improper and to award damages if it ruled in favor of the Group. In addition, the successful mediation obviated any possibility that one or more of the physicians would have been entitled to a fair hearing under state law.

These tectonic changes in health care, as we move from a world of volume to value, open the door to a host of potential, and often novel, disputes. Mediation offers the accountable care community a faster and less expensive option for resolving these disputes, thereby avoiding litigation and the resulting damage to ACO governance, operations, and patient care delivery. As modeled by this article, co-written by a lawyer-mediator and physician, we believe that mediation will often work best when the parties retain a lawyer-physician mediation team who by having experience in accountable care, each from his or her own respective discipline, will be best positioned to help ACO participants understand and resolve their disagreements.

About the Authors
Michael D. Roth (Michael@rothhealthlaw. com) is a health care neutral who arbitrates and mediates disputes between and among hospitals, health care plans, physicians, physician groups, third party payers, and other health care businesses. He serves as the hearing officer at judicial review/peer review fair hearings and at related appellate review proceedings. For close to 30 years, Mr. Roth’s private practice focused on representing health care businesses, providers, and practitioners across the health care spectrum in statutory and regulatory compliance, health care transactions, third party reimbursement, medical staff peer review, business disputes, and related civil/administrative litigation.  He is an AHLA Fellow, a Fellow of the Litigation Counsel of America, and most recently chaired the committee which drafted AHLA’s recently adopted Code of Ethics for Hearing Officers in Peer Review Hearings. Dr. Leonard M. Fromer (mdwelby@gmail. com) is Executive Medical Director, Group Practice Forum and Assistant Clinical Professor, Department of Family Medicine, University of California at Los Angeles. Dr. Fromer is a member of the board of TransforMED LLC. He also acts as a consultant to TransforMED in the area of clinical integration: center of excellence quality improvement in the chronic diseases coupled with successful practice transformation to the patient centered medical home and the accountable care organization. As Executive Medical Director of the Group Practice Forum, Dr. Fromer leads a team engaged in national projects with group practices that deliver

Second Snapshot: Mediated Resolution
At this mediation, arising out of Community Physician Group’s exclusion from Accountable Care ACO’s PPO Premium Level product, the Group, Accountable Care ACO, and Heavenly Hospital determine that the Group’s abnormally high costs were principally attributable to: (1) the extremely high costs at Heavenly Hospital to which the Group admits most of its patients in need of hospitalization, and (2) costs generated by the practice patterns of only 15% of the Group’s physicians. Rather than continue to exclude the entire Group from the ACO’s Premium Level panel, the ACO agrees to: (a) allow the Group’s other 85% of physicians onto the panel, subject to Heavenly Hospital’s agreement to lower its costs for five specified bundled procedures over the next six-month period and then paying a specified monthly penalty to the ACO if it has not by then lowered its costs for the bundled procedures, and (b) to re-consider the Group’s other 15% of physicians for membership on the panel in six months based upon the practice patterns of these physicians during the six month period. Again, a successful mediation has enabled the parties to avoid litigation. Patient continuity has been promoted because


AHLA Connections December 2013


As experienced litigators know only too well, lawsuits focused on complex, novel issues will likely be especially expensive and disruptive to ACO governance and operations.
education, tools, and services to achieve success in their clinical integration efforts. Dr. Fromer lectures extensively on the topics of health-system reform, the patient-centered medical, home and the accountable care organization. He has been in private practice in Santa Monica, California, with Prairie Medical Group for 28 years. Dr. Fromer is a past president of the California Academy of Family Physicians and has served over ten years as a member and Chairman of the American Academy of Family Physicians Commission on Health Care Services.










Patients who sign up with Premium Level physicians for their primary care are rewarded by having their copayment for office visits waived, lowered deductibles, and greater subsidized premium coverage from their employer. For example, in California an insurer that wishes to remove a physician from its preferred provider panel must afford fair procedure under certain circumstances that could include, inter alia, when removal from the panel could have a substantial financial effect on the physician. See Potvin v. Metropolitan Life Ins. Co., 22 Cal. 4th 1060 (2000). Beginning with the Health Maintenance Organization Act of 1973, managed care which took hold and peaked in the 1990s was intended to, but largely was unsuccessful, at lowering costs and improving care. In essence, managed care was based on the establishment of health care systems which sought to lower costs/improve care by placing administrative controls over primary care providers. Unlike accountable care, these controls were largely not premised on empirically evidence-based medical standards, were generally imposed upon and not collaboratively adopted with the input or assistance of physicians to be bound by the quality/cost guidelines adopted by the managed care plans, and the financial incentives of the plans were more often not, rather than in, alignment with the providers’ financial incentives. References to ACOs in this article refer to the Medicare MSSP ACOs, private ACOs, and other settings that embrace accountable, value-based, care, unless the context indicates to the contrary. MSSP ACOs must be a separate legal entity under state law and, while many commercial ACOs are separate legal entities, the authors understand

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that at least some commercial ACOs are doing business under already existing structures in which they were doing business. An MSSP ACO must be Medicare a provider with a Taxpayer Identification Number and National Provider Identifier. 42 C.F.R. §§ 425.20 and 425.204(c)(5). Also, the composition of most ACOs include health care providers across the spectrum who in many instances, prior to the formation of the ACO, referred patients to one another, had financial relationships, and/or were competitors. It is beyond the scope of this article to discuss the antitrust and fraud and abuse issues related to these prior referral patterns and/or relationships. In sum, the issues should be manageable if properly addressed in the formation and operation of the accountable care organization. 7 42 C.F.R. § 425.106(c)(3). 8 42 C.F.R. § 425.106(b). 9 These quality metrics exist in four domains: patient/ caregiver experience, care coordination/patient safety, preventive health, and at-risk population. 42 CFR § 425.502(d). See also 76 Fed. Reg. 67802 (Nov. 2, 2011); ACO Program Analysis—Quality Performance Standards Narrative Measure Specifications (Centers for Medicare & Medicaid Services Dec. 21, 2012); and ¶ 4597 of the Medicare and Medicaid Guide for a more detailed explanation of the measures. It is worth noting that these metrics and benchmarks do not measure “perfect” care. Rather, the measures will help ACOs and their participants to better empirically understand how they are doing, how they compare with others inside and outside the ACO, and what they need to do to improve quality. The same issues could be the subject of a dispute between an ACO and an entire physician group in the event that the ACO were to financially penalize the group for failing to comply with the A1C disease outcome metric. An interesting aside is that a disruptive physician will frequently for the first time have a more immediate reason for changing his conduct; this is because: (1) low citizenship/experience scoring would more likely now than in the past lead to immediate imposition of financial penalties and (2) patients are likely to have a more profound and influential role due to their scoring their physicians based upon their experiences, and the fact that these scores will be taken seriously by the ACO. Payers and ACOs could likewise disagree on which clinical practice guidelines are authoritative and valid, and on which bonus payments should be calculated. For example, an ACO could take issue with guidelines based in whole or in part on a particular third-party payer’s utilization review standards, on grounds that these standards are not reflective of good medical practice. See supra note 2. Mediation is a private negotiation facilitated by a third party who assists the parties in moving to a resolution of their dispute; that third party is the mediator or co-mediators. The authors are assuming that readers are conversant in the mediation process. While mediations are generally afforded confidentiality, these protections are not absolute. For example, under the Uniform Mediation Act, which has been adopted in 10 states, mediation communications are protected from discovery in “judicial, administrative, arbitral, or other adjudicative” proceedings. In the authors’ view, it is not clear whether a fair hearing or later use of the mediation communications within an ACO would be considered “adjudicative” and, thereby, protected. Further, the Uniform Act permits mediation communications to later be used as evidence in circumstances when the information is not otherwise available and its use substantially outweighs the interest in protecting confidentiality. Accordingly, it is highly recommended that ACO mediation participants enter into a mediation agreement that makes the communications at the mediation confidential in all setting, including at any subsequent proceeding internal to the ACO or at any fair hearing within the ACO or affiliated peer review body. On a related note, ACOs should consider incorporating these mediation confidentiality protections into their policies and procedures and making them a condition for providers who participate in and/or contract with the ACO. Wolf, M.S. et al. Patient Education Counselor (?)2007; see also Shah, L.C. et al. Journal American Board of Family Medicine 2010; 23:195-203. 23