Health Care Transformation

Do You Know if You’re in an ACO?

Hello There Health Care Transformation Tribe,

There has been some recent news on the Medicare Shared Savings front that’s a pretty big deal but honestly most people have probably never heard of an ACO, don’t realize they are in an ACO, and don’t know that ACO’s were a large part of the Affordable Care Act when it was passed back in 2010. So let me start from the beginning and lay this all out for you.

How Doctors/Health Systems Were Paid in the Past: Fee-For-Service (FFS)

What does this mean? They get paid a set amount every time they do something

What impact does it have? 

  • It incentivizes doctors to do more (more surgeries, more labs, more imaging, etc.).
  • It does not pay doctors based on the quality of care the patient receives.
  • Doctors are not incentivized to provide care if they don’t get paid for it or if the FFS reimbursement is low, even if it would actually improve care for the patient (responding to messages, making calls to patients, video visits, mental health, obesity educational classes, etc.).
  • It siloes the providers of care from one another because everyone gets paid for only the service they provide, i.e. care is not patient-centric.

Enter the Accountable Care Organization (ACO). ACO’s are groups of healthcare providers that assume responsibility for the cost and quality of care for their patients. 

What does this mean? The payer sets expected financial and quality benchmarks for the ACO’s patient population.  If the ACO is below the financial target and above the quality targets the ACO gets to share in the savings with the payer. Note- there are two types of ACO’s: one-sided risk (upside only) and two-sided risk (upside and downside). Those who enter into two-sided risk will have to pay money back to the payer if the patients spend more healthcare dollars than expected but if there are savings they get a higher percentage of the savings. That is their only incentive to take on downside risk.

What impact does it have?

  • It incentivizes health systems to provide the right care at the right time in the right setting by the right person.
  • It incentivizes prevention and high-quality patient care.
  • It incentivizes health systems to invest in people and resources that otherwise wouldn’t be reimbursed under FFS but keep patients healthy, for example, remote monitoring in the home and calling/visiting patients after being discharged from the hospital.
  • It incentivizes health systems to break down siloes and provide patient-centric care to make sure all these items are achieved.

The ACO led by CMS (Centers for Medicare and Medicaid Services) is called the Medicare Shared Savings Program (MSSP). Commercial payers have also followed suit and created their own ACO’s as well.

Little known fact: It is well established in health care that the government, i.e. CMS, is more progressive when it comes to cost reduction and quality improvement for patients, which is very surprising to most folks because they would assume it would be the private sector. Not the case in health care!

So now that you better understand what defines an ACO let’s talk about what CMS is proposing to change about the Medicare Shared Savings Program (MSSP):

  1. Renaming the program “Pathways to Success”. Not sure the need or impact of a title change but ok.
  2. Reduces the different tracks ACO’s can take and they must take on downside risk within 2 years of entering the program (right now they have six years).
  3. ACO’s must alert their patients that they are in fact in an ACO.
  4. Adjustments will be made to ACO financial targets based on local markets.
  5. Allows providers to receive payment for telehealth services to patients in their homes (which is currently not reimbursed under FFS Medicare)

What is “telehealth” you ask? Well let me explain…

Telehealth thumbnail for blog

I actually believe that most of these proposed items are good things. We should be doing more telehealth to reach patients where they are. We should be pushing health systems to move away from FFS incentives and take downside risk. It would be a good thing for patients to know whether they are in an ACO and what that means so they can continue to further engage with the health system in the most optimal way. Many are concerned that ACO’s will drop out of the program when forced to take downside risk but I think that will remain to be seen.

In the meantime, I hope you better understand the major development of the ACO that occurred within the Affordable Care Act and how some adjustments may be made to the program in the near future.

Cheers to Health and Happiness!

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