Accountable Care Organizations (ACOs), Part 2 of 3 Migena Peno Pharm.D. Candidate LECOM School of Pharmacy

Three Core Principles of ACOs 1. Provider-led organizations  Jointly accountable for quality & total per capita costs across the full continuum of care 2. Reduced overall costs  Payments linked to quality improvements 3. Reliable & progressively more complex performance measurements supporting improvement in care McClellan M, McKethan AN, Lewis JL, Roski J, Fisher ES (2010). A National Strategy to Put Accountable Care Into Practice. 29. pp. 982=990.

Medicare beneficiaries  Must be informed if their provider is part of ACO  Freedom to decline sharing of their personal health data within the ACO  Freedom to choose providers not participating in ACO without paying more  No restrictions on benefits  No restriction on where to get their care or which hospital to go  Receiving higher quality care  ACO providers are not held accountable if patients receive most of their care from providers not participating in ACO Gold J. Accountable Care Organizations, Explained. Kaiser Health News, NPR. Jan 18, 2011.

Sharing Savings  Medicare still pays healthcare providers for specific services based on the fee-for-service program  In addition, a benchmark to measure performance is developed by CMS & used to determine if ACOs should receive shared savings or punished for losses  ACOs would receive shared savings only when savings exceed minimum sharing rate set by CMS or medical expenditures are lower than benchmark  Amount of shared savings depends on whether quality performance standards are meet or exceeded Accountable Care Organizations: Improving Care Coordination for People with Medicare. HealthCare. Newman, D. Accountable Care Organizations and the Medicare Shared Savings Program. Congressional Research Service. Nov 4, 2010

Medicare Shared Savings Program  Component of “Affordable Care Act”  Rewards ACOs if they lower health care cost growth & also meet performance standards on quality of care  Risk-sharing models  One-sided: Sharing only savings for 1 st 2 years & savings & losses in 3 rd year  Two-sided: Sharing savings & losses for all 3 years (Greater share of savings but higher risk of paying losses) Accountable Care Organizations: Improving Care Coordination for People with Medicare. HealthCare.

Medicare Shared Savings Program  One-sided risk model:  Eligible for shared savings if quality measures are met & expenditures less than target amount  No penalization if no savings are achieved  Full payment is received by Medicare based of fee- for-service payment system but no shared savings Newman, D. Accountable Care Organizations and the Medicare Shared Savings Program. Congressional Research Service. Nov 4, 2010 MedPAC has analyzed issues associated with risk sharing and the implications of varying sizes of ACOs. See Medicare Payment Advisory Commission, Transcript of Public Meeting, September 13, 2010, transcripts/ MedPACfinal.pdf.

Medicare Shared Savings Program  Health care providers must participate for at least 3 years in the ACO program  Two-sided risk-sharing model:  95% fee-for-service payment paid now + (5% withhold + shared savings paid later if quality & target spending reached)  Capitation: Fixed payment amount per person to cover all care required to be provided Newman, D. Accountable Care Organizations and the Medicare Shared Savings Program. Congressional Research Service. Nov 4, 2010 MedPAC has analyzed issues associated with risk sharing and the implications of varying sizes of ACOs. See Medicare Payment Advisory Commission, Transcript of Public Meeting, September 13, 2010, transcripts/ MedPACfinal.pdf.

Medicare Shared Savings Program  One-sided risk-sharing model:  Minimal requirement  Reporting basic set of performance measures based on administrative data  Establishing a legal practice entity  Plan for transition between inpatient & outpatient care  Sufficient number of primary care physicians to meet required minimum number of patients per performance measurement Shortell S, Casalino L. Implementing Qualifications Criteria and Technical Assistance for Accountable Care Organizations. JAMA May 5, Vol 303, No. 17

Medicare Shared Savings Program  Two-sided risk-sharing model, includes all requirements for one-sided model plus:  More comprehensive performance measures including: Expanded Patient Experience Measures & Clinical Performance for Individuals with Chronic Disease like asthma, DM, & CHF  More stringent standards for financial reporting including: Financial Projections & Minimum Cash Reserve Shortell S, Casalino L. Implementing Qualifications Criteria and Technical Assistance for Accountable Care Organizations. JAMA May 5, Vol 303, No. 17

Medicare Shared Savings Program  Goals:  Better care  Improved population-wide health  Reduced Medicare Part A & B spending through changes in healthcare delivery system (done by encouraging development of ACOs)  Includes 33 measures focusing on: patient/caregiver experience (7), care coordination & patient safety (6), preventive health (8), & at risk populations (12) Centers for Medicare & Medicaid Services. Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations. 42 CFR Part 425. Final Rule.