Accountable Care Organizations

Since the implementation of the Affordable Care Act (ACA), the healthcare world has been inundated with new ideas, new laws, and a lot of change. One interesting part of the ACA that is not getting much attention is the formation of Accountable Care Organizations (ACOs) nationwide. The objective of the formation of an ACO is to combine different areas of medical care into one functioning organization that allows providers to work together to treat patients in the most efficient and cost effective way and rewards the providers for their teamwork.

The ACA includes incentives to form ACOs in an effort to cut costs to Medicare. Centers for Medicare and Medicaid Services (CMS) estimates that patients taking advantage of an ACO will accrue approximately $960 million in savings for Medicare over three years. The savings comes from patients seeing doctors who are members of the same ACO and work together to streamline care. Duplicate testing and unnecessary procedures are avoided, and patients are well taken care of by doctors who are in constant communication. Two out of three Americans over 65 have multiple chronic conditions. These patients benefit the most from care provided by an ACO. Coordinated care leads to fewer mistakes, better coordination of care, and less hospital readmissions due to poor follow up care.

The ACA is attempting to turn the healthcare industry away from a purely fee-for-service system to a system that operates with more efficiency and less redundancy of work. In an ACO structure, physicians are rewarded for value and meeting pre-set standards in quality instead of being rewarded solely for volume of medical care. ACOs combine fee-for-service, care management, and performance incentives.

Opponents of ACOs are concerned that they too closely resemble the HMOs of yesterday. The biggest difference between the two is the lack of network in the former. ACO patients are not required to visit doctors that are in their ACO. They are free to visit any doctor that accepts their insurance. However, staying in the ACO network benefits patients because all of their doctors are working cohesively for the best possible healthcare outcome.

Providers are seeing numerous benefits for forming an ACO or joining an already existing one. The foremost advantage is the shared savings. When an ACO meets quality benchmarks and the cost-of-care falls below the established threshold, the entity then gets a portion of the savings. There are 33 measures in 4 domains that an ACO must hit. In the first year, an ACO is paid for reporting, and in the second and third years they receive incentives for reporting and performance.

While ACOs are still in the early stages of growth, the number is steadily climbing. Currently there are a total of 428 ACOs in 49 states. They still serve mostly Medicare patients, but the numbers of those for privately insured patients are growing as well. Unlike Medicare ACOs, private ACOs have a good bit more flexibility. However, they do serve the same purpose-sharing savings by joining together to provide coordinated quality care.

There is concern that ACOs that dominate the healthcare landscape in any particular area, especially rural areas where there are few healthcare choices, can be considered a monopoly. This was taken into consideration, and the same day that CMS established the rules for ACOs, the Justice Department and Federal Trade Commission also issued rules that allow a certain amount of consolidation for health care groups. If you are a physician looking for more information on establishing an ACO, refer to the CMS website for rules and regulations and contact your healthcare attorney.

Sources:

Accountable Care Organizations (ACO). (March 22, 2013.)

Centers for Medicare and Medicaid Services