Sec F ACOs Flashcards
Definition of accountable care organizations (ACOs)
- ACOs are a new category of health care provider created by the ACA as part of the Medicare Shared Savings Program
- Definition - a legal entity composed of certified Medicare providers or suppliers. These providers and suppliers work together to coordinate care for a defined population of Medicare FFS beneficiaries, and they have control over the ACO’s decision making process
- ACOs that meet specified quality performance standards are eligible to receive payments for shared savings if they can reduce spending growth below target amounts
- Medicare beneficiaries will be assigned to ACOs based on where they received certain primary care and preventive services in the most recent 12 months
Key success factors of an accountable care organization
- Ability to identify the population to manage
- Ability to understand and manage cost
- Ability to manage quality
- Ability to integrate care
Providers eligible to participate in an ACO
- Professionals in group practice arrangements
- Networks of individual practices
- Joint venture arrangements between hospitals and professionals
- Hospitals employing professionals
- Critical access hospitals that are paid by Medicare in a way that supports the collection of data needed to assign patients to providers
- Rural health clinics
- Federally qualified health clinics
Methodology for measuring ACO quality performance
- ACOs are scored based on performance in 33 measures that are grouped into the following domains:
a) Patient and caregiver experience - measures include access to specialists health promotion and education, and health and functional status
b) Care coordination and patient safety - measures include risk-standardized readmissions, medication reconciliation, and screening for fall risk
c) Preventive health - measures include influenze immunization, adult weight screening and follow up, and tobacco use assessment
d) At-risk population - measures include diabetes measures (such as hemoglobin control), blood pressure control for hypertension patients, and coronary artery disease measures - In each domain, the points earned are divided by the total possible points to determine the percentage for that domain
- The ACO’s quality performance score is the straight average of the four domain percentages
Eligibility requirements for ACOs to participate in the Medicare Shared Savings Program
- Must be an eligible type of provider
- Must be capable of receiving and distributing shared savings, repaying shared losses, ensuring all providers comply with program requirements, and performing other required functions
- The governing body must be composed primarily (at least 75%) of participating providers and must also include Medicare beneficiaries served by the ACO
- Leadership and management criteria include:
a) Clinical oversight must be done by a senior-level medical director who is a board-certified physician
b) Providers must make a meaningful financial or human investment to the clinical integration program - Must exhibit a strong patient-centeredness element
- Must have a sufficient number of beneficiaries (at least 5K) and primary care providers
- Must have a compliance plan, a lead compliance official, and mechanisms for identifying compliance problems
Methodology for calculating ACO shared savings payments
- Expenditure baseline
a) Calculated from spending data from beneficiaries that would have been assigned to the ACO in the most recent three-year period
b) Data is trended to the most recent year using Medicare national spending growth rates, and is adjusted based on risk scores
c) The three years are combined using weights of 60%, 30%, and 10% (largest for most recent yr) - Spending benchmark - calculated by trending the expenditure baseline and adjusting for change sin health status (based on age and sex for continuously-enrolled beneficiaries whose risk scores increase, and based on risk scores for all others)
- Actual spending - CMS will use a 3-month run-out of claims when determining the ACO’s actual spending
- In each contract year, savings = spending benchmark - actual spending
- Maximum sharing rate = 60% for two-sided models and 50% for one-sided models. ACOs using the one-sided model do not share losses, and therefore receive a lower sharing rate for savings
- Shared savings
a) Shared savings rate = maximum sharing rate * quality performance score
b) Shared savings = savings * shared savings rate
c) Shared savings are capped at 10% of the benchmark in the one-sided model and 15% of the benchmark in the two-sided model
d) A minimum savings rate (MSR) is used to reduce the chance of payments due to random fluctuations. This rate is 2% in the two-sided model and for ACOs with 5k or more beneficiaries in the one-sided model. Spending must exceed this rate to trigger savings, but once the MSR is met, all savings are shared (even those below the MSR) - Shared losses (two-sided models only) = losses * (1 - shared savings rate)
a) Shared losses have an upper limit of 60%
b) Shared losses are also capped, starting at 5% in the first year
c) A 2% minimum loss rate is applied in the same way as the MSR
Profit formula for ACOs in the MSSP
Net gain/loss = -Revenue reductions + Bonus/share of revenue reductions - Start-up costs of the ACO - Administrative costs of operating the ACO + Reduction in direct expenses
Consideration when negotiating terms of commercial ACO contracts
- Target costs - how are the baseline costs developed? Is there rebasing from one year to the next?
- Risk adjustment - the actuary can help the payment reform team understand the benefits and impacts of the different risk adjusters to use in creating the target cost
- Trend - will the baseline and measurement years be trended, and at what rate?
- Shared savings - what are the savings rate and loss rate, and are the targets achievable?
- Attribution - the attribution method is extremely important, but the details can be quite complex
- Random variation - is the number of members attributed to the ACO large enough that gains and losses will not just be due to statistical fluctuation?
- Stop loss - the ACO and the payer may wish to negotiate specific and aggregate stop loss
- Data and reports - the ACO will need manager-level detail on enrollment, medical claims, and pharmacy claims. It will also need detailed reporting in order to reconcile gains and losses
- Quality - are there a sufficient number of measures to ensure reliable results and reasonably determined benchmarks and targets?
- Infrastructure cost support - will there be a care coordination fee to help the ACO get up and running with its infrastructure?
Ways ACOs must demonstrate patient-centeredness
- A beneficiary care experience survey
- Patient involvement in ACO governance by representation in the governing body
- A process for evaluating the health needs of the population
- Systems in place to identify high-risk individuals and develop individualized care plans for targeted populations
- A mechanism in place for the coordination of care
- A process in place for communicating clinical knowledge to beneficiaries in an understandable way
- A process to allow beneficiaries to access their medical records
- Processes for measuring clinical or service performance and using these results to improve care and service
Approaches and interventions for ACOs to optimize care and achieve performance targets
- Care redesign to improve the delivery and coordination of care - includes establishing patient-centered medical homes and improving transitions in care from hospitals to post-acute or community settings
- Care management of patients with costly, complex needs - including an individualized approach to identify and address unmet needs
- Patient and family engagement and patient activation initiatives - engaging patients in care management to identify personal goals for lifestyle change and educate them about their treatment options
- Integrated data and analytics - developing capabilities to identify patients who could benefit from more intensive care management
- Supportive payment models and financial inventives - capitation provides the greatest flexibility for engaging providers in novel ways. But it may be easier to layer a shared-savings or shared-risk model on top of existing reimbursement arrangments, at least initially
Ways in which provider group-based ACOs are expected to generate savings
- Implementing care coordination to manage the care of the patients who need additional services
- Reducing the need for tests via access to integrated medical records and consistent management by the physician
- Developing a network of efficient providers for referrals and limiting the use of less efficient and more expensive providers
- Focusing on quality, which will result in fewer unnecessary services. And emphasizing preventive services will lead to savings as population health improves
- Reducing duplication of services
- Preventing medical errors
Description of the unintended incentive in ACO payment models
1) Current rules suggest CMS will calculate benchmarks for a new 3-year period in the way original benchmarks were calculated. For e.g., a 60% weight will be applied to the most recent year
2) This creates an incentive to increase spending in that year in order to increase the benchmark
3) Conversely, this removes the incentiv to create savings in that year, penalizing ACOs that do so by giving them a lower benchmark
4) As a result of the unintended incentive, the current payment model may result in higher rather than lower Medicare FFS spending
Proposed strategies for improving incentives in ACO payment models
1) Modify the benchmark weights to give equal weight to each of the three years that are used for calculating the benchmark
a) This would reduce the incentive to increase spending in teh last year before a new contract
b) Alternatively, even more than 3 historical years could be used when calculating benchmarks
2) Introduce a form of “yardstick competition”
a) Base an ACO’s benchmark competition not only on its own past performance, but also on the performance of other Medicare providers or on a local benchmark
b) This would introduce competition into the payment model. The more an ACO lowered its spending relative to that of its competitors, the greater its cumulative rewards would be
