Since the passage of the Affordable Care Act in 2010, the industry has begun a disruptive shift from payments based on number of visits to payments based on quality metrics, patient satisfaction and cost savings. And even though we are just at the base of a rising quality/penalty reimbursement curve, providers are already feeling the effects of the value-based payment structure.
*Payments based on quality metrics and cost savings vs. number of visits
The reality is that Primary Care Physicians are already being impacted by value-based payments and the changes have only yet begun.
The Medicare and CHIP Reconciliation Act (MACRA) launched a new Quality Payment Program on the healthcare community in 2015 that further shift reimbursements to the value-based model, eliminating FFS as we know it by 2030. In order to be reimbursed for services under MACRA, physicians must either participate in a Merit Based Incentive Payment System (MIPS) or be part of an Advanced Alternative Payment Model (APM).
Although this shift represents a first step to a fresh start for a better, smarter Medicare that fosters healthier patients and a sustainable ecosystem, it will have significant and long-reaching impact on Independent providers.
ACOs were created and/or outlined in section 3022 of the Patient Protection and Affordable Care Act (ACA) in 2010, and final guidelines for establishment of ACOs under the Medicare Shared Savings Program (MSSP) were defined on March 31, 2011.
According to the Centers for Medicare and Medicaid Services (CMS), an ACO is “an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”
The Centers for Medicare and Medicaid Services (CMS) launched an initiative to test the ACO theory and program design before making final rules for the Medicare Shared Savings Program. These beta test ACOs were called “Pioneer” ACOs. The Pioneer ACO Model is separate and distinct from the Medicare Shared Savings Program (MSSP) and is no longer being licensed.
CMS officially licensed Medicare Shared Savings Program (MSSP) ACOs on January 1, 2012, and continues to license ACOs on an annual basis. The Shared Savings Program rewards ACOs that lower their growth in health care costs while meeting performance standards on quality of care and putting patients first.
Built upon the experience from MSSP, the Next Generation ACO Model allows provider groups to assume higher levels of financial risk than the Pioneer or MSSP ACO models. The goal of this model is to test whether strong financial incentives for ACOs couples with tools to support better patient engagement and care management, can further improve health comes and lower expenditures.
Commercial ACOs are similar to Medicare ACOs, but there is no licensing process. Currently, there are 169 commercial ACOs who have negotiated with insurance carriers for shared savings contracts.
This is an initiative available only to ACOs participating in the Medicare Shared Savings Program (MSSP) and offers additional start-up resources to physician- owned and rural providers ACOs to build the necessary infrastructure.
The Medicare Shared Savings Program (MSSP) is the funding mechanism for ACOs participating in the Medicare ACO model. The MSSP rewards ACOs that lower the rate of growth in health care costs for Medicare beneficiaries while meeting specific performance standards on quality of care and patient experience over the three-year contract.
Medicare ACOs are required to coordinate care, define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and encourage investment in infrastructure and redesigned care processes. In return for meeting quality and cost targets, the ACO is eligible to receive shared savings which are annual bonuses on top of traditional fee-for-service payments.
A Medicare ACO focuses on care coordination for Medicare beneficiaries. It has been licensed by CMS and utilizes one of the two shared savings models. A commercial ACO is like a Medicare ACO, but they are focused on care coordination to non-Medicare patient populations and are often formed in conjunction with insurance companies. A commercial ACO can also be licensed as a Medicare ACO if they meet the licensing criteria.
ACOs have to measure and report on five (5) quality measures which are: patient/ caregiver experience, care coordination, patient safety, preventative health, and at-risk population/ frail elderly health.
Medicare has a formal and lengthy application process. A typical application is 350 – 400 pages, and Medicare meticulously reviews each in a three-step process before licenses are provided. In addition to the initial application process, most physician-led ACOs require a second application step for the large funding cost to start up the ACO. *This second application process is not required for privately funded ACOs such as those associating with IntraCare.
It is estimated the average cost to form an ACO is between $1.8 to $4 million dollars per ACO per year. This is due to the amount of labor involved as well as legal fees and IT costs for the data extraction process and population health management systems needed.
Specialists can be part of multiple ACOs, but providers must be exclusive to one ACO. These providers sign an agreement to participate with an ACO like IntraCare. CMS then assigns patients to a providers based upon the majority of their outpatient E&M visits. Once assigned, those beneficiaries become “aligned beneficiaries” of their PCP’s ACO meaning that are eligible to participate in the ACO. Most assigned patients are your existing patients. There is no mechanism for beneficiaries to self-align with an MSSP ACO at this time.