ACOs for Physicians {Guide}

Accountable Care Organizations (ACOs) were designed in an effort to reduce the overall cost of healthcare by encouraging hospitals, doctors and other medical providers to form networks where they can provide complete medical care for each patient. They aim to deliver a more effective approach to health care, which in turn, helps keep people healthier longer, resulting in lower health care costs.

While the benefits to those seeking medical care are immense, many doctors and medical providers may not see the benefits of joining an ACO network. However, providers who decide to join ACOs actually end up making more money for keeping their patients healthy. Learn more about ACOs and how joining an ACO network can benefit you, your practice and your patients.

Why Physicians or Doctors Could Choose to Join an ACO

The healthcare industry is slowly and steadily moving away from a pay-per-service model to an accountable care model, which rewards providers based on the quality of care they provide instead of the number of patients they see in a day. It’s important to note though, ACOs don’t do away with the fee-per-service model completely.

Instead, they reward doctors who keep spending down in an effort to minimize unnecessary tests and procedures. These organizations are designed in a way that allow hospitals, doctors, and other medical providers to share patient information in an effort to provide the highest quality of care possible.

Of course, some physicians are skeptical about joining an ACO because these organizations pay physicians based on the overall quality of care provided instead of how many patients they serve. However, many ACOs have seen notable success under the new setup.

One of the biggest benefits of joining an ACO is that networks and insurance companies regularly refer new patients to an ACO-affiliated primary care physician. Medicare also automatically enrolls patients in ACOs if their physician is in the ACO, which can bring in a new influx of patients.

Even non-Medicare patients who understand the benefits of an ACO are often encouraged to choose this newer option instead of choosing an HMO for their primary care physician. Insurance companies typically lean towards ACOs over HMOs because the higher level of care provided helps keep their costs lower.

Ultimately, the idea of being able to provide patients with high-quality care is the main benefit for many providers. Physician groups, hospitals, clinics and other medical providers who are within an ACO’s network have access to their patient’s complete medical file.

When the patient is treated in an emergency room or urgent care, all of the details of what they were seen for and how they were treated is visible. This is beneficial for physicians because they have the ability to alter the treatment plan or diagnosis, helping the patient to recover from his or her injury or illness faster.

Pros and Cons of ACOs for Physicians

Like with anything, there are pros and cons of joining an ACO for providers. Healthcare services have traditionally been billed on a per-service basis, for example, and with an ACO providers are paid based on the quality of service they provide. This is calculated on the quality of service the group provides as a whole, so it could hinder some physicians’ immediate income.

However, while specialists may not see a wide range of opportunities when joining an ACO, the reverse is typically true for primary care physicians. For them, ACOs provide a wealth of opportunities, making it easier for them to increase their overall income.

Specialists who want to increase the amount of opportunities available to them can join more than one ACO. But because an ACO’s model of care is centered around the primary care physician, they can only participate in one ACO.

One of the largest benefits of joining an ACO is the ability to participate in the network’s shared savings, which reduces your overall operating costs. Shared savings is based on all costs, including the cost of patient hospitalization and prescription drugs.

The amount of shared savings each participant sees is proportional to the relative contribution to the savings each provider makes. Because primary care providers influence their patient’s health directly and work closely with them, this means that percentage of savings going to the primary care provider is often considerable.

Many doctors appreciate the fact that ACOs put an emphasis on primary care because it validates the reason they went to school to become a doctor in the first place. The fact that primary care physicians are being asked to guide others through the new ACO process is empowering.

It allows primary care physicians to really make a difference in their patients’ lives and that of the healthcare industry.

Some doctors fear that they won’t have time to really participate in an ACO because they already feel burned out or overworked. They don’t feel like they have any remaining intellectual bandwidth or the resources needed to devote to an organization.

However, it’s important to remember that one of the benefits of joining an ACO is that doctors get funding to add needed resources to their offices, including additional staff members.

Also, when you’re part of a network of providers who can all see relevant patient information, there are doctors who can fill in for you on a more regular basis. This could give you the time off you’ve needed and help reduce patient overload.

How ACOs are Performing

One of the reasons physicians are leery to join an ACO is because overall their performance varies widely. When joining an ACO, it’s important to choose a large, established network.

This way it’s easier to maximize your shared savings. It’s also important to keep in mind that the longer you’re a part of an ACO, the more benefits you reap.

You can see how the length of time you’re involved with an ACO affects you by looking at the year-after-year savings the Medicare Shared Savings Program (MSSP) has seen. It’s the largest initiative, and it’s been around since 2012. In 2016, the MSSP brought $652 million in shared savings to Medicare through ACOs.

Roughly one-third of participating ACOs generated savings, with the participants who have been involved since 2012 and 2013 accounting for $503 million in gross savings. Those who entered the initiative in 2014 were responsible for $94 million in savings, ACOs that joined the initiative in 2015 accounted for $50 million in savings, and ACOs entering the initiative in 2016 accounted for $6 million in savings.

The way the shared saving program works is ACOs are rewarded based on their savings contributions. Providers who have been a part of an ACO for a longer period of time have already restructured and redefined their processes so that they generate as much savings as possible. Because of that, they have a higher shared savings payout than newer members.

When you join an ACO, it does take time to start seeing a decent share of the program’s annual savings benefits. However, it’s important to remember that being a part of an ACO doesn’t stop you from being paid for each service you provide. You’re still paid for treating each patient, but in addition to that, an ACO rewards you for keeping costs lower.

Instead of ordering tests that might’ve already been carried out, you could look through your patient’s shared medical history to see if there are any symptoms or medications you weren’t aware of that could narrow down the options. Then, only perform expensive tests when you’ve exhausted the current resources you have.

This shared database is convenient, helps you streamline procedures and saves you money in the long run, which in turn, rewards you through the ACO shared savings plan.

Hospital-Led ACOs vs Physician-Led ACOs

One of the biggest decisions physicians looking to join an ACO have to make is which ACO to join. Some ACOs are run by physicians, while some are led by hospitals. There are even some ACOs that are led by third parties.

However, a study conducted by people affiliated with the Dartmouth Institute for Health Policy and Clinical Practice has shown that physician-led ACOs outperform those led by hospitals and third parties.The study surveyed 173 ACOs and found that 51 percent of respondents identified as being led by physicians, while 33 percent were jointly owned by physicians and hospitals, 3 percent were led solely by hospitals and 13 percent were led by a third party.

The study confirmed that physicians held the majority of board positions available in ACOs, regardless of whether the ACO was led by physicians or hospitals. This allows the organization to focus on patient care from a physician’s perspective instead of that of a healthcare administrator.

While physician-led ACOs performed better than those led by hospitals, it’s important to note that most of the difference was due to the fact that physicians were able to move patients to a lower acquity setting without facing many problems. This isn’t the case for hospitals though; it’s more difficult for them because they can’t sacrifice inpatient care.

Physicians are already on the front-facing side of outpatient care so it’s a much easier task for them.

One problem the study found with physician-led ACOs was that they are less likely to manage patients across all levels of care. When managing risk, small, specialized services are also often needed.

However, physician-led ACOs don’t often include services such as acute care, pharmaceutical and behavioral health services — things a more complex patient may need. For patients, this could result in gaps in their healthcare that need to be addressed.

Medicare Physician Fee Schedule

Many medical providers are concerned that the physician fee schedule for the shared savings plan won’t meet their immediate needs. However, it’s important to remember that those who decide to join an ACO are still paid for the services they provide their patients.

So Medicare claims and other insurance payments should still be received in a timely manner.

The only difference in payment is that the shared savings reward is paid out on an annual basis, and is paid to ACOs that meet all of the pre-set requirements. In 2016, approximately one-third of ACOs qualified for the shared savings reward. While this may not seem like a lot, it’s important to remember that as each organization develops cost-saving procedures, they are more likely to meet and exceed the required metrics for the shared savings reward.

In most cases, ACOs qualified for shared savings rewards within three years of joining.

Are Doctors In ACOs Eligible For Automatic Bonuses Under MACRA?

The Medicare Access and CHIP Reauthorization Act (MACRA) is a bipartisan law that was signed into effect April 16, 2015. It created the Quality Payment Program, which changes the way Medicare rewards clinicians value over time, streamlines several quality programs under one new Merit Based Incentive Payments System (MIPS) and awards bonus payments to participants in eligible alternative payment models (APMs).

Under MACRA, physicians who are affiliated with advanced alternative payment models are eligible for a 5 percent bonus on their Medicare payments. However, this doesn’t affect all ACO types. There are five different types of ACOs:

  • Pioneer ACOs
  • Medicare Shared Savings Program (MSSP) ACOs
  • Advance Payment ACOs
  • Next Generation ACOs
  • ACO Investment Model (AIM)

Physicians who are part of MSSP Track 2 ACOs, Next Generation ACOs, and future MSSP Track 1+ ACOs qualify for advance payment models, which makes them eligible for automatic bonuses under MACRA.

How to Become an Effective ACO

Becoming an effective ACO means concentrating on providing the highest quality of patient care possible. You have specific outcomes you need your patients to meet, and when they do meet them, it helps reduce your financial risk and increase your cost savings — because they are healthier and need care less frequently.

The metrics aren’t solely centered on your individual patient outcomes though. Instead, the entire patient population for your ACO is taken into consideration when determining how well their needs were met.

You also need to focus on streamlining your overall processes and learn to rely on using shared databases to keep costs as low as possible without affecting the quality of care you provide your patients. The more savings you have over the year, the better, because you need to meet specific requirements to be eligible for your ACOs shared savings reward.

For example, in 2016 only one-third of the ACOs in the Medicare Shared Savings Program qualified for the shared savings bonus, and most of them had been involved with an ACO long enough that they know exactly how to minimize costs effectively.