Medicare ACO Requirements and Benefits
Disjointed medical care costs billions of dollars in wasteful spending every year, both in private and governmental health insurance agencies. Medicare is looking to put an eventual end to this wasteful spending by establishing and rewarding organizations that centralize on a common goal: providing the best patient care that meets the highest quality standards.
These accountable care organizations, or ACOs as they are commonly referred to, effectively put the patient first. Each provider within the organization has access to the medical records of the beneficiary, which increases efficiency and reduces medical errors.
There’s a lot that goes into creating, running and enforcing these ACOs. Let’s take a look at the requirements and benefits they offer.
Medicare ACO Requirements
What Is a Medicare ACO?
A Medicare ACO is an accountable care organization that encompasses doctors, specialists, nurses, hospitals and other medical providers. These groups band together in a single organization whose sole mission is aimed at improving patient care.
The purpose is to coordinate care and treatment so that the information is readily available between partners in the ACO using health information technology (HIT). This eliminates wasteful spending that comes from duplicated or unnecessary treatments, saving Medicare money and providing some degree of financial reward for the ACO as a whole.
How Do Medicare ACOs Work?
ACOs work when a group of healthcare professionals come together to provide coordinated care for patients. This means all the information — family history and medical records — are shared between the clinics, hospitals, doctors and specialists.
When a patient visits any provider within the ACO, there’s no need to take down the information again, it’s already shared in a common network that each provider has access to. This results in fewer medical errors and a comprehensive treatment plan in which every provider knows the steps that have come prior.
Medicare ACO Requirements
Not just any group of medical professionals can band together and call themselves an ACO. Medicare has specific requirements in place that these providers must meet in order to be considered an ACO. These organizations also must file with the Center for Medicare Services, or CMS.
In order to qualify as an ACO, the organization has to serve a minimum of 5,000 Medicare patients for a period of 3 years. It also must have enough primary care doctors to service these patients efficiently. Other mandates include, but may not be limited to:
- Promote patient involvement
- Promote evidence-based medicine
- Internally report on cost metrics and quality of services
- Coordinate care between all providers, including primary care physicians, specialists and acute or post-acute providers
In addition to these requirements, there are quality measures that each organization must meet. The model the ACO chooses to participate in defines their risk or reward, and meeting quality measures is part of this determination.
The CMS has a list of 33 measures used to evaluate the quality of services the organization provides. The three scopes of care for these quality measures include:
- Better individual care
- Better health overall for the population
- Lowered expenditures
It’s not enough to simply reduce expenditures, however, organizations must do it while providing improved, efficient treatments for patients. Skimping on healthcare can jeopardize the ACO’s very existence.
When an ACO is created, the healthcare providers have a duty to notify the beneficiaries of this formation. Patients who see a primary care physician or specialist within the newly-formed ACO can opt out.
They are not mandated to stay in the organization and can seek other healthcare professionals if they should decide that’s within their best option.
Medicare ACO Models and Financial Savings
There are several different ACO models that vary when it comes to the key features including financial risk, patient involvement and upfront payments to help with infrastructure setup. Medicare Shared Savings Program, Pioneer ACO, Next Generation ACO and Advanced Payment ACO are the top models that you’ll encounter.
With each of these models comes a degree of financial savings. The amount of savings depends on the type of structure they implement and the risk/reward options they sign up for.
The goal of each of the ACO models is to reduce expenses, particularly when it comes to wasteful spending. To do this, the organizations are allowed to opt-in to specific models or tracks within a model, to take on the appropriate risk level.
The higher the risk, the greater the reward, which in the case of ACOs is a share of the cost savings. This share rate is a percentage of the total savings providing the spending level is below the benchmark while the ACO still maintains quality levels and compliance.
Medicare ACO Models and Quality Improvements
Quality improvements are a main concern when it comes to ACOs. Not because they’re not known for their quality, but because their overall goal is to improve the level of care.
Accountable care organizations include everything from primary care services to specialists and surgeons that work together for the common good of the patient.
Quality improvement benchmarks are set by CMS and regularly evaluated to determine how treatment compares to the benchmarks. It’s not uncommon for benchmarks to change, either, particularly as the level of care increases.
Several models have a quality payment program that rewards ACOs for their achievements, making the organizations more likely to look for efficient ways to increase care levels.
Medicare Shared Savings Program
The Medicare Shared Savings Program, or MSSP, is a program that gives those in the organization the opportunity to choose between the different rewards and risk options. For MSSP, there are three tracks.
Track 1 is the lowest risk, making it possible for MSSP ACOs that lower their expenditures to benefit from the savings providing they meet the benchmark for quality standards. If they choose Track 2, organizations have the potential for greater shared savings, but also take on more risk if they overspend per their established target.
Track 3 is similar to Track 2 in setup, but the risks and rewards are greater as they’ll share in a higher share of the savings or losses, depending on their performance.
There’s another subset of ACOs under the MSSP called Advance Payment ACOs, which generally exist in smaller, rural areas. Aptly named, these organizations typically received advance payments in order to cover startup and infrastructure costs.
Pioneer ACO Model
The Pioneer ACO model no longer exists, having ended in December of 2016. However, when these ACOs were functional, they followed a voluntary setup that looked much like Track 2 of MSSPs.
These organizations benefited from shared savings providing they met the quality standards while simultaneously lowering spending. They were also required to pay CMS if they overspent.
When the Pioneer ACO model was established in January of 2012, there were 32 ACOs participating. When it concluded in December 2016, only 9 were left with nearly 270,000 beneficiaries.
Next Generation ACO Model
\Next Generation models are currently still active, and they come with several options much like the MSSP programs. As of 2018, there were 1.4 million beneficiaries in 51 Next Generation ACOs.
This program is a combination of the Pioneer ACO model and the MSSP program. It differs in that it lets the organization claim an even higher risk and reward percentage than they would get under Pioneer or MSSP.
Of course, the opportunity to gain more rewards also means that the ACO is held to higher quality standards and to promote this, there are stronger patient protections in place to ensure that the patients receive the quality of care they deserve.
Medicare ACOs in the US Currently
There are currently over 600 ACOs in the United States, with the majority of them participating in the MSSP model. Many of them are regional, meaning that they serve a specific area, but there are some national ACOs that consist of providers in several states who work together under one umbrella.
There are a few notable ACOs that deserve mentioning, in part due to their enormous cost savings and the size of the organization in general.
The Accountable Care Coalition of Southeast Wisconsin participates as an MSSP and as a Pioneer ACO model. This organization has seen a lot of success throughout the past several years, ranking in the top 4 percent when it comes to cost savings. In 2015, this ACO managed to save $17 million for Medicare.
The Arizona Care Network in Phoenix has a large group of medical professionals that includes 5,000 clinicians, 1250 locations and 14 hospitals. Its highest cost savings was reported in 2016 when the organization received $5.8 million in shared savings.
When it comes to national ACOs, Ascension Care Management is one for the books. With a patient roster of 1.3 million beneficiaries, it has 18,000 providers that combine services, 153 of which are hospitals.
Start and End Dates for Each Model
Each of the Medicare ACO models comes with a start and end date, with the exception of the MSSP program which is a permanent fixture and has no completion date.
Pioneer ACOs were scheduled to start in 2012 and complete in 2016. Advance Payment ACOs started in 2012 with an end date of 2015. The ACO Investment model began in mid-2015 and completed at the end of 2018, while the Next Generation ACOs started in 2016 and are expected to run through the end of 2020.
How Many Medicare Beneficiaries Are in ACOs Now?
According to the CMS, there were 12 million Medicare beneficiaries in an ACO as of 2018. Of these 12 million, 10.5 million were attributed to an MSSP while 1.4 million were attributed to a Next Generation ACO. These numbers are up from prior years, and each year sees a steady increase in the number of beneficiaries involved with accountable care organizations.
How ACOs Are Filed With the Center For Medicare Services (CMS)
In order to be considered an accountable care organization, ACOs must apply with the Center for Medicare & Medicaid Services (CMS). The application is lengthy and involves providing quite a lot of information about the ACO, most importantly the list of participants.
They also have to choose a track — the risk-sharing option that defines their risk/reward percentages.
An ACO can apply to join two times a year: for July start or for January start. Once the application is accepted, they will be listed on file with the CMS and available in their public list. Renewals must be filed per the CMS guidelines as well.
Should the ACO want to participate in other incentives, they will need to fill out an application and be approved by the CMS before they can begin to reap the benefits. The applications, while lengthy, are straightforward in the information that they require of the organization and its participants.