Medicare payment reform took effect this year, and one result is that doctors are showing greater interest in accountable care organizations (ACOs).
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Developed nearly a decade ago to help rein in the growth of Medicare spending and improve patient outcomes, ACOs now are gaining attention as a way for independent practices to lessen their reporting burden under Medicare’s new payment system while possibly increasing their revenue.
The burgeoning interest in ACOs is evident in their growing numbers. In January, the Centers for Medicare & Medicaid Services (CMS) announced the formation of 99 new ACOs participating in the Medicare Shared Savings Program, the oldest and most popular category of ACO. (See sidebar, “Medicare ACOs: A taxonomy.”) That brought the number to 480, which between them serve more than nine million Medicare beneficiaries—an increase of 1.3 million, or 19%, over the previous year.
At the same time, CMS said 28 new ACOs were joining the “Next Generation” model that CMS had created in 2016. That brought the number of Next Generation ACOs to 44.
Despite the advantages they can bring, however, membership in an ACO may not be right for every practice. Depending on the type of ACO, membership could carry financial risk. It may also mean practices must adopt new information technology, as well as giving up some autonomy.
Consequently, experts say, it’s important for practices to perform extensive due diligence before joining an ACO—not just weighing the financial risks and benefits, but determining whether their culture and operations are likely to make it attractive to an ACO and be successful if they join.
To understand the appeal of ACOs to independent practices, it helps to remember that a major goal of the 2015 Medicare payment reform law was to move the program away from fee-for-service in favor of value-based reimbursement systems. To that end it created two reimbursement tracks, the Merit-based Incentive Payment System (MIPS) and the Alternative Payment Model (APM.) While both tracks tie reimbursement to meeting quality and cost metrics, collecting and reporting the necessary data is time-consuming and expensive for MIPS practices. But by joining an ACO, they can lessen the burden, or in some cases avoid it entirely.
“We’re seeing a big ramp-up in [practice] consolidation, whether it’s through an ACO or something else, because [MIPS] is a heavy financial and workflow lift, and to get the necessary support as an independent provider is pretty tough,” says Steffany Whiting, MMCi, strategy and marketing officer with CHESS, a firm that provides management services to ACOs and other value-based healthcare organizations.
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(ACOs offered by commercial payers aren’t included in this article since participation in them doesn’t reduce a practice’s Medicare reporting requirements if the practice also treats Medicare patients.)
Lessening the reporting burden was a significant motivating factor for Jeff Kagan, MD, an internist practicing in Newington, Connecticut and Medical Economics
Editorial Advisory Board member, to join an ACO. “I’m in a two-provider practice so we can’t do a lot of this stuff on our own,” he says.
Joining an ACO—and leaving
Practices joining ACOs sign contracts that spell out how any savings or cost overruns are apportioned among ACO member practices, as well as requirements in areas such as performance metrics, data reporting and use of health information technology. Contracts generally run for three years, and practices that have not met expectations or are not a good fit in other ways usually find their contracts aren’t renewed.
“Not every practice is a good fit for every ACO,” notes Susan Feldman, Ph.D., RN, associate professor and director of graduate programs in health informatics in the school of health professions at the University of Alabama at Birmingham. “If a practice isn’t recording the right data, or not reporting it, or being defiant in some other way they can be kicked out. So it’s very important for a practice to read the contract carefully before joining.”